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WORLD TRADE
ORGANIZATION

WT/DS155/R
19 December 2000
(00-5282)
Original: English

ARGENTINA – MEASURES AFFECTING
THE EXPORT OF BOVINE HIDES
AND THE IMPORT OF FINISHED LEATHER

Report of the Panel


The report of the Panel on Argentina – Measures Affecting the Export of Bovine Hides and the Import of Finished Leather is being circulated to all Members, pursuant to the DSU. The report is being circulated as an unrestricted document from 19 December 2000 pursuant to the Procedures for the Circulation and Derestriction of WTO Documents (WT/L/160/Rev.1). Members are reminded that in accordance with the DSU only parties to the dispute may appeal a panel report. An appeal shall be limited to issues of law covered in the Panel report and legal interpretations developed by the Panel. There shall be no ex parte communications with the Panel or Appellate Body concerning matters under consideration by the Panel or Appellate Body.





Note by the Secretariat: This Panel Report shall be adopted by the Dispute Settlement Body (DSB) within 60 days after the date of its circulation unless a party to the dispute decides to appeal or the DSB decides by consensus not to adopt the report. If the Panel Report is appealed to the Appellate Body, it shall not be considered for adoption by the DSB until after the completion of the appeal. Information on the current status of the Panel Report is available from the WTO Secretariat.
 




TABLE OF CONTENTS



I. PROCEDURAL BACKGROUND


II. FACTUAL ASPECTS (MEASURES ON EXPORT OF BOVINE HIDES)

A. SCOPE OF THE CLAIM

B. THE PRODUCTS CONCERNED: PRODUCTION AND PROCESSING OF RAW AND SEMI-TANNED HIDES

C. PRODUCTION, PRICE, AND TRADE FIGURES OF RAW HIDES, SEMI-FINISHED AND FINISHED LEATHER

1. Production figures for raw hides in Argentina

2. Export figures for raw hides and semi-tanned (wet blue) leather

3. Import figures for raw hides and semi-tanned (wet blue) leather
 

D. CONTEXT OF GOVERNMENT MEASURES REGARDING THE EXPORT OF RAW BOVINE HIDES IN ARGENTINA  

E. RESOLUTION 2235

F. THE PRACTICAL APPLICATION OF RESOLUTION 2235/96

 

III. CLAIMS BY THE PARTIES

 

IV. MAIN ARGUMENTS


A. VIOLATION OF ARTICLE XI:1 OF THE GATT 1994

1. Export prohibitions or restrictions maintained by a Contracting Party, made effective through "other measures"    

2. Rationale for the enactment of the Resolution

3. Alleged restrictive effect due to the presence of ADICMA representatives         

4. Alleged disclosure of confidential information to ADICMA representatives                          

5. Market power of tanneries vs. slaughterhouses and the alleged existence of a cartel


6. Claim that export and price figures reflect the restrictive effect of the measure on exports of raw bovine hides

(a) Interpretation of figures of hide production in Argentina

(b) Interpretation of export figures from Argentina

(c) Price differential between Argentine and US hides

(d) Argument that the "shortfall" of raw hides leads to increased imports of raw and wet blue hides

(e) Claim that ratio of production to export in Argentina is low

B. VIOLATION OF ARTICLE X:3 (A) OF THE GATT 1994

1. Allegation that Resolution 2235 commits Argentina to an administration of customs laws which is not impartial, reasonable, and uniform

2. Applicability of Article X:3(a) of the GATT 1994 to Resolution 2235

V. THIRD PARTY SUBMISSION BY THE UNITED STATES


VI. FACTUAL ASPECTS (TAX MEASURES ON IMPORTS)

A. THE IVA

B. ADVANCES ON THE IVA

1. Collection of the IVA on imports

2. Collection of the IVA on internal sales

C. THE IG

D. ADVANCES ON THE IG

1. Collection of the IG on imports

2. Collection of the IG on internal sales

 

VII. CLAIMS BY THE PARTIES



VIII. MAIN ARGUMENTS

A. ARTICLE III:2 OF THE GATT 1994

1. Scope and applicability of Article III:2 of the GATT 1994

(a) Applicability of Article III:2 of the GATT 1994 to advances on the IG

(b) Coverage of the advance systems by Article III:2 of the GATT 1994

(c) Coverage of "lost interest" by Article III:2 of the GATT 1994

2. "Likeness" of imported products and domestically produced products

3. Claim that imported products are taxed "in excess of" like domestic products

(a) Claim that the advance IVA on imports results in a heavier tax burden than the advance IVA domestic sales

(i) Comparison of tax burden between imported and domestic products

(ii) Mechanism for the exemption from advance IVA collection on imports

(iii) Argument that the impact of a financial cost is limited to a maximum of 30 days

(iv) Existence of a differential between generally applicable rates – issue of whether the differential is due to the tax collection method

(v) The additional IVA on internal transactions does not apply to sales by non-registered taxable persons, whereas the additional IVA on imports is levied also on imports by non-registered taxpayers

(vi) Situation of importers vis-à-vis entities that are not withholding agents in internal sales.

(vii) Situation of importers vis-à-vis certain categories of purchasers in internal sales

(viii) Threshold amounts available for internal sales, yet not for imports

(ix) Equal treatment of imported and domestic products


(x) De minimis qualification under Article III:2 of the GATT 1994

(b) Claim that the IG "collected" on imports imposes a heavier tax burden than the IG "withheld" on domestic sales

(i) Mechanism for the exemption from the advance IG collection on imports

(ii) Mechanism for refunds in situations of actual overpayment of taxes

(iii) De minimis qualification under Article III:2 of the GATT 1994

4. The requirement of "protection" in the application of Article III:2 of the GATT 1994

B. GENERAL EXCEPTION OF ARTICLE XX (D) OF THE GATT 1994

1. Paragraph (d) of Article XX of the GATT 1994

(a) "To secure compliance with laws or regulations which are not inconsistent with the provisions of this Agreement"

(b) The "necessary" character of the measure

2. Relationship of the "chapeau" of Article XX of the GATT 1994 to the content of paragraph (d)
 
3. Justification of the advance IVA and IG under the "chapeau" of Article XX of the GATT 1994

(a) "Arbitrary or unjustifiable" discrimination

(b) Disguised restriction

 

IX. THIRD PARTY SUBMISSION BY THE UNITED STATES
 

X. INTERIM REVIEW,

A. BACKGROUND

B. CLAIM UNDER ARTICLE X:3(A) OF THE GATT 1994

C. CLAIM UNDER ARTICLE III:2, FIRST SENTENCE, OF THE GATT 1994

D. DEFENCE UNDER ARTICLE XX(D) OF THE GATT 1994

 

XI. FINDINGS

A. CLAIM UNDER ARTICLE XI:1 OF THE GATT 1994

1. Measure at issue and overview of the parties' arguments

2. Burden of proof

3. Nature of the claim before the Panel

4. Mere presence of tanners' representatives as an export restriction

5. Presence of tanners' representatives along with access to information as an export restriction

6. Presence of tanners' representatives, access to confidential information and abuse of such information as an export restriction

B. CLAIM UNDER ARTICLE X:3(A) OF THE GATT 1994

1. Measure at issue and overview of the parties' arguments

2. How Article X:3(a) relates to other provisions of the GATT 1994

(a) General

(b) Article X:3(a) and MFN

(c) Substantive rules versus administration

(d) Laws of general application

3. Is Resolution 2235 uniform, impartial and reasonable?

(a) General

(b) Uniformity

(c) Reasonableness

(d) Impartiality

C. CLAIMS UNDER ARTICLE III:2, FIRST SENTENCE, OF THE GATT 1994

1. Factual aspects

(a) Value-added tax (IVA)

(ii) The IVA

(iii) Pre payment of the IVA
     Pre payment of the IVA on imports
     Pre payment of the IVA on internal sales

(b) Income tax (IG)

(i) The IG

(ii) Pre payment of the IG
    Pre payment of the IG on imports
    Pre payment of the IG on internal sales

2. Overview of the parties' arguments and analytical approach followed

3. Applicability of Article III:2

(a) Tax measures

(b) Internal measures

(c) Measures applied to products

4. Likeness of imported and domestic products

5. Comparison of tax burdens imposed

(a) Tax burdens imposed

(b) Pre payment of the IVA

(i) Claims by the European Communities

    Lower pre payment rates applicable to
    internal sales to registered taxable
    persons

    No pre payment on internal sales to non
    registered taxable persons

    No pre payment on internal sales by non
    agentes de percepción

    No pre payment on internal sales to
    certain financial entities or agentes de
    percepción/retención

    Minimum pre payment threshold for
    internal sales

(ii) Broad counter-arguments by Argentina

    Adjustment for prior-stage pre payment

    Exemption mechanism

    Magnitude and duration of the tax burden
    differentials

    Provisions of domestic law

(iii) Conclusions

(c) Pre payment of the IG

(i) Claims by the European Communities

    Lower pre payment rates applicable to
    internal sales by registered taxable
    persons

    No pre payment on internal sales of goods
    destined for the purchaser's own use or
    consumption

    Minimum pre payment threshold and
    monthly pre payment allowance for
    internal sales

(ii) Broad counter-arguments by Argentina,

    Exemption mechanism

    Refund mechanism

    Magnitude of the tax burden differential

(iii) Conclusions


6. Defence under Article XX(d) of the GATT 1994

(a) Overview of the parties' arguments and analytical approach followed

(b) Provisional justification under paragraph (d) of Article XX

(i) Existence of measures which secure compliance with other laws or regulations

(ii) Consistency with the GATT 1994 of those other laws or regulations

(iii) Necessity of the measures taken to secure compliance

(c) Consistency with the requirements of the chapeau of Article XX

(i) Interpretation and application of the chapeau

(ii) Justifiability of discrimination

 

XII. CONCLUSIONS

 

Continuation: I. PROCEDURAL BACKGROUND