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

4.162 The European Communities claims that the authorization contained in Resolution 2235 is inconsistent with GATT Article X:3(a), which stipulates that Members must administer trade regulations in a uniform and impartial manner. The authorization - through Resolution 2235 - of representatives of the Argentinean tanning industry to be present during the customs' export verification procedures of raw hides, makes an impartial, reasonable, and uniform application of the Argentinean customs law impossible, as the industry so authorized has an interest in having exclusive access to raw material when that raw material is legitimately offered for export.

4.163 In its European Communities-Bananas ruling, the Appellate Body compared the language of Article X:3(a) of the GATT with that of Article 1:3 of the WTO Import Licensing Agreement. The panel noted that there were differences between both Articles, in that the latter provides that

"the rules for import licensing procedures shall be neutral in application and administered in a fair and equitable way."

4.164 The Appellate Body nevertheless attached no importance to this difference in wording:
"In our view, the two phrases are, for all practical purposes, interchangeable."¹¹¹

4.165 These findings of the Appellate Body clearly indicate that Article X:3(a) is about basic principles of fair, equitable, neutral and equal treatment in the application of laws, regulations and (administrative) procedures related to trade in goods.

4.166 The European Communities avows that both the right contained in Resolution 2235 of representatives of the Argentinean tanning industry to be informed whenever anybody attempts to export, as well as the fact that representatives of ADICMA, an industry which has a strong interest in keeping raw material in Argentina, may be present at the customs inspection results in a violation of Article X, paragraph 3 a of the GATT, as since under such circumstances a "uniform, impartial and reasonable" application of the Argentinean customs laws is impossible. The Argentinean government is of course equally aware that Resolution 2235 has this effect. This is underscored in particular by:

-- the fact that the industry allowed to participate is the only user of the raw material concerned, and that the raw material in question concerned represents more than 50 percent of the production cost of the finished product (leather);

-- the fact that this industry has always expressly and openly stated that it wants access of foreign buyers to its domestic raw material be restricted, hence shown its partiality and interest in the products concerned;

-- the fact that, until just before the introduction of that measure the export of the product subject to that measure was squarely prohibited, and had been subject to open prohibitions and restrictions during more than 20 years;

-- the fact that it does not take specific expertise to distinguish between products eligible for refunds and raw hides or wet blue.

4.167 It cannot be considered "reasonable" that the interested industry is informed of all (attempts at) exports by those from whom they wish and effectively managed to obtain the exclusive right to purchase hides. The European Communities maintains that Argentina completely fails to explain why the very peculiar situation that sellers must submit to the presence of representatives of their potential domestic buyers when they export goods should be considered "reasonable."

4.168 As was noted above, the measure was introduced and expanded upon repeated requests of an industry that (i) uses a certain raw material, namely hides, (ii) has an obvious interest in keeping this commodity's market closed; and (iii) has expressed the view that one cannot allow for a liberalisation of this market.

4.169 Given this context, allowing an industry to participate in customs control of a raw material in which it has a vested interest can only be designed to allow that industry to have that procedure applied to its advantage.

4.170 It is obvious that the participation of representatives of an industry which has a clear interest in impeding the export of its raw material introduces a manifest element of partiality into a customs procedure. Legislation which unnecessarily allows certain interested private parties to take part in customs procedures which can be turned to their commercial advantage by definition creates the risk that there will be partial administration of those procedures.

4.171 The fact that the Argentinean government was apparently making certain information available on-line does not detract from the fact that the presence of persons who are not a party to the export transaction is incompatible with Article X:3(a).

4.172 The European Communities also argues that it cannot be considered reasonable when customs formalities are applied in such a way that a representative of all potential Argentinean hide buyers, any time when one of their suppliers would like to sell abroad rather than to them, is allowed to see and sign a document which contains the details of the export deal, including business confidential information to which even under Argentinean law itself access should be legally restricted. In fact, the immediate context of Article X:3 makes clear that the drafters of the General Agreement would have considered this clearly unreasonable. This results from the fact that in Article X:1, last sentence, it is stipulated that the obligations of that paragraph shall not require WTO Members to "disclose confidential information which (…) would prejudice the legitimate commercial interests of particular enterprises, public or private." The Argentinean measure therefore results in the opposite of what the drafters of Article X considered important, i.e. protection of legitimate business secrets.

4.173 In reply to a question by the Panel, the European Communities elaborates its claim, that Resolution 2235 is in violation of Article X:3(a), inter alia, because it entails an administration of relevant customs rules which is not uniform in that for the particular products mentioned in the Resolution a separate method of administration is introduced. The European Communities accepts that for e.g. certain agricultural products special sanitary and phytosanitary checks at the border may be indispensable and that to that extent the administration of customs procedures will not be uniform. However, the obligation to administer trade regulations (in the sense of Article X:1) in a uniform manner must be read in its context, which is to administer those regulations in a "uniform, impartial and reasonable" manner. These words inform one another and clarify the meaning of the obligation. The fact is that Resolution 2235 only applies to certain products, while for very many products "reembolsos" exist. This means that the justification given by Argentina for Resolution 2235 is not valid. Therefore, in this case the non-uniform application of the Argentinean export procedures – i.e. the fact that Argentina only gives a certain industry the right to be present, for certain products – shows that the Decree violates Article X:3(a).

4.174 Moreover, the European Communities maintains that the three criteria of X:3(a) are cumulative. So even if one considers that the fact that a certain method of administration of trade laws in the sense of Article X:3(a) is not "uniform" is not a problem in itself, Resolution 2235 certainly is neither a reasonable nor impartial way of administering those export procedures.

4.175 Argentina contests the European Communities' interpretation of the last sentence of Article X:1, since that sentence represents a waiver of the obligation to publish confidential information, and not a ban on the publication of such information. The final sentence of paragraph 1 is an exemption from the obligation to publish. It is not an obligation. The Agreement has left it to the discretion of Members to decide whether or not to publish the confidential information contained in the laws, regulations, judicial decisions and administrative rulings.¹¹²
 
4.176 Argentina asserts that the ADICMA experts have no access whatsoever to the material "offered for export." The experts intervene only when the deal to export the goods, i.e. the export operation, has already been closed. Consequently, it is not clear how this could be in breach of the obligation under Article X:3(a), even allowing for the legal interpretation put forward by the European Communities.

4.177 The European Communities argues that Argentina misunderstands its the arguments. The European Communities has never argued that the Resolution which it contests allows ADICMA-representatives to be present during contractual negotiations, e.g. when a slaughterhouse would send a fax to a potential foreign buyer. However, as ADICMA-representatives may be present when Argentinean customs procedures related to exportation of goods are applied, they are present when export regulations are being administered, which falls under Article X of the GATT, including paragraph 3 thereof. The European Communities recalls that Article X:1 – to which Article X:3 refers back - covers inter alia "requirements, restrictions or prohibitions on imports and exports" and that in for instance European Communities-Bananas,¹¹³ import licensing regulations were found to fall under Article X, paragraphs 1 and 3.

4.178 Argentina argues that the European Communities has neither provided any evidence to show that impartial application of customs rules is impossible in the presence of ADICMA representatives, nor has it been able to explain what is "not reasonable" about industry participation in this procedure. Argentina regards ADICMA participation as reasonable for the purpose of checking the quality and tariff classification of the goods for export.

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

4.179 Argentina maintains that the European Communities mistakenly applies the Article X:3(a) to Resolution 2235 which is a substantive rule of specific nature. The Article, however is only applicable to general rules. Moreover, Article X applies only between WTO Members, but not within the territory of a Member State. In addition, Argentina points out that Article X:1 only authorizes the exemption from the obligation to publish and does not mention an explicit obligation to protect confidentiality, which would be protected indirectly by Article X:3(a) through Article X:1.

4.180 Argentina maintains that Resolution 2235 is not a general rule, but a substantive rule of a specific nature, as it is directed towards a perfectly identifiable number of persons, the members of ADICMA to whom it grants the authority to be present during export procedures. The specific nature of the rule is also shown since it was issued only on the application of a party. This definition is consistent with precedent , according to which:

"... If, for instance, the restraint was addressed to a specific company or applied to a specific shipment, it would not have qualified as a measure of general application. However, to the extent that the restraint affects an unidentified number of economic operators, including domestic and foreign producers, we find it to be a measure of general application." ¹¹⁴

4.181 The essential requirement, as recognized by the Appellate Body, is that it should be designed to affect an unidentified number of persons. In the case at issue, the number of persons is perfectly identifiable. Thus, Resolution 2235 is not covered by Article X:3(a) of the GATT 1994.

4.182 Argentina states that GATT Article X refers to the same rules of a general nature throughout the text of the entire Article. The European Communities cannot argue that the alleged general rules regulating Argentine exports (which it does not identify) are those set forth in paragraph 1 of Article X, and that Resolution 2235 concerns the administration of those rules, and is consequently covered by paragraph 3(a) of Article X. The difference between the paragraphs lies in the fact that paragraph 1 of Article X refers to the publication of rules, while paragraph 3(a) refers to their administration. The European Communities interpretation of Resolution 2235 as constituting a particular method of administering export regulations is supported neither by the text of the Resolution nor by the object and purpose pursued.

4.183 Argentina asserts that the scope of Article X of the GATT covers only the administration of a rule, yet not its own substantive character. Article X:3(a), was not designed for situations where the substantive content of a rule is questioned. In the case at issue, the European Communities merely argued that the substantive content of Resolution 2235 was inconsistent, i.e. the authorization granted by the Argentine State for the designated ADICMA representatives to be present during the customs clearance of the goods. In other words, what the European Communities claims to be inconsistent is the substantive content of the rule in question and not its administration.

4.184 In support of its arguments, Argentina quotes the Appellate Body:¹¹⁵

"Article X relates to the publication and administration of "laws, regulations, judicial decisions and administrative rulings of general application," rather than to the substantive content of such measures. In European Communities - Bananas, we stated:

The text of Article X:3(a) clearly indicates that the requirements of "uniformity, impartiality and reasonableness" do not apply to the laws, regulations, decisions and rulings themselves, but rather to the administration of those laws, regulations, decisions and rulings. The context of Article X:3(a) within Article X, which is entitled "Publication and Administration of Trade Regulations," and a reading of the other paragraphs of Article X, make it clear that Article X applies to the administration of laws, regulations, decisions and rulings. To the extent that the laws, regulations, decisions and rulings themselves are discriminatory, they can be examined for their consistency with the relevant provisions of the GATT 1994."

Thus, to the extent that Brazil's appeal relates to the substantive content of the European Communities rules themselves, and not to their publication or administration, that appeal falls outside the scope of Article X of the GATT 1994. The WTO-consistency of such substantive content must be determined by reference to provisions of the covered agreements other than Article X of the GATT 1994."¹¹⁶

4.185 Argentina contends that Resolution 2235 is administered or applied in a uniform, impartial and reasonable manner to all of the subjects covered by it. The European Communities has not proven otherwise. The European Communities is taking an erroneous approach to the issue in thinking that because other persons are not authorized to be present during customs clearance of the goods, the rule is being administered in a partial, non-uniform and unreasonable manner. The fact is, there is no reason for other persons to be present during clearance because the rule is not designed for that purpose. The presence of the other interested parties, the exporter or the exporter's customs agent, is governed by Articles 340 and 36 of the Argentine Customs Code.¹¹⁷

4.186 In conclusion, if the European Communities considers that the rule is inconsistent because it authorizes ADICMA to be present during customs clearance of the goods or because other persons should be present, in other words because of its substantive content, its allegation should be examined under other provisions of the Agreement, as stated by the Appellate Body. Only because the European Communities doubts whether it can prove the alleged de facto ban on hides exports (Article XI:1) does it erroneously resort to Article X:3(a), applying it to a situation for which it was not designed.

4.187 Argentina argues further that Article X:3(a) does not deal with the application of laws, regulations, decisions and rulings of a general nature within the territory of the member State, but refers to the manner in which a Member applies its rules vis-à-vis other Members of the WTO.

4.188 In the present case, the European Communities makes an erroneous interpretation which is totally at variance with the one it offered in the case brought by Chile in respect of dessert apples. In that case, the European Communities maintained that the Article referred to the application of its regulations relating to apple-exporting members, not to their application in an impartial manner within its own territory. In the case cited, the European Communities argued that: "… the Chilean case was based on a misinterpretation of Article X:3(a), whose correct meaning they gave as requiring in substance that the administration of trade measures by the various administrations should not be discriminatory among the contracting parties … The European Communities denied that the Community surveillance measures were administered in a different manner with regard to imports of Chilean apples and imports of apples originating in other contracting parties."¹¹⁸

4.189 Argentina maintains that it applies Resolution 2235 in an impartial manner, as the resolution allows ADICMA representatives to be present when hides were being exported to any destination, not only the European Union.

4.190 The European Communities argues that Argentina's assertion that Article X:3 can only apply in case trade regulations are applied differently to different WTO Members is unfounded. Such a way of administering trade regulation certainly would fall foul of Article X:3 since it would clearly not be "uniform." However, Article X:3 also prohibits partial and unreasonable ways of administering trade regulations. Argentina's reading of Article X:3 would deprive those words of meaning, which is contrary to the Appellate Body's constant case-law that a treaty interpreter must give full meaning to all terms in a treaty, and cannot read parts of a treaty into redundancy.¹¹⁹

4.191 Argentina maintains that Article X:3(a) does not concern the application of the laws, regulations, judicial decisions and administrative rulings of general application within the territory of the Member, but rather with the way in which the Member applies its rules in respect of the other Members of the WTO.

4.192 Argentina submits that the European Communities itself had invoked the precedent of Bananas III, in which it requests the Appellate Body to rule on two issues:

"The first issue is whether the requirements of uniformity, impartiality and reasonableness set out in Article X:3(a) preclude the imposition of different import licensing systems on like products imported from different Members …."

4.193 Argentina argues that the European Communities refers to different import licensing systems on like products imported from different Members. It is not referring to different import licensing systems for importers, but licensing systems which are different in respect of different Members of the WTO. While it is true that the Appellate Body reversed the Panel's conclusion based on the attribution of a minimum value as a precedent to the Interpretative Note of the Director-General, it is also true that the Appellate Body did not rule against the argument that this was a form of discrimination among Members, but reversed the Panel's conclusion based on the finding that the question raised referred to the substantive content or administration of the rules that were supposed to be examined in the light of the Article X:3(a) obligations. In this case, the Appellate Body defined the import licensing regulations as being of substantive content, and having defined Article X:3(a) as referring to the application of the laws, regulations, judicial decisions and administrative rulings of general application, the substantive content of the rule was not covered by the Article.¹²⁰ The Appellate Body found in this legal reasoning sufficient grounds for reversing the conclusion of the Panel, which had amalgamated the concepts of "substantive content" and "administration."

4.194 Regarding the argument concerning confidential information, the European Communities once again uses the kind of reasoning it used with respect to Article XI:1, applying the same arguments to persuade the Panel that Argentina administered its laws, regulations, judicial decisions and administrative rulings of general application badly, adducing that the immediate context of paragraph 3(a) of Article X is paragraph 1 of that Article. Argentina agrees entirely with this assertion, because paragraph 3(a) itself refers to the rules of general application mentioned in paragraph 1.

4.195 Argentina does not agree with the idea that the confidential information in the last sentence of paragraph 1 is relevant for the purposes of determining whether it administers Resolution 2235 in
conformity with paragraph 3(a) of Article X.

4.196 The European Communities is using the last sentence of Article X:1 wrongly, since that sentence represents a waiver of the obligation to publish confidential information, and not a ban on the publication of such information. Moreover, the publication referred to in paragraph 1 of Article X concerns laws, regulations, judicial decisions or administrative rulings of general application that a WTO Member has put into force.

4.197 The final sentence of paragraph 1 is an exemption from the obligation to publish. It is not an obligation. The Agreement has left it to the discretion of Members to decide whether or not to publish the confidential information contained in the laws, regulations, judicial decisions and administrative rulings. In any case, as far as publication is concerned, Argentina fulfilled all of its obligations under Article X:1, which does not form part of these proceedings.

4.198 This obligation to publish, combined with the exemption from such obligation in the case of confidential information, is irrelevant for the purposes of determining the alleged unreasonable application of Resolution 2235.

4.199 The European Communities state that they agree with Argentina that the contested measure is not one "of general application" but rather an instance of "administration" of the generally applicable customs procedures for exports in Argentina within the meaning of Art. X:1. It is precisely for that reason that the contested measure falls under Art. X:3(a).

4.200 According to the European Communities, the contested measure relates to the administration of other laws, regulations and so forth in the sense of Art. X:3(a) GATT, and is therefore properly challenged by the European Communities under that provision. Argentina has confirmed that there are various laws, regulations and so forth which apply to the exportation of goods from Argentina. For instance, as Exhibit Arg-XXX it has provided a Resolution No. 1,284/95, providing rules on what kind of export declarations must be made. Also it has provided Resolution No. 125/97 on customs controls when products are exported.

4.201 The European Communities contend that the contested measure (Res. 2235/96) prescribes a certain method of administration of such laws. It stipulates that for certain products, when an export declaration has been made, ADICMA will be informed. It also stipulates that when those products are checked by Argentinean customs officials, ADICMA-representatives may be present. In other words, it provides for a certain way of administering the general customs procedures when certain products are concerned.

4.202 The European Communities do not contest the fact that Argentina applies customs checks before exports are allowed, which is a general measure falling within the scope of Art. X:1. The European Communities contest that when this regulation on export checks is administered - i.e. applied - to certain products (namely those mentioned in Res. 2235/96) it is administered in a way which allows and enables ADICMA-representatives to be present.

4.203 The European Communities state that since Res. 2,235.96 has an export restrictive effect, they challenge the substance of that measure under Art. XI. Since, for the products it covers, it makes an impartial and reasonable application of Argentinean export procedures impossible, the EC properly challenges that effect of the measure under Art. X:3.(a).

4.204 The European Communities consider that contrary to what Argentina argues, Article X:3 (a) clearly applies to the administration of trade laws in the sense of Article X:1 within a WTO Member's territory. That follows from the plain wording of Article X:3 (a). In fact it is hard to see where else a WTO Member can administer its trade laws than within its own territory.

4.205 The European Communities state that contrary to what Argentina argues, Art. X :3(a) applies to all unreasonable and partial methods of administering trade laws. Since the provision inter alia obliges WTO Members to administer trade laws "in a uniform . manner",¹²¹ it certainly prohibits discriminatory application in an unreasonable and partial manner of trade laws.

4.206 According to the European Communities, it is however not limited to that situation. It is clear from the wording of Art. X :3(a) that it enunciates three cumulative obligations ; trade laws must be administered not only in a uniform manner, but also in an impartial manner, and in a reasonable manner. Applying national export regulations to certain products in a partial and unreasonable manner is a violation of Art. X :3(a), also if that is done with regard to exports irrespective of their destination."

V. THIRD PARTY SUBMISSION BY THE UNITED STATES

5.1 In its third party submission, the United States makes observations on the purpose and scope of Article XI GATT; and offers observations on some factual aspects of the dispute. It concludes that the measure in question may well constitute a prohibited export restriction under Article XI of GATT 1994.

5.2 An export restriction under the apparent circumstances of the present case, that is, potentially intended to benefit domestic industry, either by bestowing a raw material price advantage on the domestic industry, or by restricting the supply of the raw material to foreign competitors, is precisely the trade distortion the Article XI seeks to prohibit. The US recalls that hides are a by-product of meat production, and their supply is dictated by the demand for meat, not by the demand for hides. It argues that when demand for hides is limited, the supply does not decline as it would normally do in the case of non-by-products. Rather, supply continues, unaffected by demand, and the prices decline to reflect the limited demand relative to supply. For this reason, restricting exports of hides from Argentina could have enormous economic value to Argentine tanners: if there is a large supply of hides produced by the meat industry and a limited demand by Argentine tanners, this will result in low input costs for the Argentine tanners. Further, eliminating sales of Argentine hides to competing tanneries outside of Argentina would keep world market prices of hides — the prices that the Argentine tanners' competitors must pay — relatively high. In other words, restricting exports of hides from Argentina could bestow a substantial economic benefit on the Argentine tanning industry, and could disadvantage its foreign competitors.

5.3 The 1950 Report of the Working Party on "The Use of Quantitative Restrictions for Protective and Commercial Purposes,"¹²² which examined the use of both import and export restrictions, concluded that:

"the Agreement does not permit the imposition of restrictions upon the export of a raw material in order to protect or promote a domestic industry, whether by affording a price advantage to that industry for the purchase of its materials, or by reducing the supply of such materials available to foreign competitors, or by other means. However, it was agreed that the question of the objective of any given export restriction would have to be determined on the basis of the facts in each individual case."

5.4 Any export restrictions on Argentine hides, therefore, could potentially be a textbook example of the kind of practice that Article XI:1 is intended to prevent.

5.5 As concerns the scope of GATT Article XI, the US observes that language of the provision is broad, and prohibits export restrictions "made effective," not just through quotas and licenses, but also through "other measures" of a contracting party. As the Panel in "Japan - Trade in Semiconductors" noted,

"Article XI:1, unlike other provisions of the General Agreement, did not refer to laws or regulations, but more broadly to measures. This wording indicated clearly that any measure instituted or maintained by a contracting party which restricted the exportation or sale for export or products was covered by this provision, irrespective of the legal status of the measure."

5.6 In addition to not being limited to laws and regulations, Article XI:1 is also not limited to measures that explicitly restrict exports, such as export quotas or licenses. Rather, it prohibits export restrictions that are "made effective" by measures, whether or not those measures, by their literal terms, prohibit or restrict exports.

5.7 Whether an export restriction is made effective through a measure can be a fact-intensive inquiry, depending heavily on the context and the surrounding factual circumstances. In Japan - Trade in Semiconductors, the Panel had to consider whether certain measures of the Japanese government were export restrictions, even though they were not legally binding or mandatory. The Panel examined the entire factual context of the measures, after noting that government-industry relations vary from country to country and from industry to industry, and concluded that

" All these factors led the Panel to conclude that an administrative structure had been created by the Government of Japan which operated to exert maximum possible pressure on the private sector to cease exporting at prices below company-specific costs. … These measures operated furthermore to facilitate strong peer pressure to comply with requests by MITI and at the same time to foster a climate of uncertainty as to the circumstances under which their exports could take place. The Panel considered that the complex of measures exhibited the rationale as well as the essential elements of a formal system of export control. . . . The Panel concluded that the complex of measures constituted a coherent system restricting the sale for export of monitored semi-conductors at prices below company-specific costs to market other than the United States, inconsistent with Article XI:1."¹²³

5.8 The United States maintains that the factual and historical context of Argentina's measure concerning the export of bovine hides, described in the European Communities' submission, strongly suggests that this measure operates as a prohibited export restriction:

5.9 The United States notes that Article XI:1 does not prohibit all export restrictions, but only export restrictions other than transparent and non-discriminatory means of taxes, duties, or charges. In the present case, the Argentine authorities found that the export tax was insufficient to achieve its purposes, and so conjoined it with some other non-tax measure apparently aimed at discouraging exports. Those other measures are what Article XI:1 is aimed at eliminating. This is particularly true in the case of export-restricting measures that are not, by their literal terms, export restricting, but which have the purpose and effect of restricting exports.

5.10 The United States notes that, the presence of the hide exporter's domestic customers at the export processing would, in the absence of strict and reliable procedures, raise a well-founded fear that valuable commercial information could be compromised and/or misused by the domestic customers. This alone could chill exports and constitute an export restriction. The protection of confidential business information from disclosure is critical to the rights and obligations assumed under the WTO. There is a wide recognition under the WTO Agreements that the threat of compromising confidential information may prevent interested parties from benefiting from the rights granted by the WTO¹²⁴. The United States points out, however, that the possible disclosure of sensitive confidential information is only one aspect of this measure that might effect an export restriction. Even if confidential information is protected, the right of notification and presence of the tanners may still act as a strong disincentive to export.

5.11 The United States notes that this dispute, although presented in the context of a particular export restriction, may raise concerns of a more systemic nature. Whether a Member can avoid prohibitive restrictions under the WTO simply by putting the "fox in charge of the henhouse" (rather than taking the specific prohibited action itself) is an issue that could apply as easily to import restrictions as to export restrictions. The Panel should consider the systemic implications of this dispute as it undertakes its task.

5.12 As concerns the scope of Article XI:1, the United States further disagrees with Argentina's interpretation of the standard developed in the Japan - Trade in Semiconductors dispute:

5.13 First, the United States contends that dispute at issue is very different from that presented in the Semiconductors case, and it can be misleading to apply the criteria used in that dispute to this dispute. While in Semiconductors, the focus was measures undertaken by the Japanese government aimed at the producing/exporting entities, in the present case, the measure is directed, not at the producer/exporters, but at their domestic customers who have the right to be notified of, and participate in, the export processing of products that they apparently do not want exported. Consequently, to apply correctly the first criterion of Semiconductors to this case, i.e. are there reasonable grounds to believe that sufficient incentives or disincentives for non-mandatory measures to take effect, the Panel should ask whether, given the apparent opposition of Argentine tanners to hide exports and the long history of the restriction of such exports, a measure that notifies Argentine tanners of hide exports and that gives them the right to participate in the export processing of those hides would act effectively as a disincentive to exports, regardless of a legally binding effect.

5.14 With respect to the second criterion, i.e. that the operation of the measures was dependent on Government action or intervention, the United States argues that the measure operates by virtue of Government action, both because it results from government resolutions and because it is apparently through government action that the Argentine tanners are notified of exports and are invited to participate in their customs processing.

5.15 As concerns arguments on factual aspects of the case, the United States observes that it is not dispositive whether or not the Argentine tanners have the legal ability to stop the particular export they are asked to oversee. That the tanners are notified of any exports and will become privy to information related to those exports (e.g., the identity of the hide seller) could itself effectively chill export trade. Even if the particular export at issue cannot be stopped or made complicated in some manner by the Argentine tanners, the same cannot be said about subsequent transactions.

5.16 Concerning the alleged purpose of the tanner representatives at export verification, it seems curious that an industry association would put so much effort – first in obtaining the right to be present, then in actually overseeing export processing – simply to ensure the accuracy of the government's export statistics.

5.17 The United States observes further that it is irrelevant that the tanners may be verifying exports of their own products, as well as those of their suppliers. The point is that, as applied to their suppliers, this measure could amount to an export restriction.

5.18 Concerning Argentina's argument that no domestic complaints over Resolution 2235 had been launched, the United States argues that this is not probative of whether the Argentine measures are export restrictions under the WTO. Argentine law might or might not prohibit actions that a WTO panel might find to constitute prohibited export restrictions under Article XI. Further, there may be many reasons for not bringing a formal complaint to Argentine authorities that have nothing to do with the merits of the claim.

5.19 The United States argues that the lack of exports following the imposition of a measure may well be probative of whether the measure constitutes an export restriction. This is particularly true where there is an apparent strong interest in trade in Argentine hides, and where the economic conditions appear favourable for such trade. In a similar manner, the Panel in Semiconductors examined prices before and after the measures at issue in that case, to determine whether the measure was having an impact on exports.¹²⁵
 

Notes

¹¹¹ Report by the Appellate Body on European Communities - Regime for the Importation, Sale and Distribution of Bananas, AB-1997-3, WT/DS27/AB/R, 9 September 1997, at paragraph 203 2^nd subparagraph.

¹¹²The obligation to publish, combined with the exemption from such obligation in the case of confidential information, is irrelevant for the purposes of determining the alleged unreasonable application of RG 2235/96; see Argentina second submission B III 3.

¹¹³ Report by the Appellate Body on European Communities - Regime for the Importation, Sale and Distribution of Bananas, Op. Cit., at paragraph 203.

¹¹⁴ Report of the Panel in "United States - Restrictions on Imports of Cotton and Man-Made Fibre Underwear," WT/DS/24/R, paragraph 7.65, confirmed by the Appellate Body, and Report of the Appellate Body in European Communities - Measures Affecting the Importation of Certain Poultry Products, WT/DS69/AB/R, paragraph 113. "… if, for instance, the restraint was addressed to a specific company or applied to a specific shipment, it would not have qualified as a measure of general application. However, to the extent that the restraint affects an unidentified number of economic operators, including domestic and foreign producers, we find it to be a measure of general application."

¹¹⁵ Report of the Appellate Body in European Communities - Regime for the Importation, Sale and Distribution of Bananas, Op. Cit., paragraph 200: "The text of Article X:3(a) clearly indicates that the requirements of "uniformity, impartiality and reasonableness" do not apply to the laws, regulations, decisions and rulings themselves, but rather to the administration of those laws, regulations, decisions and rulings. The context of Article X:3(a) within Article X, which is entitled "Publication and Administration of Trade Regulations," and a reading of the other paragraphs of Article X, make it clear that Article X applies to the administration of laws, regulations, decisions and rulings. To the extent that the laws, regulations, decisions and rulings themselves are discriminatory, they can be examined for their consistency with the relevant provisions of the GATT 1994." Report of the Appellate Body on European Communities - Measures Affecting the Importation of Certain Poultry Products, Op. Cit., paragraph VI.7: "Thus, to the extent that Brazil's appeal relates to the substantive content of the European Communities rules themselves, and not to their publication or administration, that appeal falls outside the scope of Article X of the GATT 1994. The WTO-consistency of such substantive content must be determined by reference to provisions of the covered agreements other than Article X of the GATT 1994."

¹¹⁶ Report of the Appellate Body in European Communities - Measures Affecting the Importation of Certain Poultry Products, Op. Cit., paragraph 115.

¹¹⁷ Article 340 of the Argentine Customs Code stipulates that: "the exporter or, where appropriate, the customs agent acting as a representative of the exporter, must participate in the inspection of the goods … ."

¹¹⁸ "EEC - Restrictions on Imports of Dessert Apples - Complaint by Chile," 36S/132, paragraph 6.5.

¹¹⁹ See for instance the Report by the Appellate Body on Canada – Measures Affecting the Importation of Milk and the Exportation of Dairy Products, WT/DS103/AB/R, WT/DS113/AB/R, 13 October 1999, at paragraph 133.

¹²⁰ "The context of Article X:3(a) within Article X, which is entitled 'Publication and Administration of Trade Regulations', and a reading of the other paragraphs of Article X, makes it clear that Article X applies to the Administration of laws, regulations, decisions and rulings … ." Paragraph 200 of the report of the Appellate Body in European Communities – Regime for the Importation, Sale and Distribution of Bananas, Op. Cit.

¹²¹By trade laws in this section are meant all laws, regulations etc. covered by Art. X:1.

¹²²GATT/CP. 4/33, Sales No. GATT/1950-3

¹²³L/6309, adopted on May 4, 1988, 35S/116, 153-155, paragraph 117.
¹²⁴ For instance, Article X of the Agreement on Implementation of Article VII of the GATT 1994 (Customs Valuation) and Article 2.9 - 2.13 of the Agreement on Preshipment Inspection recognize the importance of protecting confidential information from disclosure in the context of customs processing. Article 2.14 of the latter agreement also recognizes the need for preshipment entities to avoid conflicts of interest. More generally, Section 7 of the Agreement on Trade-Related Aspects of Intellectual Property Rights protect the rights of persons to prevent proprietary information from being "disclosed to, acquired by, or used by others without their consent in a manner contrary to honest commercial practices."

¹²⁵ Japan - Trade in Semiconductors, Op. Cit., paragraph 119.