ARGENTINA MEASURES AFFECTING THE

Transcription

1 In the World Trade Organization ARGENTINA MEASURES AFFECTING THE IMPORTATION OF GOODS Geneva, 14 November 2013

2 TABLE OF CONTENTS 1. INTRODUCTION DJAI REQUIREMENT Points that Argentina has Acknowledged Points that Argentina Contests Issues relating to the GATT Argentina's assertions in relation to Article XI:1 of the GATT Argentina's assertions in relation to Article VIII of the GATT are wrong Argentina's distinction between "substantive" and "procedural" provisions for purposes of Article XI of the GATT is wrong The notions of "prohibition" and "restriction" in Article XI of the GATT Is the DJAI a "customs formality"? Is the WCO SAFE Framework relevant for the Panel's analysis in the present dispute? Argentina's assertions in relation to Article X:1 of the GATT Argentina's assertions in relation to Article X:3(a) of the GATT Issues relating to the Import Licensing Procedures Agreement The European Union's claims Argentina's defence in relation to the Import Licensing Procedures Agreement The notion of "import license" in Article 1.1 of the Import Licensing Procedures Agreement Is the DJAI "application and documentation" for "customs purposes"? Argentina's assertions on the nature of the Import Licensing Procedures Agreement as "lex specialis" Conclusion on the Import Licensing Procedures Agreement RESTRICTIVE TRADE-RELATED REQUIREMENTS The European Union has identified the precise content of the RTR requirements as an overarching measure The RTR requirements as a single overarching measure is different from the five requirements individually identified The European Union has shown that the RTR requirements as an overarching measure has a general and prospective application The RTR requirements as an overarching measure has general application The RTR requirements as an overarching measure has prospective application i -

3 Argentina's reliance on EC Large Civil Aircraft is misplaced EU's comments on Argentina's responses to the Panel's Questions after the first meeting Question 7 Value of the Plan Estratégico Industrial Question 8 Objectives pursued by Argentina through its managed trade strategy Questions 13 and 14 - Value of certain evidence produced by means of documents signed by a Notary Public, including affidavits Questions 16 to 17 Argentina's refusal to provide certain documents to the Panel Question 26 Nota de Pedido Question 42 Value of unofficial press clippings EU's comments on the Panel's communication dated 6 November CONCLUSION ii -

4 TABLE OF CASES CITED Short Title Argentina Hides and Leather Australia Automotive Leather II Brazil Aircraft Canada Dairy China Raw Materials China Raw Materials EC Bananas III EC IT Products EC Selected Customs Matters EC Selected Customs Matters EC and certain member States Large Civil Aircraft EC and certain member States Large Civil Aircraft Indonesia Autos Japan Apples Full Case Title and Citation Panel Report, Argentina Measures Affecting the Export of Bovine Hides and Import of Finished Leather, WT/DS155/R and Corr.1, adopted 16 February 2001, DSR 2001:V, p Panel Report, Australia Subsidies Provided to Producers and Exporters of Automotive Leather, WT/DS126/R, adopted 16 June 1999, DSR 1999:III, p. 951 Panel Report, Brazil Export Financing Programme for Aircraft, WT/DS46/R, adopted 20 August 1999, as modified by Appellate Body Report WT/DS46/AB/R, DSR 1999:III, p Appellate Body Report, Canada Measures Affecting the Importation of Milk and the Exportation of Dairy Products, WT/DS103/AB/R, WT/DS113/AB/R and Corr.1, adopted 27 October 1999, DSR 1999:V, p Appellate Body Reports, China Measures Related to the Exportation of Various Raw Materials, WT/DS394/AB/R / WT/DS395/AB/R / WT/DS398/AB/R, adopted 22 February 2012 Panel Reports, China Measures Related to the Exportation of Various Raw Materials, WT/DS394/R / WT/DS395/R / WT/DS398/R / and Corr.1, adopted 22 February 2012, as modified by Appellate Body Reports WT/DS394/AB/R / WT/DS395/AB/R / WT/DS398/AB/R Appellate Body Report, European Communities Regime for the Importation, Sale and Distribution of Bananas, WT/DS27/AB/R, adopted 25 September 1997, DSR 1997:II, p. 591 Panel Reports, European Communities and its member States Tariff Treatment of Certain Information Technology Products, WT/DS375/R / WT/DS376/R / WT/DS377/R, adopted 21 September 2010, DSR 2010:III, p. 933 Appellate Body Report, European Communities Selected Customs Matters, WT/DS315/AB/R, adopted 11 December 2006, DSR 2006:IX, p Panel Report, European Communities Selected Customs Matters, WT/DS315/R, adopted 11 December 2006, as modified by Appellate Body Report WT/DS315/AB/R, DSR 2006:IX, p Appellate Body Report, European Communities and Certain Member States Measures Affecting Trade in Large Civil Aircraft, WT/DS316/AB/R, adopted 1 June 2011, DSR 2011:I, p. 7 Panel Report, European Communities and Certain Member States Measures Affecting Trade in Large Civil Aircraft, WT/DS316/R, adopted 1 June 2011, as modified by Appellate Body Report, WT/DS316/AB/R, DSR 2011:II, p. 685 Panel Report, Indonesia Certain Measures Affecting the Automobile Industry, WT/DS54/R, WT/DS55/R, WT/DS59/R, WT/DS64/R and Corr.1 and 2, adopted 23 July 1998, and Corr. 3 and 4, DSR 1998:VI, p Panel Report, Japan Measures Affecting the Importation of Apples, WT/DS245/R, adopted 10 December 2003, upheld by Appellate Body Report WT/DS245/AB/R, DSR 2003:IX, p iii -

5 Japan Film Short Title Thailand Cigarettes (Philippines) US Continued Zeroing US COOL US COOL US Orange Juice (Brazil) US Shrimp (Viet Nam) US Tuna II (Mexico) US Underwear Full Case Title and Citation Panel Report, Japan Measures Affecting Consumer Photographic Film and Paper, WT/DS44/R, adopted 22 April 1998, DSR 1998:IV, p Panel Report, Thailand Customs and Fiscal Measures on Cigarettes from the Philippines, WT/DS371/R, adopted 15 July 2011, as modified by Appellate Body Report WT/DS371/AB/R, DSR 2011:IV, p Appellate Body Report, United States Continued Existence and Application of Zeroing Methodology, WT/DS350/AB/R, adopted 19 February 2009, DSR 2009:III, p Appellate Body Reports, United States Certain Country of Origin Labelling (COOL) Requirements, WT/DS384/AB/R / WT/DS386/AB/R, adopted 23 July 2012 Panel Reports, United States Certain Country of Origin Labelling (COOL) Requirements, WT/DS384/R / WT/DS386/R, adopted 23 July 2012, as modified by Appellate Body Reports WT/DS384/AB/R / WT/DS386/AB/R Panel Report, United States Anti-Dumping Administrative Reviews and Other Measures Related to Imports of Certain Orange Juice from Brazil, WT/DS382/R, adopted 17 June 2011, DSR 2011:VII, p Panel Report, United States Anti-Dumping Measures on Certain Shrimp from Viet Nam, WT/DS404/R, adopted 2 September 2011, DSR 2011:X, p Panel Report, United States Measures Concerning the Importation, Marketing and Sale of Tuna and Tuna Products, WT/DS381/R, adopted 13 June 2012, as modified by Appellate Body Report WT/DS381/AB/R Panel Report, United States Restrictions on Imports of Cotton and Man-made Fibre Underwear, WT/DS24/R, adopted 25 February 1997, as modified by Appellate Body Report WT/DS24/AB/R, DSR 1997:I, p iv -

6 TABLE OF EXHIBITS 1 Exhibit No. EU-423 EU-424 EU-425 EU-426 EU-427 EU-428 EU-429 EU-430 EU-431 EU-432 Title Meaning of the term "overarching", OED on-line, available at and "Las petroleras Total Austral y Wintershall anunciaron a la Presidenta una inversión millones de dólares", dated 22 February 2013, available at "Inauguración de la fábrica de bicicletas López Hnos. en Chaco: Palabras de la Presidenta de la Nación" dated 17 July 2013, available at (Exhibit EU-425 "Acto de inauguración de la Planta de Lavarropas Samsung en Cañuelas: Palabras de la Presidenta de la Nación", dated 30 July 2013, available at "Acto de inauguración de obras y empresas privadas: Palabras de la Presidenta de la Nación" dated 3 May 2013, available at acto-de-inauguracion-de-obras-y-empresas-privadas-palabras-de-la-presidenta-de-lanacion "Visita a la fábrica de tractores AGCO: Palabras de la Presidenta de la Nación" dated 1 October 2013, available at "'La propia virtuosidad del modelo es la que permite que aumente la recaudación', señaló la Presidenta en Casa Rosada", dated 4 June 2013, available at "Hola Guillermo, te estamos llamando, queremos importar ", El Cronista, dated 24 June 2013, available at "Giorgi destacó que las pymes ya controlan el 50% del mercado nacional de juguetes y llamó a 'incorporar creatividad y diseño'", Ministerio de Industria, dated 20 septiembre 2013, available at "El Ministerio de Industria realizó el Plenario de Foros del Plan Estratégico Industrial con empresarios", Ministerio de Industria, dated 23 septiembre 2013, available at 1 The European Union incorporates hereto the Exhibits JE and the table of Exhibits JE included in the second written submission of the United States and Japan in DS444 and DS v -

7 Exhibit No. EU-433 EU-434 EU-435 EU-436 EU-437 EU-438 EU-439 EU-440 EU-441 EU-442 EU-443 EU-444 EU-445 EU-446 EU-447 Title "Giorgi: 'Necesitamos legisladores que defiendan la industrialización como lo hace el gobierno nacional'", Ministerio de Industria, dated 30 septiembre 2013, available at "Ahora Moreno avala acuerdos entre privados para controlar importaciones", El Cronista, dated 3 October 2013, available at Moreno-avala-acuerdos-entre-privados-para-controlar-importaciones html "1º Encuentro empresario por un acuerdo productivo", ADMIRA, dated 30 September 2013, available at "ACUERDO PRODUCTIVO: 2do. Encuentro Empresario", ADMIRA, dated 9 October 2013, available at "Sintonía fina, parte dos", Página 12, dated 10 October 2013, available at "Refuerzan presión sobre automotrices para que compren partes locales", El Cronista, dated 23 October 2013, available at Press Release from Cámara de Comercio Exterior de Córdoba, Cámara de Industriales Metalúrgicos y de Componentes de Córdoba, and Unión Industrial de Córdoba, dated 3 June 2013, available at "Se duplicó el cepo a las importaciones y ya tiene impacto en el empleo", La Nacion, dated 14 October 2013, available at "Desbordado por el cepo a la importación", La Nacion, dated 9 September 2013, available at "En sólo dos años, más de 20 empresas extranjeras se fueron de la Argentina", El Cronista, dated 3 October 2013, available at Palabras de la Presidenta de la Nación Cristina Fernández con motivo de la inauguración de la fábrica de bicicletas "LÓPEZ HNOS", en la provincia de Chaco, dated 17 July 2013, available at inauguracion-de-la-fabrica-de-bicicletas-qlopez-hnosq-en-chaco-palabras-de-lapresidenta-de-la-nacion Inauguración de nueva planta de Fiat Argentina en Córdoba: Palabras de la Presidenta de la Nación, dated 4 June 2013, available at Notaries de Geneve, "Activites du Notaire", available at Samples of the Export Declaration Forms Overview of the evidence provided compared to statements taken from Clarin and La Nación - vi -

8 Exhibit No. EU-448 Title Edelman Trust Barometer 2013, at slide 23 (available at - vii -

9 1. INTRODUCTION 1. Argentina's defence strategy in the present dispute appears to be based on two main tactics. First, the avoidance of engaging in any serious debate over the facts of the case. Second, putting forward various legal interpretations and assertions that generally run against the text of the provisions at issue, as well as the manner that they have been consistently interpreted by the Appellate Body and the Panels in the past. 2. On the facts, the result of Argentina's tactics is that Argentina fails to contest the main facts presented. In relation to the DJAI, Argentina does not contest (and actually confirms) the main factual elements of the structure, operation and effects of the DJAI presented. In relation to the RTR requirements, Argentina actually acknowledges the existence of the facts presented and simply retorts that they should be viewed as "unrelated 'one-off' actions". Argentina's avoidance to discuss the facts of this case is also evidenced by its staunch refusal to provide meaningful answers to many of the Panel's questions. Argentina's strategy simplifies the Panel's task. The Panel can rely on the evidence presented and also draw appropriate inferences from Argentina's refusal to provide the requested documents. 3. On the law, Argentina's various assertions find no support in the text of the covered agreements, or in the WTO jurisprudence. Moreover, if Argentina's assertions were accepted, this would create enormous loopholes in the disciplines of, in particular, Article XI of the GATT and the Import Licensing Procedures Agreement. This would be contrary to these provisions' object and purpose. 4. In its second written submission, the European Union will first address the DJAI Requirement and then the RTR requirements. On the DJAI, the European Union will first identify the factual points that Argentina does not contest and then explain the reasons for which Argentina's legal assertions should be rejected. On the RTR requirements, the European Union will discuss the reasons for which Argentina's assertions are baseless and will provide comments on Argentina's responses to the Panel's written questions. The European Union will also provide some comments on the Panel's communication of 6 November

10 5. The European Union concludes its second written submission with the request that the Panel finds that Argentina has failed to comply with its obligations under the covered agreements. 2. DJAI REQUIREMENT 2.1. POINTS THAT ARGENTINA HAS ACKNOWLEDGED 6. Through its first written submission, its oral statements during the first Hearing and its responses to the written questions of the Panel, Argentina has acknowledged the accuracy of a number of facts presented in its own submissions. 7. Argentina has generally confirmed the European Union's description of the DJAI system's design, structure and operation. 2 In particular, Argentina has confirmed that DJAI clearance is a prerequisite for the importation into Argentina of virtually all goods. Argentina has also confirmed that no importation can take place for as long as the DJAI system in at the "observada", i.e., blocked status Argentina has also confirmed that a number of Argentinean governmental entities have the power to block imports through the DJAI system. However, Argentina has failed to address a number of issues, such as (a) the role of the INTI; 4 and (b) the lack of publication of the legal instruments through which SEDRONAR, SENASA and INV have been given the power to review and block imports through the DJAI System. 5 In addition, Argentina has made confusing statements as to whether SENASA and INV actually have the power to review and block imports through the DJAI System. For example, Argentina has stated that the agreements between these governmental bodies and AFIP are "non-operative" 6, and that these governmental bodies "will" assess imports at some time in the See Argentina's First Written Submission, paras. 218 to 238. See, for example, Argentina's First Written Submission, paras. 232 to 234. See the European Union's First Written Submission, in para. 42 and footnote 57, as well as the European Union's response to the Question 27. See the European Union's First Written Submission, in paras. 255 to 259. Argentina has provided to the Panel the agreements between those entities and the AFIP, but has not provided any detail on whether, when and where these instruments were published in accordance with the requirements of Article X:1 of the GATT. See Argentina's response to Question

11 future. 7 Therefore, as a result of Argentina's failure to publish promptly all relevant legal instruments in accordance with the provisions of Article X:1 of the GATT, there is still uncertainty as to which governmental entities actually review and block imports through the DJAI system. And this uncertainty persists even at this stage of the dispute settlement proceedings, compounded by Argentina's confusing statements in its First Written Submission and in its Responses to the Panel's Questions. 9. Most importantly, Argentina has confirmed that the Secretariat for Domestic Trade has the power to block the imports of all goods through the DJAI system. 8 Likewise, Argentina has implicitly acknowledged the Secretariat for Domestic Trade's broad discretion in blocking imports and the lack of publication of a specific list of reasons for which this Secretariat may block imports. 9 Argentina's responses in Questions 24 and 25 actually serve to illustrate these points: (a) Argentina fails to explain how the supposed "legislative mandate" of the Secretariat for Domestic Trade, described in its response to Question 25, is reflected in the DJAI related mandate of the Secretariat as described in Resolution 1/2012; 10 and (b) Argentina fails to explain how this supposed "legislative mandate" is related to the information that the Secretariat actually requires from importers, once their imports are blocked through the placing of an "observation" in the DJAI system and which is described in the relevant Note circulated by the Secretariat for Domestic Trade At this point, the European Union would like to take the opportunity to make a clarification in relation to the terminology used to describe that Note circulated by the Secretariat for Domestic Trade. The European Union has described the content of that Note in paragraphs 65 to 68 of its First Written Submission. The European Union has also highlighted the fact that this Note informs applicants, whose imports have been blocked through the placing of an "observation" in the DJAI See Argentina's First Written Submission, in para See, for example, Argentina's First Written Submission, paras. 227 and 231. See, for example, Argentina's responses to Question 22, Question 24 and Question 25. See the European Union's First Written Submission in para. 41. See the European Union's First Written Submission, in paras. 65 to

12 system, that they must provide to the Secretariat information on their prospective exports, as well as on the prices of all their imported goods over a specific time period, in order to have the "observation" lifted and the imports authorised. 11. The European Union has submitted a copy of this Note as Exhibit EU-413. The European Union has also submitted a number of websites and other public sources confirming the existence of this Note, as well as the fact that it had been released by the Secretariat for Domestic Trade. On the Exhibit is can be seen that the title of the Note is "DJAI Observada". The European Union has referred to this Note as the "Note circulated by the Secretariat for Domestic Trade". 12 Union has also included within a parenthesis the words "nota de pedido". The European 12. The European Union has noted that some of our co-complainants have used the term "nota de pedido" in order to describe a different document, which has been submitted to the Panel as Exhibit JE-314. This document is very different from the "Note circulated by the Secretariat for Domestic Trade", i.e., Exhibit EU-413, which is the document discussed in paragraphs 65 to 68 of the European Union's First Written Submission. 13. In order to avoid any potential confusion between these documents, the European Union will refer to Exhibit EU-413 as "Nota de pedido DJAI Observada" and not as "nota de pedido" in the remaining stages of these proceedings. 14. In conclusion, the European Union considers that Argentina's submissions and statements in these proceedings, in combination with the evidence placed at the disposal of the Panel, have served to establish the facts that justify the European Union's claims under Article X:1, Article X:3(a) and Article XI:1 of the GATT, irrespective of whether the DJAI system is considered an "import license", or not. The European Union respectfully requests the Panel to draw the relevant conclusions and find that Argentina has failed to comply with its obligations under the covered agreements. 12 See the title preceding para. 65 of the European Union's First Written Submission

13 2.2. POINTS THAT ARGENTINA CONTESTS 15. The European Union notes that Argentina does not contest the main facts presented. In particular, Argentina does not contest the structure and operation of the DJAI system; the powers of the various governmental entities that use it and, most importantly, the powers of the Secretariat for Domestic Trade; the effects of the placing of an "observation"; the timeframes that are triggered by the placing of an "observation" in the DJAI system; the important numbers of imports that have been blocked or delayed through the placing of an "observation" in the DJAI system; etc. 16. Argentina has based its defence on a number of legal interpretations and assertions. These legal interpretations and assertions are wrong and should be rejected, for the reasons discussed in the following paragraphs Issues relating to the GATT Argentina's assertions in relation to Article XI:1 of the GATT 17. Argentina's defence is based on one main assertion: that a type of measures that Argentina calls "customs formalities" fall outside the scope of Article XI of the GATT, because they allegedly fall only within the scope of Article VIII of the GATT. 13 Argentina further asserts that Article XI of the GATT covers only "substantive" provisions and not "procedural" provisions. According to Argentina, the latter fall only within the scope of Article VIII of the GATT. These assertions run against both the text of the relevant provisions of the GATT and the consistent jurisprudence of past Panels and the Appellate Body Argentina's assertions in relation to Article VIII of the GATT are wrong 18. Argentina asserts that "it cannot be the case that customs formalities that are permitted under Article VIII are prohibited quantitative restrictions under Article XI". 14 Argentina also asserts that "the potential trade-restrictive effects of customs See, for example, Argentina's First Written Submission, in paras. 176 to 182. See Argentina's First Written Submission, in para

14 formalities are governed by Article VIII" and "because Article VIII contemplates by its terms that such effects may occur, it cannot be the case that these same effects render a customs formality a prohibited quantitative restriction under Article XI. Otherwise, Members could not maintain customs formalities, because they would be prohibited under Article XI". 15 a number of reasons. Argentina's assertions are wrong for 19. First, Argentina fails to explain which provision of Article VIII of the GATT allegedly "permits" those "customs formalities". 20. Second, the text of Article VIII does not even mention the term "customs formalities". Article VIII:3 simply provides that there should not be "substantial penalties" for "minor breaches of customs regulations or procedural requirements". There is no reference to "customs formalities". 21. Third, no provision of Article VIII states that "import and export formalities" are "permitted". Article VIII:1(c) simply imposes on WTO Members the obligation to "minimize their incidence and complexity". Therefore, the text of Article VIII does not provide for any alleged "permission". 22. There is nothing in the context, or the object and the effect of Article VIII, or of Article XI of the GATT, that would provide for any such "permission". As Canada and Australia have already mentioned in their Third Party interventions, the Article VIII:1(c) obligation does not constitute a "comprehensive regime for the regulation" of "import and export formalities". Argentina's assertion, if accepted, would open an enormous loophole in the GATT and "would result in the trade restrictive effects of customs formalities effectively being unreviewable under the GATT" Fourth, the fact that "import and export formalities", as well as other "quantitative restrictions" and "licensing" are mentioned in the text of Article VIII of the GATT does not mean that these measures fall only within the scope of Article VIII and fall outside the scope of Article XI of the GATT. The "restrictions on the See Argentina's First Written Submission, in para See Canada's Oral Statement in para. 13, referring to Australia's Third Party Written Submission, in para

15 importation of goods" are also mentioned in other provisions of the GATT, such as Article XIII. For example, Article XIII:1 reads: "no prohibition or restriction shall be applied on the importation of any product unless the importation of the like product of all third countries is similarly prohibited or restricted." Likewise, Article XIII:2 reads: "In applying import restrictions to any product, the [WTO Members] shall aim at a distribution of trade ". 24. The fact that Article XIII provides a very elaborate set of rules on how import restrictions should be administered does not imply that such import restrictions are "permitted" by Article XIII and fall outside the scope of Article XI of the GATT. If that erroneous interpretation was accepted, then Article XI would have no scope: all measures mentioned in Article XI would fall within the scope of Article XIII (and/or Article VIII) of the GATT and Article XI would be made redundant. However, such an outcome would be contrary to the rules of interpretation recognised by the Appellate Body, which provide that all provisions in the covered agreements should be given meaning. 25. The proper interpretation of Article XI, Article XIII and Article VIII:1(c), which would give meaning to all three Articles, is that import prohibitions and restrictions are generally prohibited by Article XI:1 of the GATT. WTO Members may impose such import prohibitions or restrictions, only if they are justified by one of the exceptions provided in the GATT, such as those contained in Article XI:2. Article XX, Article XXI, etc. In the event that a WTO Member is authorised to impose such import restrictions by virtue of some exception, then the WTO Member must further ensure that these measures and their administration also comply with the provisions of Article XIII and Article VIII:1(c) of the GATT. 26. Therefore, Argentina's erroneous assertion must be rejected. Article XI of the GATT covers "customs formalities", just like it covers all other measures other than duties, taxes and other charges Argentina's distinction between "substantive" and "procedural" provisions for purposes of Article XI of the GATT is wrong 27. Argentina asserts that "Article XI prohibits quantitative restrictions, but not the means by which they are made effective". According to Argentina, "to the extent that quantitative restrictions are made effective through import formalities and - 7 -

16 requirements, those formalities and requirements are subject to the separate disciplines of Article VIII" Argentina also asserts that "the fact that the Members negotiated separate disciplines in respect of the trade effects of import licensing procedures [in the Import Licensing Agreement] indicates that these trade effects are not of the same type that can be analysed as potential quantitative restrictions under Article XI" and that this means that the "effects of import formalities and requirements are distinct from the effects of substantive rules of importation that may limit or restrict trade" In summary, Argentina asserts that "Article XI relates to substantive rules of importation that limit or restrict trade, whereas Article VIII and the ILP Agreement relate to import procedures, including the trade effects of those procedures" Argentina's assertions are wrong. This is made clear by the considerations mentioned in the preceding paragraphs in relation to Argentina's alleged "permission" of "customs formalities", as well as by the following considerations. 31. First, there is nothing in the text of Article XI:1 of the GATT that could support Argentina's erroneous assertion. Quite to the contrary, the text of Article XI of the GATT expressly provides that it covers all measures that may restrict imports, with the exception of duties, taxes and other charges. 32. It is noted that the title of Article XI reads "general elimination of quantitative restrictions". Likewise, Article XI:1 uses language which is all-encompassing. It reads: "no prohibition or restriction", as well as "other measures". combination of the fact that the text of Article XI uses such general and allencompassing language with the fact that Article XI:1 contains its own exception (i.e., duties, taxes and other charges), confirms that all measures may fall within the scope of Article XI, irrespective of whether they could be characterised as "substantive" or "procedural". The See Argentina's First Written Submission, in para See Argentina's First Written Submission, in para See Argentina's First Written Submission, in para

17 33. Second, Argentina is wrong when it draws a distinction between, on the one hand, "quantitative restrictions" and, on the other hand, the "means by which they are made effective". 34. The text of Article XI:1 reads: " made effective through quotas, import or export licenses or other measures". If Argentina's erroneous assertion was accepted, then "quotas" should be considered as a "means" by which some other, undefined "quantitative restriction" would allegedly be "made effective". 35. The consequence would be that quotas would fall outside the scope of Article XI of the GATT and would fall only within the scope of Article VIII of the GATT. However, this outcome is denied by the Report of the Panel, on which Argentina relies in support of its erroneous assertion: 20 China-Raw Materials. In that case, the Panel found that the quotas imposed by China on the exportation of the relevant goods were prohibited by Article XI of the GATT. 21 Therefore, the consistent WTO dispute settlement jurisprudence (including the Panel Reports on which Argentina relies) confirms that there is no difference between the "prohibitions or restrictions" and the "means by which they are made effective". Article XI:1 of the GATT applies to both of them. 36. Third, Argentina's interpretation of the findings of the Panel in China-Raw Materials is wrong. 22 Argentina asserts that the Panel in that case allegedly "recognizes that the trade-restrictive effects of substantive rules cannot be attributed to the procedures that are used to implement those rules". 23 assertion is wrong for a number of reasons. 37. Firstly, the Panel in China-Raw Materials did not find that the challenged export licences constituted a "procedure". "procedure" in the relevant Sections of its Report. 24 This The Panel does not even use the word Quite to the contrary, the Panel considered the export licenses simply as a type of measure that may fall within the scope of Article XI:1 of the GATT, where, by their nature, they have a See Argentina's First Written Submission, in paras. 180, 186 and 187. Panel Report, China-Raw Materials, paras and 7.206; 8.10(a) and (b); and footnote 313. See Argentina's First Written Submission, in paras. 186 and 187. See Argentina's First Written Submission, in para Panel Report, China-Raw Materials, paras to

18 limiting or restrictive effect. 25 This finding is fully consistent with the legal interpretation of Article XI:1 of the GATT proposed, which focuses the analysis on whether the challenged measure (a) is a governmental measure; and (b) prohibits or restricts the importation of goods. 26 Consequently, the basis, on which Argentina's assertion lies, is false. 38. Secondly, the Panel in China-Raw Materials found that licenses would constitute a "quantitative restriction" that would breach Article XI:1 of the GATT, where the licensing authorities retained some discretion on whether to grant the licenses or not In that particular case, the facts showed that the Chinese authorities always granted the export licenses for those goods that were also subject to export quotas. 28 If the applicant had already obtained the export quota (usually through a quota bidding procedure), the Chinese implementing regulations obliged the Chinese authorities automatically to issue an export license. 29 In other words, the facts of that case showed that the export licenses relating to goods subject to export quotas were in reality "automatic". In light of these facts, it is not surprising that the Panel concluded that these automatic licenses did not constitute a "quantitative restriction" In contrast, the facts of that case also showed that the Chinese authorities did retain the discretion to refuse the grant of the export licenses that were imposed on goods which were not subject to export quotas. On the facts of the case, the Panel found that this discretion stemmed from the power of the Chinese authorities to request undefined documents from the applicants. 31 The Panel went on to confirm the consistent jurisprudence on Article XI:1 of the GATT on "discretionary", or "non Panel Report, China-Raw Materials, para See the European Union's First Written Submission, in para Panel Report, China-Raw Materials, para Panel Report, China-Raw Materials, para Panel Report, China-Raw Materials, paras and Panel Report, China Raw Materials, para Panel Report, China-Raw Materials, paras and

19 automatic" licenses, and found that these export licenses breached Article XI:1 of the GATT In the present case, the facts are very similar to the facts of that latter category of export licenses in China-Raw Materials, i.e., the export licenses imposed on goods that were not subject to export quotas. Argentina imposes the DJAI system on all goods to be imported into Argentina. Argentina has not asserted that it imposes any quota on these goods in addition to the DJAI. And, Argentina's legislation allows to the Secretariat for Domestic Trade the discretion to block imports on the basis of undefined criteria. As the Panel in China-Raw Materials found, the "authority to deny the license is ever present because the conditions for granting it are subject to the demands of the particular governmental entity". Therefore, "this uncertainty amounts to a restriction that is inconsistent with Article XI:1" of the GATT In conclusion, Argentina's assertions are wrong and should be rejected. The European Union has already presented in its First Written Submission the proper interpretation of Article XI:1 of the GATT, as consistently followed by both the Appellate Body and the Panels in the past. 34 The European Union respectfully requests the Panel to apply this correct legal interpretation on the facts of the present case and to find that the DJAI system breaches Article XI:1 of the GATT The notions of "prohibition" and "restriction" in Article XI of the GATT 43. Argentina asserts that "a proper interpretation of Article XI:1 requires a showing that the measure at issue limits imports or exports in a quantifiable way and that this quantitative limitation on imports or export is a result of the measure". 35 Argentina also asserts that the co-complainants "have presented no evidence at all that the DJAI procedure has had a quantifiable limiting effect on imports into Argentina, let alone a quantifiable limiting effect that can be separated and Panel Report, China-Raw Materials, para Panel Report, China-Raw Materials, para See the European Union's First Written Submission, in paras. 239 to 251. See Argentina's First Written Submission, in para

20 distinguished from the alleged RTRRs that the DJAI procedure is allegedly used to implement" The European Union does not understand what Argentina means by a "showing" that the measure limits imports in a "quantifiable way". A "prohibition" or "restriction" on imports would normally always have an impact on the quantity of the goods that could be imported. For example, an import ban would clearly have an impact on the quantity of the goods that could be imported. Argentina fails to explain how this impact could be "quantified". Argentina also fails to explain how this impact should be "shown", other than by simply submitting to the Panel the text of the domestic measure that imposes the import ban. 45. The European Union has already presented a concise description of the WTO jurisprudence on the notion of "quantitative restriction" for purposes of Article XI of the GATT. 37 The scope of the term is broad and applies to conditions that are "limiting"; measures that create uncertainties and affect investment plans; as well as measures that restrict market access. 46. Argentina seems to disagree with the consistent WTO jurisprudence on this matter. 38 Argentina seems to attempt to interpret a certain statement from the Appellate Body Report in China-Raw Materials as "casting doubt on prior panel reports", 39 including the Panel Report in China-Raw Materials, which has summarised and applied the WTO jurisprudence on this issue If Argentina asserts that the Appellate Body Report in China-Raw Materials has introduced a notion of "restriction", which is different from the interpretation given to that term by the Panel in the same case (consistently with the interpretation of other panels in previous cases), then Argentina is wrong. 48. The Appellate Body made the statement to which Argentina refers, in the context of its analysis of Article XI:2(a) of the GATT. The Appellate Body found that the Se Argentina's First Written Submission, in para See the European Union's First Written Submission, in para See Argentina' First Written Submission, in paras. 332 and 334. See Argentina's First Written Submission, in paras. 330 and 333. See Argentina's First Written Submission, in para

21 words "prohibitions" and "restrictions" "refer to the same types of measures in both paragraph 1 and subparagraph 2(a)" of Article XI of the GATT. 41 Appellate Body also found that "if a restriction does not fall within the scope of Article XI:1, then Article XI:2 will also not apply to it". 42 The In other words, the Appellate Body found that a measure could be analysed under Article XI:2(a), only if it fell within the scope of Article XI:1 of the GATT. 49. On the facts of that case, the Appellate Body noted the Panel's finding that the relevant measures breached Article XI:1 of the GATT, 43 and went on to uphold the Panel's conclusion that the challenged measures were not justified by Article XI:2(a) of the GATT This means that the Appellate Body actually approved the Panel's interpretation of the notions of "prohibition" and "restriction" in Article XI:1 of the GATT. This is because the Appellate Body found that a measure could be analysed under Article XI:2(a) of the GATT only if it fell within the scope of Article XI:1 of the GATT. If the Appellate Body disagreed with the Panel's interpretation of Article XI:1 of the GATT, then it would have found that there is no reason to analyse the measure under Article XI:2(a): the measure would fall outside the scope of both Article XI:1 and Article XI:2(a). 51. However, this is not what the Appellate Body did. Quite to the contrary, the Appellate Body found that the measure was a "restriction" which fell within the scope of Article XI:2(a) of the GATT and, consequently, within the scope of Article XI:1 of the GATT. 52. Therefore, the Appellate Body's Report in China-Raw Materials actually confirms the Panel's interpretation of the notion of "restriction" in Article XI:1 of the GATT. That Panel interpretation is fully consistent both with the interpretation followed by the other panels in previous cases and with the interpretation suggested in the present case With the exception that Article XI:2(a) is limited to export restrictions, while Article XI:1 covers both import and export restrictions. Appellate Body Report, China-Raw Materials, para Appellate Body Report, China-Raw Materials, para Appellate Body Report, China-Raw Materials, para Appellate Body Report, China Raw Materials, para

22 53. In light of these consideration, the European Union respectfully requests the Panel to reject Argentina's erroneous assertions and to find that the DJAI constitutes a "quantitative restriction" which is inconsistent with Article XI:1 of the GATT Is the DJAI a "customs formality"? 54. Article XI of the GATT covers all measures (with the exception of duties, taxes and charges). This includes both "import formalities and requirements" and what Argentina calls "customs formalities". Consequently, the Panel does not need to determine whether the DJAI requirement constitutes a "customs formality", or not. Even if the DJAI system was a "customs formality", it would still fall within the scope of Article XI of the GATT and would be contrary to Article XI:1 of the GATT as an "other measure" In any event, the facts of this case establish that the DJAI requirement is not a "customs formality". The European Union has summarised in its first written submission the facts that support this conclusion As a reminder, the DJAI requirement does not constitute a "customs formality" because it has been introduced and is implemented through a number of legal instruments that are different from Argentina's customs' legislation; it involves a number of governmental entities that are not related to the customs procedures (such as the Secretariat for Domestic Trade); following the blocking of an import, it involves the submission of documents and information that have nothing to do with customs procedures (such as information on quantities exported by the importer, the importer's prices for unrelated goods, etc.); and it has different legal effects that the customs procedures, i.e., a DJAI authorisation is not the same as customs clearance. The last point is implicitly acknowledged by Argentina in its Response to Question 30, where Argentina lists the additional documents and information that the importer needs to submit to the Customs Authorities in order to receive customs clearance See the European Union's First Written Submission, in para See the European Union's First Written Submission, in paras. 34 and 281. See Argentina's Response to Question 30(a) and (b)

23 Is the WCO SAFE Framework relevant for the Panel's analysis in the present dispute? 57. Argentina devoted a large part of its first written submission to the discussion of various WCO initiatives, such as the SAFE Framework. The European Union notes that the United States has already presented a comprehensive discussion of the relevant WCO documents, which clearly establish that the DJAI system has nothing to do with the SAFE Framework. In order to avoid repetition, the European Union incorporates by reference into this Submission the relevant sections of the United States' submissions and statements. 58. In any event, the European Union considers that the Panel does not need to embark into a lengthy analysis and discussion of the SAFE Framework, or any other WCO initiative in the present case. 59. The European Union does not exclude that the WCO standards and initiatives might be relevant in a different case, where the defending party would raise a defence under Article XX(d) of the GATT and sought to demonstrate that the challenged measures were necessary in order to secure compliance with customs laws and regulations which are not inconsistent with the GATT. It cannot be excluded that compliance with such WCO standards and initiatives could be a fact that would be relevant for the Panel's assessment of whether the challenged measures were indeed "necessary" in the sense of Article XX(d). 60. However, in the present case, Argentina does not raise any defence under Article XX of the GATT. In these circumstances, Argentina's alleged compliance with the SAFE Framework is not relevant for the Panel's analysis of the DJAI system under Article XI:1 of the GATT. This is because, even if the DJAI system had common elements with the SAFE Framework (which it does not, as shown by the United States), this fact would still not bring the DJAI system outside the scope of Article XI:1 of the GATT. The DJAI system would still be inconsistent with Article XI:1 of the GATT, because it meets the conditions outlined in paragraphs 239 to 251 of the European Union's first written submission. 61. Consequently, Argentina's assertions are both legally and factually baseless and should be rejected in their entirety

24 Argentina's assertions in relation to Article X:1 of the GATT 62. Argentina's defence is based on two assertions. First, that the legal instruments that Argentina has failed to publish do not constitute "measures of general application", which fall within the scope of Article X:1 of the GATT. 48 Second, that Argentina has actually published (a) the "statutory regulatory authority of each agency that participates" in the DJAI system; and (b) a "standardised model" of the agreement pursuant to which each agency may accede to the system In relation to its first assertion, Argentina is simply factually wrong. It asserts that the European Union's challenge is directed against the "observations that each agency may make" in relation to each specific import application, depending on the "good as it relates to the agency's regulatory authority". 50 what the European Union is challenging under Article X:1 of the GATT. However, this is not 64. The European Union's first written submission lists the types of legal instruments that Argentina has failed to publish in accordance with Article X:1 of the GATT. These do not include the "observations that each agency may make" in a "specific case". Quite to the contrary, the European Union challenges Argentina's failure to publish, in accordance with Article X:1 of the GATT, the complete list of governmental bodies that may block imports; the legal instruments through which certain governmental bodies have been given the power to block imports; the list of goods the importation of which each governmental body can block; the conditions on the basis of which the 180 days deadline may be extended, etc Therefore, Argentina's assertion does not even relate to the claim that the European Union is advancing and it should be rejected as irrelevant See Argentina's First Written Submission, in para See Argentina's First Written Submission, in para It is interesting to note that, inadvertently, Argentina acknowledges the lack of transparency surrounding each individual decision to block a particular importation! This Argentina acknowledgment should be read in conjunction with the judgments of the Argentinean courts, which have confirmed that applications have been blocked in the DJAI system for long periods and that applicants cannot discover the reasons for which their imports have been blocked. See the European Union's First Written Submission, in paras. 254 to