January 18, Sincerely,

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1 January 18, 2013 Mr. Bradford Ward Assistant United States Trade Representative for Monitoring and Enforcement Office of the United States Trade Representative th Street, NW Washington, DC Re: Docket USTR , Request for Comments on the WTO Dispute Settlement Proceeding Regarding Argentina-Measures Affecting the Importation of Goods Dear Mr. Ward: In the interest of maintaining our views current for the record, the undersigned associations (with the addition of the Telecommunications Industry Association (TIA)) hereby re-submit the comments initially provided in response to a similar request for comments in September As previously, we applaud the efforts of the Office of the U.S. Trade Representative and commend the United States for requesting the establishment of a World Trade Organization (WTO) dispute settlement panel in the above-referenced matter. We recognize the substantial work already underway to address these issues. We stand ready to support the work of the United States and other governments to encourage respect for the multilateral trading system. Sincerely, Emergency Committee for American Trade (ECAT) Information Technology Industry Council (ITI) National Association of Manufacturers (NAM) Pharmaceutical Research and Manufacturers of America (PhRMA) Telecommunications Industry Association (TIA) U.S. Chamber of Commerce (USCC) United States Council for International Business (USCIB)

2 Appendix Protectionist and Extra-Legal Trade Measures Undertaken by the Government of Argentina (GOA) I. WTO Non-Compliant Measures Non-Automatic Import Licenses (NAILs) & Other Pre-Approval Requirements for Imports Products in over 600 harmonized tariff codes (totaling as many as 4,000 finished products) are subject to non-automatic import licenses in Argentina. 1 The stated objective, according to Argentina s Minister of Industry, is to defend our domestic market from unfair competition by limiting imports, while reducing trade deficits with trading partners. 2 Products range from, but are not limited to, electronics, certain fabrics, foodstuffs, bicycles and bicycle parts, and paper products. Furthermore, the import licenses are not being granted within the 60- day period outlined by the WTO with any regularity, and some companies are close to reaching 500 days without obtaining licenses. The GOA claims that non-automatic import licenses promote increased local production and protect jobs in Argentina. Government officials have been frank about their motives, encouraging importers to increase local production or assembly in exchange for lighter restrictions on the products they continue to import. The local chambers of commerce and trade institutions understand that the real objectives are to reduce the trade deficit and protect domestic employment. Furthermore, through Resoluciones Generales Nos and 3255, the GOA introduced new pre-approval mandates requiring companies to seek advance approval before they may import any good into Argentina, with or without non-automatic import license. The Resoluciones obliges all importers to fill out a sworn affidavit, the Declaración Jurada Anticipada de Importación (DJAI) to be transmitted through a single window to the Argentine Tax Agency (AFIP). The Secretary for Domestic Commerce concurrently announced that importers are required to fill out a separate Petition Form (Nota de Pedido) and send it directly to the Secretariat, thus creating a secondary window. While there has been no official announcement of this secondary requirement in the Argentine Government s Official Bulletin, nonetheless, companies have been forced to fill out the Nota de Pedido and send it to the Secretariat of Domestic Commerce in parallel with their DJAI filings. This lack of transparency and dual-track application process have only added to the delay in the release of imported goods. On February 9, 2012, the service industry was added to the list of sectors needing pre-approval requirements. The GOA issued Resolucion Generales No which obliged companies in the service industry to file a sworn declaration with detailed 1 See WTO document G/LIC/N/2/ARG/22/Add.1, 21 March 2011 for NAIL s for Vehicles, Resolución No. 77/2011 Comercio Exterior - Ministerio de Industria y Comercio (4 March 2011) for NAIL s for certain iron and steel products, mechanical appliances, and electric lamps, and WTO document G/LIC/N/2/ARG/22/Add.1, 21 March 2011 for NAIL s for i.e. motor vehicles, auto-parts, motorcycles, bicycles, textiles and clothing, electronic and media equipment, and informatics equipment. 2 Argentina adds import restrictions to 200 goods, by Jude Webber, Financial Times, February 16, 2011.

3 information on services delivered between parties in Argentina and abroad. All in-determined services, services of more than $100,000, and quota payments of more than $10,000 have to be declared and approved in advance through the official single window process and through the Secretariat. The use of non-automatic import licensing in this manner is inconsistent with WTO law and practice. In a Panel Report adopted by the Dispute Settlement Body the WTO found that the requirement to prevent trade distortion found in the Licensing Agreement refers to any trade distortion that may be caused by the introduction or operation of licensing procedures, and is not necessarily limited to that part of trade to which the licensing procedures themselves apply. WTO Agreement on Import Licensing Procedures, Articles 1.2 & Delays in granting import licenses of well over 60 days fails to meet WTO rules, which state that the period for processing applications shall not be longer than 30 days if applications are considered as and when received, and not longer than 60 days if applications are considered simultaneously. WTO Agreement on Import Licensing Procedures, Article 3.5 (f) Balance of Payment Measures, Including Coerced Dollar-For-Dollar Import/Export Plans Numerous companies have reported being forced to negotiate and sign agreements committing themselves to balance imports and exports. For instance, a GOA plan for the automotive industry requires that imports must be compensated for by exports or by irrevocable capital. Companies that don't have a local operation or an export plan to balance their imports have been prevented from importing their products into the Argentine market. This treatment began in the auto sector and has spread to other sectors including pharmaceuticals and agricultural machinery. Reportedly, it is now being applied, as well, to the producers of all products subject to Non-Automatic Import Licenses. As one official Argentine source told a reporter, the deals are company by company and not at a sector-wide level. Companies have to present import plans and, in tandem, export plans that allow them in a year to keep their trade balance in balance. In the only on-the-record response to these allegations at the WTO in May of 2010, the GOA responded that such measure(s) do not exist. Nonetheless, these policies were cited by the WTO: Import/export compensation agreements with importers under which importers commit to export the same value of products made in Argentina. For example, compensation agreements "one-to-one" signed between the Ministry of Industry and 17 (sic) car manufacturers (Ford, Chery, General Motors, Volkswagen, Mercedes Benz, Porsche, Fiat, PSA, Alfa Romeo, Hyundai, Kia, Renault, Nissan, Subaru, BMW, and Mitsubishi), and with John Deere machinery manufacturer. 4 3 European Communities - Measures Affecting the Importation of Certain Poultry Products, WT/DS69/R, March 12, WTO document WT/TPR/OV/14, 21 November 2011.

4 In addition, for more than two years the GOA has restricted or banned many processed food imports. Beginning in 2009, many Argentine supermarkets and large retailers were told to stop importing some processed foods, and certificates of free circulation were denied to importers. These warnings evolved into trade-balancing mandates by the GOA, which extracted signed commitments from importers to export an amount equivalent to the value of imports. Processed food imports have reportedly been restricted by the GOA s measures including ketchup, tomato sauces, fruit and vegetable juices, chocolates, olive oil, canned yellow corn, potato chips, bacon, and biscuits. Internal Letter SCI No. 232 confirms that the GOA is implementing this strategy in an effort to change the cost structure of the goods that are components of the domestic market. However, this strategy violates Article XI of the General Agreement on Tariffs and Trade (GATT) 1947, which states that no prohibitions or restrictions other than duties, taxes or other charges, whether made effective through quotas, import or export licenses or other measures, shall be instituted or maintained by any contracting party on the importation of any product of the territory of any other contracting party or on the exportation or sale for export of any product destined for the territory of any other contracting party. Also, these measures are inconsistent with GATT 1947 Article III and the WTO Agreement on Trade Related Investment Measures. Market Surveillance Controls (MSC) In order to give select domestically manufactured goods a competitive advantage over imported products, Argentina has put in place measures to control imports by requiring that all importers of a certain product provide market surveillance reports. Previously, the principal importer, usually the manufacturer, conducted market surveillance and could extend the report to its importers, resellers, distributors, and retailers. As of April 2011, all importers have been required to conduct their own market surveillance before products can clear customs. This increases costs for importers, resellers, distributors, and retailers by requiring repetitive testing of the same product and delaying time-to-market with no demonstrated benefits to consumers. In addition, the government of Argentina is enforcing price-control policies, and has requested increased prices as high as 18 percent on certain products when the country is running an annual inflation rate of 27 to 30 percent. According to the United Nations Economic Commission for Europe s 2011 publication, Reducing Non-Tariff Barriers to Trade, MSC provides for, public authorities to act in cooperation with industry to ensure that dangerous and noncompliant goods are removed from the market and the workplace. The GOA has put the onus on the private sector by requiring that all importers of a product provide market surveillance reports. In addition, Argentina requires initial product safety certification, factory audits, and periodic verification of essential safety requirements. Products in one of five certified product families are required to provide at least one sample to undergo testing. However, the product families have not been adequately defined, meaning that any product is potentially liable to meet this requirement. These disproportionate

5 and costly market-based surveillance requirements are exacerbated by the fact that local testing labs do not have the capacity to conduct product examinations in a timely manner. The measure is inconsistent with WTO rules in the article 2.2 of the Agreement on Technical Barriers to Trade that stipulates that, Members shall ensure that technical regulations are not prepared, adopted or applied with a view to or with the effect of creating unnecessary obstacles to international trade. For this purpose, technical regulations shall not be more trade-restrictive than necessary to fulfill a legitimate objective, taking account of the risks non-fulfillment would create. It is also inconsistent with national treatment obligations which prohibit the use of internal taxes and other internal regulatory measures so as to afford protection to domestic production. Valuation of Imports In July 2005 the AFIS issued Resolucion Generales No. 1907/2005, the resolution aimed to combat tax evasion and under-invoicing practices by creating a system for controlling the value of goods through the establishment of reference values. The reference values that are used are established by an analysis division of the Valuation Technique Bureau of the Argentine Customs Services (DGA). In practice, at the time of reporting an import, if the importer s declared value for the goods is below the reference value, the goods must pass through the Red Channel clearance process in order to clear Customs. This includes a thorough review of the documents and physical inspection of the goods, with resulting delays in the clearance process. Furthermore, clearance will take place only if a bond is previously posted that secures the tax difference between the paid amount and the amount resulting from considering the respective reference value. Once the bond is posted and the goods have cleared customs, the importer will have 15 days in which to justify the declared value. The value reported by the importer may then be adjusted. A recent WTO panel analyzed a similar system of reference values established by the Colombian authorities (WT/DS366/R). Following the general principles set forth by the panel, it can be argued that the reference value system established by Resolucion Generales No. 1907/2005 is not WTO compliant, as the reference values established by the Argentine Customs Service follow none of the valuation methods set forth in the GATT Valuation Agreement. Ultimately, the reference value system makes importing into Argentina more expensive by forcing the importer to automatically post a bond whenever the declared value is below an arbitrarily fixed reference value. This is a clear violation of Argentina's obligations as a member of the WTO.

6 II. Other Trade-Restrictive Measures Supply of Financial Services On February 21, 2011, the Argentine Insurance Regulator (SSN) established a new regulatory framework (Resolucion Generales No /2011), effective September 1, 2011, which prohibits cross-border reinsurance operations, subject to a few exceptions. Prior to that regulation, overseas reinsurers were allowed to engage in reinsurance business from their home country, either upon registration with the regulator or via a broker authorized to operate in Argentina. The practical effect of the new regulation is that local cedants will only be allowed to cede reinsurance risks to locally-based Argentine reinsurers, Argentine subsidiaries, or branches of foreign companies. Foreign reinsurance companies that do not set up local operations in Argentina by September 1 st will be allowed to enter into reinsurance contracts only in the absence of local capacity, and subject to the regulator's prior approval on a case-by-case basis. In addition, the government of Argentina has blocked all payment of dividends and royalties to parent companies/shareholders abroad. Argentina subsidiary companies are no longer allowed to pay dividends and royalties outside the country; dividend payments have been stopped by order of the government of Argentina to Argentine banks. Subsidiary companies are encouraged to reinvest dividends in Argentina.