ARGENTINA MEASURES AFFECTING THE

Transcription

1 In the World Trade Organization ARGENTINA MEASURES AFFECTING THE IMPORTATION OF GOODS Opening Oral Statement by the European Union (2nd Substantive meeting with the Panel) Geneva, 10 December 2013

2 Opening Oral Statement (2 nd Hearing) by the European Union TABLE OF CONTENTS 1. INTRODUCTION DJAI REQUIREMENT Issues relating to the GATT Argentina's assertions in relation to Article VIII of the GATT Does Article VIII permit measures with "trade restrictive effects"? Argentina's assertions in relation to Article XI:1 of the GATT Does Article XI:1 distinguish between "quantitative restrictions" and the "means" by which they are made effective? The acquis of the WTO dispute settlement system Do "quantitative restrictions" need to be "expressed in terms of quantity" or be "quantifiable"? Article X:1 and Article X:3(a) of the GATT Issues relating to the Import Licensing Procedures Agreement Facts that Argentina has acknowledged Article 1.6 of the ILP Agreement The WCO SAFE Framework Argentina's assertions in relation to the ILP Agreement Argentina's definition of import licensing Is the DJAI for "customs purposes"? RESTRICTIVE TRADE-RELATED REQUIREMENTS CONCLUSION i -

3 Opening Oral Statement (2 nd Hearing) by the European Union TABLE OF CASES CITED Short Title China Raw Materials China Raw Materials Japan Semi- Conductors Turkey Rice US Poultry (China) US Stainless Steel (Mexico) Full Case Title and Citation Appellate Body Report, 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 Report, 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 GATT Panel Report, Japan Trade in Semi-Conductors, L/6309, adopted 4 May 1988, BISD 35S/116 Panel Report, Turkey Measures Affecting the Importation of Rice, WT/DS334/R, adopted 22 October 2007, DSR 2007:VI, p Panel Report, United States Certain Measures Affecting Imports of Poultry from China, WT/DS392/R, adopted 25 October 2010, DSR 2010:V, p Appellate Body Report, United States Final Anti-Dumping Measures on Stainless Steel from Mexico, WT/DS344/AB/R, adopted 20 May 2008, DSR 2008:II, p ii -

4 Madam Chairperson, distinguished members of the Panel. 1. INTRODUCTION 1. We would like to start our statement today by thanking you for the way you have conducted the proceedings so far. We would also like to thank the Secretariat and the interpreters for their hard work in supporting you. 2. As we are entering the final stages of these proceedings, the European Union considers that the legal and factual issues that are at the heart of this dispute have already been clarified. There is little disagreement between the parties as to the existence of the facts presented by the co-complainants, both in relation to the DJAI and in relation to the RTRRs. Differences continue to exist on the legal characterisation of these facts, as well as on the proper interpretation of certain provisions of the GATT and the Import Licensing Procedures Agreement. 3. However, most of these legal issues have already been dealt with by past panels. Some had already been resolved under the GATT We believe that if the Panel follows the consistent legal interpretation developed by previous panels, it will be able to deliver a balanced Report, which will enhance the security and predictability of the multilateral trading system. 2. DJAI REQUIREMENT 4. In our presentation we will focus our discussion on the views expressed by Argentina in its second written submission. We believe that Argentina's second written submission contains a number of assertions that run against both the text of the GATT and the consistent jurisprudence of the WTO dispute settlement system. To facilitate the Panel's task, we will address these assertions in the order that they appear in Argentina's second written submission ISSUES RELATING TO THE GATT 5. We will start with Argentina's assertions in relation to Article VIII of the GATT Argentina's assertions in relation to Article VIII of the GATT Does Article VIII permit measures with "trade restrictive effects"? - 1 -

5 6. In paragraph 126 of its second written submission, Argentina states that "Article VIII of the GATT recognizes that import formalities or requirements may have some trade-restrictive effects". 1 In paragraph 129 of its second written submission, Argentina asserts that Article VIII "expressly" grants to Members the right to have in place measures with some "trade-restrictive effects". 7. The Panel will search in vain the text of Article VIII of the GATT for this supposed "express" "recognition". 8. First, Article VIII does not "recognise" any "right". The only thing that the text of Article VIII "recognises" is the obligation of WTO Members to "minimise the incidence and complexity of import and export formalities" and to decrease and simplify the relevant documentation requirements. Therefore, Article VIII of the GATT does not grant any "express right", contrary to Argentina's assertion in paragraph 129 of its second written submission. 9. Second, the text of Article VIII does not contain the words "trade-restrictive effects". Article VIII regulates only the "incidence and complexity" of import formalities and requirements. restrictive effects". There is no reference to their potential "trade 10. Those effects are addressed, instead, specifically in Article XI of the GATT. Indeed, the words "quantitative prohibitions and restrictions" appear only in the text of Article XI of the GATT and not in the text of Article VIII. This fact clearly establishes that the "trade restrictive effects" of import formalities and requirements actually fall within the scope of Article XI of the GATT. 11. The conclusion is that Argentina's assertions in relation to Article VIII of the GATT are completely baseless. 12. Argentina has probably realised that its Article VIII assertions are untenable. This is probably the reason for the subtle, but significant shift in Argentina's terminology. In its first written submission and in paragraphs 175, 176, 177, 181, the title and the entire section starting with paragraph 191, paragraphs 264, 297, 314 and 343, Argentina repeatedly asserts that "customs formalities" fall outside the scope of Article XI of the GATT. In contrast, in Argentina's second written 1 Emphasis added

6 submission, "customs formalities" has been replaced with a preponderance of references to "import formalities", such as in paragraphs 125, 126, 127, 129, 131, 134 and The shift in Argentina's terminology is understandable. The debate that took place during the First Hearing has shown that, as a matter of fact, the DJAI requirement does not constitute a "customs formality". Likewise, it has been shown that, as a matter of law, Article VIII of the GATT does not even mention the term "customs formalities". 14. In any event, the subtle change in Argentina's terminology cannot change the fact that its assertions in relation to Article VIII of the GATT are completely baseless. The European Union respectfully requests the Panel to reject them in their entirety Argentina's assertions in relation to Article XI:1 of the GATT 15. We will now address the assertions contained in Argentina's second written submission in relation to Article XI:1 of the GATT. To facilitate your task, we will again follow the order of presentation in Argentina's second written submission Does Article XI:1 distinguish between "quantitative restrictions" and the "means" by which they are made effective? 16. In paragraph 134 of its second written submission, Argentina asserts that "Article XI plainly distinguishes between quantitative restrictions and the means by which such restrictions are made effective". Argentina's statement is wrong. 17. Article XI of the GATT does not draw any "distinction" between the notions of "quantitative prohibitions or restrictions", on the one hand, and the notions of "quotas, licenses, or other measures", on the other. The "quotas, licenses and other measures" are the "quantitative prohibitions or restrictions". The two sets of terms are used in an identical manner. 18. This can be seen, for example, in paragraph of the Panel Report in China- Raw materials, which is one of the paragraphs of that case to which Argentina refers with approval. 2 In that paragraph of its Report, the Panel used the two sets 2 Argentina's First Written Submission, para

7 of terms as having the same meaning. In particular, the Panel listed the words "quota, ban, licensing requirement or other type of 'restriction'" in a parenthesis next to the words "quantitative restriction", as part of the definition of the term "quantitative restriction". 19. Likewise, in paragraphs and of the same Report, the Panel found that the defending party's series of legal instruments "had resulted in the imposition of a restriction or prohibition" in the exportation of the relevant goods. In the preceding paragraphs to of its Report, the Panel described these "restrictions or prohibitions" through the use of the terms "export quota" and "export prohibition". In other words, the Panel treated the notions of "restrictions or prohibitions", "export quotas" and "export prohibitions" as having exactly the same meaning. 20. Consequently, Argentina's assertions are wrong. The "quotas, licenses and other measures" are not the "procedures" through which some other "quantitative restriction" is imposed. The "quotas, licenses and other measures" themselves are "quantitative restrictions" for purposes of Article XI:1 of the GATT The acquis of the WTO dispute settlement system 21. In paragraph 141 of its second written submission, Argentina asserts that the complainants have "referred to prior panel reports applying Article XI, without engaging in any independent interpretative analysis of that provision". paragraph 142, Argentina asserts that "prior panels interpreting Article XI have failed to interpret the term "prohibitions or restrictions" in light of the context provided by the title of that provision". In paragraph 145, Argentina asserts that the European Union should not have referred to prior panel reports, but that it should have explained "whether or how those prior reports properly took into account the context provided by the title of Article XI". In paragraph 147, Argentina asserts that virtually all prior panels have made the same "error" in interpreting Article XI of the GATT. Argentina concludes that "this error cannot continue to be overlooked". 22. Argentina does not claim that the European Union and the other complainants have described the consistent interpretation of Article XI in the wrong way. Quite to the contrary, Argentina acknowledges that the consistent interpretation of In - 4 -

8 Article XI by past panels is precisely what the European Union and the other complainants have discussed. What Argentina claims is that this Panel should ignore the consistent interpretation of Article XI:1 by the WTO dispute settlement system and that it should "begin the interpretative process anew" Argentina is wrong. The Appellate Body has already ruled in paragraph 160 of its Report in US-Stainless Steel (Mexico), that "the legal interpretation embodied in adopted panel reports become part and parcel of the acquis of the WTO dispute settlement system" and that an "adjudicatory body will resolve the same legal question in the same way in a subsequent case". 24. Therefore, in accordance with the guidance provided by the Appellate Body, neither the Panel, nor the complainants need to "reinvent the wheel" in the present case. The consistent interpretation of Article XI by past panels is clear. The Panel should simply follow the legal interpretation of Article XI of the GATT that has already become "part and parcel of the acquis of the WTO dispute settlement system" and reject Argentina's baseless assertions Do "quantitative restrictions" need to be "expressed in terms of quantity" or be "quantifiable"? 25. In paragraph 320 of its Report in China-Raw Materials, the Appellate Body stated that "Article XI of the GATT covers those prohibitions and restrictions that have a limiting effect on the quantity or the amount of a product being imported or exported". 26. Argentina advances a number of assertions, based on an erroneous reading of that statement. In paragraphs 149 and 151 of its second written submission, Argentina asserts that the Appellate Body's statement means that a measure would fall within the scope of Article XI of the GATT only where it is "expressed in terms of quantity" The reader will search in vain the text of the Appellate Body report in order to find the word "expressed". The Appellate Body has simply not stated that the measure must be "expressed in terms of quantity". Argentina is trying to devise a "legal 3 4 Argentina's second written submission, para Emphasis added

9 test", which would include words and notions that the Appellate Body has never used. 28. Therefore, the assertion of Argentina must be rejected. A measure does not need to be "expressed in terms of quantity" in order to constitute a "quantitative restriction" and fall within the scope of Article XI of the GATT. 29. Argentina's second assertion is that the measure must be "quantifiable", i.e., "capable of being measured or assessed with respect to, or on the basis of, quantity". Argentina is again inventing terms and notions that the Appellate Body Report does not contain. The Appellate Body has not found that a measure would fall within the scope of Article XI of the GATT only if it is "quantifiable". In fact, the Appellate Body has not even used the term "quantifiable". 30. Therefore, Argentina's assertions have no basis in the text of the Appellate Body Report in China-Raw Materials. 31. In reality, the Appellate Body's statement in China-Raw Materials did not introduce a new concept of "quantitative restriction", nor did it challenge the panel's legal interpretation of that term. In its Report, wherever the Appellate Body had doubts about the Panel's legal interpretation and analysis, the Appellate Body stated them expressly. For example, in paragraph 334 of its Report, the Appellate Body expressly stated that it had "some doubts as to the validity of [a certain] Panel concern". However, the Appellate Body did not express any such doubts in relation to the panel's legal interpretation and application of the notion of "quantitative restriction" in Article XI:1 of the GATT. 32. Quite to the contrary, the Appellate Body upheld and confirmed the panel's analysis. For example, in paragraph 320 of its Report, the Appellate Body noted that the panel had already found in its own Report that the title of Article XI of the GATT "suggests that Article XI governs the elimination of 'quantitative restrictions' generally". The Appellate Body simply confirmed that statement of the panel. Indeed, the last sentence of paragraph 320 of the Appellate Body's Report is nothing more than a restatement of the legal interpretation that the panel had already applied in its own Report. 33. Moreover, the Appellate Body found in paragraph 321 of its Report that the terms "prohibitions and restrictions" have the same meaning in both Article XI:1 and - 6 -

10 Article XI:2(a) of the GATT. The Appellate Body went on to uphold and confirm the Panel's finding that the relevant measure could not be justified by Article XI:2(a) of the GATT, in paragraph 344 of its Report. By doing so, the Appellate Body also confirmed that the relevant measure constituted a prohibited "quantitative restriction" in the sense of Article XI:1 of the GATT. 34. This is because the Appellate Body found, in paragraph 321 of its Report, that Article XI:2(a) only covers measures that fall within the prohibition of Article XI:1. If the Appellate Body had disagreed with the panel's characterisation of the relevant measure as a "quantitative restriction" for purposes of Article XI:1, then it would have not proceeded with the analysis of the potential compatibility of the measure with Article XI:2(a). If the measure was not a "quantitative restriction" for purposes of Article XI:1, then it would also fall outside the scope of Article XI:2(a). 35. Consequently, by accepting that the measure was a "quantitative restriction" for purposes of Articles XI:1 and XI:2(a) of the GATT, the Appellate Body confirmed the panel's legal interpretation of the term "quantitative restriction". And, it is not disputed that this legal interpretation is fully in line with the consistent interpretation developed by other panels who had dealt with Article XI:1 in the past. 36. The conclusion is that Argentina's reading of the Appellate Body's statement in paragraph 320 of its Report in China-Raw Materials is wrong. Moreover, Argentina's definition of the term "quantitative restriction" must be rejected. For these reasons, Argentina's long discussion of the various pieces of evidence submitted by the complainants in paragraphs 152 to 157 of its second written submission, is not relevant for the current proceedings. The design, structure and characteristics of the DJAI requirement, as shown in the text of the Argentinean legal instruments through which the DJAI requirement has been imposed, suffice for the Panel to find that the DJAI requirement falls within the prohibition of Article XI:1 of the GATT. 37. Moving on with Argentina's second written submission, we note that in paragraph 158, in combination with footnote 130, Argentina acknowledges that the DJAI requirement imposes significant delays on the importation of goods, as established - 7 -

11 even by Argentinean court judgments. However, Argentina asserts that this is not sufficient to show that the DJAI falls within the prohibition of Article XI:1 of the GATT, because there is "no evidence that the imports that were the subject of these applications did not take place". 38. Argentina is again wrong. Delays in the granting of import and export licenses have been defined as "quantitative restrictions" prohibited by Article XI:1 of the GATT, even before the creation of the WTO. An example can already be seen in paragraphs 118 and 132 of the Report of the GATT panel in Japan- Semiconductors. This is definitely a part of the "acquis of the WTO dispute settlement system", which Argentina cannot deny. 39. We also note that Argentina asserts in paragraph 160 of its second written submission that imports from the European Union and other complaining countries have increased during the year that followed the introduction of the DJAI. Again, this is not relevant for the analysis of whether the DJAI requirement falls within the scope of Article XI of the GATT. There is no Report of the Appellate Body, or any panel, that has ever found that a measure falls within the prohibition of Article XI:1 of the GATT, only where the imports into the defending Member have decreased. Moreover, this increase in imports can be attributed to the euro's low exchange rate following the sovereign debt crisis of In these circumstances, the natural flow of trade could have led to even greater increases of imports into Argentina, in the absence of the DJAI. Therefore, the trade statistics on which Argentina relies, are not relevant for the Panel's analysis of Article XI:1 of the GATT Article X:1 and Article X:3(a) of the GATT 40. Argentina's second written submission does not include any new arguments in relation to the European Union's claims under Article X:1 and Article X:3(a) of the GATT. As a result, our comments will be brief. 41. In paragraph 205 of its second written submission, Argentina asserts that the product scope of the DJAI is limited, because "the participating agencies may only review and make observations on imports that are relevant to their statutory customs-control authority". However, it has already been established as a fact, which Argentina has not contested, that the Secretariat for Domestic Trade has the - 8 -

12 power to review and block the importation of all goods. Therefore, there are no goods that can escape either the DJAI Requirement, or the Secretariat for Domestic Trade's power to block their importation, through the placing of an "observation" in the DJAI system. 42. In addition, we note that there is no reference to the DJAI in the purported "statutory authority" of the Secretariat for Domestic Trade. And, with the exception of the AFIP, Argentina has failed to publish the grounds on the basis of which the Secretariat for Domestic Trade would block, or authorise imports into Argentina. 43. The European Union considers that the record contains already all the factual and legal elements that allow the Panel to find that Argentina has acted inconsistently with its obligations under Article X:1 of the GATT and Article X:3(a) of the GATT. We respectfully request the Panel to reach this finding ISSUES RELATING TO THE IMPORT LICENSING PROCEDURES AGREEMENT 44. We will now discuss the views expressed in Argentina's second written submission in relation to the Import Licensing Procedures Agreement Facts that Argentina has acknowledged 45. The European Union has raised claims under a number of provisions of the Import Licensing Procedures Agreement, including Articles 1.3, 1.4(a), 1.6, 3.3 and 3.5(f). Argentina has not raised any factual or legal defence in relation to any of these specific claims either in its first written submission, or in its second written submission. Argentina's sole defence is based on the proposition that nothing related to the DJAI would fall within the scope of the Import Licensing Procedures Agreement. We will address this theory of Argentina in a minute. But, before doing so, we would like to highlight certain facts that Argentina has acknowledged in its submissions Article 1.6 of the ILP Agreement 46. We start with paragraph 177 of Argentina's second written submission. In that paragraph, Argentina acknowledges that there are four governmental bodies that have the right to review and, potentially, block imports through the DJAI system

13 Argentina has also stated in paragraph 181 of its second written submission that when a governmental body blocks an importation, through the placing of an "observation" into the DJAI, the applicant must approach that body directly in order to see how it can convince it to lift the "observation". As Argentina has stated, "it is the private instance which conditions the action of the Administration". 47. We consider that these statements constitute admission 's claim under Article 1.6 of the Import Licensing Procedures Agreement. This Article provides that "applicants shall have to approach only one administrative body in connection with an application. Where it is strictly indispensable to approach more than one administrative body, applicants shall not need to approach more than three administrative bodies". 48. In the present case, Argentina has acknowledged that applicants may need to approach at least four governmental bodies in order to have their application approved. This is more than the number of three provided in Article 1.6. Consequently, Argentina has acted inconsistently with its obligations under Article 1.6 of the Import Licensing Procedures Agreement The WCO SAFE Framework 49. Our second comment relates to Argentina's statements in relation to the WCO SAFE Framework. In paragraph 195 of its first written submission, Argentina asserted that the DJAI "aimed at implementing the WCO Safe Framework". Likewise, in paragraph 192 of its first written submission, Argentina asserted that the DJAI is "specifically designed in accordance with the WCO SAFE Framework" and "brings Argentina in line with the best customs administration practices". 50. Argentina takes a very different position in its second written submission and in the written communication that it addressed to the Panel in relation to the Panel's questions to the WCO Secretariat. On the seventh paragraph of the written communication addressed to the Panel, Argentina states that the WCO Safe Framework is irrelevant for the resolution of the legal questions raised under the

14 Import Licensing Procedures Agreement. 5 paragraph 201 of its second written submission. 6 Argentina expresses the same view in 51. The debate that took place during the First Hearing, together with the parties' written responses to the Panel's Questions following the First Hearing, have shown that, as matter of fact, the DJAI does not comply with the WCO standards. 52. This factual conclusion has been confirmed by the responses provided by the WCO Secretary General to the questions asked by the Panel. 7 The Secretary General has confirmed that the vast majority of the WCO members consider that the SAFE Framework aims at preventing terrorist attacks and related security threats. 8 He has also confirmed that the types of issues which the Secretariat for Domestic Trade purportedly "examines" through the DJAI, are not covered by the SAFE Framework, as interpreted by the majority of the WCO members. 9 WCO Secretary General has further confirmed that the standards of the SAFE Framework provide that traders should submit advance declarations to the importing country's customs authorities generally 24 hours before arrival at the first port in the country of destination for bulk cargo, or 24 hours before loading at the port of departure for containerized cargo. 10 The This is completely at odds with the DJAI's requirement to submit the sworn affidavit even before the trader issues a purchase order. 53. The European Union considers that, through the latest written submissions and communications, Argentina has conceded that the DJAI does not comply with the SAFE Framework. The European Union also considers that through those latest Argentina states: "Thus, the only two threshold legal questions that this Panel needs to resolve before addressing the complainants' claims under the ILP Agreement are: [ ] It is worth noting that the resolution of neither one of these issues depends upon whether or to what extent the DJAI procedure fully or partially mirrors the WCO SAFE Framework standards." Argentina states: "Given the non-binding nature of the SAFE Framework, Argentina considers that whether the DJAI procedure is entirely in line with each and every standard contained therein is irrelevant for the purposes of this dispute". Letter of the WCO Secretary General dated 2 December 2013, with ref. 13.FL-0584E/S.A. Letter of the WCO Secretary General, response to Question 2. Letter of the WCO Secretary General, response to Question 4. Letter of the WCO Secretary General, response to Question

15 submissions, Argentina has retracted the defences that it had tried to build on the WCO standards. 54. The European Union respectfully requests the Panel to take note of these factual admissions of Argentina and draw the necessary conclusion: that the DJAI requirement is not a customs procedure, formality or requirement Argentina's assertions in relation to the ILP Agreement 55. In its second written submission, Argentina focuses its analysis on the provisions of Article 1.1 of the Import Licensing Procedures Agreement. The European Union will discuss Argentina's assertions in the order that they appear in Argentina's second written submission Argentina's definition of import licensing 56. In paragraph 166 of its second written submission, Argentina suggests its own definition of the term "import licensing" for purposes of Article 1.1 of the Import Licensing Procedures Agreement. Argentina states that it understands "import licensing" as "the administration of quantitative restrictions or other measures similarly aimed at regulating the importation of goods". Moreover, in paragraph 170 of its second written submission, Argentina invites the Panel to find that "import licenses" are "only those administrative procedures used for the purposes of regulating the importation of certain goods". 57. Argentina's limitation of "import licensing" only to the measures that are "administering quantitative restrictions" is contradicted by the text of the Import Licensing Procedures Agreement. First, Article 1.1 does not contain the words "quantitative restrictions". Second, the only "prior condition" for importation mentioned in Article 1.1 is the "submission of an application or other documentation". Third, Article 3.3 of the Import Licensing Procedures Agreement expressly provides that licensing can be used "for purposes other than the implementation of quantitative restrictions". Therefore, the text of the Import Licensing Procedures Agreement establishes that the first prong of the definition of "import licensing" suggested by Argentina is wrong

16 58. The second prong of Argentina's definition is "other measures similarly aimed at [or used for the purposes of] regulating the importation of goods". This Argentina statement has a number of problems. 59. First, it is clear that the "aim" or "purpose" of the defending Member cannot be the element that determines whether the relevant measure constitutes an "import license" or not. As Japan has already mentioned, the Panel in Turkey-Rice has already resolved this issue in paragraph of its Report, where it states that "the proclaimed objectives of a particular document or requirement" are not the main issues that would determine whether a measure "may be characterised as an 'import license'". The Panel's finding in Turkey-Rice is fully consistent with the text in the footnote to Article 1.1 of the Import Licensing Procedures Agreement, which makes clear that a set of "administrative procedures" may constitute an "import license", even where the domestic legislation does not call "import licenses" the authorisations-to-import granted pursuant to these procedures Second, it is not clear what Argentina means by the word "similarly". If through the use of that word, Argentina seeks to define as "import licenses" only those measures that are used for the "administration of quantitative restrictions", then Argentina is wrong. The European Union has just discussed the reasons for which the text of the Import Licensing Procedures Agreement contradicts that prong of the definition suggested by Argentina Third, it is not clear what Argentina means by the words "regulating the importation of goods". Article 2 of the Import Licensing Procedures Agreement deals with "automatic import licensing", which is defined, inter alia, as "import licensing where approval of the application is granted in all cases". Automatic import licenses are generally associated with the gathering of statistical information, or monitoring purposes. 13 measures that "regulate the importation of goods". It is not clear whether they qualify as Given that the Import Licensing Procedures Agreement expressly includes automatic licences in the See the European Union's first written submission, in para See, also, the European Union's second written submission, in paras. 89 and 90. Panel Report, China-Raw Materials, para

17 notion of "import licenses", the prong of "regulating the importation of goods" in Argentina's definition cannot be accepted. 62. Consequently, Argentina's definition of "import licensing" contains too many errors and must be rejected. The European Union has already presented the correct interpretation of the term "import licensing" for purposes of the Import Licensing Procedures Agreement in its own submissions; particularly in paragraphs 276 to 283 of its first written submission and in paragraphs 84 to 91 of its second written submission. The European Union respectfully requests the Panel to endorse the European Union's interpretation. 63. In any event, we note that, on the facts of the present case, the DJAI is a measure which has both the purpose and the effect of "regulating the importation of goods". 14 The DJAI legal instruments give to the participating governmental bodies and, in particular, the Secretariat for Domestic Trade, the power and the discretion to block imports through the placing of an "observation" into the system. Moreover, there are numerous examples of imports that have been blocked completely, or delayed for very significant periods of time, reported both by Argentinean court judgments and by other public sources mentioned in the European Union's submissions and exhibits. 64. Therefore, the DJAI would constitute an "import license" for purposes of the Import Licensing Procedures Agreement, even if "import licenses" were defined as measures that have the object or the effect of regulating the importation of goods Is the DJAI for "customs purposes"? 65. In paragraph 172 of its second written submission, Argentina asserts that the DJAI is "entirely for customs purposes". In paragraph 173 of its second written submission, Argentina asserts that the information collected through the DJAI is "processed and reviewed by Argentina's customs authority AFIP and by other agencies with supplementary customs-control authority as relevant to the particular risks involved". In paragraph 182 of its second written submission, Argentina asserts that "each of the other agencies participating in the DJAI" has statutory authority that is supplementary to AFIP's customs control authority" and that "such 14 See the European Union's first written submission, in paras. 286 to

18 inter-agency cooperation" is "recognised in the SAFE Framework as a central element of customs control authority". 66. The problem with Argentina's assertions is that the letter of the WCO Secretary General has confirmed that the types of matters that the various Argentinean governmental bodies are supposed to be examining and, in particular, the "statutory mandate" of the Secretariat for Domestic Trade, are not considered by the WCO members as customs related matters. 15 are simply wrong. Therefore, Argentina's assertions 67. Moving on with Argentina's second written submission, we note that in paragraph 198, it seeks to draw a distinction between the term "customs purposes" and the term "customs clearance purposes". 68. We note that it is Argentina who argued, in paragraph 293 of its first written submission, that "in fact" a DJAI authorisation "can automatically be converted into a customs clearance procedure". However, the debate that took place during the First Hearing in combination with the parties' responses to the written questions showed that this is not the case. The legal effects of a DJAI authorisation are different from the legal effects of "customs clearance". Following the receipt of a DJAI authorisation, traders need to proceed with a different procedure and provide different documentation and information to Argentina's customs' authorities in order to achieve customs clearance. 16 Therefore, Argentina's assertion in paragraph 293 of its first written submission has been proven wrong. This is an additional element supporting the conclusion that the DJAI is not for "customs purposes" Madame Chair, this concludes our statement in relation to the DJAI requirement. 3. RESTRICTIVE TRADE-RELATED REQUIREMENTS Letter of the WCO Secretary General, response to Question 4. Argentina has already acknowledged this fact in its written response to Question 30, following the First Hearing. See, also, the European Union's first written submission, in paras. 34 and 282; as well as the European Union's second written submission, in paras. 92 to

19 70. Our statement will be brief on this point, as the EU has already addressed extensively Argentina's main argument in its second written submission. 18 The EU has shown that, contrary to Argentina's allegations, it has properly identified the measure at issue (RTR requirements as an overarching measure). Specifically, the EU has done so by identifying the specific actions that prohibit or restrict the importation of products and/or the use of imported products in Argentina (RTR requirements), the objectives pursued by the overarching measure (trade balancing and import substitution), the unwritten nature of the measure (i.e. not published) and its general and prospective application. The EU has also provided extensive evidence of the existence of that measure, which is more than necessary to make a prima facie case. 71. In its second written submission, Argentina has failed, once again, to address in a meaningful manner the evidence adduced by the Complainants showing the existence of the RTR requirements. We will turn to this in a moment. 72. Before that, however, the EU notes that Argentina has totally disregarded the requests for information made by the Panel in its communication of 6 November Those requests reiterated the requests made by the Panel as part of its questions after the first hearing. It is beyond dispute that the information the Panel has requested Argentina to produce is pertinent for the resolution of this dispute. It is also beyond dispute that the requested information is available to the Argentine Government and could have been easily provided. In spite of all this, Argentina has decided to withhold the requested information without advancing any proper justification. Argentina's attitude is unprecedented and unjustifiable in light of the duties imposed by Article 13.1 DSU. In its communication of 6 November 2013, the Panel reminded Argentina of its authority to draw appropriate inferences from a Member's refusal to provide information. In view of Argentina's persistent and unmotivated refusal to respond to the Panel's repeated requests, the moment has come for the Panel to draw appropriate inferences with regard to the existence of the RTRs. 18 See European Union's second written submission, paras

20 73. Let me turn now to the very limited arguments submitted by Argentina in an attempt to discredit some of the evidence provided by the Complainants. 74. First, Argentina cites the statements made by certain economic operators about their willingness to invest in Argentina and resort to local suppliers to develop their business. 19 But this argument misses the point. 75. The EU has challenged the RTR requirements as an overarching measure whereby Argentina requires certain economic operators to undertake specific actions with a view to eliminating trade deficits and achieving import substitution. One of those commitments alludes to the requirement to make investments in Argentina as a condition to continue importing products. But, of course, this does not mean that each and every single decision by an operator to invest in Argentina has been imposed by the Argentine authorities. Nor has the EU ever made such allegation. Nevertheless, EU has provided ample evidence that the Argentine authorities have sought investment commitments from many economic operators and that they have linked them to import restrictions The fact that some of the statements submitted now by Argentina concern companies affected by RTR requirements does not prove the inexistence of such requirements. For instance, the EU has provided irrefutable evidence of an agreement signed between FIAT and the Argentine authorities, whereby FIAT agrees to even out its trade balance, make investments and increase local content. 21 This agreement was announced officially by the Ministry of Industry. 22 Argentina has at no point during these proceedings contested the existence of this agreement. Instead, Argentina contends that "major companies are motivated to invest and trust in Argentina ( ) for purely economic reasons". 23 If that was the case, however, one can only wonder why the Argentine authorities have put so much Argentina's second written submission, paras See European Union's first written submission, paras See European Union's first written submission, paras See Exhibit JE-88 ( See Argentina's second written submission, paras. 29 and

21 effort in the conclusion of agreements containing RTR requirements with FIAT and many other major companies. 77. Quite tellingly, even the press releases which Argentina has chosen to provide to the Panel speak openly about the trade restrictions that the EU is challenging in this case. For instance, in an interview to Toyota's CEO, 24 the journalist asked whether the company was worried that Argentina's import restrictions would render difficult the company's exports in view of the lack of inputs. Toyota's CEO replied that he was not worried because the trade balance of the company was the best in the sector. In this exchange, both the journalist and Toyota's CEO acknowledged implicitly, as an obvious fact, the existence of the restrictions in the form of trade balancing requirements complained against by the EU. 78. In any event, the statements cited by Argentina must be understood in the very peculiar context in which they were made. As evidenced by the Complainants, the business environment in Argentina is characterized by extreme uncertainty and unpredictability due to the large discretional powers enjoyed by certain authorities. 25 In view of this, it is only understandable if companies having signed agreements or having committed to undertake one or more of the actions referred to as RTR requirements, regard as necessary, as a precaution, to express themselves positively about their reasons to remain in Argentina when publicly asked about it. Otherwise, their situation could deteriorate. 79. Furthermore, it may be assumed that those operators which have stayed in Argentina despite the RTR requirements, have chosen to do so because it is still feasible for them to do business in Argentina. Many operators, however, have left Argentina and many other could leave if the restrictions remain in place Exhibit ARG-62 ("-Es verdad, pero las trabas locales a las importaciones complicaron las exportaciones por falta de insumos. Eso lo preocupa? -No. Porque si vemos nuestro balance comercial, creo que somos los mejores en el sector de autos. Las Toyota Hilux y SW4 son vehículos que gustan mucho, entonces hay muchos países que los quieren"). See e.g. European Union's first written submission, para. 74. See European Union's first written submission, para. 118 ("It would appear that several entities (such as Louis Vuitton, Polo Ralph Lauren, Cartier, Calvin Klein, Ermenegildo Zegna, Yves Saint Laurent or Escada) left Argentina because their lack of willingness to abide by the RTR requirements")

22 80. For these reasons, the statements provided by Argentina about the willingness of some economic operators to invest in Argentina and use local suppliers to develop their business do not prove the inexistence of the RTRs. For that Argentina should have rebutted the extensive evidence provided to the Panel by the Complainants. But Argentina has not even attempted to do so. 81. Second, Argentina argues that the statements made by several Argentine officials about the objectives pursued by Argentina "are similar to those usually issued by most leaders and officials in other countries". 27 However, even assuming that this were true, this criticism misses again the point. The EU does not take issue with those statements as such. The EU has referred to those statements in order to confirm that Argentina pursues certain trade policy objectives, namely the elimination of trade balance deficits and import substitution. The EU has further shown that it is in view of those objectives that Argentina imposes the RTR requirements as an overarching measure. In order to establish the existence of those requirements, the EU has relied on a variety of sources of evidence, such as those produced by the EU in this case, including, official documents, unofficial press releases, industry surveys, affidavits, etc. In this respect, the EU wonders what kind of evidence would be sufficient in Argentina's view to show the existence of an "unwritten" measure. 82. Finally, the EU strongly disagrees with Argentina's contention that any statement must be supported by the relevant business data or trade effects. 28 By now it is well established that, in order to prove a claim under Articles XI:1 or III:4 of the GATT 1994, it is not necessary to show any actual negative trade effects In sum, none of the allegations raised by Argentina calls into question the value of the evidence which Argentina seeks to discredit, in particular official and unofficial press releases. Furthermore, the EU reiterates that Argentina has not disputed the value of other evidence submitted in this case. Therefore, the EU requests the Panel to find that the RTR requirements exist as an overarching measure which is inconsistent with Articles XI:1 and/or III:4 of the GATT Argentina's second written submission, paras Argentina's second written submission, paras. 35, final sentence and 39. See EU's response to Question

23 4. CONCLUSION 84. To conclude, the European Union respectfully requests the Panel to find that the DJAI Requirements and the RTR requirements are inconsistent with the covered agreements and to recommend that Argentina brings itself into compliance with its obligations under the covered agreements as soon as possible. Many thanks. We look forward to your questions