Argentina — Textiles and Apparel1

Appellate Body report, Argentina — Measures Affecting Imports of

1

Footwear, Textiles, Apparel and other Items – Complaint by United

States, WT/DS56/AB/R, adopted 27/03/1998

Facts: Argentina appealed the panel’s findings about the following

things: first, second.US and the third parties present their argument. The
appellate body upheld all of the panel’s original findings and
conclusions.

Issue: There were five issues in the case: first, whether Argentina’s
application of the DIEM violated the Article II of GATT 1994. Second,
whether the panel had made a mistake when concluding that Argentina’s
usage of the DIEM means that Argentina had violated the Article II of
the GATT 1994 “in all cases”. Third, Whether by ignoring Argentina’s
duties to IMF, the panel had let the Article VIII of GATT 1994 to be
wrongly applied to the 3% Ad valorem statistical tax. Fourth, whether
the Article 11 of DSU had been violated by the panel.

Law: Article II of the GATT 1994; Article VIII of the GATT 1994;
Agreement Between the IMF and the WTO; The Declaration on the
Relationship of the World Trade Organization with the International
Monetary Fund; The Declaration on the Contribution of the World Trade
Organization to Achieving Greater Coherence in Global Economic
Policymaking; Article 11 of the DSU.

Holding: The Appellate Body had made five conclusions: first, yes,
Argentina had violated the Article II of GATT 1994 through the
application of the DIEM. Second, no, the panel never made the
conclusion the conclusion that Argentina had violated the Article II of
GATT 1994 “ in all cases”. Third, no, the panel’s application of Article
VIII of GATT 1994 to the 3% Ad valorem statistical tax is correct.
Fourth, no, the panel did not violate the Article 11 of DSU.

Reasoning: The Appelate Body’s conlusions could be explained as

followed: First, Argentina application of the DIEM allowed them to
collect and ad valorem higher 35%, which was what agreed in their
schedule, the LXIV that went into effect in 1/1/1995. This is because in
the event that the import price is lower than the representative
international price, 35% of the DIEM or less than 35% of the DIEM
could still be bigger than the 35% ad valorem duties. For example, if the
import price is 100 dollars and the representative international price is
150 dollars , the 35% ad valorem duties would be 35 dollars and 25 % of
the DIEM would be 37.5 dollars. This combining with the fact that the
Argentina customs was instructed to choose the duties that was higher
means that there was definitely cases when Argentina is applying tariff
that is higher than 35% ad valorem. Second, the Panel stated that “... the
very nature of the minimum specific duty system imposed in Argentina
on the items at issue will inevitably lead, in certain instances, to the
imposition of duties above 35 per cent ad valorem.” . This reference to
"in certain instances" indicates that the Panel did not conclude that there
was infringement "in all cases". Third, The Agreement Between the IMF
and the WTO, however, does not modify, add to or diminish the rights
and obligations of Members under the WTO Agreement, nor does it
modify individual States' commitmentsto the IMF. It does not provide
any substantive rules concerning the resolution of possible conflicts
between obligations of a Member under the WTO Agreement and
obligations under the Articles of Agreement of the IMF or any
agreement with the IMF. However, paragraph 10 of the Agreement
Between the IMF and the WTO contains a direction to the staff of the
IMF and the WTO Secretariat to consult on "issues of possible
inconsistency between measures under discussion". Fourth, regarding
the fact that the panel admitted the US evidence late and allowing
Argentina to counter it. Article 11 of the DSU does not establish time
limits for the submission of evidence to a panel. Article 12.1 of the DSU
directs a panel to follow the Working Procedures set out in Appendix 3
of the DSU, but at the same time authorizes a panel to do otherwise after
consulting the parties to the dispute. The Working Procedures in
Appendix 3 also do not establish precise deadlines for the 66See Panel
Report, paras. 3.179 and 6.55. 67Argentina's appellant's submission,
paras. 107-108. WT/DS56/AB/R Page 29 presentation of evidence by a
party to the dispute. 68 It is true that the Working Procedures "do not
prohibit" submission of additional evidence after the first substantive
meeting of a panel with the parties. Regarding the consulting IMF issue.
The only provision of the WTO Agreement that requires consultations
with the IMF is Article XV:2 of the GATT 1994. This provision requires
the WTO to consult with the IMF when dealing with "problems
concerning monetary reserves, balances of payments or foreign
exchange arrangements". 73 However, this case does not relate to these
matters. Article 13.1 of the DSU gives a panel "... the right to seek
information and technical advice from any individual or body which it
deems appropriate." This is a grant of discretionary authority: a panel is
not duty-bound to seek information in each and every case or to consult
particular experts under this provision.

REFFERENCE:
Appellate Body report, Argentina — Measures Affecting Imports of
Footwear, Textiles, Apparel and other Items – Complaint by United
States, WT/DS56/AB/R, adopted 27/03/1998