(a)the minimum specific duties imposed by Argentina on textiles and apparel are inconsistent with the requirements of Article II of GATT;
(b)the statistical tax of three per cent ad valorem imposed by Argentina on imports is inconsistent with the requirements of Article VIII of GATT.10
The Panel made the following recommendation:
The Panel recommends that the Dispute Settlement Body request Argentina to bring its measures into conformity with its obligations under the WTO Agreement.11
(a)Whether the application by a Member of a type of duty other than the type provided for in that Member's Schedule is, in itself, inconsistent with Article II of the GATT 1994;
(b)Whether the Panel erred in concluding that Argentina had acted inconsistently with its obligations under Article II of the GATT 1994 "in all cases" in which Argentina applied the DIEM;
(c)Whether the Panel erred in its application of Article VIII of the GATT 1994 to the 3 per cent ad valorem statistical tax by not taking into account commitments that Argentina states it made to the IMF; and
(d)Whether the Panel acted inconsistently with Article 11 of the DSU in: (i) admitting certain evidence submitted by the United States two days prior to the second substantive meeting of the Panel with the parties, and granting Argentina only two weeks to respond; and (ii) not seeking information from, and consulting with, the IMF so as to obtain its opinion on specific aspects of the matter concerning the statistical tax imposed by Argentina.
(a) Each Member shall accord to the commerce of the other Members treatment no less favourable than that provided for in the appropriate Part of the appropriate Schedule annexed to this Agreement.
(b) The products described in Part I of the Schedule relating to any Member, which are the products of territories of other Members, shall, on their importation into the territory to which the Schedule relates, and subject to the terms, conditions or qualifications set forth in that Schedule, be exempt from ordinary customs duties in excess of those set forth and provided therein.
6.31 We note that the past GATT practice is clear: a situation whereby a contracting party applies one type of duties while its Schedule refers to bindings of another type of duties constitutes a violation of Article II of GATT, without any obligation for the complaining party to submit further evidence that such variance leads to an effective breach of bindings.... As a guarantee for predictability and to ensure the full respect of the negotiations under Article II, GATT practice has generally required that once a Member has indicated the type(s) of duties in specifying its bound rate, it must apply such type(s) of duties. Accordingly, faced with such a variance in the type [of] duties applied by Argentina from that reflected in its Schedule, we consider that we do not have to examine the effects of that variance on possible future imports. Indeed, such a variance undermines the stability and predictability of Members' Schedules.
6.32 We, therefore, find that Argentina, in using a system of specific minimum tariffs although it has bound its tariffs at ad valorem rates only, is violating the provisions of Article II of GATT and that the United States does not have to provide further evidence that the resultant duties exceed the bound tariff rate. Such a variance between Argentina’s Schedule and its applied tariffs constitutes a less favourable treatment to the commerce of the other Members than that provided for in Argentina’s Schedule, contrary to the provisions of Article II of GATT.21
In the light of the foregoing, we find that the United States has provided sufficient evidence that Argentina has effectively imposed duties on imports of textiles and apparel above 35 per cent ad valorem, that indeed the total amount of duties collected annually on these items leads to the conclusion that duties above 35 per cent ad valorem on the average transaction value have been imposed on the same items, and that in any case, as we found in paragraph 6.47 above, 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.41
As Argentina did not provide any affirmative evidence to the contrary, we consider that this US evidence provides reliable information that, on a tariff line basis, duties above the bound rate of 35 per cent ad valorem have been imposed. We agree that, if an average calculation shows duties above 35 per cent, this is evidence of a sufficient number of transactions which were subject to duties imposed above the 35 per cent ad valorem. The United States was able to demonstrate that Argentina had imposed and collected duties on the effective price of the import transactions at levels well above the bound rate of 35 per cent ad valorem.42
We find no exception in the WTO Agreement that would excuse Argentina's compliance with the requirements of Article VIII of GATT. Moreover, we see nothing in the Agreement Between the IMF and the WTO, the Declaration on the Relationship of the World Trade Organization with the International Monetary Fund and the Declaration on the Contribution of the World Trade Organization to Achieving Greater Coherence in Global Economic Policymaking that suggests that we should interpret Article VIII as argued by Argentina.58
We see no reason to address this wider issue since, in the situation before the Panel, there is no evidence that Argentina was requested by the International Monetary Fund ("IMF") to impose an import tax that would violate the provisions of the WTO Agreement. Moreover, we see nothing in the Agreement Between the IMF and the WTO, the Declaration on the Relationship of the World Trade Organization with the International Monetary Fund and the Declaration on the Contribution of the World Trade Organization to Achieving Greater Coherence in Global Economic Policymaking that suggests that we should change our approach.59 (emphasis added)
With a view to achieving greater coherence in global economic policy-making, the WTO shall cooperate, as appropriate, with the International Monetary Fund and with the International Bank for Reconstruction and Development and its affiliated agencies. (emphasis added)
The function of panels is to assist the DSB in discharging its responsibilities under this Understanding and the covered agreements. Accordingly, a panel should make an objective assessment of the matter before it, including an objective assessment of the facts of the case and the applicability of and conformity with the relevant covered agreements, and make such other findings as will assist the DSB in making the recommendations or in giving the rulings provided for in the covered agreements....
We note that the rules of procedures of panels do not prohibit the practice of submitting additional evidence after the first hearing of the Panel. Until the WTO Members agree on different and more specific rules on this regard, our main concern is to ensure that "due process" is respected and that all parties to a dispute are given all the opportunities to defend their position to the fullest extent possible. In light of the difficulties faced by Argentina in responding to this evidence on such a short notice, we decided to accept this additional evidence on the understanding that Argentina would have a period of two weeks to provide further comments on these additional invoices and customs documents. Argentina informed the Panel that it would not be submitting any further comment.
(a) modifies the Panel's findings in paragraphs 6.31 and 6.32 of the Panel Report by concluding that the application of a type of duty different from the type provided for in a Member's Schedule is inconsistent with Article II:1(b), first sentence, of the GATT 1994 to the extent that it results in ordinary customs duties being levied in excess of those provided for in that Member's Schedule. In this case, Argentina has acted inconsistently with its obligations under Article II:1(b), first sentence, of the GATT 1994, because the DIEM regime, by its structure and design, results, with respect to a certain range of import prices in any relevant tariff category to which it applies, in the levying of customs duties in excess of the bound rate of 35 per cent ad valorem in Argentina's Schedule;
(b)concludes that the Panel did not err in finding that Argentina had acted inconsistently with its obligations under Article II of the GATT 1994 "in all cases" in which Argentina applied the DIEM, and, therefore, upholds the findings of the Panel in paragraph 6.65 of the Panel Report;
(c)upholds the findings of the Panel in paragraphs 6.79 and 6.80 of the Panel Report; and
(d)concludes that the Panel did not violate Article 11 of the DSU in: (i) admitting certain evidence submitted by the United States two days prior to the second substantive meeting of the Panel with the parties, and granting Argentina two weeks to respond; and (ii) not seeking information from, and consulting with, the IMF so as to obtain its opinion on specific aspects of the matter concerning the statistical tax imposed by Argentina.
Signed in the original at Geneva this 11th day of March 1998 by:
Florentino Feliciano Mitsuo Matsushita
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