1 CASE NAME AND CITATION Argentina — Textiles and Apparel1 Complainant: United States Respondent: Argentina Institution: WTO (World Trade Organization) FACTS Argentina appeals certain issues in the Panel Report.2 The Panel was formed to deal with the United States' claim that Argentina imposed specific duties on various textiles, apparel, or footwear articles that were found to exceed the binding 35 percent ad valorem of the valuation outlined in the Agreement Schedule LXIV of Argentina and impose a statistical tax of percent ad valorem on imports from all sources other than MERCOSUR countries.3 On November 25, 1997, the Panel determined that Argentina's safeguard measures were incompatible with the requirements of GATT Articles II and VIII.4 On February 1998, Argentina filed an appellant's submission.5 ISSUES Whether Argentina applies DIEM instead of the value-added taxes outlined in Argentina’s Schedule violates Article II: 1(b) GATT 1994; Whether Argentina applied the DIEM is inconsistent with the GATT 1994 "in all cases"; Whether the Panel erred in not taking into account Argentina's commitments to the IMF and apply Article VIII of the GATT 1994 to the percent ad valorem statistical tax; Whether the Panel's failure to consult the IMF violates Article 11 of the DSU LAW Article II:1(a), Article II:1(b), Article VIII:1(a), Article XV:2 of the GATT 1994; Articles 11 and 13 of the DSU HOLDINGS Argentina - Measures Affecting Imports of Footwear, Textiles, Apparel and Other Items, WT/DS56/AB/R, adopted 27/03/1998 1WT/DS56/R, 25 November 1997 Report of the Appellate Body - 27 Mar 1998 Panel Report, para 7.1 Pursuant to Rule 21(1) of the Working Procedures for Appellate Review Argentina's imposition of a tax other than that mentioned in the Argentina Schedule is in violation Article II:1(b) of the GATT 1994;6 Argentina has breached Article II of GATT 1994 "in all cases" in which the DIEM was used;7 Argentina's three percent ad valorem statistical tax, in its current form, is in breach of Article VIII:1(a) of GATT;8 Article 11 of the DSU was not violated by the Panel.9 REASONING Regarding Argentina's imposition of a tax other than that mentioned in the Argentina Schedule is in violation Article II:1(b) of the GATT 1994: GATT practice requires each member to apply signed taxes 10 According to the structure and design of the DIEM, it is shown that the specific tax rate will vary with the price of the product For example, a high product price has a low tax, and a low product price has a high tax rate Applying 35 percent or a lower rate of 35 percent, still has the potential to generate 35 percent greater DIEM equivalent ad valorem Therefore, Argentina's application of a tax other than that reflected in its schedule is contrary to the provisions of Article II of GATT This constitutes a less favorable treatment to the other Members because it results in taxation over that specified in Argentina’'s schedule Regarding Argentina has breached Article II of GATT 1994 "in all cases" in which the DIEM was used: The United States presented evidence that Argentina had imposed and collected taxes on the actual prices of import transactions at a much higher rate than the binding rate of 35 percent ad valorem And Argentina has not produced any conclusive evidence to the contrary There is enough reason to conclude that the structure and design of the specific minimum tax system adopted in Argentina will inevitably lead to the imposition of a tax of more than 35 percent ad valorem Regarding Argentina's three percent ad valorem statistical tax, in its current form, is in breach of Article VIII:1(a) of GATT: Appellate Body Report, para 87.a Appellate Body Report, para 87.b Panel Report, para 6.80 Appellate Body Report, para 87.d 10 Appellate Body Report, para 40 Argentina has failed to demonstrate that the 3% statistical tax is mandatory because of its agreement with the IMF There is no agreement between the WTO and the IMF that IMF membership takes precedence in Article VIII of the GATT 1994 and the statement of consistency in global economic policymaking There is ,therefore, no exception to justify Argentina's failure to fulfill Article VIII of the GATT 1994 obligations Regarding Article 11 of the DSU was not violated by the Panel: Matters requiring the WTO to consult with the IMF are provided for in Article XV:2 of the GATT 1994.11 However, this case is not one of the issues in these matters According to Article 13 of the DSU, the Panel has the authority to obtain information from whatever source it deems relevant and to determine whether or not to obtain information from experts.12 Furthermore, under paragraph of the Agreement Between the IMF and the WTO, the IMF is not permitted to present its opinions to the WTO dispute settlement body.13 This shows that the Panel did not violate Articles 11 and 13 of the DSU by proceeding without contacting the IMF 11 Appellate Body Report, para 84 12 Appellate Body Report, para 84 13 Appellate Body Report, para 85 REFERENCES General Agreement on Tariffs and Trade 1994 World Trade Organization, (1999), Argentina — Measures Affecting Imports of Footwear, Textiles, Apparel and other Items, ... on Tariffs and Trade 1994 World Trade Organization, (1999), Argentina — Measures Affecting Imports of Footwear, Textiles, Apparel and other Items, ... actual prices of import transactions at a much higher rate than the binding rate of 35 percent ad valorem And Argentina has not produced any conclusive evidence to the contrary There is enough... Appellate Body Report, para 87.d 10 Appellate Body Report, para 40 Argentina has failed to demonstrate that the 3% statistical tax is mandatory because of its agreement with the IMF There is no