Assignment:
Argentina - Measures Relating to Trade in Goods and Services
In what ways did this dispute show the WTO was a well-designed institution and in what ways did the dispute show there were problems with the WTO mechanisms which need to be resolved.
The World Trade Organization (WTO) is a global international organization that deals with trade rules between nations. As a trade agreement negotiator, it settles trade disputes between its members and supports the needs of developing countries (WTO, 2018).
Established in 1995, it took over essentially the same functions from the General Agreement on Tariffs and Trade (Gatt) which was established in 1948. Their main functions consists of sorting out any issues or complications faced between countries and help settle their trade disagreements which would facilitate export and import of goods and services for businesses (WTO, 2018).
Their main goal is to ensure that trade flows as smoothly, predictably and freely as possible. Located in Geneva, Switzerland, it has 164 member countries as of 29 July 2016, this intergovernmental organisation deals with different cases from all around the world, one of which will be discussed in this paper, the dispute between Panama and Argentina in regards to measures related to trade on goods and services.
In order to demonstrate how well designed the WTO is as an institution, we will determine how effective it was at resolving the issues between Panama and Argentina, as well as the functioning of their mechanisms, whether issues arise from them or not. Thus, this paper will examine the theoretical frameworks of the WTO in reference to the dispute between Panama and Argentina.
On the 12th of December 2012, Panama appealed for consultations with Argentina in regards to procedures enforced by Argentina that that affect trade of goods and services. Panama was not the only country to complain over restrictions on trade of goods and services as other countries such as Japan, Mexico, the United States and the European Union were brought up disputes as well (WTO 2018).
This dispute was in reference to eight financial, taxation, foreign exchange and registration measures enforced by argentina (WTO 2018). The first measure is withholding tax on payments of interest or remuneration, the second is presumption of unjustified increase in wealth, the third is transaction valuation based on transfer prices, the fourth is payment received rule for the allocation of expenditure, the fifth is requirements relating to reinsurance services, the sixth is requirements for access to the Argentine capital market, the seventh is requirements for the registration of branches, and finally the eight, foreign exchange authorization requirement (Wto.org, 2018).
In reference to the General Agreement on Trades and Services (GATS) the above enforcements have inconsistencies with the requirements of Article II and Article XVII of the GATS. The first measure was considered inconsistent because " Argentina accords to services and service suppliers of non cooperative jurisdication less favurable treatment than that is accords to like services and service suppliers of cooperative jurisdictions less favourable treatment that that it accords to like services and service suppliers of cooperative jurisdictins" (WTO, 2018)
On the other hand, the second, third and fourth measures do not differ with the General Agreement on Trade and Services Article XVII for the reason that "argentina does not modify the conditions of competition in favour of argentine services or service suppliers"(WTO, 2018) in comparison to similar to similar services or service suppliers from jurisdictions that use the pretext of fiscal transparency to avoid cooperation, in the applicable services and means of supply in which Argentina has set up particular allegiance.( WTO, 2018)
In regards to the fifth measure, requirements associated to reinsurance services, the panel rejected the claims subject to Article XVI:2 as it is not shielded by the provision; and Article XVI:1 of the GATS for the reason that Panama was not succesful in presenting sufficient proof to make a "prima facie case"( WTO,2018)