UPDATE 2-US, Japan follow EU, slam Argentine "protectionism" at WTO

Tue Aug 21, 2012 11:54am EDT

* US, Japan, EU accuse Argentina of illegally blocking imports

* USTR says "protectionist measures" affect billions of dollars of U.S. exports

* WTO disputes total 18 so far in 2012, more than double 2011

* Argentina has 60 days to settle dispute or face adjudication at WTO

By Tom Miles

GENEVA, Aug 21 (Reuters) - The United States and Japan launched complaints against Argentina at the World Trade Organization (WTO) on Tuesday, alleging that its import licensing rules discriminate against foreign goods.

"Argentina's protectionist measures adversely affect a broad segment of U.S. industry, which exports billions of dollars in goods each year to Argentina. These exports support jobs and businesses here at home," U.S. Trade Representative Ron Kirk said in an emailed statement.

"The Obama Administration insists that all of our trading partners play by the rules and uphold their WTO obligations so that American workers receive the benefits negotiated in our agreements."

The two complaints follow similar litigation brought by the European Union in May.

More than 20 WTO members have voiced criticisms of Argentina's rules, contributing to a sharp worsening of its international trade relationships since President Cristina Fernandez decided to seize control of oil firm YPF from its parent, Spain's Repsol, in April.

The U.S. and Japanese complaints both allege that Argentina's rules are unjustified by the WTO rulebook.

The European Union had made the same point, adding that the licensing rules "instead aimed at advancing the Argentinean Government's stated policies of re-industrialization, import substitution and elimination of trade balance deficits".

WTO members have the right to ask importers to apply for an import licence, but they are supposed to grant them automatically. In Argentina, however, many licences labelled "automatic" suffer long delays, according to the European Commission.

EU and U.S. officials say Argentina's rules have effectively restricted all imports since its procedures were tightened in February 2012.

Fernandez won a landslide re-election last year on promises of increasing the government's role in the economy, despite complaints from investors that her policies were protectionist and made it difficult to import products necessary to keep local businesses running.

Latin America's No. 3 economy relies heavily on a robust trade surplus, which is used to help fatten central bank foreign reserves tapped to pay government debt. The government has also moved to curb imports to protect local jobs.

It has also been criticised for a policy of "trade balancing", which forces an importer to guarantee an equal value of exports, saddling a car producer, for example, with a duty to ship a large amount of rice out of the country in return for a consignment of vehicle components.

"Argentina may claim that companies enter into these arrangements voluntarily, but many of the (WTO) members supporting this statement share concerns that it may be operating otherwise," U.S. Ambassador to the WTO Michael Punke said in March, in a statement backed by 13 WTO members.

DISPUTES ON THE RISE

Fernandez hit back at the earlier EU complaint by saying EU import duties sometimes amounted to more than the value of the product. Argentina has also accused developed countries of abusing trade rules to try to keep developing countries down.

"We have a policy that protects our work, our businesses, our economy," Fernandez said in May. "It's as if this is considered legal protectionism when it is done by developed countries and populist protectionism when it is done by emerging countries."

Notification of the two new complaints comes a day after Argentina hit the EU with a separate WTO complaint, alleging discriminatory treatment by Spain against Argentine shipments of biodiesel.

These bring the number of trade disputes launched at the WTO so far this year to 18, already more than double the eight that were filed last year.

Argentina is the second nation to be hit by a triple complaint by Japan, the EU and the United States this year. On March 13, the three joined forces to hit China with a trade suit over exports of rare earths and other metals.

Argentina now has 60 days to satisfy Japan and the United States that its rules comply with WTO rules or face a possible escalation of the dispute. Afterwards, the complainants can ask the WTO to adjudicate, which could end in Argentina being forced to repeal any laws found to contravene WTO rules.

The European Union has not said whether it will ask the WTO to set up an adjudication panel on its dispute with Argentina.

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