BRUSSELS/GENEVA (Reuters) - The European Union filed a suit against Argentina’s import restrictions with the World Trade Organization (WTO) on Friday, intensifying the disputes between the South American nation and its trading partners.
The EU’s executive Commission said the case followed measures by Argentina that include an import licensing regime and an obligation on companies to balance imports with exports.
“Argentina’s import restrictions violate international trade rules and must be removed,” EU Trade Commissioner Karel De Gucht said. “These measures are causing very real damage to EU companies - hurting jobs and our economy as a whole.”
The case raises pressure on Argentina, which is being criticized by a growing number of trade partners on an increasing number of issues.
At the WTO’s Trade and Goods Council on March 30, 19 WTO members - including the United States, Japan, South Korea and Australia - expressed concern about Argentina’s restrictive trade measures.
The suit was not a response to a decision by President Cristina Fernandez in April to seize control of Argentina’s biggest oil firm, YPF, a subsidiary of Spain’s Repsol (REP.MC). But De Gucht said that decision demonstrated the difficulties of dealing with Argentina.
“The trade and investment climate in Argentina has steadily become worse over the years, and the recent expropriation of Repsol by the Argentinian state is clear proof,” De Gucht told a news conference. “Argentina’s trade policy has become rooted in unfair trade practices.”
As a first step to fight the import procedures, the European Union is “requesting consultations”, or formally demanding negotiations to try to settle the matter. The WTO confirmed it had received the EU’s request.
If talking does not work, 60 days after the initial complaint the European Union can ask the WTO to set up a panel of three arbitrators to judge the case.
The process is likely to take about a year, but either side could appeal, which would then add another three months or more. The time scales can stretch in such cases and many take years to resolve.
Argentina’s measures are part of a campaign to support its economy and reindustrialize the country.
If the European Union wins, the WTO might tell Argentina to bring its regulations into line with WTO rules, but it would be up to the European Union to make sure Argentina complies. That could turn into a further trade case that could add another year or more to the dispute.
An Argentine trade official said the EU move was not a surprise, and it was awaiting more details.
“It was expected,” the official said. “For the time being we did not receive any formal notification.”
WTO members have the right to ask importers to apply for an import license, but they are supposed to grant one automatically. In Argentina, however, a lot of licenses labeled “automatic” suffer long delays, according to the Commission, which is not compatible with WTO rules.
EU exports to Argentina include cars, motorcycles, textiles, toys and footwear, and last year were worth 8.3 billion euros. In 2011, Argentina’s non-automatic import licenses affected EU exports worth about 500 million euros, the Commission said.
Argentina tightened its procedures in February 2012, with a new requirement for pre-approval of all imports. That means all EU exports to Argentina are now affected, a Commission official said, adding that in April the value of EU exports to Argentina was down four percent on the same month in 2011.
And three times as many containers have been stopped at Buenos Aires terminals since the latest measures were put in place, she said.
The Commission says importers of some goods are required to limit their imports, to balance them with exports or invest in production facilities in Argentina.
U.S. Ambassador to the WTO Michael Punke led criticism of Argentina’s practices at the March 30 WTO meeting, calling them “unbefitting” of a member of the WTO and the G20 group of nations. Argentina’s top trade official said at the time that Punke’s allegations had “no basis in objective facts”.
Editing by Rex Merrifield and Jon Hemming