Determinations Under Section 304 of the Trade Act of 1974: Argentine Specific Duties and Non-Tariff Barriers Affecting Textiles, Apparel, Footwear and Other Items

OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE

[Docket No. 301-108]

Determinations Under Section 304 of the Trade Act of 1974:

Argentine Specific Duties and Non-Tariff Barriers Affecting Textiles,

Apparel, Footwear and Other Items

agency: Office of the United States Trade Representative.

action: Notice of determinations, termination and monitoring.

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summary: The United States Trade Representative (USTR) has determined

that Argentina's specific duties on textiles and apparel and

statistical tax on almost all imports violate the General Agreement on

Tariffs and Trade (GATT) 1994. This determination is based on the

report of a dispute settlement panel convened under the auspices of the

World Trade Organization (WTO) at the request of the United States and

the report of the WTO Appellate Body reviewing the panel report. The

panel report and the Appellate Body report (the WTO reports) were

adopted by the WTO Distpute Settlement Body (DSB) on April 22, 1998.

The United States expects that Argentina will conform its specific

duties and statistical tax to meet its obligations under the GATT 1994,

consistent with the decisions of the panel and the Appellate Body. In

light of the foregoing, the USTR will not take action under section 301

of the Trade Act of 1974 (the Trade Act) at this time and has

terminated this investigation. The USTR will monitor Argentina's steps

to implement the WTO reports

[[Page 25540]]

and will take action under section 301(a) of the Trade Act if Argentina

fails to implement the rulings and recommendations of the WTO reports

within a reasonable period of time to be determined in accordance with

WTO rules.

effective date: April 3, 1998.

addresses: 600 17th Street, NW, Washington, DC 20508.

for further information contact: Kellie A. Meiman, Director for

Mercosur and the Southern Cone, (202) 395-5190, or Hal S. Shapiro,

Assistant General Counsel, (202) 395-3582.

supplementary information: Under the GATT 1994, Argentina agreed to a

maximum tariff rate of 35 percent of the value of imported textile,

apparel and footwear products. Argentina, through, has imposed minimum

specific duties--i.e., a minimum flat rate--applicable to hundreds of

categories of textiles, apparel and footwear that exceed 35 percent

when assessed on a wide variety of imports. The imposition of duties

greater than an agreed upon maximum rate is inconsistent with Article

II of the GATT 1994, which provides that imports shall be exempt from

all duties or charges of any kind imposed on or in connection with

importation in excess of those set forth in a WTO Member's tariff

binding.

Argentina also has imposed a statistical tax on almost all imports

that is calculated based on the value of the merchandise subject to it.

The tax formerly was 3 percent of the price of covered imports, but

Argentina reduced it to 0.5 percent in January 1998. Article VIII of

the GATT 1994 states that all fees and charges imposed by WTO members,

other than ordinary import or export duties, shall be limited to the

approximate cost of services rendered and shall not represent an

indirect protection to domestic products or a taxation of imports for

fiscal purposes. Because the statistical tax is levied as a percentage

of the value of imported items, and has no maximum charge, it is not

limited to the cost of any service rendered.

On January 22, 1997, the United States requested the establishment

of a WTO dispute settlement panel to examine whether Argentina's

measures are inconsistent with its obligations under the WTO

agreements. On November 25, 1997, the panel determined that Argentina's

specific duties on textiles and apparel violate GATT Article II and

that the statistical tax violates GATT Article VIII. The panel's

decision did not address Argentina's specific duties on footwear

because, shortly after the United States requested the establishment of

a panel, Argentina revoked these duties and imposed a safeguard measure

in their place. On March 27, 1998, the WTO Appellate Body affirmed the

panel's decision, though it disagreed with the panel's reasoning in

certain respects.

Pursuant to section 304(a)(1)(A) of the Trade Act (19 U.S.C.

2414(a)(1)(A)), the USTR is required to determine in this case whether

Argentina's specific duties and statistical tax violate, or otherwise

deny, benefits to which the United States is entitled under a trade

agreement. Where that determination is affirmative, the USTR must take

action under section 301 of the Trade Act (19 U.S.C. 2411), subject to

the specific direction of the President, if any, unless the USTR finds

that one of the circumstances set forth in section 301(a)(2)(B) (19

U.S.C. 2411(a)(2)(B)) exists.

Based on the results of the WTO dispute settlement proceedings, as

well as public comments received and appropriate consultations, the

USTR has determined that Argentina's specific duties on textile and

apparel imports violate Argentina's obligations under GATT 1994 Article

II and its statistical tax on almost all imports violates GATT Article

VIII.

The decision of the panel, as modified by the decision of the

Appellate Body, was adopted at the April 22, 1998 meeting of the DSB.

The USTR expects that Argentina will conform its specific duties and

statistical tax to meet its obligations under the GATT 1994, consistent

with the decisions of the panel and the Appellate Body, and will do

within a reasonable period of time to be determined in accordance with

WTO rules. Therefore, pursuant to section 301(a)(2)(B)(i) of the Trade

Act, the USTR is not taking action at this time under section 301(a) of

the Trade Act and has terminated this investigation. Pursuant to

section 306 of the Trade Act (19 U.S.C. 2416), the USTR will monitor

Argentina's implementation of the WTO reports and will take action

under section 301(a) if Argentina fails to implement the rulings and

recommendations of the WTO reports within a reasonable period of time

to be determined in accordance with WTO rules.

Irving A. Williamson,

Chairman, Section 301 Committee.

[FR Doc. 98-12195 Filed 5-7-98; 8:45 am]

BILLING CODE 3190-01-M