[Federal Register: May 8, 1998 (Volume 63, Number 89)]
[Notices]               
[Page 25539-25540]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr08my98-104]

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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