In December 2012, Panama questioned eight measures imposed by Argentina at the WTO. The dispute concerns financial, taxation, foreign exchange, and registration measures (Diagram 1), and mainly affects services and service providers from “non-cooperative jurisdictions,” that is, those that do not exchange information with Argentina for the purposes of fiscal transparency.
The Panel established to examine the dispute recently released its report, in which it determined that these measures are incompatible with the non-discrimination commitments agreed to as part of the General Agreement on Trade in Services (GATS). On the one hand, the eight measures go against the most-favored-nation principle: no less favorable treatment is not to be granted to suppliers from non-cooperative jurisdictions in contrast to those from cooperative ones. Furthermore, some of the measures are also incompatible with the national treatment principle regarding the modes and services for which there are specific commitments, because foreign service suppliers (in this case, suppliers from non-cooperative jurisdictions) do not receive the same treatment as their Argentine counterparts.
Figure 1. Measures Implemented by Argentina and Questioned by Panama
If the report is adopted by the WTO’s Dispute Settlement Body (DSB) (which is very likely because it will only be rejected if all members agree to do so, Panama included), the DSB will recommend that Argentina bring its policies into conformity with the provisions. Regardless, both parties can appeal the decision (which Panama might do because some of its questions were rejected), whereupon the Appellate Body (AB) will ratify, modify, or revoke the recommendation. Should the AB ratify the incompatibility of the measures Argentina has imposed with its GATS commitments, Argentina must adjust its rules to the DSB’s recommendations in a timely fashion. If it does not, it will have to negotiate mutually acceptable compensation with Panama. If no agreement is reached, Panama could request authorization from the DSB to retaliate within the sector of the dispute or, if this is not possible, in a different sector within the same agreement or, in the absence of one, within a different arrangement.