Decisions of the Appellate Body of the World Trade Organization Argentina--Measures Affecting Imports of Footwear, Textiles, Apparel and Other Items 4. Analysis of the Appellate Body Report a. Article II of GATT b. Article VIII of GATT and IMF Obligations c. Evidentiary Issues 4. Analysis of the Appellate Body Report a. Article II of GATT Argentina requested that the Appellate Body declare that the Panel erred in concluding that Argentina had acted inconsistently with article II "in all cases" in which Argentina applied its specific import duties program. Argentina argued that the Panel's jurisprudential error was in reading into the GATT a greater obligation than that specifically set forth: article II simply requires that Argentina provide treatment "no less favourable than" that provided in its bindings. This is an important issue for any lawyer dealing with WTO obligations: are they to be read expansively and teleologically, or is a formal, positivist reading, construing derogations of sovereignty narrowly, required? The implication for this case is that nothing in article II expressly prohibits specific, as opposed to ad valorem, duties. Therefore, the Panel had no positive basis to find that the Argentine specific import duties program is illegal in the abstract, but must consider particular cases to determine whether the duty charged was in fact greater than that bound. Of course, the Argentine position also requires that variability of the ad valorem effective tariff be accepted. Neither the Panel nor the Appellate Body addressed whether this variability would violate the MFN (most favored nation) obligation under article I of GATT. Recall that the Panel found that the specific import duties program violated article II in reliance on what it referred to as "past GATT practice." The Appellate Body found this to be error, where the Panel did not consider the text of the actual GATT obligations, and where the Panel relied on working party reports that did not arise in dispute resolution and an unadopted panel report.8 Having rejected the Panel's interpretation, the Appellate Body constructed its own interpretation. The Appellate Body adopted a formalist, positivist stance, searching for any restriction beyond the language of article II, which seems only to set an upper limit by reference to tariff bindings: the language is "no less favourable." The Appellate Body concluded that Argentina's specific import duties program violates article II only "to the extent that it results in ordinary customs duties being levied in excess of those provided for in that Member's Schedule."9 This sovereignty-preserving approach is consistent with the principle of in dubio mitius relied upon in the Beef Hormones decision.10 The Panel had accepted statistical evidence from the U.S. regarding the relationship between the average import prices to the total amount of duties collected as providing reliable evidence that duties higher than the bound rate had been collected.11 However, the Panel referred to these excessive duties being applied only "in certain cases." Therefore, the Appellate Body found that the Panel did not err as claimed by Argentina, because the Panel had not taken the position that Argentina claimed it had. The Appellate Body agreed with the Panel that for a certain range of import prices within each relevant tariff category, there would be expected a violation of article II. The Appellate Body therefore found no reason to reverse the Panel decision in this regard. This argument also involves an important burden of proof issue. Once the U.S. made a "prima facie" case, the U.S. argues, it was for Argentina to rebut that case. The Appellate Body seemed to leave intact the allocation of burden of proof by the Panel: requiring the U.S. to advance a prima facie case, then requiring the respondent to rebut that case. b. Article VIII of GATT and IMF Obligations Argentina did not appeal the Panel's finding that its 3% statistical tax violated article VIII of GATT, but argued that the Panel had failed adequately to take account of Argentina's ostensible IMF obligation to impose the statistical tax. The obligation is argued by Argentina to be contained in its "Memorandum on Economic Policy" which it negotiated with the IMF, and which is referred to by Argentina as a "memorandum of understanding" between it and the IMF. Argentina further argued that the Panel had erred by failing to consider subsequent "legislative" developments in the form of the Agreement Between the International Monetary Fund and the World Trade Organization based on the Declaration on the Contribution of the World Trade Organization to Achieving Greater Coherence in Global Economic Policymaking. Argentina argued that this examination is not intended to find a formal exception, but to form a basis for interpreting the WTO obligations in their broader context. This is an interesting example of an alleged conflict between a WTO legal obligation and another ostensible international legal obligation. However, the Panel had found no evidence that Argentina had been requested or was under a legally binding obligation to the IMF to impose the 3% statistical tax. The Appellate Body agreed that Argentina had shown neither an "irreconcilable conflict" between its WTO obligations and its IMF obligations, nor that the IMF obligations were legally binding. Importantly, the Appellate Body added that "[w]e also agree with the Panel that there is nothing in the Agreement Between the IMF and the WTO, the Declaration on the Relationship of the WTO with the IMF or the Declaration on Coherence which justifies a conclusion that a Member's commitments to the IMF shall prevail over its obligations under Article VIII of the GATT 1994."12 The Appellate Body continued as follows: The Agreement Between the IMF and the WTO, however, does not modify, add to or diminish the rights and obligations of Members under the WTO Agreement, nor does it modify individual States' commitments to the IMF. It does not provide any substantive rules concerning the resolution of possible conflicts between obligations of a Member under the WTO Agreement and obligations under the Articles of Agreement of the IMF or any agreement with the IMF.13 Without an explicit legal statement in WTO law, the Appellate Body is, at least in this case, unwilling to take account of potentially conflicting non-WTO international legal obligations. Perhaps if the conflicting non-WTO obligation were a multilateral treaty, the conclusion could change. c. Evidentiary Issues Finally, Argentina objected to the Panel's decision to accept evidence from the U.S. two days before the second meeting of the Panel, and 10 days after the last date for submitting rebuttals. Argentina described this alleged error as a failure of due process and a violation of article 11 of the Dispute Settlement Understanding ("DSU"). Article 11 of the DSU provides that the Panel must make "an objective assessment of the facts of the case and the applicability of and conformity with the relevant covered agreements." The Appellate Body pointed out that while the DSU itself does not provide any specific timetable for the submission of evidence, the Working Procedures appended thereto contemplate that evidence would be submitted before the first substantive meeting of the Panel. These are not, however, in the Appellate Body's words, "hard and fast" rules. The Appellate Body found that the Panel's actions an acceptable exercise of discretion, considering that the Panel gave Argentina two weeks to evaluate the new evidence and that Argentina had no comment on the new evidence. The Appellate Body also approved the Panel's exercise of discretion in declining to consult with the IMF regarding the nature of Argentina's agreement with the IMF. 8 Appellate Body Report, para. 43, citing Japan--Taxes on Alcoholic Beverages, adopted 1 November 1996, WT/DS8/AB/R, WT/DS10/AB/R, WT/DS11/AB/R, pp. 14-15. 9 Appellate Body Report, para. 55. 10 European Communities--Measures Affecting Meat and Meat Products, adopted 13 February 1998, WT/DS26/AB/R, WT/DS48/AB/R, para. 165. 11 Panel Report, para. 6.51. 12 Appellate Body Report, para. 70. 13 Appellate Body Report, para. 72.
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