PublicationsArgentina – Measures Affecting the Export of Bovine Hides and the Import of Finished Leather

July 27, 20200

Bovine Hides are a by-product of meat production. Raw hides constitute the most important feed-in in the process of leather production. Argentina was known to be one of the world’s greatest exporters of raw hides, which was then used by the tanners in various countries including the European Communities. This reduced, when in May 1972, the Argentinian government prohibited bovine exports with the aim of “protecting the adequate supplies of bovine hides to the tanning industry”. In 1992, the government finally lifted the export ban, but imposed a 15% duty on the export of bovine hides, in addition to the existing export duties.

While the additional 15% was later abolished, representatives of the Argentinian Chamber for the Tanning Industry (CICA) and the Association of Industrial Producers of Leather, Leather Manufactures and Related Products (ADICMA) were allowed to be present when concerned goods were presented for import under Resolution 2235. The presence of the ADICMA has been majorly questioned by the European Countries.

Argentina also had two kinds of taxes in place: The ‘IVA’, which is like a general VAT applicable to goods sold within the country or those imported from abroad. The second kind of tax is the ‘IG’ which is an income tax applicable to the profits derived from domestic and imported products. It is a tax on annual profits. Resolution 3431 provided that when goods are imported into Argentina, an advance payment must be made to the customs authority, of “an additional amount, besides the ordinary IVA due on that import transaction”. A similar provision was made in Resolution 3543 for IG payments. It is important to note that the prepayment as well as the additional amount to be paid applied only to imports and not for internal sale transactions.

Owing to the aforementioned factual history, the European Communities claimed before the panel that “the export prohibition maintained by Argentina violated Articles XI:1 and X:3 (a) of GATT 1994 and that the additional VAT and the advance turnover tax were not in conformity with Article III:2 of GATT 1994.”


It was alleged by the European Community that the Argentinian government allows for the presence of the ADICMA representatives during the export process of bovine hides to ensure that the tariff heading corresponded with the description of the goods and correct duties are being imposed. They claimed this as violative of Article XI:1 which disallows export restrictions.[i] The panel was posed with three main questions:

  • Will the mere presence of the ADICMA personnel cause an export restriction?
  • If not presence, then will the fact that ADICMA will have access to confidential information be an export restriction?
  • Will the presence of the cartel effectuate an export restriction by ADICMA?

The European Communities claimed that trade statistics show extremely low exports over the years. Argentina argued that low exports could be due to the price premium that the frigoríficos could obtain by exporting even after considering export duties. Further, ADICMA representatives only have supervisory powers and they do not have any right to stop or delay shipments. In case of a dispute between the ADICMA personnel and the Customs officer, the customs officer’s say will be final and binding. It was also observed that the cost of exporting is higher than selling domestically, so producers may have preferred reducing exports.

Since European Communities are the complaining party, the burden of proof is on them. The panel set forth their standard of proof and said that “they cannot consistently draw inferences from the circumstantial pieces of evidence placed before them unless the evidence clearly creates a link with claims made by the European Communities”. The Panel rejects accepting weak circumstantial evidence as conclusive proof against Argentina and established that the European Communities had to first demonstrate that there was a private restrictive practice. Secondly, they must give evidence to show that this practice was due to the direct involvement of the ADICMA personnel.

Thirdly, they must display the presence an export restriction and fourthly, that there was a direct link between the restrictive practice and the export restriction. Only then it would be considered strong evidence which cancels the possibility of other alternatives.

The apprehension that the exporters will feel intimidated when the ADICMA has access to confidential information was disregarded, as the information being argued as “confidential” is publicly available. The ADICMA was not exposed to any information that they otherwise did not have access to. Moreover, there was no evidence indicating the Argentineangovernment’s involvement in cartels, if any. Thus, the Panel held that Resolution 2235 i.e. the presence of ADICMA personnel was not effectuating export restrictions. Therefore, allegations against Argentina for the violation of Article XI:1 were not upheld.

We believe that the role of the ADICMA was merely supervisory for the benefit of export and not in restraint. They were quite subordinate to the Customs officer and the circumstantial evidence produced against them were rather weak. The Panel’s rejection of them creating an export restriction was justified and it would have been erroneous for them to decide otherwise.


Article X of the GATT, 1994 deals with the publication and administration of trade regulations. The Panel began by noting that when discussing the violation of any aspect of this article, the focus should not be on what constitutes a violation of the ‘substantive provisions’ of the agreement, but rather the administration of the customs laws of Argentina. This, however, did not disallow challenging the validity of a custom measure, provided that the measure is administrative. It was revealed that the resolution did not establish any substantive rules for the enforcement of export laws. Rather, it provided merely for the presence of ADICMA representatives, assisting the custom officials in enforcing the substantial rules.

Clause 1 of Article X provides that the article will apply to laws of general application.[ii] Argentina was trying to claim that the present resolution would not come under the ambit of the Article as the presence of ADICMArepresentatives was only for particular shipments, thus making it a ‘shipment specific’ regulation. The panel however held that since the representatives had the right to be present for inspection of all shipments, this measure was of general application and would come under the ambit of Article X(1).

Clause 3 of the Article provides for the uniform, impartial and reasonable application of all laws, regulations and rules.[iii] The panel rejected the European Communities’ argument and declared that for the resolution to be uniform, all products don’t need to be treated equally. They held that all hides exports were uniformly subject to the possibility of the presence of the ADICMA representatives. The panel, however, felt that the resolution provided for a process that was neither reasonable nor impartial. They said that the presence of the ADICMA representatives created the possibility of confidential business information being revealed to them as the identity of the exporter was revealed, which was further complicated by their right to choose to be present for the customs process. This according to them, would lead to an unreasonable administration of the laws and regulations. Finally, they held that when there is a provision for the presence of any unnecessary persons of commercial interest in export transactions, it entails a risk of applying the rules partially. Since the resolution did not provide for any safeguards to prevent this, they concluded the mechanism to not be impartial.

While we agree that the resolution satisfies the test of uniformity, we disagree that it is unreasonable and partial. The panel itself stated that impartiality does not depend merely on the presence on the representatives, but on their role in the process and their accessibility to confidential information. The process was such that ADICMA representatives could only be present for maintenance of transparency and efficiency, and had no authoritative role. The decision of the panel was based solely on the possibility that impartibility or reasonableness could have been breached, without any evidence for the same.


The European Communities alleged that certain measures of tax collection adopted by Argentina were violative of article III:2, which prohibits the discriminatory application of internal tax measures.[iv] There are two kinds of taxes in place: The ‘IVA’ which is like a general VAT and the ‘IG’ which is an income tax applicable on the profits derived from domestic and imported products. 

According to the European Communities, IVA was collected in advance and the importer had to pay the IVA due as well as an additional amount. If the importer was a registered taxable person the additional amount would be credited to him against final IVA only if his imported goods would be resold in Argentina. If there was no resale or if the importer wasn’t a registered person then no IVA would be credited back. Similarly, for IG, the tax was collected and withheld in advance for most import transactions involving the sale of good in Argentina. The European Communities argued that they had to bear heavier ‘financial cost’ for the advance payments made and such measures impose a higher nominal burden on imported goods as compared to domestic goods.

Argentina argued that the Panel must first go into whether the products are ‘like’ or not. This requires them to apply the likeness test which is done on a case-to-case basis taking into account physical characteristics and other criteria. Only once such likeness had been established, the Panel can decide whether the tax imposed on imported products was in excess of like domestic products. The European Communities, however, argued that it is prima facie evident that the tax measures are different for imported and domestic goods.

The Panel was concerned about the variation in the tax measures. The design and structure of these tax measures varied not based on ‘physical characteristic or likeness qualities’ of products but rather on factors completely unrelated to likeness. This meant that the import and domestic tax measure were distinct for imported and domestic goods generally and in these situations the ‘likeness’ determination was unnecessary. An origin-based distinction in respect of internal taxes suffices to exhibit an Article III:2 violation.[v]

Argentina argued that Article III is limited to tax on products and income tax is generally excluded from the ambit. The Panel said that the income tax, in this case, was calculated from the price of the product, due to which, the tax measure falls within Article III. Argentina contended that they aren’t liable under Article III:2 as the measures are mere pre-payments that will eventually be adjusted once the goods are resold domestically. They aren’t actual additional amounts. Therefore, the imported and domestic products are treated alike. The Panel said that these taxes create a charge and although the prima facie nominal tax remains the same for domestic and imported products, there is an ‘actual difference’ in the ‘manner of charge’ thus making it discriminatory.

The panel concluded that a charge is a “pecuniary burden” and imposes liability on a person to pay the money. Both, IVA and IG are internal tax measures applied by Argentina once the goods enter the territory. Since the advance payment collection of IVA and IG on imported goods creates an actual burden in excess of the tax burden imposed on domestic goods it is discriminatory and hence violative of the national treatment provision laid in Article III:2.

We believe that the Panel’s reasoning is technically sound, but we need to understand that practically, imposing an advance payment (which is later credited) gives the government assurance and certainty about the level of imports, which is then the basis of many decisions. The government may also sometimes take such measures if it wants to discourage imports and boost domestic markets in the economy, provided that it conforms with the GATT, 1994. Regardless, this is an exceptional case and generally, issues of income tax aren’t within its purview.


Once the panel declares that the actions of a country are violative of the provisions of GATT, they have to figure out whether the measures fall within the exceptions in Article XX. The analysis under Article XX is a two-tiered process. The first step is to identify whether the measure falls within the scope of any provisions of the Article i.e. paragraph (d) in this case. [vi] The second step is whether the requirements under the introductory provision, i.e. the chapeau are met.[vii]

The provisional justification under paragraph (d) includes three elements. The panel first had to evaluate whether the measures secure compliance with other laws and regulations. The resolutions in question-related to pre-payments which were collected by the Argentinian authorities to ensure payment of the IVA and IG taxes. This collection was for the compliance of IVA and IG laws of Argentina, and therefore the panel held that the first condition was satisfied. Secondly, it was noted that the IVA and IG Acts were consistent with other provisions of the GATT, 1994. The last question before the panel was concerning the ‘necessity’ of the measures that were taken to secure compliance with the laws. Keeping in mind the prevailing scenario in Argentina and their background of tax evasion and low tax compliance, the panel agreed that these resolutions were necessary measures, thus fulfilling all conditions under paragraph (d) of Article XX.

The panel thereafter analysed the consistency of the measure with the chapeau of Article XX. They noted that‘discrimination’ under the chapeau was broad enough to take within its ambit, not only discrimination between various exporting members but also between the exporting and importing members. Having already identified the presence of such discrimination in Article III, they continued their analysis to uncover whether such discrimination was justifiable. The necessity of the measures was highlighted, and the panel noted that the imposition of the extra burden of pre-payments was unavoidable to ensure compliance of the IVA and IG laws. However, they took the view that Argentina could have compensated the importers for interest lost or paid, thus avoiding the discrimination that was now happening. Since the discrimination was avoidable and Argentina couldn’t make a convincing case for their actions, the panel held that the discrimination was unjustifiable and therefore not covered under the exception of Article XX.

What however the panel failed to consider was that the Argentinian government couldn’t reimburse the importers for their lost interest. They ignored the fact that the measure was considered necessary in the first place because of the widespread tax evasion in the country. It was thus clear that they wouldn’t have enough money to compensate the importers for their loses, thus making the measures unavoidable and therefore justified.


 Argentina Bovine Hides is a case where the Panel has adjudicated on behavioural aspects as well as substantive provisions and decided the following based on the GATT, 1994:

  • Article XI:1 – There was no violation of this Article as their regulations did not create an export
  • Article X:3(a) – Argentina was in violation of this article as the measure was not administered in an impartial and reasonable
  • Article III:2 – Argentina was in violation of this article as the measures created an unfair tax burden on imported goods in excess of domestic
  • Article XX(d)– Argentina was in violation of this article as their measures were unjustifiable and hence did not fall within the

The case essentially focuses on widening the scope of Article III, preventing the misuse of article XX and fleshing out the nuances of Article X and XI. It sets a good precedent for guidelines it provides in analyzing any claim under these four articles. The Panel has given a well-reasoned judgment after satisfactorily allowing both parties to put their best arguments forward.


[i] Article XI:1 of GATT 1994 provides:

“No prohibitions or restrictions other than duties, taxes or other charges, whether made effective through quotas, import or export licences or other measures, shall be instituted or maintained by any contracting party on the importation of any product of the territory of any other contracting party or the exportation or sale for export of any product destined for the territory of any other contracting party.”

[ii] Article X:1 of GATT 1994 provides:

“Laws, regulations, judicial decisions and administrative rulings of general application, made effective by any contracting party, pertaining to the classification or the valuation of products for customs purposes….”

[iii] Article X:3(a) of GATT 1994 provides:

“Each contracting party shall administer in a uniform, impartial and reasonable manner all its laws, regulations, decisions and rulings of the kind described in paragraph 1 of this Article.”

[iv] Article III:2 of GATT 1994 provides:

  1. The products of the territory of any contracting party imported into the territory of any other contracting party shall not be subject, directly or indirectly, to internal taxes or other internal charges of any kind in excess of those applied, directly or indirectly, to like domestic products. Moreover, no contracting party shall otherwise apply internal taxes or other internal charges ….. contrary to the principles set forth in paragraph

[v] Indonesia – Certain Measures Affecting the Automobile Industry, 1998 DS54

[vi] Article XX(d) of GATT 1994 provides:

“(d) necessary to secure compliance with laws or regulations which are not inconsistent with the provisions of this Agreement….”

[vii] Article XX of GATT 1994 provides:

“Subject to the requirement that such measures are not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination between countries where the same conditions prevail, … nothing in this Agreement shall be construed to prevent the adoption or enforcement by any contracting party of measures:”

Legal Maxim (July 7, 2022) Argentina – Measures Affecting the Export of Bovine Hides and the Import of Finished Leather. Retrieved from
"Argentina – Measures Affecting the Export of Bovine Hides and the Import of Finished Leather." Legal Maxim - July 7, 2022,
Legal Maxim July 27, 2020 Argentina – Measures Affecting the Export of Bovine Hides and the Import of Finished Leather., viewed July 7, 2022,<>
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"Argentina – Measures Affecting the Export of Bovine Hides and the Import of Finished Leather." Legal Maxim - Accessed July 7, 2022.
"Argentina – Measures Affecting the Export of Bovine Hides and the Import of Finished Leather." Legal Maxim [Online]. Available: [Accessed: July 7, 2022]

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