## Facts

- Argentina’s Schedule (Schedule LXIV) bound most relevant industrial tariffs at **35% ad valorem**, effective **January 1, 1995**.
- Argentina applied **Minimum Specific Import Duties** known as **Derechos de Importación Específicos Mínimos (DIEM)** to certain **textiles and apparel** (and previously footwear).
- DIEM were calculated using a **representative international price** and operated as a floor: customs authorities were instructed to collect the **higher of** (i) the bound **ad valorem** duty or (ii) the **specific minimum** duty.
- For goods with declared customs values below the representative price, DIEM yielded duties that, in effect, **exceeded** the **35% ad valorem** bound rate.
- Argentina also imposed a **3% ad valorem “statistical tax”** on imports from most sources (with preferential treatment for **MERCOSUR**), described as connected to gathering customs statistics; it was reimposed in **March 1995** after having been set at **zero** earlier.
- The United States challenged these measures under the GATT 1994 and the DSU. During the dispute, Argentina **revoked** the DIEM regime for **footwear**, and the panel did not rule on the revoked footwear DIEM.
- The panel found DIEM on **textiles and apparel** inconsistent with **GATT 1994 Article II:1(b)** and found the **statistical tax** inconsistent with **Article II:1(b)** (as an unrecorded “other duty or charge”) and with **Article VIII:1(a)** (as a charge not limited to the cost of services).
- Argentina appealed issues of law and legal interpretation, including claims that the panel failed to make an objective assessment under **DSU Article 11**.

## Issues

1. Whether Argentina’s DIEM on textiles and apparel were “ordinary customs duties” that, as applied, resulted in duties **in excess of** Argentina’s **35% ad valorem** bound rate, contrary to **GATT 1994 Article II:1(b)**.
2. Whether the 3% statistical tax was an “other duty or charge” imposed on or in connection with importation and, if so, whether maintaining it was inconsistent with **Article II:1(b)** because it was not properly recorded in Argentina’s Schedule.
3. Whether the statistical tax could be justified as a permissible fee or charge under **GATT 1994 Article VIII:1(a)** as limited to the approximate cost of services rendered.
4. Whether the panel failed to make an objective assessment of the matter in violation of **DSU Article 11**.

## Decision

- The Appellate Body **upheld** that Argentina’s DIEM on **textiles and apparel** were inconsistent with **GATT 1994 Article II:1(b)** because they led to the collection of import duties **above** the bound **35% ad valorem** rate.
- The Appellate Body **upheld** that the **3% statistical tax** was an **“other duty or charge”** within the meaning of **Article II:1(b)** and that Argentina acted inconsistently with Article II by maintaining the tax without having recorded it in its Schedule as required.
- The Appellate Body **agreed** with the panel that the statistical tax was also inconsistent with **Article VIII:1(a)** because Argentina did not show that the charge was limited to the **approximate cost of services rendered**; the tax operated as a broad import levy rather than a cost-based fee.
- The Appellate Body **rejected** Argentina’s challenge under **DSU Article 11**, finding no basis to conclude that the panel failed to make an objective assessment of the matter.
- The Appellate Body recommended that Argentina **bring its measures into conformity** with its WTO obligations.

## Legal Principles

- A Member’s **tariff bindings** under **GATT 1994 Article II:1(b)** constrain the **duty actually collected**; a Member may not collect more than the bound level by changing the form of the duty.
- A **minimum specific import duty** that is applied as a mandatory floor and that, in certain price ranges, yields an effective incidence **above** a bound ad valorem rate is inconsistent with **Article II:1(b)**.
- “**Other duties or charges**” imposed on or in connection with importation fall under **Article II:1(b), second sentence** and may be maintained only if properly **recorded in the Schedule** by the required benchmark date.
- Under **GATT 1994 Article VIII:1(a)**, fees and charges imposed on or in connection with importation must be limited to the **approximate cost of services rendered**; an across-the-board ad valorem charge that raises revenue beyond service costs breaches Article VIII.
- A claim under **DSU Article 11** requires more than disagreement with a panel’s weighing of evidence; it requires showing that the panel failed to conduct an objective assessment in a legally material way.

## Conclusion

In *Argentina—Measures Affecting Imports of Footwear, Textiles, Apparel and Other Items*, the Appellate Body sustained findings that Argentina’s DIEM on textiles and apparel caused duties to exceed its bound 35% ad valorem rate in violation of GATT Article II:1(b), and that Argentina’s 3% statistical tax was an unrecorded “other duty or charge” inconsistent with Article II and also a non-cost-based import charge inconsistent with Article VIII:1(a), while rejecting Argentina’s DSU Article 11 challenge and recommending conformity.


Argentina—Measures Affecting Imports of Footwear, Textiles, Apparel and Other Items, WT/DS56/AB/R (April 22, 1998)