Financial Services. WTO Appellate Body Report

Author:Sayenko Kharenko
Profession:Sayenko Kharenko
 
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The dispute "Argentina - Financial Services" deals with a number of restrictive measures relating to the provision of financial services, which were imposed by Argentina with respect to the trade partners not cooperating for "tax transparency purposes". The dispute was initiated by Panama that had been subject to such measures for a certain period of time. The Panel examining the dispute found that the actions of Argentina were inconsistent with its obligations under the General Agreement on Trade in Services (the "GATS"). However, the Appellate Body reversed the Panel's findings.

SUMMARY

In order to strengthen the national tax system and protect the investors' rights, Argentina launched the legislative reform aimed to combat the tax evasion, fraud, concealment and money laundering.

For the purposes of implementation of the reform, Argentina divided its foreign partners in two categories: "cooperative countries" and "non-cooperative countries".

In order to be classified as a "cooperative", the respective country had to:

sign with Argentina an agreement on exchange of tax information or a convention for the avoidance of international double taxation with a broad information exchange clause provided that there was an effective exchange of information; initiate the negotiations with Argentina with a view to signing such agreement . If a country failed to cooperate with Argentina, it was subject to the special treatment involving the heavier tax burden, additional conditions for provision of reinsurance services, additional requirements on registration of the foreign company branches, restrictions on the access to the foreign exchange market and the capital market of Argentina. In general, Panama challenged eight restrictive measures imposed by Argentina.

SIGNIFICANCE OF THE REPORT

The Appellate Body report was one of the most anticipated by the international community. The report was expected to provide a guidance on to what extend the WTO Members may take the measures violating their WTO obligations, but designed to ensure the transparency of the tax system. The significance of this report was further warmed up by the "Panama Papers", which burst into a blaze on the eve of the publication of the Appellate Body Report.

The key argument raised by Panama in this dispute related to the imposition by Argentina of different requirements with regard to "cooperative countries" and "non-cooperative countries". Panama argued that the imposition...

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