WTO finds against Argentina in EU leather dispute

GENEVA, Switzerland (Reuters) -- A World Trade Organization (WTO) dispute panel has found in favor of the European Union in a complaint that Argentina is breaking global trading rules over its handling of cattle hide exports.

The three panelists also found that special Argentine taxes on imports of finished leather went against the rules and recommended that the WTO's Dispute Settlement Body tell Argentina to come into line.

The EU argued that Argentine regulations allowing representatives of the country's tanning industry to take part in customs inspection of hides before they were exported was itself a violation of WTO agreements.

It asserted that the presence of the Argentine tanners -- potential rival customers for the hides -- could influence customs authorities to restrict exports as well as giving them access to confidential business information.

The panel said the EU had failed to prove that this was the case.

But it found that the fact that officials of other national industries did not take part in customs inspection of exported goods of interest to them meant Argentina was breaking WTO rules that call for uniform treatment of all exports.

The panel also found -- in an EU complaint supported by the United States -- that an additional value-added tax and an advance turnover tax Argentine importers have to pay on finished leather products from abroad was against the rules.

It said the taxes violated an article of the WTO's underlying General Agreement on Tariffs and Trade which bars tax discrimination against foreign goods which could compete with similar domestic products.

Diplomats said Argentina was likely to appeal against the ruling, a process that could extend the case for several more months.

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