RTA DISPUTES - LATIN AMERICA
This page covers disputes under DR-CAFTA, the Andean Community, Mercosur, the ALADI Partial Complementation Agreements, and the Mexico-El Salvador-Honduras-Guatemala ("Triángulo del Norte") FTA. Last edited: 27 June 2017
See also BADICC, Base de Datos Integrados de Controversias Comerciales. (SELA database on Latin trade disputes)
Access to preferential tariff treatment:
(1) Dominican Republic denial of CAFTA tariff treatment for electrical cables (conductóres eléctricos) and polypropylene sacks produced in free trade zones in Costa Rica: Letter of complaint by Costa Rica to Dominican Republic authorities 7 October 2009; Consultation request by Costa Rica under CAFTA Article 20.4, 26 November 2009, response 1 February 2010 and further response 10 February 2010 concerning application of CAFTA rule of origin; background article by Juan Luis Zuñiga of CATrade Consulting Group; Costa Rica request for Commission meeting under CAFTA Article 20.5, 15 February 2010; panel request by Costa Rica 19 April 2010 regarding tariff treatment of electrical cables and polypropylene sacks; Dominican Republic acceptance of panel request 4 May 2010; also various other documents on this dispute, which did not result in a panel report.
Related proceedings: On 15 December 2009, the Dominican Republic initiated a safeguard investigation on polypropylene sacks and tubular fabric, then imposed a provisional safeguard on 16 March 2010 and a final safeguard measure on 5 October 2010. Costa Rica requested WTO consultations on 15 October 2010 and requested a WTO panel on 15 December 2010. A single panel was established on 11 February 2011 for the complaints brought against this measure by Costa Rica, El Salvador, Guatemala and Honduras. The WTO panel report was circulated on 31 January 2012 and adopted on 22 February 2012.
(2) El Salvador denial of CAFTA tariff treatment for goods exported by Costa Rican firms located in free trade zones, particularly automobile wheels and pineapple juice concentrate: Costa Rica consultation request under CAFTA Article 20.4, 19 April 2010; various other documents on this dispute, which was not pursued.
(3) El Salvador denial of CAFTA tariff treatment for Costa Rica exports to El Salvador: press report on new consultation request by Costa Rica, 22 September 2013 and press report on the consultations 19 November 2013. Official press release on meeting of DR-CAFTA Free Trade Commission 20 December 2014. Official press release on 22 January 2014, on Costa Rica's request for establishment of a panel under CAFTA. Official press release 12 May 2014 on Costa Rica's pursuit of its claim before the panel, which was constituted in April 2014; 72-page panel report dated 18 November 2014.
(4) US ethanol tariff: Claim that US eliminated preferential tariff-rate quota treatment for ethanol from Costa Rica, through change in US legislation referenced in CAFTA Annex 3.3: Consultation request 31 March 2014: Costa Rica official press release and press reports (1) and (2). Press report on consultations 11 June 2014; press report 13 April 2015 on efforts to resolve dispute without a panel.
Compliance with CAFTA-DR labor obligations
(3) Guatemala and compliance with CAFTA-DR labor chapter obligations: U.S. request for consultations with Guatemala under CAFTA Article 20.5.2, regarding effective enforcement of labor laws, 30 July 2010; request for Free Trade Commission meeting 16 May 2011; Panel request and press release 9 August 2011; action plan 27 April 2012; Guatemala-U.S. agreement on 18-point labor rights Enforcement Plan (text from Guatemala) and press release, 11 April 2013. Readout of meeting between USTR Froman and Guatemalan Labor and Trade Ministers 7 March 2014 (US reserves right to resume dispute settlement process if concerns regarding Enforcement Plan implementation not addressed by 25 April). On 25 August 2014, USTR Froman announces 4-week suspension of case to review information provided by Guatemala. On 18 September 2014, USTR Froman announces US request to panel to resume its work effective 19 September. Initial report delivered to disputing Parties 17 September 2016; Final panel report delivered to disputing Parties 14 June 2017 and released 27 June 2017. Complete set of dispute documents here.
2. Andean Community
Please see the Andean Community site on Solución de Controversias with abundant documentation and links to material on the Andean Community dispute settlement system and Andean Community disputes.
3. Mercosur (since 1998)
(1) Application by Brazil of Restrictive Measures to Trade with Argentina, Award 28 April 1999 (Ad-hoc Tribunal found that Brazilian import licensing requirements on imports from Argentina breached treaty, recommended compliance by Dec. 31, 1999)
(2) Subsidies on Production and Export by Brazil of Pork Meat to Argentina: Award on 27 September 1999. (Ad-hoc Tribunal rejected claims by Argentina regarding a system for corn stocking, and regarding Brazil’s advances on exchange contracts; found that use of PROEX program for export financing was only acceptable for capital goods. Tribunal issued clarification on 27 October 1999)
(3) Application by Argentina of Safeguard Measures on Textiles from Brazil: Award 10 March 2000 and clarification 7 April 2000. (Panel found that Argentina’s application of safeguards to textiles is incompatible with Mercosur legal regime, ordered revocation of safeguard measure within 15 days. Brazil brought a complaint about the same textile safeguard to the WTO’s Textiles Monitoring Body and requested a WTO panel (dispute WT/DS190), which was established on March 20, 2000; the parties notified a settlement to the WTO in June 2000.)
(4) Application of Anti-dumping Measures on Imports of Whole Chickens from Brazil: Award 21 May 2001 and clarification 18 June 2001. (Panel found that Mercosur law does not regulate the application of anti-dumping measures; rejected claim by Brazil; Brazil then took the same dispute to the WTO (WT/DS241) and prevailed there)
(5) Market Access Restrictions in Argentina on Bicycles Imported from Uruguay: Award 29 September 2001 and clarification . (Argentina treated Uruguayan bicycles made by one company as non-MERCOSUR in origin and therefore subject to the common external tariff; panel ruled that this measure violated Argentina’s MERCOSUR obligations, ordered its revocation and restoration of market access)
(6) Brazilian Import Ban on Remolded Tires from Uruguay: Award 9 January 2001. (Panel found that Brazilian government ban on imports of remolded tires was incompatible with Mercosur standstill on new trade restrictions; Brazil later defended related measures in the WTO against a challenge by the EU (WTO dispute WT/DS332, Brazil - Tyres), raising environmental defenses not mentioned in the Mercosur proceedings)
(7) Barriers to Entrance of Argentine Phytosanitary Products into the Brazilian Market: Award 19 April 2002. (Panel found that Brazil had failed to implement in its domestic law five Mercosur Common Market Group resolutions designed to create a streamlined phytosanitary system for evaluating and registering food; panel found that Brazil was obligated to implement these within a reasonable period of time and six years was not reasonable; panel ordered enactment within 120 days.)
(8) Application of Uruguay’s IMESI (Specific Internal Taxes) on the Sale of Cigarettes: Award 21 May 2002 and clarification 19 June 2002. (Found that Uruguayan method of calculating taxes on imported cigarettes discriminated against Paraguayan cigarettes, denying national treatment; ordered Uruguay to cease discrimination within 6 months)
(9) Uruguayan Subsidies for Processing of Wool: Award 4 April 2003. (Found that Uruguayan export subsidies for processed wool products exported to Mercosur are inconsistent with Mercosur law and must be eliminated in 15 days).
(10) Discriminatory and restrictive measures by Brazil on trade in tobacco and tobacco products: Award 5 August 2005 (Complaint by Uruguay concerning Brazilian decree raising tariffs on these products to 150%; Brazil repealed decree during the proceeding)
(11) Argentine Ban on Imports of Remolded Tires: Award Oct. 25, 2005 (In first case under Protocol of Olivos, found that the Argentine ban was consistent with Mercosur law; revoked on appeal)
(12) Appeal by Uruguay of Award on Argentine Ban on Imports of Remolded Tires: Award Dec. 20, 2005 by Permanent Appellate Tribunal (TPR). (Reversed the award; found that Argentine measure was incompatible with Mercosur law). English language translation of this award by Tais Jost, Nicolas Perrone, Carolina Saldanha and Maria Alejandra Calle-Saldarriaga.
(13) Request for Ruling regarding Excess in Compensatory Measures in the Dispute between Uruguay and Argentina on the Prohibition of Imports of Remolded Tires from Uruguay (TPR): Award Jun. 8, 2007. (Permanent Appellate Tribunal found that the Uruguayan compensatory measure was proportional and lawful).
(14) Decision regarding Argentine compliance with the Tribunal Award on Remolded Tires: Award Apr. 26, 2008. (Permanent Appellate Tribunal found that Argentina had not brought itself into compliance and until it does, Uruguay has the right to maintain compensatory measures)
(15) Failure by the Argentine State to Adopt Appropriate Measures to Prevent and/or Cease Impediments to Free Circulation Caused by Blockages in Argentine Territory of Access Roads to the International Bridges Gral. St. Martin and Gral. Antigas which connect Argentina and Uruguay: Award 21 June 2006. Uruguay challenged Argentina’s failure to act against environmental groups that blocked the international bridges between Uruguay and Argentina from 8 December 2005 to 20 March 2006, and again from 5 April to 2 May 2006 to protest the construction of two pulp mills on the River Uruguay; argued that blockage injured imports, tourism and transportation, in violation of Mercosur guarantees of free circulation of goods, services and factors of production via elimination of quantitative restrictions and measures of equivalent effect; panel largely agreed. (English language translation of this award by Ruth Kelly and Luis Gustavo Meira Moser)
(16) Appeal by Argentina of the above (TPR): Award Jul. 6, 2006. Permanent Appellate Tribunal rejected Argentina’s appeal in limine, and assessed all costs and expenses of the proceeding against Argentina.
Related proceedings: On 4 May 2006, Argentina filed an application instituting proceedings against Uruguay concerning Uruguay's authorization of construction of two pulp mills on the River Uruguay, and requested provisional measures by the Court. On 29 November 2006, Uruguay requested provisional measures against Argentina's failure to act against a renewed blockade by citizen groups. The Uruguayan request stated that Argentina had allowed and encouraged bridge blockages on 13-15 October and 3-5 November 2006, leading up to a blockade starting 20 November and announced to continue until February 2007. The Court denied both requests for provisional measures, and delivered its Judgment on 20 April 2010. (ICJ webpage with case summary and links to documents)
(17) Urgent Appeal by Paraguay regarding its Suspension from the Organs of Mercosur and the Incorporation of Venezuela as a Full Member: On 29 June 2012, the presidents of Argentina, Brazil and Uruguay decided to suspend Paraguay's participation in Mercosur organs for having impeached and removed its President Fernando Lugo, under the Protocol of Ushuaia on democratic commitment; they also granted full membership to Venezuela (which had been blocked by Paraguay). On 9 July 2012, Paraguay appealed directly to the Mercosur Permanent Review Tribunal requesting that these decisions be declared inapplicable. The award of 21 July 2012 found unanimously that the Tribunal's jurisdiction includes the application of the Protocol of Ushuaia, but the procedural prerequisites for such an appeal had not been satisfied; a majority found that under the circumstances, the Tribunal could not intervene without the consent of the other Parties of Mercosur.
4. ALADI Economic Complementation Agreements:
(1) Chile - Price-band tariffs on vegetable oil mixtures: Dispute brought by Bolivia against Chile in 2000 concerning Chile's 48% price-band tariffs on imports of vegetable oil mixtures. Bolivia brought the dispute under Chapter XIII of the Bolivia-Chile (ALADI) Economic Complementation Agreement No. 22, which provides that a dispute settlement panel decision is fully binding on the parties. After the tribunal award, Bolivia threatened to raise tariffs on Chilean products; ultimately Chile reimbursed the safeguard duties collected.
(2) Chile - Price-band tariffs on vegetable oil mixtures: Dispute brought by Argentina in 2000 against price-band tariffs imposed by Chile, under the Chile-Mercosur Economic Complementation Agreement No. 35; after Argentina prevailed, and Chile did not comply, in October 2000 Argentina brought a dispute in the WTO (WT/DS207, Chile — Price Band System and Safeguard Measures Relating to Certain Agricultural Products) and prevailed in 2002. Argentina brought WTO compliance proceedings in 2006-2007, and prevailed at the panel and appellate levels, but has not yet notified any request to suspend WTO concessions.
(3) Chile - Price-band tariffs on food preparations: Dispute brought by Colombia in 2002 after Chile reclassified sugar-containing food preparations (HS 2106.9090) under Chile's price-band tariff on sugar. Colombia brought a dispute under Article 32 of the Chile-Colombia Economic Complementation Agreement No. 22 and the second and sixth protocols of ECA No.22. According to news reports, the final Panel Report of 19 May 2004 found that the Chilean tariff had breached a commitment in Article 5 of the sixth protocol not to include new products in the price-band system. Colombia then (by Decrees 3146 and 3234 of 2004) imposed tariffs of 10%-35% on imports fom Chile of fresh apples, pears and grapes; wine in vessels of 2 l or less; cigarettes; diesel or semi-diesel trucks under 5 tons; and preparations for making beverages. In July 2006, Chile and Colombia agreed to a seventh protocol to ECA No.22 (providing a duty-free tariff rate quota for imports into Chile of sugar from Colombia); Colombia agreed to revoke Decree 3146 and not to pursue a WTO dispute. ECA No.22 has been replaced by the Chile-Colombia FTA which entered into force on 8 May 2009.
(4) Peru - Origin of Computers Imported from Mexico: Dispute brought by Mexico in 2002 under the Mexico-Peru Economic Complementation Agreement No. 8, regarding Peru's refusal to accord the 100% tariff preference provided for in ECA No.8 to computers from Mexico. Summary of the case; Consultation request 16 January 2002, and Panel Request 15 September 2003. The Final Panel Report of 11 March 2004 found that the computers in question originated in Mexico and that Peru's refusal to recognize them as such, and Peru's measures, were incompatible with ECA No.8 and ALADI Resolutions 78 and 252.
5. Mexico-El Salvador-Honduras-Guatemala ("Triángulo del Norte") FTA:
Mexico - Pharmaceutical register: Dispute brought by El Salvador concerning Mexico's rules requiring that any pharmaceutical registered in Mexico must be manufactured there. Summary of the case; Consultation request 18 July 2003, Request for meeting of the FTA Commission 20 October 2003, Panel request 17 May 2004. The Final panel report of 14 August 2006 (official publication in Diario Oficial) found that this requirement denied national treatment and contravened Articles 3-03, 15-04(4) and 15-10(1) of the agreement. Mexico issued decrees on 2 January 2008 and 5 August 2008 modifying the Reglamento de Insumos para la Salud.