INTRODUCTION

On 4 October 1996, the United States requested Argentina to hold consultations pursuant to Article 4 of the Understanding on Rules and Procedures Governing the Settlement of Disputes (“DSU”), Article XXII:1 of the General Agreement on Tariffs and Trade 1994 (“GATT 1994”), Article 14 of the Agreement on Technical Barriers to Trade (“TBT Agreement”), Article 19 of the Agreement on Implementation of Article VII of the GATT 1994 (“Customs Valuation Agreement”), and Article 7 of the Agreement on Textiles and Clothing (“ATC”), regarding certain measures maintained by Argentina affecting imports of footwear, textiles, apparel and other items, namely, measures imposing specific duties on various footwear, textiles and apparel in excess of the bound rate of 35 per cent ad valorem provided in Argentina's Schedule LXIV; a statistical tax of three per cent ad valorem on imports of all sources other than MERCOSUR countries; and measures imposing, inter alia, labelling requirements related to affidavits of product components (WT/DS56/1).

Pursuant to Article 4.11 DSU, Hungary requested to be joined in these consultations on 21 October 1996 (WT/DS56/2). The European Communities (“EC”) made a similar request on 25 October 1996 (WT/DS56/3). In separate communications dated 6 November 1996, Argentina accepted the request of Hungary and the request of the EC to join the consultations which the United States had requested (WT/DS56/4).

During the consultations, a mutually agreed solution was reached between the United States and Argentina regarding Argentina's labelling requirements. However, the parties failed to reach a mutually satisfactory solution on the other aspects raised during the consultations.

On 9 January 1997, the United States requested the Dispute Settlement Body (“DSB”) to establish a panel (WT/DS56/5). The United States claimed that Argentina's measures were “inconsistent with the obligations of Argentina under Articles II, VII, VIII and X of the GATT 1994; Articles 1 through 8 of the Agreement on Implementation of Article VII of the GATT 1994; and Article 7 of the Agreement on Textiles and Clothing”.