PROCEDURAL BACKGROUND

On 23 December 1998 the European Communities requested consultations with Argentina pursuant to Article 4 of the Understanding on Rules and Procedures Governing the Settlement of Disputes (hereinafter the “DSU”), Article XXII of the General Agreement on Tariffs and Trade 1994 (hereinafter the “GATT 1994”) regarding an alleged de facto export prohibition maintained by Argentina on raw and semi-tanned bovine hides; an “additional VAT” of nine percent raised by Argentina on the import of products into its territory; and an “advance turnover tax” based on the price of the imported goods imposed on operators when importing goods into Argentina.

Consultations were held in Geneva 5 February 1999, but did not lead to a mutually satisfactory resolution of the matter. On 31 May 1999, the European Communities requested the Dispute Settlement Body (hereinafter the “DSB”) to establish a panel pursuant to Article XXIII of the GATT 1994, and Article 6 of the DSU. The European Communities claimed that the export prohibition maintained by Argentina violated Articles XI:1 and X:3 (a) of GATT 1994 and that the “additional VAT” and the “advance turnover tax” were not in conformity with Article III:2 of GATT 1994.

At its meeting on 26 July 1999, the DSB established a panel pursuant to the request of the European Communities, in accordance with Article 6 of the DSU. In document WT/DS155/3, the Secretariat reported that the parties had agreed that the panel would have the standard terms of reference. The terms of reference are the following:

Document WT/DS155/3, “Argentina - Measures affecting the export of bovine hides and the import of finished leather,” also reported that, on 31 January 2000, the Panel was constituted as follows:

The United States reserved its rights to participate in the panel proceedings as a third party, and presented arguments to the Panel.