EU takes Argentina trade fight to WTO

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The European Union launched a challenge at the World Trade Organization Friday against Argentine import restrictions, escalating a trade war triggered when Buenos Aires seized Spanish oil assets.

"Argentina's import restrictions violate international trade rules and must be removed," said EU Trade Commissioner Karel De Gucht, inviting other global rivals to join his battle against a "protectionist import regime (that is) ... clearly getting worse."

De Gucht told a Brussels news conference that 19 other un-named international trading partners had "expressed concern."

"This is not a spat between Europe and one of its trade partners," he said. "Europe is not a lone voice, Europe is not the only one complaining."

He said it was "time to call a halt" to protectionism, adding: "In this spirit... we would welcome any of our trade partners joining our action in the coming days and weeks."

He said the restrictions were there simply "to try and prop up the Argentine economy at the expense of Europe and other economies in the global trade family."

Argentine President Cristina Kirchner later rejected the claims of protectionism, arguing that tariffs applied by her country were lower than those of developed nations.

"It's as if there were a kind of legal protectionism, that of the developed countries, and a populist protectionism, that of emerging economies. Well, that isn't the case," she said in a speech.

She noted some European economies applied tariffs of 159 percent for butter and 126 percent for meat, while rice producers in Argentina compete with a 450 percent tariff in Japan compared with a maximum 35 percent Argentine tariff.

The EU exports more than 11 billion euros ($13.8 billion) worth of goods and services to Argentina each year, importing a similar amount in return, but complained that "Argentina's restrictive measures are extending to more and more sectors."

Announcing the move, De Gucht highlighted procedures to obtain an import licence as well as an obligation on companies to balance imports with exports.

De Gucht said the trend began in 2005 with restrictions on cars, household appliances, laptops and mobile phones, but that in February, "Argentina tightened the screws" by subjecting "all products" to a non-written "illegal" accreditation regime.

In terms of trade volumes, he said this meant about 16 times more trade was affected, a decision that had "cost jobs" in European companies.

Kirchner countered that in the Group of 20, Argentina is, apart from Germany, "the country with the greatest freedom of investment and trade".

Brussels is initially seeking direct talks with Buenos Aires and has 60 days under WTO case rules in which to try to resolve the dispute.

Thereafter, the WTO would usually be asked to rule on the legality of Argentina's actions. Such cases invariably take years.

De Gucht was at pains to dissociate the import restrictions from the decision by Argentina earlier this month to formally nationalise YPF, majority owned by Spanish energy giant Repsol.

He underlined that the EU has "no direct relation of a legal order" with Argentina in this instance, that Spain was the aggrieved party.

Spanish Prime Minister Mariano Rajoy said the seizure would trigger a "tremendous" loss in international investor confidence in the country.

YPF accounts for 34 percent of Argentina's domestic oil production, 25 percent of domestic gas production and 54 percent of domestic refining, according to the Argentine Oil Institute.

Kirchner argued the move was justified because Argentina faces sharp rises in its bill for imported oil and Repsol has failed to make agreed investments needed to expand domestic production.

Repsol says it wants at least $10 billion in compensation and has cancelled its contract to supply liquid natural gas to Argentina.

Buenos Aires said Repsol is leaving a $9 billion debt, while in just over a decade it earned more than $15.7 billion, most of it sent overseas and not reinvested in the country.

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