Abstract
AbstractCan a WTO Member discriminate against foreign suppliers of services located in jurisdictions that refuse to share information with a government to permit it to determine if its nationals engage in tax evasion? Does it matter if the Member uses standards developed by an international body as the criterion for deciding whether to impose measures? InArgentina–Financial Services,the WTO Appellate Body held that services from jurisdictions that share financial tax information may be different from services provided by jurisdictions that do not cooperate in supplying such information. It overruled a Panel finding that measures to increase taxes on financial transactions with non-cooperative jurisdictions were discriminatory. We argue that the AB reached the right conclusion on the basis of the wrong arguments; that it missed an important opportunity to clarify what WTO Members are permitted to do to enforce their domestic regulatory regimes; and increased the scope for confusion and future litigation by considering that the likeness of services and service suppliers may be a function of prevailing domestic regulatory regimes.
Highlights
Argentina–Financial Services1 was the first financial services-related dispute to be brought to the WTO Appellate Body (AB) and the first in which the General Agreement on Trade in Services (GATS) carve-out for prudential regulation was invoked.2 It is a rather distinctive case inWe are grateful to our discussant, Rob Howse, and participants in the EUI workshop ‘WTO Case-Law of 2016’ on 14–15 June 2017 for helpful comments and suggestions
Can a WTO Member discriminate against foreign suppliers of services located in jurisdictions that refuse to share information with a government to permit it to determine if its nationals engage in tax evasion? Does it matter if the Member uses standards developed by an international body as the criterion for deciding whether to impose measures? In Argentina–Financial Services, the WTO Appellate Body held that services from jurisdictions that share financial tax information may be different from services provided by jurisdictions that do not cooperate in supplying such information
We argue that the AB reached the right conclusion on the basis of the wrong arguments; that it missed an important opportunity to clarify what WTO Members are permitted to do to enforce their domestic regulatory regimes; and increased the scope for confusion and future litigation by considering that the likeness of services and service suppliers may be a function of prevailing domestic regulatory regimes
Summary
Argentina–Financial Services was the first financial services-related dispute to be brought to the WTO Appellate Body (AB) and the first in which the GATS carve-out for prudential regulation was invoked. It is a rather distinctive case in. We will argue in what follows that the way the AB dealt with this case constitutes a missed opportunity to clarify three issues of central importance for the trading system: (i) determining the ‘likeness’ of services and service suppliers originating (based) in different jurisdictions; (ii) establishing the function of Art. XIV in matters pertaining to the enforcement of domestic law and regulations on national persons (natural or legal); and (iii) clarifying the role that internationally agreed good regulatory practices may play in justifying the use of services trade policies. XIV in matters pertaining to the enforcement of domestic law and regulations on national persons (natural or legal); and (iii) clarifying the role that internationally agreed good regulatory practices may play in justifying the use of services trade policies Both the Panel and AB focused predominantly on the question of likeness and neglected the salience of Art. XIV in this case, given that the measures targeted Argentine tax nationals that sought to evade Argentine law, not foreign suppliers of services.
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