The European Union on Friday started legal proceedings at the World Trade Organization against Argentina, claiming the South American country stifles imports to protect its own industry.
The EU, the world's largest trading bloc, said that Argentina's recent move to seize control of a division of Spanish energy company Repsol was indicative of the worsening business climate in the country that has been seeking to limit foreign imports for the past 7 years.
EU Trade Commissioner Karel De Gucht said the situation in Argentina is `'clearly getting worse" by the month, leaving him `'no choice but to challenge Argentina's protectionist import regime."
And even though the EU started actions on its own, it said its complaints were shared by at least 19 other nations, including the United States, Japan and Australia.
`'Europe is not a lone voice, Europe is not the only one," De Gucht said, and urged others to come on board with their own complaints.
`'I would certainly welcome any of our trade partners joining our WTO action in coming days and weeks," he said.
The EU alleges that Argentina insists on pre-approval of all imports, systematically delays them and has policies to refuse or limit import amounts.
"Argentina's import restrictions violate international trade rules and must be removed. These measures are causing very real damage," De Gucht told reporters.
The EU trade department said that the Argentine restrictions already affected exports worth some (EURO)500 million ($628 million) last year and that total was rising fast this year. Overall, EU exports to Argentina amounted to (EURO)8.3 billion ($10.4 billion) last year.
Under the WTO rules, the EU and Argentina first will consult each other to settle their differences but if no bilateral deal is reached then, the 27-nation bloc can demand that WTO rules on the legality of Argentina's practices. At the end of a drawn-out process, the WTO can impose potentially crippling fines.
Beyond the current complaints, the EU said it was continuing to monitor the Repsol case for the latest developments.
`'It was perhaps the most visible protectionist action by Argentina making headlines across the world but dig a little bit deeper and what you find is that Argentina's trade policy has become rooted in unfair trade practices," De Gucht said.
Repsol last week has sued Argentina over its takeover of the company's majority stake in the YPF oil and gas producer. Repsol and the investment firm Texas Yale Capital Corp. demand that Argentina makes an offer for the stake that Repsol held in YPF. The two want compensation for money lost when shares of Repsol and YPF plummeted after the takeover announced last month.