Ukraine: Argentina – Financial Services. WTO Appellate Body Report

Last Updated: 19 September 2016
Article by Sayenko Kharenko

Most Popular Article in Ukraine, September 2016

The dispute "Argentina – Financial Services" deals with a number of restrictive measures relating to the provision of financial services, which were imposed by Argentina with respect to the trade partners not cooperating for "tax transparency purposes". The dispute was initiated by Panama that had been subject to such measures for a certain period of time. The Panel examining the dispute found that the actions of Argentina were inconsistent with its obligations under the General Agreement on Trade in Services (the "GATS"). However, the Appellate Body reversed the Panel's findings.


In order to strengthen the national tax system and protect the investors' rights, Argentina launched the legislative reform aimed to combat the tax evasion, fraud, concealment and money laundering.

For the purposes of implementation of the reform, Argentina divided its foreign partners in two categories: "cooperative countries" and "non-cooperative countries".

In order to be classified as a "cooperative", the respective country had to:

  • sign with Argentina an agreement on exchange of tax information or a convention for the avoidance of international double taxation with a broad information exchange clause provided that there was an effective exchange of information;
  • initiate the negotiations with Argentina with a view to signing such agreement .

If a country failed to cooperate with Argentina, it was subject to the special treatment involving the heavier tax burden, additional conditions for provision of reinsurance services, additional requirements on registration of the foreign company branches, restrictions on the access to the foreign exchange market and the capital market of Argentina. In general, Panama challenged eight restrictive measures imposed by Argentina.


The Appellate Body report was one of the most anticipated by the international community. The report was expected to provide a guidance on to what extend the WTO Members may take the measures violating their WTO obligations, but designed to ensure the transparency of the tax system. The significance of this report was further warmed up by the "Panama Papers", which burst into a blaze on the eve of the publication of the Appellate Body Report.

The key argument raised by Panama in this dispute related to the imposition by Argentina of different requirements with regard to "cooperative countries" and "non-cooperative countries". Panama argued that the imposition of the restrictive measures against "non-cooperative countries" constituted a discrimination under the GATS.

The cornerstone principle underlying the GATS, as well as the whole WTO system, is prohibition of the discrimination, which covers two concepts: the most-favoured nation treatment and national treatment.

Most-favoured nation treatment (the "MFN") embodied inArt. II:1 GATS provides that each WTO Member shall accord "immediately and unconditionally to services and service suppliers of any other Member treatment no less favourable than that it accords to like services and service suppliers of any other country". In other words, each WTO Member must ensure the MFN treatment with respect to "like" services and service suppliers of any third country. At the same time, this rule applies only to the measures falling under the GATS.1

National treatment obligation embodied in Art. XVII GATS provides that each WTO Member shall accord to services and service suppliers of any other WTO Member treatment no less favourable than that it accords to its own like services and service suppliers. At the same time, this obligation does not apply to all measures, but rather to the specific service sectors with respect to which the WTO members agreed to the application of the national treatment obligation.2

In this dispute, the Appellate Body, inter alia,gave an extensive interpretation of (1) "likeness" of the services and service suppliers and (2) the compliance with the "treatment no less favourable".


The establishment of "likeness" was the key issue during the examination of discrimination in the present dispute. In particular, the question was raised:

  • whether the services of cooperative and non- cooperative countries are like (in terms of the MFN treatment); and
  • whether the services of Argentina and non- cooperative countries are like (in the scopes of national treatment).

The Panel found that the distinction in treatment of services of cooperative and non-cooperative countries depended on origin. It concluded that the services of cooperative and non-cooperative countries were like for the purpose of Art, II:1 GATS, and, accordingly, Argentina violated the MFN obligation.

The same conclusion was reached in the context of Argentina's compliance with the national treatment obligation. Thus, the Panel found that the Respondent also violated Art. XVII GATS.

Analysing the issue of likeness, the Appellate Body noted that " likeness" in terms of trade in services is directly connected with the fact, whether the respective services are in a competitive relationship, and, if so, to which extent. Moreover, the competitive relations and modification thereof constitute a prerequisite for further analysis of WTO Members' obligation to provide "treatment no less favourable" to the services of any other WTO Member.

Furthermore, the Appelite Body drew attention to the matter of "presumption of likeness". According to the said cocept, if the distinction is based exclusively on origin of services, such services are like.


According to the Appellate Body Report, under both the MFN and national treatment standards, the concept of "treatment no less favourable" is focused on the measure's modification of the conditions of competition. This requirement is not satisfied if the conditions of competition are modified to the detriment of like services from non-cooperative countries.

In examining the "no less favourable treatment" standard, the Panel attached the importance to the regulatory aspects. Thus, the Panel established a three-tier test for determining whether the non-cooperative countries were accorded "treatment no less favourable". Firstly, it should be established whether different treatment was accorded to the two categories of services (of cooperative and non-cooperative countries); secondly, it should be examined whether the non-cooperative countries were accorded "less favourable" treatment; thirdly, such assessment shall be conducted in the light of the regulatory impact on the conditions of competition (analysis of so-called "regulatory aspects").

Thus, after the preliminary findings that Argentina's regulatory aspects modify the conditions of competition to the detriment of like services from "non-cooperative" countries, and, accordingly, accord them less favourable treatment, the Panel did not complete the analysis, but took an additional step relating to the impact of regulatory aspects on the conditions of competition.

The Appellate Body did not agree with the Panel on interpretation of the "no less favourable treatment" standard. As it stated, neither Art. ІІ:1, nor Art. XVII GATS furnish grounds for the application of the additional standard regarding the impact of regulatory aspects on the conditions of competition.


If a WTO member violates GATS provisions by introducing measures, which restrict trade in services but are required for the interests of this WTO Member, such measures may be justified under Art. XIV GATS.

In particular, pursuant to Art. XIV(c) GATS, the restrictive measures may be justified if they are "necessary to secure compliance with laws or regulations which are not inconsistent with the provisions of this Agreement". At the same time, for the application of this exception, a restrictive measure shall not (1) be applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination between countries where like conditions prevail; or (2) cause disguised restrictions on trade in services.

According to the Panel's findings, the restrictive measures, introduced by Argentina, may be justified under Art.XIV(c). However, the Panel found that the restrictive measures at hand violated the requirement not to "be applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination between countries".

In general, this conclusion of the Panel was upheld by the Appellate Body, which, in particular, provided explanations as to the application of Art. XIV(c) GATS:

  • the measure "secures compliance with laws or regulations when its design reveals that it secures compliance with specific rules, obligations, or requirements of the respective laws or regulations, even if the measure cannot be guaranteed to achieve such result";
  • with respect to the "necessity" of introduction of the measure, there shall be sufficiently proximate relationship between the restrictive measure and the laws and regulations, such that the measure can be deemed to be "necessary" to secure compliance with such laws or regulations.


Therefore, the Appellate Body reversed the Panel's findings on the existence of discriminatory treatment between cooperative and non-cooperative countries, concluding that the Panel used an erroneous 'likeness' test. However, the Appellate Body did not undertake the 'likeness' analysis, leaving the question of the ratio between States' obligations under the WTO and their aspirations to introduce measures aimed at ensuring the transparency of the tax system, open.


1 According to the concept embodied in Art. II:1 GATS, the MFN treatment aims to accord equal opportunities to supply of services of all WTO Members. Therefore, all like services and service suppliers receive equal treatment from any WTO Member regardless of their origin. Respectively, if the WTO Member accords more favourable treatment to certain services or service supplies originating from any WTO Member, the same treatment should be accorded immediately and unconditionally to the services and service suppliers of any other WTO Member. In other words, the discrimination based on the origin of services is prohibited.

2 Accordingly, the MFN treatment aims to eliminate the discrimination between the "like" services and service providers originating from the third countries – the WTO Members; meanwhile, the national treatment aims to prohibit discrimination in favour of the national "like" services and service suppliers.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.