ARGENTINA – MEASURES RELATING TO TRADE IN GOODS AND SERVICES AB-2015-8
Document: Report of the Appellate Body
Date: 14 April 2016
Document codes: WT/DS453/AB/R
Complainant: Panama
Respondent: Argentina
Third parties: Australia, China, Ecuador, EU, Guatemala, Honduras, India, U.S., Brazil, Singapore, Oman, Saudi Arabia
Dispute stage: Appellate Body
Agreements cited: Art. II:1, XVI, XVII, I:1  Services (GATS)Art. I:1, III:4, XI:1  GATT 1994Art. XVII, XVI:1, XVI:2(a), XVI:2(e)  Services (GATS)

ARGENTINA – MEASURES RELATING TO TRADE
IN GOODS AND SERVICES
AB-2015-8
Report of the Appellate Body

ABBREVIATIONS USED IN THIS REPORT
Abbreviation Description
AFIP Federal Administration of Public Revenue
AFIP Resolution
No. 3.576/2013
General Resolution No. 3.576 of the Federal Administration of Public
Revenue (AFIP) of 27 December 2013
Argentina's
Constitution
Constitution of the Republic of Argentina
Argentine Central
Bank
Central Bank of the Argentine Republic
Commercial
Companies Law
Law No. 19.550 on Commercial Companies of 3 April 1972
Communication "A"
No. 4662
Communication "A" No. 4662 of the Central Bank of the Argentine
Republic of 11 May 2007
Communication "A"
No. 4692
Communication "A" No. 4692 of the Central Bank of the Argentine
Republic of 31 July 2007
Communication "A"
No. 4940
Communication "A" No. 4940 of the Central Bank of the Argentine
Republic of 12 May 2009
cooperative countries countries that Argentina classifies as "countries cooperating for tax
transparency purposes"
Criminal Tax Law Criminal Tax Law No. 24.769
Decree No. 589/2013 Decree No. 589 of the Federal Administration of Public Revenue (AFIP) of

DSB Dispute Settlement Body
DSU Understanding on Rules and Procedures Governing the Settlement of
Disputes
FATF Financial Action Task Force
G-20 Group of Twenty
Gains Tax Law Law No. 20.628 on Gains Tax of 29 December 1973
GATS General Agreement on Trade in Services
GATT 1994 General Agreement on Tariffs and Trade 1994
Global Forum Global Forum on Transparency and Exchange of Information for Tax
Purposes
Law against Money
Laundering
Law No. 25.246 of 5 May 2000 on Concealment and Laundering of Money
of Criminal Origin
Law on Tax Procedure Law No. 11.683, consolidated text of 1978, and amendments thereto,
approved by Decree No. 821/1998 of 13 July 1998, published in the
Official Journal of the Argentine Republic on 20 July 1998
non-cooperative
countries
countries that Argentina classifies as "countries not cooperating for tax
transparency purposes"
OECD Organisation for Economic Co-operation and Development
Panel Report Panel Report, Argentina – Measures Relating to Trade in Goods and
Services, WT/DS453/R
Resolution on
Companies
Incorporated Abroad
General Resolution No. 7 of the General Justice Inspectorate (IGJ) of
25 August 2005, as modified by General Resolution No. 1/2014 of the
General Justice Inspectorate (IGJ) of 8 April 2014
Rules of the National
Securities Commission
Rules of the National Securities Commission, New Text 2013 (Title XI),
approved by General Resolution No. 622

Abbreviation Description
SSN National Insurance Supervisory Authority
SSN Resolution
No. 35.615/2011
Resolution No. 35.615 of the National Insurance Supervisory Authority
(SSN) of 11 February 2011, amended by Article 4 of SSN Resolution
No. 35.794/2011 and Articles 1 and 2 of SSN Resolution
No. 38.284/2014
SSN Resolution
No. 35.794/2011
Resolution No. 35.794 of the National Insurance Supervisory Authority
(SSN) of 19 May 2011
SSN Resolution
No. 38.284/2014
Resolution No. 38.284 of the National Insurance Supervisory Authority
(SSN) of 21 March 2014
TBT Agreement Agreement on Technical Barriers to Trade
Working Procedures Working Procedures for Appellate Review, WT/AB/WP/6, 16 August 2010
WTO World Trade Organization

PANEL EXHIBITS CITED IN THIS REPORT
Panel Exhibit(s) Description
ARG-22 OECD Report, Addressing Base Erosion and Profit Shifting (2013)
ARG-25 Financial Action Task Force (FATF) Recommendations, International
Standards on Combating Money Laundering and the Financing of
Terrorism and Proliferation (February 2012)
ARG-27 Resolution No. 35.615 of the National Insurance Supervisory Authority
(SSN) of 11 February 2011, as amended by Article 4 of SSN Resolution
No. 35.794/2011 and Articles 1 and 2 of SSN Resolution
No. 38.284/2014
ARG-31 / PAN-71 Communication "A" No. 4940 of the Central Bank of the Argentine
Republic of 12 May 2009
ARG-32 Law No. 25.246 of 5 May 2000 on Concealment and Laundering of Money
of Criminal Origin
ARG-33 / PAN-62

General Resolution No. 7 of the General Justice Inspectorate (IGJ) of
25 August 2005, as modified by General Resolution No. 1/2014 of the
General Justice Inspectorate (IGJ) of 8 April 2014
ARG-35 / PAN-3 Decree No. 589 of the Federal Administration of Public Revenue (AFIP) of
27 May 2013
ARG-37 / PAN-3 General Resolution No. 3.576 of the Federal Administration of Public
Revenue (AFIP) of 27 December 2013
ARG-41 Global Forum on Transparency and Exchange of Information, Tax
Co-operation 2009: Towards a Level Playing Field (OECD, 2009)
ARG-42 / PAN-4 Law No. 20.628 on Gains Tax of 29 December 1973
ARG-43 / PAN-34 Law No. 19.550 on Commercial Companies of 3 April 1972
ARG-45 / PAN-9 Law No. 11.683, consolidated text of 1978, and amendments thereto,
approved by Decree No. 821/1998 of 13 July 1998, published in the
Official Journal of the Argentine Republic on 20 July 1998
ARG-47 Resolution No. 38.284 of the National Insurance Supervisory Authority
(SSN) of 21 March 2014
ARG-48 / PAN-40 Resolution No. 35.794 of the National Insurance Supervisory Authority
(SSN) of 19 May 2011
ARG-50 / PAN-58 Rules of the National Securities Commission, New Text 2013 (Title XI),
approved by General Resolution No. 622
ARG-69 / PAN-67 Communication "A" No. 4662 of the Central Bank of the Argentine
Republic of 11 May 2007
ARG-70 / PAN-68 Communication "A" No. 4692 of the Central Bank of the Argentine
Republic of 31 July 2007
ARG-135 Resolution No. 38.708 of the National Insurance Supervisory Authority
(SSN) of 6 November 2014, and Annex thereto (General Regulation for
Insurance Activities)
PAN-7 Notarized sworn statement of 14 March 2014 prepared by a legal expert
on banking matters
PAN-36 Resolution No. 35.615 of the National Insurance Supervisory Authority
(SSN) of 11 February 2011, as amended by Article 4 of SSN Resolution
No. 35.794/2011
PAN-72 Communication "B" No. 7953 of the Central Bank of the Argentine
Republic of 15 August 2003

CASES CITED IN THIS REPORT
Short Title Full Case Title and Citation
Argentina – Hides and
Leather
Panel Report, Argentina – Measures Affecting the Export of Bovine Hides and
Import of Finished Leather, WT/DS155/R and Corr.1, adopted 16 February 2001,
DSR 2001:V, p. 1779
Argentina – Import
Measures
Panel Reports, Argentina – Measures Affecting the Importation of Goods,
WT/DS438/R and Add.1 / WT/DS444/R and Add.1 / WT/DS445/R and Add.1,
adopted 26 January 2015, as modified (WT/DS438/R) and upheld (WT/DS444/R /
WT/DS445/R) by Appellate Body Reports WT/DS438/AB/R / WT/DS444/AB/R /

Brazil – Retreaded Tyres Appellate Body Report, Brazil – Measures Affecting Imports of Retreaded Tyres,
WT/DS332/AB/R, adopted 17 December 2007, DSR 2007:IV, p. 1527
Canada – Autos Panel Report, Canada – Certain Measures Affecting the Automotive Industry,
WT/DS139/R, WT/DS142/R, adopted 19 June 2000, as modified by Appellate Body
Report WT/DS139/AB/R, WT/DS142/AB/R, DSR 2000:VII, p. 3043
Canada – Periodicals Appellate Body Report, Canada – Certain Measures Concerning Periodicals,
WT/DS31/AB/R, adopted 30 July 1997, DSR 1997:I, p. 449
Canada – Wheat Exports
and Grain Imports
Appellate Body Report, Canada – Measures Relating to Exports of Wheat and
Treatment of Imported Grain, WT/DS276/AB/R, adopted 27 September 2004,
DSR 2004:VI, p. 2739
Canada – Wheat Exports
and Grain Imports
Panel Report, Canada – Measures Relating to Exports of Wheat and Treatment of
Imported Grain, WT/DS276/R, adopted 27 September 2004, upheld by Appellate
Body Report WT/DS276/AB/R, DSR 2004:VI, p. 2817
China – Auto Parts Panel Reports, China – Measures Affecting Imports of Automobile Parts,
WT/DS339/R, Add.1 and Add.2 / WT/DS340/R, Add.1 and Add.2 / WT/DS342/R,
Add.1 and Add.2, adopted 12 January 2009, upheld (WT/DS339/R) and as
modified (WT/DS340/R / WT/DS342/R) by Appellate Body Reports
WT/DS339/AB/R / WT/DS340/AB/R / WT/DS342/AB/R, DSR 2009:I, p. 119
China – Electronic
Payment Services
Panel Report, China – Certain Measures Affecting Electronic Payment Services,
WT/DS413/R and Add.1, adopted 31 August 2012, DSR 2012:X, p. 5305
China – Publications and
Audiovisual Products
Appellate Body Report, China – Measures Affecting Trading Rights and Distribution
Services for Certain Publications and Audiovisual Entertainment Products,
WT/DS363/AB/R, adopted 19 January 2010, DSR 2010:I, p. 3
China – Publications and
Audiovisual Products
Panel Report, China – Measures Affecting Trading Rights and Distribution Services
for Certain Publications and Audiovisual Entertainment Products, WT/DS363/R and
Corr.1, adopted 19 January 2010, as modified by Appellate Body Report
WT/DS363/AB/R, DSR 2010:II, p. 261
China – Rare Earths Appellate Body Reports, China – Measures Related to the Exportation of Rare
Earths, Tungsten, and Molybdenum, WT/DS431/AB/R / WT/DS432/AB/R /
WT/DS433/AB/R, adopted 29 August 2014
Colombia – Ports of Entry Panel Report, Colombia – Indicative Prices and Restrictions on Ports of Entry,
WT/DS366/R and Corr.1, adopted 20 May 2009, DSR 2009:VI, p. 2535
EC – Asbestos Appellate Body Report, European Communities – Measures Affecting Asbestos and
Asbestos-Containing Products, WT/DS135/AB/R, adopted 5 April 2001,
DSR 2001:VII, p. 3243
EC – Bananas III Appellate Body Report, European Communities – Regime for the Importation, Sale
and Distribution of Bananas, WT/DS27/AB/R, adopted 25 September 1997,
DSR 1997:II, p. 591
EC – Bananas III
(Ecuador)
Panel Report, European Communities – Regime for the Importation, Sale and
Distribution of Bananas, Complaint by Ecuador, WT/DS27/R/ECU, adopted
25 September 1997, as modified by Appellate Body Report WT/DS27/AB/R,
DSR 1997:III, p. 1085
EC – Bananas III
(Article 21.5 – Ecuador)
Panel Report, European Communities – Regime for the Importation, Sale and
Distribution of Bananas – Recourse to Article 21.5 of the DSU by Ecuador,
WT/DS27/RW/ECU, adopted 6 May 1999, DSR 1999:II, p. 803

Short Title Full Case Title and Citation
EC – Countervailing
Measures on DRAM Chips
Panel Report, European Communities – Countervailing Measures on Dynamic
Random Access Memory Chips from Korea, WT/DS299/R, adopted 3 August 2005,
DSR 2005:XVIII, p. 8671
EC – Seal Products Appellate Body Reports, European Communities – Measures Prohibiting the
Importation and Marketing of Seal Products, WT/DS400/AB/R / WT/DS401/AB/R,
adopted 18 June 2014
EC – Tariff Preferences Appellate Body Report, European Communities – Conditions for the Granting of
Tariff Preferences to Developing Countries, WT/DS246/AB/R, adopted
20 April 2004, DSR 2004:III, p. 925
EC and certain member
States – Large Civil
Aircraft
Appellate Body Report, European Communities and Certain Member States –
Measures Affecting Trade in Large Civil Aircraft, WT/DS316/AB/R, adopted
1 June 2011, DSR 2011:I, p. 7
India – Autos Panel Report, India – Measures Affecting the Automotive Sector, WT/DS146/R,
WT/DS175/R, and Corr.1, adopted 5 April 2002, DSR 2002:V, p. 1827
Japan – Alcoholic
Beverages II
Appellate Body Report, Japan – Taxes on Alcoholic Beverages, WT/DS8/AB/R,
WT/DS10/AB/R, WT/DS11/AB/R, adopted 1 November 1996, DSR 1996:I, p. 97
Japan – Apples Appellate Body Report, Japan – Measures Affecting the Importation of Apples,
WT/DS245/AB/R, adopted 10 December 2003, DSR 2003:IX, p. 4391
Korea – Various
Measures on Beef
Appellate Body Report, Korea – Measures Affecting Imports of Fresh, Chilled and
Frozen Beef, WT/DS161/AB/R, WT/DS169/AB/R, adopted 10 January 2001,
DSR 2001:I, p. 5
Korea – Various
Measures on Beef
Panel Report, Korea – Measures Affecting Imports of Fresh, Chilled and Frozen
Beef, WT/DS161/R, WT/DS169/R, adopted 10 January 2001, as modified by
Appellate Body Report WT/DS161/AB/R, WT/DS169/AB/R, DSR 2001:I, p. 59
Mexico – Anti-Dumping
Measures on Rice
Appellate Body Report, Mexico – Definitive Anti-Dumping Measures on Beef and
Rice, Complaint with Respect to Rice, WT/DS295/AB/R, adopted 20 December
2005, DSR 2005:XXII, p. 10853
Mexico – Taxes on Soft
Drinks
Appellate Body Report, Mexico – Tax Measures on Soft Drinks and Other
Beverages, WT/DS308/AB/R, adopted 24 March 2006, DSR 2006:I, p. 3
Thailand – Cigarettes
(Philippines)
Appellate Body Report, Thailand – Customs and Fiscal Measures on Cigarettes
from the Philippines, WT/DS371/AB/R, adopted 15 July 2011, DSR 2011:IV,
p. 2203
Thailand – Cigarettes
(Philippines)
Panel Report, Thailand – Customs and Fiscal Measures on Cigarettes from the
Philippines, WT/DS371/R, adopted 15 July 2011, as modified by Appellate Body
Report WT/DS371/AB/R, DSR 2011:IV, p. 2299
Turkey – Rice Panel Report, Turkey – Measures Affecting the Importation of Rice, WT/DS334/R,
adopted 22 October 2007, DSR 2007:VI, p. 2151
US – Carbon Steel Appellate Body Report, United States – Countervailing Duties on Certain
Corrosion-Resistant Carbon Steel Flat Products from Germany, WT/DS213/AB/R
and Corr.1, adopted 19 December 2002, DSR 2002:IX, p. 3779
US – Clove Cigarettes Appellate Body Report, United States – Measures Affecting the Production and
Sale of Clove Cigarettes, WT/DS406/AB/R, adopted 24 April 2012, DSR 2012: XI,
p. 5751
US – COOL Appellate Body Reports, United States – Certain Country of Origin Labelling
(COOL) Requirements, WT/DS384/AB/R / WT/DS386/AB/R, adopted 23 July 2012,
DSR 2012:V, p. 2449
US – FSC
(Article 21.5 – EC)
Appellate Body Report, United States – Tax Treatment for "Foreign Sales
Corporations" – Recourse to Article 21.5 of the DSU by the European
Communities, WT/DS108/AB/RW, adopted 29 January 2002, DSR 2002:I, p. 55
US – FSC
(Article 21.5 – EC)
Panel Report, United States – Tax Treatment for "Foreign Sales Corporations" –
Recourse to Article 21.5 of the DSU by the European Communities,
WT/DS108/RW, adopted 29 January 2002, as modified by Appellate Body Report
WT/DS108/AB/RW, DSR 2002:I, p. 119
US – Gambling Appellate Body Report, United States – Measures Affecting the Cross-Border
Supply of Gambling and Betting Services, WT/DS285/AB/R, adopted
20 April 2005, DSR 2005:XII, p. 5663 (and Corr.1, DSR 2006:XII, p. 5475)

Short Title Full Case Title and Citation
US – Gambling Panel Report, United States – Measures Affecting the Cross-Border Supply of
Gambling and Betting Services, WT/DS285/R, adopted 20 April 2005, as modified
by Appellate Body Report WT/DS285/AB/R, DSR 2005:XII, p. 5797
US – Gasoline Appellate Body Report, United States – Standards for Reformulated and
Conventional Gasoline, WT/DS2/AB/R, adopted 20 May 1996, DSR 1996:I, p. 3
US – Large Civil Aircraft
(2nd complaint)
Appellate Body Report, United States – Measures Affecting Trade in Large Civil
Aircraft (Second Complaint), WT/DS353/AB/R, adopted 23 March 2012, DSR
2012:I, p. 7
US – Poultry (China) Panel Report, United States – Certain Measures Affecting Imports of Poultry from
China, WT/DS392/R, adopted 25 October 2010, DSR 2010:V, p. 1909
US – Shrimp (Thailand) Panel Report, United States – Measures Relating to Shrimp from Thailand,
WT/DS343/R, adopted 1 August 2008, as modified by Appellate Body Report
WT/DS343/AB/R / WT/DS345/AB/R, DSR 2008:VII, p. 2539
US – Stainless Steel
(Mexico)
Appellate Body Report, United States – Final Anti-Dumping Measures on Stainless
Steel from Mexico, WT/DS344/AB/R, adopted 20 May 2008, DSR 2008:II, p. 513
US – Tuna II (Mexico) Appellate Body Report, United States – Measures Concerning the Importation,
Marketing and Sale of Tuna and Tuna Products, WT/DS381/AB/R, adopted
13 June 2012, DSR 2012:IV, p. 1837
US – Wool Shirts and
Blouses
Appellate Body Report, United States – Measure Affecting Imports of Woven Wool
Shirts and Blouses from India, WT/DS33/AB/R, adopted 23 May 1997, and Corr.1,
DSR 1997:I, p. 323

APPELLATE BODY

Argentina – Measures Relating to Trade in
Goods and Services

Panama, Appellant/Appellee
Argentina, Other Appellant/Appellee

Australia, Third Participant
Brazil, Third Participant
China, Third Participant
Ecuador, Third Participant
European Union, Third Participant
Guatemala, Third Participant
Honduras, Third Participant
India, Third Participant
Oman, Third Participant
Saudi Arabia, Third Participant
Singapore, Third Participant
United States, Third Participant
AB-2015-8

Appellate Body Division:

Chang, Presiding Member
Bhatia, Member
Zhang, Member

1 INTRODUCTION
1.1. Panama and Argentina each appeals certain issues of law and legal interpretations developed
in the Panel Report, Argentina – Measures Relating to Trade in Goods and Services 1
(Panel Report). The Panel was established on 25 June 2013 to consider a complaint by Panama 2
with respect to certain financial, taxation, foreign exchange, and registration measures adopted by
Argentina, each distinguishing between "countri es cooperating for tax transparency purposes"
(cooperative countries) and "countries not cooperating for tax transparency purposes"
(non-cooperative countries) in accordance with Decree No. 589/2013
3 of Argentina's Federal
Administration of Public Revenue (AFIP). In particular, Panama challenged the following
eight measures4:
Measure 1: An irrebuttable presumption that payments made by Argentine consumers to
creditors located in non-cooperative countries in certain transactions represent a net gain of
100% for the purpose of determining the tax base for gains tax, applied pursuant to
Article 93(c) of the Gains Tax Law
5 (withholding tax on payments of interest or
remuneration);
Measure 2: A rebuttable presumption of unjustifi ed increase in wealth applicable to any
entry of funds – for the benefit of Argentine taxpayers – from non-cooperative countries in
the context of an ex officio determination of the taxable subject matter by the AFIP for the
purpose of gains tax, applied pursuant to the unnumbered provision added after Article 18 of
the Law on Tax Procedure6 (presumption of unjustified increase in wealth);
Measure 3: The obligation to apply valuation methods based on transfer pricing to
transactions between Argentine taxpayers and persons of non-cooperative countries for the
purpose of determining the tax base for gains tax, applied pursuant to Article 8,
fifth paragraph, and Article 15, second paragraph, of the Gains Tax Law (transaction
valuation based on transfer pricing);

1 WT/DS453/R, 30 September 2015.
2 Request for the Establishment of a Panel by Panama, WT/DS453/4, 13 May 2013.
3 Decree No. 589 of the Federal Administration of Public Revenue (AFIP) of 27 May 2013
(Decree No. 589/2013) (Panel Exhibits ARG-35 and PAN-3).
4 In section 5 of this Report, we provide a more detailed description of these measures.
5 Law No. 20.628 on Gains Tax of 29 December 1973 (Gains Tax Law) (Panel Exhibits ARG-42 and
PAN-4).
6 Law No. 11.683, consolidated text of 1978, and amendments thereto, approved by Decree
No. 821/1998 of 13 July 1998, published in the Official Journal of the Argentine Republic on 20 July 1998
(Law on Tax Procedure) (Panel Exhibits ARG-45 and PAN-9).

Measure 4: The allocation of expenditure for transactions between Argentine taxpayers and
persons of non-cooperative countries to the fiscal years in which payment for the
transactions actually takes place for the purpose of determining the tax base for gains tax,
applied pursuant to the last paragraph of Article 18 of the Gains Tax Law (rule on the
allocation of expenditure);
Measure 5: Certain requirements that service suppliers of non-cooperative countries must
meet in order to gain access to Argentina's reinsurance services market, applied pursuant to
SSN Resolution No. 35.615/2011 7, as amended by Article 4 of SSN Resolution
No. 35.794/20118 and SSN Resolution No. 38.284/2014 9 (requirements relating to
reinsurance services);
Measure 6: Certain requirements that stock market intermediaries 10 must fulfil in order to
engage in transactions ordered by persons of non-cooperative countries, applied pursuant to
Title XI ("Prevention of money laundering and financing of terrorism"), Section III, Article 5
of the Rules of the National Securities Commission 11 (requirements for access to the
Argentine capital market);
Measure 7: Certain requirements with which companies of non-cooperative countries must
comply in order to register branches in the Pu blic Trade Register of the Autonomous City of
Buenos Aires, applied pursuant to Article 192 of the Resolution on Companies Incorporated
Abroad12 (requirements for the registration of branches); and
Measure 8: A requirement to obtain prior authorization from the Central Bank of the
Argentine Republic (Argentine Central Bank) to access the Single Free Foreign Exchange
Market in order to purchase foreign currency for the repatriation of direct and portfolio
investments when the beneficiary abroad is residing, incorporated, or domiciled in a
non-cooperative country, applied pursuant to Communication "A" No. 4940
13, Section I, of
the Argentine Central Bank (foreign exchange authorization requirement).
1.2. With respect to Argentina's obligations under the General Agreement on Trade in Services
(GATS), Panama claimed before the Panel that all eight challenged measures are inconsistent with
Article II:1 of the GATS because these measures accord less favourable treatment to services and
service suppliers of non-cooperative countries th an that accorded to like services and service
suppliers of cooperative countries. 14 Panama also claimed that measures 2, 3, and 4 are
inconsistent with Article XVII of the GATS because these measures accord less favourable
treatment to services and service suppliers of non- cooperative countries than that accorded to like

7 Resolution No. 35.615 of the National Insurance Supervisory Authority (SSN) of 11 February 2011
(SSN Resolution No. 35.615/2011) (Panel Exhibits ARG-27 and PAN-36).
8 Resolution No. 35.794 of the National Insurance Supervisory Authority (SSN) of 19 May 2011
(SSN Resolution No. 35.794/2011) (Panel Exhibits ARG-48 and PAN-40). Article 4 of this resolution develops
point 19 of Annex I to SSN Resolution No. 35.615/2011. (Panel Report, para. 2.24)
9 Resolution No. 38.284 of the National Insurance Supervisory Authority (SSN) of 21 March 2014
(SSN Resolution No. 38.284/2014) (Panel Exhibit ARG-47). This Resolution replaces points 18 and 20(f) of
Annex I to SSN Resolution No. 35.615/2011. (Panel Report, para. 2.24) Although SSN Resolution 35.794/2011
and SSN Resolution No. 38.284/2014 were not mentioned in the panel request, the Panel identified these
two legal instruments as forming part of its terms of reference. (Panel Report, para. 7.20) At the same time,
the Panel found that a further amendment to SSN Resolution No. 35.615/2011 – made by means of Resolution
No. 38.708 of the National Insurance Supervisory Authority (SSN) of 6 November 2014, and Annex thereto:
General Regulation for Insurance Activities (Panel Exhibit ARG-135) – was not within its terms of reference,
and decided that it would therefore not consider the amendment contained in that Resolution in its analysis of
measure 5. (Panel Report, para. 7.19)
10 "Stock market intermediaries" means the persons indicated in Article 1 of the Rules of the National
Securities Commission, including "bargaining agents, liquidation and compensation agents, distribution and
placement agents, and collective investment management agents". (Panel Report, fn 53 to para. 2.35
(referring to Rules of the National Securities Commission, infra, fn 11))
11 Rules of the National Securities Commission, New Text 2013 (Title XI), approved by General
Resolution No. 622 (Rules of the National Securities Commission) (Panel Exhibits ARG-50 and PAN-58).
12 General Resolution No.7 of the General Justice Inspectorate (IGJ) of 25 August 2005 (Resolution on
Companies Incorporated Abroad) (Panel Exhibits ARG-33 and PAN-62).
13 Communication "A" No. 4940 of the Central Bank of the Argentine Republic of 12 May 2009
(Communication "A" No. 4940) (Panel Exhibits ARG-31 and PAN-71).

domestic services and service suppliers.15 With respect to measure 5, Panama further claimed that
this measure is inconsistent with Articles XVI:1 and XVI:2(a) of the GATS because Argentina
restricts the number of foreign service suppliers and accords them treatment less favourable than
that specified in its Schedule of Commitments.
16
1.3. With respect to Argentina's obligations under the General Agreement on Tariffs and
Trade 1994 (GATT 1994), Panama claimed that measures 2 and 3 are inconsistent with Article I:1
of the GATT 1994 because an advantage, favour, priv ilege, or immunity granted to products from
cooperative countries is not accorded to like products from non-cooperative countries.
17 Panama
also claimed that measure 3 is inconsistent with Article III:4 of the GATT 1994 because it places
products imported from non-cooperative countries in a less favourable position than that of like
domestic products.
18 Alternatively to its claim under Article III:4, Panama claimed that measure 3
is inconsistent with Article XI:1 of the GATT 1994 because this measure establishes limiting
conditions on the import/export of products from/to non-cooperative countries.19
1.4. Argentina requested that the Panel re ject Panama's claims in their entirety. 20 In the
alternative, in the event that the Panel were to find that these measures are inconsistent with the
GATS provisions cited by Panama, Argentina invoke d: Article XIV(c) of the GATS with respect to
measures 1, 2, 3, 4, 7, and 821; Article XIV(d) of the GATS with respect to measures 2, 3, and 422;
and paragraph 2(a) of the GATS Annex on Financ ial Services with respect to measures 5 and 6. 23
Moreover, in the event that the Panel were to find that Argentina acted inconsistently with
Articles I:1, III:4, and XI:1 of the GATT 1994 with respect to the measures in question, Argentina
argued that these measures are justified pursuant to Article XX(d) of the GATT 1994.
24 Argentina
maintained that the measures at issue are defensive tax measures that are in line with the
recommendations of the Global Forum on Transparency and Exchange of Information for Tax
Purposes (Global Forum), and that they serve to protect Argentina's tax base by preventing tax
evasion, tax avoidance, and fraud.
25 Argentina further contended that these measures serve to
prevent concealment and laundering of money of criminal origin, that they are in line with the
framework of the Financial Action Task Force (FATF)
26, and that they serve to protect investors
and the soundness of the Argentine financial system.27
1.5. The Panel Report was circulated to Members of the World Trade Organization (WTO) on
30 September 2015. With respect to Panama's claims under the GATS, the Panel found that:
a. the GATS is applicable to all eight measures because there is trade in services, and the
eight measures at issue are measures affecting trade in services within the meaning of
Article I:1 of the GATS28;
b. all eight measures are inconsistent with Article II:1 of the GATS because they do not
accord, immediately and unconditionally, to services and service suppliers of
non-cooperative countries treatment no less favourable than that which they accord to
like services and service suppliers of cooperative countries
29;
c. measures 2, 3, and 4 are not inconsistent with Article XVII of the GATS because they
accord to services and service suppliers of non-cooperative countries treatment no less
favourable than that which they accord to like Argentine services and service suppliers,

16 Panel Report, para. 3.1.e.
18 Panel Report, para. 3.1.c.
19 Panel Report, para. 3.1.c.
20 Panel Report, para. 3.3.
21 Panel Report, para. 7.526.
22 Panel Report, para. 7.765.
23 Panel Report, para. 7.781.
24 Panel Report, para. 7.1070.
25 Panel Report, paras. 7.527 and 7.534.
26 Panel Report, para. 7.534.
27 Panel Report, paras. 7.786 and 7.789.
28 Panel Report, para. 8.2.a.
29 Panel Report, para. 8.2.b.

in the relevant services and modes of supply in which Argentina has undertaken specific
commitments30;
d. measures 1, 2, 3, 4, 7, and 8 "are not covered under the exception of Article XIV(c) of
the GATS because their application constitutes arbitrary and unjustifiable discrimination
within the meaning of the chapeau of Article XIV of the GATS"31; and
e. measures 5 and 6 "are not covered by paragraph 2(a) of the Annex on Financial Services
because they were not taken for prudential reasons within the meaning of that
provision".32
1.6. Further, with respect to measure 5, the Panel rejected Panama's claims under
Article XVI:2(a) and Article XVI:1 of the GATS, finding, respectively, that this measure is not
covered by Article XVI:2(a)
33 and that Panama had failed to establish a prima facie case of
inconsistency in this respect.34 With respect to measures 2, 3, and 4, as the Panel had found that
these measures are not inconsistent with Article XVII of the GATS, the Panel refrained from ruling
on whether these measures are covered under the exception provided for in Article XIV(d) of the
GATS.
35
1.7. Regarding Panama's claims under the GATT 1994 with respect to measures 2 and 3, the
Panel rejected Panama's claims under Article I:1. 36 The Panel found that Panama had failed to
demonstrate that measure 2 constitutes a rule and formality in connection with exportation or a
charge imposed on the international transfer of payments for exports, within the meaning of
Article I:1 of the GATT 1994. 37 The Panel also found that Panama had failed to demonstrate that
measure 3 constitutes a matter referred to in Article III:4 or a rule and formality in connection
with exportation or importation, within the meaning of Article I:1 of the GATT 1994.38 With respect
to measure 3, the Panel rejected Panama's claims under Article III:4 and Article XI:1 of the
GATT 1994 because, respectively, Panama had failed to demonstrate that the measure is a matter
referred to in Article III:4 of the GATT 1994 39, and the measure, being fiscal in nature, is not
covered by Article XI:1 of the GATT 1994. 40 Finally, having rejected Panama's claims under
Articles I:1, III:4, and XI:1 of the GATT 1994, the Panel refrained from ruling on whether these
measures are covered by the exception provided for in Article XX(d) of the GATT 1994.41
1.8. On 27 October 2015, Panama notified the Dispute Settlement Body (DSB), pursuant to
Articles 16.4 and 17 of the Understanding on Ru les and Procedures Governing the Settlement of
Disputes (DSU), of its intention to appeal certain issues of law covered in the Panel Report, and
certain legal interpretations developed by the Panel, and filed a Notice of Appeal and appellant's
submission pursuant to Rule 20 and Rule 21, respectively, of the Working Procedures for Appellate
Review42 (Working Procedures). On 2 November 2015, Argentina notified the DSB, pursuant to
Articles 16.4 and 17 of the DSU, of its intention to appeal certain issues of law covered in the
Panel Report, and certain legal interpretations developed by the Panel, and filed a Notice of Other
Appeal and other appellant's submission purs uant to Rule 23 of the Working Procedures.
On 16 November 2015, Argentina and Panama each filed an appellee's submission.
43
On 19 November 2015, Australia, Brazil, the Euro pean Union, Guatemala, and the United States
each filed a third participant's submission. 44 On the same day, Singapore notified its intention to
appear at the oral hearing as a third participant.45 Subsequently, China, Ecuador, Honduras, India,

30 Panel Report, para. 8.2.c.
31 Panel Report, para. 8.2.d.
32 Panel Report, para. 8.2.e.
33 Panel Report, para. 8.3.
34 Panel Report, para. 8.4.
35 Panel Report, para. 8.5.
37 Panel Report, para. 8.6.a.
38 Panel Report, para. 8.6.b.
39 Panel Report, para. 8.6.c.
40 Panel Report, para. 8.6.d.
41 Panel Report, para. 8.7.
42 WT/AB/WP/6, 16 August 2010.
43 Pursuant to Rules 22 and 23(4) of the Working Procedures.
44 Pursuant to Rule 24(1) of the Working Procedures.
45 Pursuant to Rule 24(2) of the Working Procedures.

Oman, and Saudi Arabia each notified its intention to appear at the oral hearing as a third
participant.46
1.9. On 19 November 2015, just prior to the 5 p.m. deadline set out in the Working Schedule for
Appeal for filing third participants' submissions and executive summaries, Australia sent an e-mail
communication to the Appellate Body and the participants and third participants in this appeal
indicating that it had omitted to include the executive summary of its third participant's written
submission, and that it would endeavour to send the executive summary the following morning.
On 20 November 2015, Australia filed an executiv e summary of its third participant's submission.
On the same day, the Appellate Body Division hearing this appeal sent a letter to Australia,
informing it that the executive summary had not been filed in accordance with the official Working
Schedule. The Division invited Australia to file a written request explaining why the executive
summary should nonetheless be included in the Addendum
47 to the Appellate Body Report in these
proceedings.
1.10. On 24 November 2015, Australia filed a request that the executive summary of its third
participant's submission be included in the Addendum to the Appellate Body Report should the
Division consider that there was no unfairness to any of the participants in this appeal, and taking
account of the short length and limited scope of its written submission, and that the absence of an
executive summary had been rectified as quickly as possible. On 25 November 2015, the Division
invited the participants and third participants to comment on this issue in writing. Brazil, the
European Union, and the United States each submitted comments. The European Union noted
that, while Rule 18(1) of the Working Procedures should, in principle, be strictly enforced, the
Division's decision should take into account the particular mitigating circumstances of the present
case, including that Australia had informed the Appellate Body and all participants of the oversight
prior to the deadline and the nature of the document . Brazil and the United States considered that
there was no reason for the Division not to accept Australia's request in the particular
circumstances, as, in their view, no participan t had suffered any prejudice due to Australia's
delayed submission of the executive summary of its written submission.
1.11. We note that the Appellate Body has held that compliance with established time periods by
all participants regarding the filing of submissions is an important element of due process of law
and "a matter of fairness and orderly procedure", which are referred to in Rule 16(1) of the
Working Procedures.
48 These considerations are also valid with respect to executive summaries of
written submissions. In the particular circumstances of this case, we have accepted Australia's
request to include the executive summary of its third participant's written submission in the
Addendum to this Appellate Body Report.
1.12. By letter of 22 December 2015, the Chair of the Appellate Body notified the Chair of the
DSB that the Appellate Body would not be able to circulate its Report within the 60-day period
pursuant to Article 17.5 of the DSU, or within th e 90-day period pursuant to the same provision.
49
The Chair of the Appellate Body explained that th is was due to a number of factors, including the
number and complexity of the issues raised in this and concurrent proceedings, the demands on
the WTO Secretariat's translation services, the shorta ge of staff in the Appellate Body Secretariat,
the intervening holiday period, as well as the scheduling difficulties arising from a substantial
workload, overlaps in the composition of the Divisions hearing appeals concurrently pending before
the Appellate Body, and constraints resulting from the need for Spanish-speaking staff of which
the Appellate Body Secretariat has only a limite d number. On 22 February 2016, the Chair of the
Appellate Body informed the Chair of the DSB th at the Report in these proceedings would be
circulated no later than 19 April 2016.
50

46 On 21 January 2016, China, India, Oman, and Saudi Arabia each submitted its delegation list for the
oral hearing; on 22 January 2016, Ecuador submitted its delegation list for the oral hearing; and on 25 January
2016, Honduras submitted its delegation list for the oral hearing to the Appellate Body Secretariat and the
participants and third participants in this dispute. For purposes of this appeal, we have interpreted these
actions as notifications expressing the intention to attend the oral hearing as a third participant pursuant to
Rule 24(4) of the Working Procedures.
47 In accordance with the Appellate Body's communication of 11 March 2015, contained in document
WT/AB/23.
48 See Appellate Body Report, US – Stainless Steel (Mexico), para. 164.
49 WT/DS453/9.
50 WT/DS453/10.

1.13. The oral hearing in this appeal was held on 28-29 January 2016. The participants and eight
third participants (Australia, Brazil, China, the European Union, Guatemala, Honduras, Oman, and
the United States) made opening and/or closing statements. The participants and third participants
responded to questions posed by the Members of the Division hearing the appeal.
2 ARGUMENTS OF THE PARTICIPANTS
2.1. The claims and arguments of the participan ts are reflected in the executive summaries of
their written submissions provided to the Appellate Body.
51 The Notices of Appeal and
Other Appeal, and the executive summaries of the participants' claims and arguments, are
contained in Annexes A and B of the Addendum to this Report, WT/DS453/AB/R/Add.1.
3 ARGUMENTS OF THE THIRD PARTICIPANTS
3.1. The arguments of those third participants that filed a third participant's submission are
reflected in the executive summaries of their written submissions provided to the Appellate Body52,
and are contained in Annex C of the Addendum to this Report, WT/DS453/AB/R/Add.1.
4 ISSUES RAISED IN THIS APPEAL
4.1. The following issues are raised in this appeal:
a. with respect to Article II:1 of the GATS, whether the Panel erred in finding that
measures 1 through 8 are inconsistent with Article II:1 of the GATS and, in particular:
i. whether the Panel erred in its interpretation and application of the term "like services
and service suppliers" (raised by Argentina);
ii. whether the Panel erred in its allocation of the burden of proof (raised by Argentina);
iii. whether the Panel erred by making a prima facie case of "likeness" for Panama in the
absence of evidence and legal argument (raised by Argentina);
iv. whether the Panel acted inconsistently with Article 11 of the DSU in finding that the
services and service suppliers at issue are "like" (raised by Argentina); and
v. whether the Panel erred in its interpretation and application of the term "treatment
no less favourable" (raised by Panama);
b. with respect to Article XVII of the GATS, whether the Panel erred in finding that
measures 2, 3, and 4 are not inconsistent with Article XVII:1 of the GATS and, in
particular:
i. whether the Panel erred in relying upon its findings under Article II:1 in its analysis
of "like services and service suppliers" under Article XVII:1 of the GATS (raised by
Argentina);
ii. whether the Panel erred by making a prima facie case of "likeness" for Panama in the
absence of evidence and legal argument (raised by Argentina);
iii. whether the Panel acted inconsistently with Article 11 of the DSU in finding that the
services and service suppliers at issue are "like" under Article XVII:1 of the GATS
(raised by Argentina); and

51 Pursuant to the Appellate Body communication on "Executive Summaries of Written Submissions in
Appellate Proceedings" and "Guidelines in Respect of Executive Summaries of Written Submissions in Appellate
Proceedings". (WT/AB/23, 11 March 2015)
52 Pursuant to the Appellate Body communication on "Executive Summaries of Written Submissions in
Appellate Proceedings" and "Guidelines in Respect of Executive Summaries of Written Submissions in Appellate
Proceedings". (WT/AB/23, 11 March 2015)

iv. whether the Panel erred in its interpretation and application of the term "treatment
no less favourable" (raised by Panama);
c. with respect to the Panel's application of Article XIV(c) of the GATS to measures 1, 2, 3,
4, 7, and 8:
i. whether the Panel erred by failing to focus its analysis on the relevant aspects of the
measures that gave rise to the findings that these measures are inconsistent with
Article II:1 of the GATS (raised by Panama);
ii. whether the Panel erred in finding that these measures are designed to secure
compliance with the relevant Argentine laws or regulations (raised by Panama); and
iii. whether the Panel erred in finding that these measures are "necessary" to secure
compliance with the relevant Argentine laws or regulations (raised by Panama); and
d. whether the Panel erred in its interpretation of paragraph 2(a) of the GATS Annex on
Financial Services in finding that this provision covers all types of measures affecting the
supply of financial services within the meaning of paragraph 1(a) of the Annex.
5 OVERVIEW OF THE MEASURES AT ISSUE
5.1. Before turning to the issues of law and legal interpretation raised in this appeal, we provide
an overview of the eight measures at issue in this dispute. Before the Panel, Panama challenged
four separate tax measures (measures 1, 2, 3, and 4) and four measures relating to, respectively,
access to the reinsurance sector, access to the Argentine capital market, the registration of
branches of foreign companies, and access to the foreign exchange market (measures 5 to 8). All
of these measures are based on the distin ction between "cooperative" countries and
"non-cooperative" countries that is established in Decree No. 589/2013.
53
5.2. We begin by describing the distinction between cooperative countries and non-cooperative
countries underlying each of the eight measures challenged by Panama. Subsequently,
we describe the eight specific measures at issue based on the Panel's factual findings.54 Finally, we
briefly address the international instruments relevant to Argentina's defence that have been
developed by the Global Forum and the FATF. For more details regarding the Panel's
understanding of these measures and their factual context, recourse should be had to the
Panel Report.
5.1 The distinction between cooperative and non-cooperative countries
5.3. Argentina classifies countries as either "cooperative" or "non-cooperative" for tax
transparency purposes. Argentina's Decree No. 589/2013 sets out the criteria and the process for
classifying countries as cooperative or non-cooperative.
55 The Panel described Decree
No. 589/2013 as the "key element" of the eight measures challenged by Panama, insofar as all
eight measures refer to services and service su ppliers of non-cooperative countries under the
Decree.56 Article 1 of the Decree lays down the requirements for Argentina to grant "cooperative"
status to a country, dominion, jurisdiction, territory, associate State, or special tax regime.57 To be
granted cooperative status under Article 1 of the Decree, the country, dominion, jurisdiction,
territory, associate State, or special tax regime must either (i) sign with Argentina an agreement
on exchange of tax information or a convention on avoidance of international double taxation with
a broad information exchange clause, provided that there is an effective exchange of information,

53 Panel Report, paras. 2.1-2.2.
54 We understand that all of the relevant Argentine legal provisions underpinning the measures at issue
are included in the Panel Report; however, for the convenience of the reader, we provide the relevant excerpts
of these legal provisions in the attached Appendix.
55 The relevant text of Decree No. 589/2013 is set out in the attached Appendix.
56 Panel Report, para. 2.4.
57 Decree No. 589/2013 replaces the references to "countries with low or no taxes" contained in the
Gains Tax Law and in the regulation thereto with "countries not considered 'cooperative for tax transparency
purposes'". (Panel Report, fn 14 to para. 2.5 (referring to Decree No. 589/2013 (Panel Exhibits ARG-35 and
PAN-3))) See also Panel Report, paras. 7.5 and 7.15.

or (ii) initiate with Argentina the negotiations necessary for concluding such an agreement and/or
convention.58
5.4. Article 2 of Decree No. 589/2013 authorizes the AFIP to draw up the list of countries
considered to be cooperative for tax transparency purposes, and to keep the list up to date in
accordance with the provisions of the Decree. 59 Argentina explained to the Panel that this list is
updated annually at the beginning of each fiscal year.60
5.5. For many years, Panama was classified as a non-cooperative country. Following the
establishment of the Panel, Panama was included in the list of cooperative countries 61, even
though it did not have in place a double taxa tion convention or an information exchange
agreement with Argentina, and was not negotiating such a convention or agreement with
Argentina.
62 At the second substantive meeting of the Panel, Argentina explained that the AFIP
was reviewing whether to maintain Panama's status as a cooperative country. 63 As of the date on
which the Panel Report was issued to the parties, Panama was included in the list of cooperative
countries published by the AFIP.
64
5.2 Measure 1: Withholding tax on payments of interest or remuneration
5.6. Measure 1 consists of an irrebuttable presumption that payments made by Argentine
consumers to creditors located in non-cooperative countries, as consideration for the granting of
credits or loans or the placement of funds in Argentina, represent a net gain of 100% for the
purpose of determining the tax base for gains tax. 65 This measure, which is applied pursuant to
Article 93(c) of the Gains Tax Law 66, concerns situations in which a foreign supplier, such as a
bank or financial institution, grants credits or loans or places funds in Argentina through
cross-border supply. 67 In such situations, the foreign supplier is a "non-resident" that obtains
income in the form of interest or remuneration paid by Argentine consumers for the granting of
credits or loans or the placement of funds. For the purpose of Article 93(c), the foreign supplier
constitutes a "beneficiary abroad" whose income, generated in Argentina, is subject to gains tax in

58 Panel Report, para. 7.182 (referring to Decree No. 589/2013 (Panel Exhibits ARG-35 and PAN-3)).
59 Panel Report, para. 2.6 (referring to Decree No. 589/2013 (Panel Exhibits ARG-35 and PAN-3)).
60 Panel Report, para. 2.6 (referring to Argentina's response to Panel questions No. 9(b), para. 14, and
No. 10(b)(ii); and opening statement at the second Panel meeting, para. 41). The Panel also found that AFIP
Resolution No. 3.576/2013, adopted in the exercise of the powers conferred by Article 2(b) of Decree
No. 589/2013, exhibits slight differences in comparison with the Decree. (General Resolution No. 3.576 of the
Federal Administration of Public Revenue (AFIP) 27 December 2013 (AFIP Resolution No. 3.576/2013) (Panel
Exhibits ARG-37 and PAN-3)) In particular, the Panel noted that AFIP Resolution No. 3.576/2013 classifies
cooperative countries into three categories (rather than into two categories as in Decree No. 589/2013),
namely: (i) cooperative countries that have signed a double taxation convention or information exchange
agreement, with a positive assessment of effective exchange of information; (ii) cooperative countries with
which a double taxation convention or information exchange agreement has been signed but it has not been
possible to assess an effective exchange; and (iii) cooperative countries with which the process of negotiating
or ratifying a double taxation convention or information exchange agreement has been initiated. (Panel Report,
para. 2.8 and fn 357 to para. 7.182 (referring to AFIP Resolution No. 3.576/2013 (Panel Exhibits ARG-37 and
PAN-3))) Moreover, with respect to category (iii), the Panel noted that AFIP Resolution No. 3.576/2013 refers
to the "initiation" of the negotiation or ratification process, whereas Decree No. 589/2013 refers only to
negotiation. (Panel Report, fn 357 to para. 7.182 (referring to AFIP Resolution No. 3.576/2013 (Panel Exhibits
ARG-37 and PAN-3)))
61 Executive summary of Panama's first written submission to the Panel (Panel Report, Annex B-1),
para. 1.5.
62 Panel Report, fn 16 to para. 2.6 and fn 469 to para. 7.291 (both quoting Argentina's opening
statement at the second Panel meeting, paras. 42-43).
63 Panel Report, fn 16 to para. 2.6 and fn 469 to para. 7.291 (both quoting Argentina's opening
statement at the second Panel meeting, paras. 42-43).
64 Panel Report, para. 2.7; Executive summary of Panama's first written submission to the Panel (Panel
Report, Annex B-1), para. 1.5.
65 Panel Report, paras. 2.13 and 7.237.
66 The relevant text of Article 93(c) of the Gains Tax Law is set out in the attached Appendix.
67 Panel Report, para. 7.237.

Argentina.68 When the Argentine consumer pays interest or remuneration to the foreign supplier
for its services, Argentine tax authorities collect the gains tax through withholding.69
5.7. Article 93(c) of the Gains Tax Law presumes, against any possibility of evidence to the
contrary, a net gain for a beneficiary abroad when interest or remuneration is paid to this
beneficiary on credits, loans, or placem ents of funds of any origin or type. 70 The provision
establishes two different margins of presumed net gain depending upon whether the creditor is
located in a cooperative country or a non-cooperative country.
71 For creditors located in
cooperative countries, as provided under Article 93(c)(1) of the Gains Tax Law, the net gain is
presumed to be 43%. However, for creditors located in non-cooperative countries, as provided
under Article 93(c)(2) of the Gains Tax Law, the net gain is presumed to be 100%.
72 Argentina
applies a tax rate of 35% in both cases. 73 This means that the interest or remuneration paid by a
borrower in Argentina to a creditor abroad is subject to a 15.05% tax if the creditor is located in a
cooperative country, and a 35% tax if the creditor is located in a non-cooperative country.74
5.3 Measure 2: Presumption of unjustified increase in wealth
5.8. Measure 2 consists of a rebuttable presumption of unjustified increase in wealth applicable to
any entry of funds – for the benefit of Argentine taxpayers – from non-cooperative countries in the
context of an ex officio determination of the taxable subject matter by the AFIP for the purpose of
gains tax.
75 This measure is applied pursuant to the unnumbered provision added after Article 18
of the Law on Tax Procedure.76
5.9. According to Article 11 of the Law on Tax Procedure, Argentine taxpayers themselves will
usually determine, through their sworn declarations, what is subject to taxation. 77 The AFIP will
resort to an ex officio determination of what is subject to taxation, under Article 16 of the Law on
Tax Procedure, only when the Argentine taxpayer has not submitted a sworn declaration, or when
a submitted sworn declaration is contested.
78 The AFIP may make its ex officio determination
directly, as a result of certain knowledge of the taxable subject matter, or by estimation. 79 When
the AFIP makes an ex officio determination by estimation, it may apply the presumption of
unjustified increase in wealth listed in Article 18(f) of the Law on Tax Procedure.80
5.10. For any entry of funds from non-cooperative countries, however, measure 2 provides that
the AFIP will automatically determine the taxable subject matter ex officio, applying the
presumption of unjustified increase in wealth to such entry of funds. 81 The presumption of
unjustified increase in wealth applies to funds from non-cooperative countries "irrespective of their
nature or purpose or the type of transaction involved". 82 Pursuant to Article 18 of the Law on Tax
Procedure, the amount of such presumed unjustified increases in wealth, plus 10% falling under
the heading of "income disposed of or consumed as non-deductible expenditure", represents net

68 Argentina's response to questioning at the oral hearing; Panama's first written submission to the
Panel, para. 4.4.
69 Argentina's response to questioning at the oral hearing; Panama's first written submission to the
Panel, para. 4.5.
70 Panel Report, para. 2.14.
71 Panel Report, paras. 2.14 and 7.690.
72 Panel Report, paras. 2.14 and 7.690. The Panel found that the presumption of a net gain of 100%
applies only when the recipient of the credit or loan or the investor of the funds is a person covered by
Article 49 of the Gains Tax Law, a natural person, or an undivided estate, but not if it is a financial entity
governed by Law No. 21.526. (Panel Report, para. 2.15)
73 Panel Report, paras. 2.14, 7.238, and 7.690.
74 Panel Report, para. 7.690. The 15.05% tax on interest or remuneration paid to a creditor in a
cooperative country is calculated by multiplying the presumed net gain of 43% by the tax rate of 35%.
Similarly, the 35% tax on interest or remuneration paid to a creditor in a non-cooperative country is calculated
by multiplying the presumed net gain of 100% by the tax rate of 35%.
75 Panel Report, paras. 2.17, 7.240, and 7.517.
76 The relevant text of the unnumbered provision added after Article 18 of the Law on Tax Procedure is
set out in the attached Appendix.
77 Panel Report, para. 2.43 and fn 61 thereto.
78 Panel Report, paras. 2.43, 7.243, and 7.496.
79 Panel Report, para. 2.43.
80 Panel Report, paras. 2.43 and 7.241.
81 Panel Report, para. 7.243.
82 Panel Report, para. 2.17 (quoting Law on Tax Procedure (Panel Exhibits ARG-45 and PAN-9)).

gains during the financial year in which they occur, for the purpose of determining the gains tax. 83
Accordingly, classifying an entry of funds as an unjustified increase in wealth automatically
involves an increase in the tax base for gains tax. 84 The presumption of unjustified increase in
wealth may be rebutted if the taxpayer conclusi vely proves that the funds originated from
activities actually carried out by the taxpayer, or by a third party in the non-cooperative
countries.85
5.4 Measure 3: Transaction valuation based on transfer pricing
5.11. Measure 3 consists of the obligation to apply valuation methods based on transfer pricing
for transactions between Argentine taxpayers an d persons of non-cooperative countries for the
purpose of determining the tax base for the gains tax payable by Argentine taxpayers. 86 This
measure is applied pursuant to Article 8, fifth paragraph, and Article 15, second paragraph, of the
Gains Tax Law.87
5.12. Article 14 of the Gains Tax Law establishes the rule that transactions between an Argentine
taxpayer and an unrelated counterpart in a cooperative country shall be considered as
arm's-length transactions "if their services and conditions are in line with normal arm's-length
market practices". 88 The valuation of the transaction shall be based on the value agreed upon
between the parties, unless the parties are related, in which case the transfer pricing regime
applies.89 This general rule applies both for transactions with persons of cooperative countries and
for transactions with Argentine persons.90
5.13. With respect to transactions between Argentine taxpayers and persons domiciled,
incorporated, or located in a non-cooperative country, however, measure 3 provides that such
transactions shall not be considered to be consistent with normal arm's-length market practices or
prices. Rather, the transactions shall be valued in accordance with the transfer pricing regime as
though the transactions were conducted between related parties, irrespective of whether the
parties are actually related.
91
5.5 Measure 4: Rule on the allocation of expenditure
5.14. Measure 4 concerns the allocation of expenditure for transactions between Argentine
taxpayers and persons of non-cooperative countries.
92 This measure is applied pursuant to the last
paragraph of Article 18 of the Gains Tax Law.93
5.15. An Argentine taxpayer may, pursuant to Article 80 of the Gains Tax Law, deduct
expenditure of different types with a view to determining net profits. 94 In principle, both

83 Panel Report, para. 2.17 (quoting Law on Tax Procedure (Panel Exhibits ARG-45 and PAN-9)), fn 63 to
para. 2.43, and para. 7.297.
84 Panel Report, para. 7.297.
85 Panel Report, paras. 2.18, 7.240, 7.297, and 7.517.
86 Panel Report, paras. 2.19-2.20.
87 The relevant text of Article 8, fifth paragraph, and Article 15, second paragraph, of the Gains Tax Law
is set out in the attached Appendix.
88 Panel Report, para. 7.245; Argentina's response to questioning at the oral hearing. The third
paragraph of Article 14 of the Gains Tax Law provides as follows:
Transactions between a stable institution, as referred to in subparagraph (b) of Article 69, or a
company or trust fund covered by subparagraphs (a) and (b) and the subparagraph added after
subparagraph (d) of Article 49 – respectively, and related persons or entities incorporated,
domiciled or located abroad shall, for all purposes, be considered as being between independent
parties if their services and conditions are in line with normal arm's-length market practices,
except in the cases covered by subparagraph (m) of Article 88. When such services and
conditions are not in line with arm's-length market practices, they shall be adapted in accordance
with the provisions of Article 15.
(Panel Report, fn 64 to para. 2.45 (quoting Gains Tax Law (Panel Exhibits ARG-42 and PAN-4)))
89 Panel Report, paras. 7.306 and 7.497.
90 Argentina's response to questioning at the oral hearing.
91 Panel Report, paras. 2.19-2.20, 7.246, and 7.306.
92 Panel Report, paras. 2.21-2.22.
93 The relevant text of Article 18 of the Gains Tax Law is set out in the attached Appendix.
94 Argentina's response to questioning at the oral hearing.

expenditure and profits shall be allocated to the fiscal year in which they accrue (accrual rule). 95
However, pursuant to measure 4, expenditure for transactions between an Argentine taxpayer and
a person of a non-cooperative country must be allocated to the fiscal year in which payment for
the transaction has been executed (payment received rule).
96 This allocation of expenditure does
not necessarily occur in the same fiscal year as that in which the payment obligation accrues.97
5.16. While the expenditure incurred may be deducted from the taxpayer's tax base under both
the accrual rule and the payment received rule, these rules differ with respect to the time at which
such expenditure may be allocated and deducted, i. e. the time at which the expenditure has been
accrued (accrual rule), on the one hand, or the time at which the payment has been executed
(payment received rule), on the other hand.
98
5.6 Measure 5: Requirements relating to reinsurance services
5.17. Measure 5 consists of certain requirements that service suppliers of non-cooperative
countries must meet in order to gain access to Argentina's reinsurance services market. This
measure is applied pursuant to points 18 and 20(f) of Annex I to SSN Resolution No. 35.615/2011,
and it has been amended on several occasions.
99
5.18. SSN Resolution No. 35.615/2011 imposed a ba n on the supply of reinsurance services by
branches of companies in non-cooperative countri es (point 18 of Annex I to the Resolution) and
reinsurance establishments that deliver their services from their country of origin that is a
non-cooperative country (point 20(f) of Annex I to the Resolution). Point 19 of Annex I to
SSN Resolution No. 35.615/2011 provides, however, that the National Insurance Supervisory
Authority may authorize reinsurance contracts with foreign reinsurance establishments that
conduct their operations from their head office if the reinsurance operations cannot be covered on
the national reinsurance market because of the scale or the characteristics of the risks ceded.
100
5.19. Subsequently, on 25 March 2014, Argentina published SSN Resolution No. 38.284/2014,
which replaced the text of points 18 and 20(f) of Annex I to SSN Resolution No. 35.615/2011. The
new text of points 18 and 20(f) lifts the ban on supplying reinsurance services through
cross-border trade and commercial presence for entities of non-cooperative countries.
101 The new
text provides for the possibility of supplying such services, provided that the parent companies of
the branches of companies of non-cooperative coun tries, and the reinsurance entities that deliver
their services directly from non-cooperative countries, comply with certain requirements.102
5.20. Following the amendment of 25 March 2014, points 18 and 20(f) of Annex I to SSN
Resolution No. 35.615/2011 provide that foreign suppliers of reinsurance services may be
authorized to offer reinsurance operations from their country of origin (point 20(f)) or through a
branch in Argentina (point 18) provided that they meet the following requirements: (i) prove that
they have been incorporated and registered in a cooperative country (in the case of branches, this
proof applies to the parent company)
103; and (ii) prove that they have been incorporated and
registered in countries that cooperate in the global fight against money laundering and terrorist

95 Panel Report, para. 2.48. Article 18 of the Gains Tax Law provides, in relevant part:
… the profits referred to in Article 49 shall be attributed to the tax year in which the accounting
year in which they are accrued ends. … The above provisions on the allocation of profits shall
apply correlatively to the allocation of expenditure, unless otherwise provided.
(Panel Report, fn 66 to para. 2.48 (quoting Gains Tax Law (Panel Exhibits ARG-42 and PAN-4)))
96 Panel Report, paras. 2.22, 7.250, and 7.311.
97 Panel Report, para. 7.250.
98 Panel Report, para. 7.314 (referring to Argentina's first written submission to the Panel, Explanatory
Annex No. 1, para. 127) and para. 7.699 (referring to Argentina's first written submission to the Panel,
para. 301).
99 The relevant text of points 18 and 20(f) of Annex I to SSN Resolution No. 35.615/2011, as amended,
is set out in the attached Appendix.
100 Panel Report, paras. 2.26-2.27.
101 Panel Report, paras. 2.30 and 7.32.
102 Panel Report, paras. 7.32.
103 Panel Report, paras. 2.32 and 7.322.

financing offences in accordance with the criteria defined by the FATF (in the case of branches,
such proof relates to the parent company).104
5.21. With respect to the first requirement abov e, if a foreign supplier of reinsurance services
operating via supply mode 1 or 3 does not prove that it has been incorporated and registered in a
cooperative country, points 18 and 20(f), as amende d, provide that such supplier must prove that
it is subject to the control and supervision of a body (i) that fulfils functions similar to those of the
National Insurance Supervisory Authority and (ii) with which a memorandum of understanding on
cooperation and exchange of information has been signed.
105 With regard to the second
requirement referred to in paragraph 5.20 above, if a foreign supplier of reinsurance services via
supply mode 1 or 3 does not prove that it has been incorporated and registered in a country
collaborating in the global fight against money laundering and terrorism financing offences in
accordance with the criteria defined by the FATF , points 18 and 20(f), as amended, provide that
the assessment of the service supplier's request for authorization shall be subject to enhanced due
diligence, proportionate to the risks, an d that the counter-measures indicated in
Recommendation 19 of the FATF and the Interpretive Note thereto may be applied.106
5.7 Measure 6: Requirements for access to the Argentine capital market
5.22. Measure 6 imposes requirements that stock market intermediaries 107 must fulfil in order to
engage in transactions ordered by persons of non-cooperative countries.108 The measure is applied
pursuant to Title XI ("Prevention of money laund ering and financing of terrorism"), Section III,
Article 5 of the Rules of the National Securities Commission. 109 Pursuant to this provision,
two requirements must be met for a stock market intermediary in Argentina to engage in
transactions involving the public offering of negotiable securities, forward contracts, futures or
options, or other financial instruments when conducted or ordered by persons incorporated,
domiciled, or residing in non-cooperative countries . First, the persons incorporated, domiciled, or
residing in non-cooperative countries that place the order with the stock market intermediary must
have the status of intermediaries registered with an entity under the control and supervision of a
body fulfilling functions similar to those of the Argentine National Securities Commission. Second,
the body in question must have signed a me morandum of understanding on cooperation and
exchange of information with the Argentine National Securities Commission.
110 Argentine stock
market intermediaries are not subject to these re quirements when they engage in transactions
conducted or ordered by persons of cooperative countries.111
5.8 Measure 7: Requirements for the registration of branches
5.23. Measure 7 contains certain requirements with which companies of non-cooperative countries
must comply in order to register branches in the Public Trade Register of the Autonomous City of
Buenos Aires. 112 This measure does not apply to the regi stration of branches of companies of

104 Panel Report, paras. 2.32 and 7.322.
105 Panel Report, paras. 2.33, 7.254, and 7.323.
106 Panel Report, para. 7.323. Recommendation 19 concerns "high-risk countries" and states, in part,
that:
[f]inancial institutions should be required to apply enhanced due diligence measures to business
relationships and transactions with natural and legal persons, and financial institutions, from
countries for which this is called for by the FATF. The type of enhanced due diligence measures
applied should be effective and proportionate to the risks.
(Panel Report, fn 885 to para. 7.724 (quoting Financial Action Task Force (FATF) Recommendations,
International Standards on Combating Money Laundering and the Financing of Terrorism and Proliferation
(February 2012) (Panel Exhibit ARG-25), p. 20))
107 "Stock market intermediaries" means the persons indicated in Article 1 of the Rules of the National
Securities Commission, including "bargaining agents, liquidation and compensation agents, distribution and
placement agents, and collective investment management agents". (Panel Report, fn 53 to para. 2.35
(referring to Rules of the National Securities Commission) (Panel Exhibits ARG-50 and PAN-58))
108 Panel Report, para. 2.35.
109 The relevant text of Title XI, Section III, Article 5 of the Rules of the National Securities Commission
is set out in the attached Appendix.
110 Panel Report, paras. 2.36 and 7.257.
111 Panel Report, para. 7.257.
112 Panel Report, para. 2.37.

cooperative countries. 113 Measure 7 is maintained pursuant to Article 192 of the Resolution on
Companies Incorporated Abroad.114
5.24. Article 192 of the Resolution on Companies Incorporated Abroad stipulates that, in order to
meet the requirements set forth in Article 118 115 and Article 188, subparagraphs 3(b) and 3(c)
thereof116, branches of companies set up, registered, or incorporated in non-cooperative countries
shall be required to prove "that the company is effectively engaged in economically significant
business activities in the place where it was set up, registered or incorporated and/or in third
countries".
117 The provision further stipulates that the General Justice Inspectorate may request
additional documents from companies of non-cooperative countries, and that it may separately
request information in order to verify the records of the companies' partners. The General Justice
Inspectorate shall consider compliance with the requirements in Article 188 "restrictively" when a
branch of a company of a non-cooperative country is being registered.
118
5.9 Measure 8: Foreign exchange authorization requirement
5.25. Measure 8 requires prior authorization from the Argentine Central Bank to access the Single
Free Foreign Exchange Market in order to purchase foreign currency for the repatriation of direct
and portfolio investments when the beneficiary abroad is a natural or legal person residing,
incorporated, or domiciled in a non-cooperative country.
119 This measure is applied pursuant to
Section I of Communication "A" No. 4940 of the Argentine Central Bank.120
5.26. When a natural or legal person residing, incorporated, or domiciled in a non-cooperative
country wishes to repatriate direct investment of the type indicated in point 1.13 of

113 Panel Report, para. 7.266.
114 The relevant text of Article 192 of the Resolution on Companies Incorporated Abroad is set out in the
attached Appendix.
115 The requirements for the registration of branches of all companies incorporated abroad
(in cooperative and in non-cooperative countries) are set out in Article 118 of the Commercial Companies Law.
These requirements are as follows: (i) to prove the existence of the company in accordance with its country's
legislation; (ii) to establish a domicile in Argentina, complying with the publication and registration required by
law for companies incorporated in Argentina; and (iii) to justify the decision to establish the representative
office and designate the person to be responsible for it. In the case of branches, the assigned capital must also
be specified, if this is required by special laws. (Panel Report, para. 2.50 and fn 69 thereto (referring to Law
No. 19.550 on Commercial Companies of 3 April 1972 (Commercial Companies Law) (Panel Exhibits ARG-43
and PAN-34)))
116 Panel Report, para. 7.265. Article 188, subparagraphs 3(b) and 3(c) of the Resolution on Companies
Incorporated Abroad provide as follows:
The following shall be submitted for the purpose of the registration provided for in Article 118,
third paragraph, of [the Commercial Companies Law]:
…
3. The documents from abroad drawn up by an official of the company whose representative
authority must be attested therein and authenticated by a notary or government official,
certifying: …
…
(b) That it has one or more agencies, branches or representative offices operating outside the
Republic and/or non-current (fixed) assets or operating rights in such assets belonging to
third parties and/or holdings in other companies not subject to public offering and/or habitually
conducts investment transactions on stock exchanges or securities markets as provided for in its
corporate purpose;
(c) Particulars of the persons who are partners at the time of the decision to request registration,
indicating for each partner as a minimum their first name and surname or title, domicile or head
office, identity card or passport number or registration, authorization or incorporation details,
and the number of shares and votes and their percentage of the registered capital. This
documentation need not be submitted if the personal particulars of the partners are in line with
the requirement in subparagraph 2(a) and are accompanied by a statement of their means of
livelihood by the company official referred to at the beginning of this subparagraph.
(Panel Report, fn 57 to para. 2.37 (quoting Resolution on Companies Incorporated Abroad (Panel Exhibits
ARG-33 and PAN-62)))
117 Panel Report, paras. 2.38 and 7.701.
118 Panel Report, paras. 2.38 and 7.701.
119 Panel Report, paras. 2.39, 2.40 and 7.270. See also para. 7.723.
120 The relevant text of Section I of Communication "A" No. 4940 of the Argentine Central Bank is set
out in the attached Appendix.

Communication "A" No. 4662 121, it must obtain prior authorization from the Argentine Central
Bank, irrespective of compliance with the relevant requirements in Argentine legislation. This is not
the case for repatriation of direct investment by natural or legal persons residing, incorporated, or
domiciled in a cooperative country, which, in principle, need not obtain prior authorization from the
Argentine Central Bank so long as they comply with the requirements laid down in
Argentine law.
122
5.10 The measures challenged by Panama
5.27. The table below sets out the eight specific measures at issue in this dispute and the claims
raised by the parties on appeal with respect to each measure.
Measure Description
Claims and defences
on appeal
1 Withholding tax on payments of interest or
remuneration
- Article II:1 of the GATS
- Article XIV(c) of the GATS
2 Presumption of unjustified increase in wealth - Article II:1 of the GATS
- Article XVII of the GATS
- Article XIV(c) of the GATS
3 Transaction valuation based on transfer pricing - Article II:1 of the GATS
- Article XVII of the GATS
- Article XIV(c) of the GATS
4 Rule on the allocation of expenditure - Article II:1 of the GATS
- Article XVII of the GATS
- Article XIV(c) of the GATS
5 Requirements relating to reinsurance services - Article II:1 of the GATS
- Paragraph 2(a) of the GATS
Annex on Financial Services
6 Requirements for access to the Argentine capital
market
- Article II:1 of the GATS
- Paragraph 2(a) of the GATS
Annex on Financial Services
7 Requirements for the registration of branches - Article II:1 of the GATS
- Article XIV(c) of the GATS
8 Foreign exchange authorization requirement - Article II:1 of the GATS
- Article XIV(c) of the GATS

121 Point 1.13 of the above-mentioned Communication provides that repatriation of direct investment
could occur in the following circumstances: (i) sale of the direct investment; (ii) definitive liquidation of the
direct investment; (iii) capital reduction decided by the local company; and (iv) the refund of irrevocable
contributions by the local company. (Panel Report, fn 78 to para. 2.52 (referring to Communication "A"
No. 4662 of the Central Bank of the Argentine Republic of 11 May 2007 (Panel Exhibits ARG-69 and PAN-67),
as amended by Communication "A" No. 4692 of the Central Bank of the Argentine Republic of 31 July 2007
(Panel Exhibits ARG-70 and PAN-68)))
122 The Panel explained that there are additional requirements that must be met by entities authorized
to deal in foreign exchange before they can engage in transactions exempt from prior authorization. (See Panel
Report, para. 7.270)

5.11 International instruments relevant to Argentina's defence
5.28. In the event that the Panel were to find th e measures at issue to be inconsistent with the
provisions of the GATS cited by Panama, Ar gentina invoked Article XIV(c) thereof and
paragraph 2(a) of the GATS Annex on Financial Services to justify these measures. 123 Argentina
invoked the exception in Article XIV(c) of the GATS to justify measures 1, 2, 3, 4, 7, and 8 124,
maintaining that these measures are "necessary to secure compliance" with Argentina's tax laws
or regulations within the meaning of Article XIV(c), including the "prevention of deceptive and
fraudulent practices" under subparagraph (i) commonly associated with transactions with
non-cooperative countries.
125 Specifically, Argentina stated before the Panel that its measures
were taken to counter harmful tax practices, such as tax evasion, tax avoidance, fraud,
concealment and laundering of money of criminal origin, and terrorist financing.
126 Argentina
invoked paragraph 2(a) of the GATS Annex on Financial Services to justify measures 5 and 6 127,
maintaining that these measures had been taken for prudential reasons, including the protection of
financial consumers and investors from the distortions, manipulations, and abusive situations
arising out of a lack of an effective exchange of information, as well as the preservation of the
integrity and smooth functioning of the Argentine financial system and capital market.
128
5.29. Argentina maintains that it has followed the recommendations of the Global Forum of the
Organisation for Economic Co-operation and Development (OECD) in establishing a comprehensive
regulatory framework addressing the risks posed by harmful tax competition to the integrity and
stability of its tax system.
129 Argentina also maintains that it has adopted certain measures
pursuant to the provisions of the FATF. 130 In the context of Article XIV(c) of the GATS, Argentina
explained to the Panel that, while the measures at issue seek to ensure compliance with Argentine
laws or regulations, these are, in turn, in line with the international instruments of the Global
Forum and the FATF.
131 The Panel provides more detailed information about the Global Forum and
the FATF in sections 2.4.3 and 2.4.4 of its Report.132

123 Before the Panel, Panama claimed that: (i) measures 1 to 8 are inconsistent with Article II:1 of the
GATS; (ii) measures 2 to 4 are also inconsistent with Article XVII of the GATS; and (iii) measure 5 is also
inconsistent with Articles XVI:1 and XVI:2(a) of the GATS. (Panel Report, para. 3.1) Before the Panel,
Argentina also invoked Article XIV(d) of the GATS as an alternative to its principal defence presented under
Article XIV(c) with respect to Panama's claims under Article XVII concerning measures 2, 3, and 4. (Panel
Report, para. 7.779) The Panel exercised judicial economy with respect to Argentina's defence under
Article XIV(d). (Panel Report, para. 7.780)
124 Panel Report, para. 7.526.
125 Panel Report, para. 7.527.
126 See Panel Report, paras. 7.534-7.535.
127 Panel Report, para. 7.781.
128 Panel Report, paras. 7.893 and 7.921.
129 Panel Report, para. 7.527.
130 See Panel Report, paras. 2.23-2.34, 7.534, and 7.935-7.936.
131 See Panel Report, para. 7.597.
132 See Panel Report, paras. 2.55-2.62.

6 ANALYSIS OF THE APPELLATE BODY
6.1 Article II:1 and Article XVII of the GATS – "Likeness"
6.1. Argentina appeals the Panel's findings that the services and service suppliers at issue are
"like" under both Article II:1 and Article XVII of the GATS. With respect to Article II:1, Argentina
requests us to reverse the Panel's finding that services and service suppliers located in
non-cooperative countries are "like" services and service suppliers located in cooperative
countries
133, and, consequently, to reverse the Panel's conclusion that measures 1-8 are
inconsistent with Article II:1 of the GATS. 134 With respect to Article XVII, Argentina requests us to
reverse the Panel's finding that services and service suppliers located in non-cooperative countries
are "like" services and service suppliers of Argentine origin
135, and, consequently, to modify the
legal basis for the Panel's conclusion that measures 2, 3, and 4 are not inconsistent with
Article XVII of the GATS.136
6.1.1 The Panel's findings under Article II:1 of the GATS
6.2. Before the Panel, Panama alleged that all eight measures at issue are inconsistent with
Article II:1 of the GATS. Panama argued that the measures provide for a distinction based
exclusively on the origin of the service supplier, and that, therefore, there was no need for a
casuistic demonstration that the services and/or service suppliers are "like", and that "likeness"
could be presumed.
137 The Panel began its analysis of whether the services and service suppliers
of cooperative countries and non-cooperative countries are "like" by reviewing the interpretation
by previous panels of the phrase "like services and service suppliers" in Articles II:1 and XVII:1 of
the GATS. In particular, the Panel referred to the following statement of the panel in China –
Publications and Audiovisual Products:
When origin is the only factor on which a measure bases a difference of treatment
between domestic service suppliers and foreign suppliers, the "like service suppliers"
requirement is met, provided there will, or can, be domestic and foreign suppliers that
under the measure are the same in all material respects except for origin.
138
6.3. The Panel further noted another statement by the same panel that:
… where a difference of treatment is not exclusively linked to the origin of service
suppliers, but to other factors, a more detailed analysis would probably be required to
determine whether service suppliers on either side of the dividing line are, or are not,
"like".
139
6.4. The Panel then explained that the panel in China – Electronic Payment Services had
addressed a measure that accorded differential treatment that was not exclusively linked to the
origin of the service suppliers, and that the panel in that dispute had concluded, in the context of
Article XVII of the GATS, that "like services are serv ices that are in a competitive relationship with
each other".140 The Panel further explained that it saw no obstacle in using, in its analysis under
Article II of the GATS, the same "liken ess" interpretation as the panel in China – Electronic
Payment Services did under Article XVII, because "the likeness analysis under Article II of the

133 Argentina's other appellant's submission, para. 131 (referring to Panel Report, paras. 7.185-7.186).
134 Argentina's other appellant's submission, para. 131 (referring to Panel Report, paras. 7.365, 7.367,
and 8.2.b).
135 Argentina's other appellant's submission, para. 131 (referring to Panel Report, paras. 7.488-7.489).
136 Argentina's other appellant's submission, para. 131 (referring to Panel Report, paras. 7.523-7.525
and 8.2.c).
137 Panel Report, para. 7.153.
138 Panel Report, para. 7.156 (quoting Panel Report, China – Publications and Audiovisual Products,
para. 7.975, in turn referring to Panel Reports, Canada – Wheat Exports and Grain Imports,
paras. 6.164-6.167; and Argentina – Hides and Leather, paras. 11.168-11.169).
139 Panel Report, para. 7.158 (quoting Panel Report, China – Publications and Audiovisual Products,
para. 7.975). (emphasis added)
140 Panel Report, para. 7.159 (quoting Panel Report, China – Electronic Payment Services, para. 7.700).

GATS does not differ from the likeness analysis under Article XVII of the GATS in the sense that it
requires an approach based on the competitive relationship."141
6.5. The Panel explained that it would take as a starting point the competitive relationship
between services and service suppliers of no n-cooperative countries, on the one hand, and
services and service suppliers of cooperative countries, on the other hand. The Panel noted that
the distinction between non-cooperative countries and cooperative countries was reflected in each
of the eight measures at issue by virtue of the provisions of Decree No. 589/2013.
142 The Panel
then noted that the parties disagreed as to whether the presumption of likeness based on origin
that had been applied by panels under the GATT 1994 could also be applied under the GATS. The
Panel considered that, in order to apply this presumption under the GATS, it should first examine
"whether the difference in treatment between coop erative and non-cooperative countries is due to
origin".
143 If it concluded that this difference "is not due exclusively to origin", it would continue its
analysis by examining "whether there is also another factor or 'other factors' linked to the
difference in treatment between services and serv ice suppliers of non-cooperative countries and
services and service suppliers of cooperative countries".144 The Panel reasoned:
[T]he mere fact that differential treatment is accorded depending on whether or not a
country is included in a list is closely linked to origin. This implies that any service
supplier based in Panama – or in any other country considered by the Argentine
authorities to be a cooperative country – is subject to the same treatment because it
is based in that country. We therefore co nsider that the difference in treatment
between cooperative and non-cooperative countries inherent in the eight measures at
issue is due to origin. However, even though the origin rule is applied in the form of a
list of cooperative countries, it is not origin per se which determines that certain
countries are on the list and others not, but the regulatory framework inextricably
linked to such origin. This raises a doubt as to whether the difference in treatment
between cooperative and non-cooperative countries inherent in the eight measures at
issue is based exclusively on origin, as asserted by Panama, or whether there is also
some "other factor" explaining the difference in treatment, as we shall consider
below.
145
6.6. The Panel stated that, given that there were doubts regarding the existence of "other
factors", it would consider whether there were such other factors relevant to the examination of
the likeness of the services and service suppliers in this dispute. 146 In particular, the Panel
considered the possibility of Argentina having access to tax information on foreign suppliers as an
"other factor" in this dispute and set out to assess whether this had an impact on the competitive
relationship of the services and service suppliers concerned.
147 The Panel further held that it was
for Argentina to prove that this "other factor" affects the competitive relationship between services
and service suppliers, for example, by showing its effect on the characteristics of the service and
on consumers' preferences.148
6.7. Next, the Panel assessed how the differentiation between cooperative and non-cooperative
countries had been implemented in practice, and noted that the list of cooperative countries
published by the AFIP "includes countries that have not signed a double taxation convention or an
information exchange agreement and with which there is no exchange of tax information, as well
as countries which have in fact concluded such conventions or agreements and which, therefore,
exchange tax information."
149 The Panel found that "[t]his factual situation [made] it extremely
difficult" for it to make the comparison it need ed to make for an examination of "likeness", and
concluded that it was impossible to compare relevant services and service suppliers in order to
evaluate the relevant "other factor".
150 The Panel then held:

141 Panel Report, para. 7.161.
142 Panel Report, para. 7.163.
143 Panel Report, para. 7.165.
144 Panel Report, para. 7.165.
146 Panel Report, para. 7.168.
147 Panel Report, para. 7.173.
148 Panel Report, para. 7.179.
149 Panel Report, para. 7.183.
150 Panel Report, para. 7.184.

Accordingly, having concluded that the difference in treatment between cooperative
and non-cooperative countries inherent in the eight measures at issue is due to origin,
we consider that Panama has proved that services and service suppliers of cooperative
and non-cooperative countries are like by reason of origin.
151
6.8. On that basis, the Panel found that, for purposes of Panama's claims under Article II:1 of the
GATS, the services and service suppliers of coop erative countries are "like" the services and
service suppliers of non-cooperative countries.152
6.1.2 The Panel's findings under Article XVII of the GATS
6.9. With respect to Article XVII of the GATS, Panama alleged that measures 2, 3, and 4 are
inconsistent with Article XVII because they accord services and service suppliers of
non-cooperative countries treatment less favourable than that accorded by Argentina to its
domestic like services and service suppliers. Argentina did not present specific arguments in
relation to Article XVII, but referred to its arguments presented under Article II:1 of the GATS.
153
6.10. Having found that Argentina has assumed specific commitments in the sectors and modes of
supply cited by Panama in respect of measures 2, 3, and 4 154, and that these measures affect the
supply of services, the Panel turned to consid er whether the relevant services and service
suppliers of non-cooperative countries are like Argentine services and service suppliers. In that
respect, the Panel noted that both Argentina an d Panama had indicated that their arguments on
"likeness" developed under Article II:1 were also relevant under Article XVII of the GATS.
6.11. At the outset of its analysis, the Panel recalled its conclusion under Article II:1 that the
services and service suppliers of cooperative countries are like the services and service suppliers of
non-cooperative countries. 155 The Panel further noted that, while under Article II:1 the services
and service suppliers being compared are those of cooperative and non-cooperative countries, in
the case of Article XVII, the appropriate compar ison for determining "likeness" must be made
between Argentine services and service suppliers , on the one hand, and services and service
suppliers of non-cooperative countries, on the other hand.156
6.12. The Panel then noted that the treatment provided for in the relevant measures is the same
for transactions between Argentine taxpayers and Argentine service suppliers as it is for
transactions between Argentine taxpayers an d service suppliers in cooperative countries 157, and
that Argentina had agreed that Argentine services and service suppliers are comparable to services
and service suppliers of cooperative countries.
158 The Panel then referred back to its finding under
Article II:1 that services and service suppliers of cooperative countries are like those of
non-cooperative countries, and held that this finding could be transposed to Article XVII. On this
basis, the Panel concluded that Argentine services and service suppliers are "like" the services and
service suppliers of non-cooperative countries for purposes of the analysis under Article XVII of the
GATS.
159
6.1.3 Claims and arguments on appeal
6.13. With respect to the Panel's finding of "lik eness" under Article II:1 of the GATS, Argentina
alleges that the Panel erred in its interpretation of Article II:1 in finding that services and service
suppliers may be considered "like" when a measur e provides for differential treatment "exclusively
on the basis of origin".
160 Moreover, Argentina raises, as an independent basis on which we should
reverse the Panel's finding of inconsistency with Article II:1, the claim that the Panel erred by

151 Panel Report, para. 7.185.
152 Panel Report, para. 7.186.
153 Panel Report, para. 7.444.
154 Panel Report, para. 7.470.
155 Panel Report, para. 7.482 (referring to Panel Report, paras. 7.185-7.186).
156 Panel Report, para. 7.483.
157 Panel Report, para. 7.486.
158 Panel Report, para. 7.487.
159 Panel Report, para. 7.489.
160 Argentina's other appellant's submission, paras. 50-63.

making a prima facie case of "likeness" under Article II:1 of the GATS for Panama in the absence
of evidence and legal argument presented by Panama.161
6.14. Alternatively, in the event that we cons ider that a presumption of likeness is warranted
when a measure provides for differential treatment "exclusively on the basis of origin", Argentina
alleges that the Panel erred in finding that the services and service suppliers at issue are "like" in
the absence of a finding that the measures at i ssue provide for differential treatment "exclusively
on the basis of origin". 162 In that event, Argentina further alle ges, first, that the Panel erred in
placing the burden on Argentina to demonstrate th at the services and service suppliers at issue
were not "like", rather than holding Panama to its burden of establishing that the services and
service suppliers at issue are "like" 163; and, second, that the Panel acted inconsistently with
Article 11 of the DSU in finding that the services and service suppliers at issue are "like" under
Article II:1 of the GATS. In the event that we find that the Panel failed to undertake an objective
assessment of the matter as required under Article 11 of the DSU, Argentina also requests us to
complete the legal analysis and find, on the basi s of the Panel's factual findings and uncontested
evidence on the Panel record, that the services and service suppliers at issue are not "like" under
Article II:1 of the GATS.
164
6.15. With regard to the Panel's finding of "l ikeness" under Article XVII of the GATS, Argentina
alleges that the Panel erred in relying upon its "likeness" findings under Article II:1 in finding that
the services and service suppliers at issue are "like" "by reason of origin" for purposes of
Article XVII of the GATS. 165 In addition, Argentina alleges that the Panel committed legal error by
making a prima facie case of "likeness" under Article XVII for Panama in the absence of evidence
and legal argument.166
6.16. Argentina further alleges that the Panel failed to make an objective assessment of the
matter, as required under Article 11 of the DSU, by ignoring uncontested evidence on the record
demonstrating that the services and service suppliers at issue are not "like". Argentina raises this
claim only in the event that we find that Argent ina bore the burden of proving "likeness" under
Articles II:1 and XVII of the GATS, or that Panama had otherwise established a prima facie case of
"likeness".167 Further, in the event that we find that the Panel failed to undertake an objective
assessment of the matter as required under Article 11 of the DSU, Argentina requests us to
complete the legal analysis and find that the services and service suppliers at issue are not "like"
under Article XVII of the GATS.
168
6.17. Panama requests us to: (i) uphold the Panel's conclusion under Article II:1 of the GATS that
the services and service suppliers located in non- cooperative countries are "like" the services and
service suppliers located in cooperative countries 169; (ii) uphold the Panel's conclusion under
Article XVII of the GATS that se rvices and service suppliers located in non-cooperative countries
are "like" the services and service suppliers of Argentine origin 170; and (iii) find that the Panel did
not fail to undertake an objective assessment of the matter as required under Article 11 of the
DSU.171
6.1.4 "Likeness" under Article II:1 and Article XVII of the GATS
6.18. Argentina's appeal calls for us to consider certain issues relating to the interpretation of the
phrase "like services and service suppliers" in Ar ticle II:1 and Article XVII of the GATS. We begin
by setting out our understanding of the phrase "like services and service suppliers" in Articles II:1
and XVII:1 of the GATS. Article II:1 of the GATS provides:

161 Argentina's other appellant's submission, paras. 94-99.
162 Argentina's other appellant's submission, paras. 66-67.
163 Argentina's other appellant's submission, paras. 68-79.
164 Argentina's other appellant's submission, para. 125.
165 Argentina's other appellant's submission, paras. 80-93.
166 Argentina's other appellant's submission, paras. 94-99.
167 Executive summary of Argentina's other appellant's submission, Annex B-2 to this Report, para. 12;
see also Argentina's other appellant's submission, para 101 and fn 91 thereto.
168 Argentina's other appellant's submission, para. 125.
169 Panama's appellee's submission, para. 7.1 (referring to Panel Report, paras. 7.185-7.186).
170 Panama's appellee's submission, para. 7.1 (referring to Panel Report, paras. 7.488-7.489).
171 Panama's appellee's submission, para. 7.1.

Article II
Most-Favoured-Nation Treatment
1. With respect to any measure covered by this Agreement, each Member shall
accord immediately and unconditionally to se rvices 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.
6.19. Article XVII:1 of the GATS provides:
Article XVII
National Treatment
1. In the sectors inscribed in its Schedule, and subject to any conditions and
qualifications set out therein, each Member shall accord to services and service
suppliers of any other Member, in respect of all measures affecting the supply of
services, treatment no less favourable than that it accords to its own like services and
service suppliers.
172
6.20. The concept of "likeness" is a key concept that appears in several provisions of the covered
agreements, and it has been addressed ex tensively by GATT and WTO panels and the
Appellate Body, primarily in the context of trade in goods. The Appellate Body has clarified that the
term "like" must be interpreted in the light of its context and the object and purpose of the
agreement in which the relevant provision appears.173
6.21. The Appellate Body has considered that the word "like" refers to something sharing a
number of identical or similar characteristics or qualities. 174 Furthermore, the Appellate Body has
held that the term "similar" as a synonym of "lik e" echoes the language of the French version of
these provisions, " produits similaires ", and the Spanish version, " productos similares ".175 These
terms imply some kind of comparison. While what is being compared is different in the context of
trade in goods and trade in services, we consider that, in the context of both trade in goods and
trade in services, "likeness" refers to something that is similar.
6.22. This raises the question of what degree or extent of similarity is required in order for
services and service suppliers to be considered "like". 176 In this respect, we turn to consider the
context in which the word "like" appears in the pr ovisions of Articles II:1 and XVII:1 of the GATS.
We note that both Article II:1 and Article XVII:1 further refer to "treatment no less favourable" of
like services and service suppliers, and that Article XVII:3 provides that "treatment shall be
considered to be less favourable if it modifies the conditions of competition in favour of services or
service suppliers of [one] Member compared to like services or service suppliers of any other
Member." This demonstrates that Article XVII is concerned with competitive opportunities for like
services and service suppliers of another Member.
6.23. In this vein, the panel in China – Electronic Payment Services held that Article XVII seeks to
ensure equal competitive opportunities for like services of other Members, and that services are
therefore "like" when they are in a competitive relationship with each other. That panel further
reasoned that a measure of a Member can modify the conditions of competition, and thus be
inconsistent with Article XVII:1, only if the foreign and domestic services at issue are indeed in a
competitive relationship.
177 In other words, if the services being compared are not in a competitive
relationship, the conditions of competition cannot be affected.
6.24. We turn next to consider the obligation to accord most-favoured-nation treatment to like
services and service suppliers of any other Member. While Article II:1 refers to "treatment no less

172 Fn omitted.
173 Appellate Body Report, Japan – Alcoholic Beverages II, pp. 18-19 and 21, DSR 1996:I, pp. 111-112
and 114.
174 Appellate Body Report, EC – Asbestos, para. 91.
175 Appellate Body Report, EC – Asbestos, para. 91.
176 See also Appellate Body Report, EC – Asbestos, para. 92.
177 Panel Report, China – Electronic Payment Services, para. 7.700.

favourable", we note that Article II:3 refers to "advantages". 178 An "advantage" is "[t]he fact or
state of being in a better position with respect to another". 179 Being in a better position as
compared to another is closely related to the concept of competition. This suggests that, also in
the context of Article II of the GATS, the determ ination of "likeness" of services and service
suppliers must focus on the competitive relationship of the services and service suppliers at issue.
We note that, similarly, with regard to Articles I:1 and III:4 of the GATT 1994, the Appellate Body
has held that, notwithstanding their textual differences, both of these provisions are concerned
with "prohibiting discriminatory measures" and ensuring "equality of competitive opportunities"
between products that are in a competitive relationship.
180
6.25. Thus, we consider that the concept of "likeness" of services and service suppliers under
Articles II:1 and XVII:1 of the GATS is concerned wi th the competitive relationship of services and
service suppliers. This is consonant with the Appellate Body's understanding of "likeness" in the
ambit of trade in goods. In EC – Asbestos , the Appellate Body held that the word "like" in
Article III:4 of the GATT 1994 is to be interpreted as applying to products that are in a competitive
relationship, and that therefore a determination of "likeness" under Article III:4 is, fundamentally,
a determination about the nature and extent of a competitive relationship between and among
products.
181 As the Appellate Body noted, "[i]f there is – or could be – no competitive relationship
between products, a Member cannot intervene, through internal taxation or regulation, to protect
domestic production."182
6.26. Further, in the context of trade in goods, the Appellate Body noted that there is a spectrum
of degrees of "competitiveness" or "substitutability" of products in the marketplace. 183 The
assessment of such a competitive relationsh ip requires a market-based analysis. The
Appellate Body also stated that not all products that are in some competitive relationship are "like
products", and that it is difficult, if not impossible, in the abstract, to indicate precisely where on
this spectrum the word "like" falls.
184 In our view, the same is true with respect to "like services
and service suppliers", and, thus, the likeness of services and service suppliers can only be
determined on a case-by-case basis, taking into account the specific circumstances of the
particular case.
6.27. We note that what is being compared for "l ikeness" is different in the context of trade in
goods and trade in services. Articles II:1 and XVII:1 of the GATS refer to "like services and service
suppliers". In contrast, Articles I:1, III:2, and III:4 of the GATT 1994, for instance, refer to "like
products", but they do not include a reference to "like producers". The term "service supplier" is
defined in Article XXVIII(g) of the GATS as "any person that supplies a service". With respect to
the "supply of a service", Article XXVIII(b) stipulat es that it "includes the production, distribution,
marketing, sale and delivery of a service". A ccordingly, this term covers a broad array of
service-related activities. The word "service" is not defined in the GATS itself.
185
6.28. Next, we consider the reference to "services and service suppliers". We note that the panel
in EC – Bananas III addressed this reference and held that "to the extent that entities provide

178 We note that, similarly, Article I:1 of the GATT 1994 also refers to "any advantage".
179 Oxford English Dictionary online, definition of "advantage",
<http://www.oed.com/view/Entry/2895>.
180 Appellate Body Report, EC – Seal Products, para. 5.82.
181 Appellate Body Report, EC – Asbestos, para. 99.
182 Appellate Body Report, EC – Asbestos, para. 117. (emphasis original)
183 Appellate Body Report, EC – Asbestos, para. 99. We note that while Article III:4 of the GATT 1994
refers to "like" products, the first and second sentences of Article III:2 (read in the light of the Ad Article III,
paragraph 2) refer to "like" and "directly competitive or substitutable product[s]", respectively.
184 Appellate Body Report, EC – Asbestos, para. 99.
185 We note that, with regard to the national treatment obligation, Members' Schedules of Commitments
define the scope of service transactions and sectors that are subject to the obligation. We further note that, in
trade in services, the classification and description of services is based mainly on two instruments: (i) the
Services Sectoral Classification List, established by the WTO Secretariat in 1991; and (ii) the UN Central
Product Classification (CPC). The Services Sectoral Classification List was based on the 1991 provisional
UN CPC. The most recent UN CPC (Ver.2.1) was released on 11 August 2015, and is available at:
<http://unstats.un.org/unsd/cr/registry/cpc-21.asp>.

these like services, they are like service suppliers." 186 The panel in China – Electronic Payment
Services considered that, while this may be so in some cases, in other cases an inquiry into the
likeness of service suppliers may be called for, and that panel indeed assessed likeness with
respect to both the services
187 and the service suppliers at issue.188
6.29. In our view, the reference to "services and service suppliers" indicates that considerations
relating to both the service and the service suppli er are relevant for determining "likeness" under
Articles II:1 and XVII:1 of the GATS. The assessm ent of likeness of services should not be
undertaken in isolation from considerations relating to the service suppliers, and, conversely, the
assessment of likeness of service suppliers should not be undertaken in isolation from
considerations relating to the likeness of the se rvices they provide. We see the phrase "like
services and service suppliers"
189 as an integrated element for the likeness analysis under
Articles II:1 and XVII:1, respectively. Accordingly, separate findings with respect to the "likeness"
of services, on the one hand, and the "likeness" of service suppliers, on the other hand, are not
required. Because the "likeness" analysis serves to assess the competitive relationship of the
"services and service suppliers"190 at issue, the particular features of that competitive relationship,
in the circumstances of any specific case, will determine the relative weight to be accorded in the
analysis of "likeness" to considerations relating to the service and the service supplier,
respectively. In any event, in a holistic analysis of "likeness", considerations relating to both the
service and the service supplier will be relevant , albeit to varying degrees, depending on the
circumstances of each case.
6.30. We now turn to the question of how a pa nel should proceed in determining "likeness". We
note that, with regard to Article III:4 of the GATT 1994, the Appellate Body in EC – Asbestos
referred to the GATT working party report on Border Tax Adjustments , which employed four
general criteria for analysing "likeness" in the cont ext of trade in goods: (i) the properties, nature,
and quality of the products; (ii) the end-uses of th e products; (iii) consumers' tastes and habits or
consumers' perceptions and behaviour in respect of the products; and (iv) the tariff classification
of the products.
191 In addition, the Appellate Body noted th at, although each criterion addresses,
in principle, a different aspect of the products involved, which should be examined separately, the
different criteria are interrelated. 192 Furthermore, the Appellate Body held that the criteria for
analysing "likeness" are analytical tools to assist in the task of examining the relevant evidence,
and that they are "neither a treaty-mandated nor a closed list of criteria that will determine the
legal characterization of products".
193 The Appellate Body also clarified that no evidence should be
a priori excluded from a panel's analysis of likeness.194
6.31. With these considerations in mind, we consider how a panel should proceed in assessing the
"likeness" of services and service suppliers in the particular context of Article II:1 and

186 Panel Report, EC – Bananas III (Ecuador), para. 7.322 reads:
[I]n our view, the nature and the characteristics of wholesale transactions as such, as well as of
each of the different subordinated services mentioned in the headnote to section 6 of the CPC,
are "like" when supplied in connection with wholesale services, irrespective of whether these
services are supplied with respect to bananas of EC and traditional ACP origin, on the one hand,
or with respect to bananas of third-country or non-traditional ACP origin, on the other. Indeed, it
seems that each of the different service activities taken individually is virtually the same and can
only be distinguished by referring to the origin of the bananas in respect of which the service
activity is being performed. Similarly, in our view, to the extent that entities provide these like
services, they are like service suppliers.
See also para. 7.346.
187 Panel Report, China – Electronic Payment Services, paras. 7.698-7.704
188 Panel Report, China – Electronic Payment Services, paras. 7.705-7.709.
189 Emphasis added.
190 Emphasis added.
191 Appellate Body Report, EC – Asbestos, para. 101.
192 Appellate Body Report, EC – Asbestos, para. 102. The Appellate Body noted that, for instance, "the
physical properties of a product shape and limit the end-uses to which the products can be devoted. Consumer
perceptions may similarly influence – modify or even render obsolete – traditional uses of the products. Tariff
classification clearly reflects the physical properties of a product." (Ibid.)
193 Appellate Body Report, EC – Asbestos, para. 102.
194 Appellate Body Report, EC – Asbestos, para. 113. In this respect, the Appellate Body explained that,
for instance, risks posed by a product to human health may be pertinent in an examination of "likeness" under
Article III:4 of the GATT 1994, as it may affect the competitive relationship in the marketplace between
allegedly "like" products, and that such risks need not be examined under a separate criterion, as they can be
evaluated under the existing criteria of physical properties and of consumers' tastes and habits. (Ibid.)

Article XVII:1 of the GATS. We recall that the Appe llate Body has clarified that the term "like"
must be interpreted in the light of its context and the object and purpose of the agreement in
which the relevant provision appears. 195 As we have set out above, we consider that the analysis
of "likeness" serves the same purpose in the cont ext of both trade in goods and trade in services,
namely, to determine whether the products or services and service suppliers, respectively, are in a
competitive relationship with each other. Thus, to the extent that the criteria for assessing
"likeness" traditionally employed as analytical t ools in the context of trade in goods are relevant
for assessing the competitive relationship of services and service suppliers, these criteria may be
employed also in assessing "likeness" in the cont ext of trade in services, provided that they are
adapted as appropriate to account for the specific characteristics of trade in services. In particular,
we note that Articles II:1 and XVII:1 of the GATS refer to likeness of "services and service
suppliers", and, accordingly, these criteria may be applied both in regard to the service and in
regard to the service supplier in a holistic analysis as indicated above.
6.32. For example, the characteristics of services and service suppliers or consumers' preferences
in respect of services and service suppliers may be relevant for determining "likeness" under the
GATS. We note that, in this vein, the panel in EC – Bananas III considered the "nature and the
characteristics"
196 of the service transactions at issue, which may be seen as an adaptation of the
original criterion in Border Tax Adjustments – namely, properties, nature and quality. Furthermore,
with respect to the criterion of tariff classificati on, the classification and description of services
under, for instance, the UN Central Product Classification (CPC) could be relevant. 197 The panel in
China – Electronic Payment Services undertook another such adaptation in considering evidence
that the service suppliers at issue "describe[d] their business scope in very similar terms", and
that this suggested that "these suppliers compete[d] with each other in the same business
sector".
198 T h i s m a y b e s e e n a s a d a p t a t i o n s o f t h e c r i t e r i a o f " p r o p e r t i e s , n a t u r e a n d q u a l i t y " ,
"end-use", and/or "consumer preferences". As in the context of trade in goods, however, we
equally consider that the criteria for analysing "likeness" of services and service suppliers are
simply analytical tools to assist in the task of examining the relevant evidence, and that they are
neither a treaty-mandated nor a closed list of criter ia that will determine the legal characterization
of services and service suppliers as "like".
199
6.33. We further note that different modes of supply as defined in Article I:2 exist only in trade in
services under the GATS, and not in trade in goods under the GATT 1994, and, accordingly, the
analysis of "likeness" of services and service suppliers may require additional considerations of
whether or how this analysis is affected by the mode(s) of service supply. 200 Having said that, we
also note that we are not called upon to pronounce in this appeal on the relevance and weight of
specific criteria for determining whether service suppliers and the services provided are "like".
6.34. While the criteria for analysing "likeness" must be adapted to the particular context of
Articles II:1 and XVII:1 of the GATS in accordance with the above considerations, this does not
change the fundamental purpose of the comparison to be undertaken in order to determine
"likeness" in the context of trade in services, namely, to assess whether and to what extent the
services and service suppliers at issue are in a competitive relationship. The existence of a
competitive relationship is a precondition for the subsequent analysis under the requirement of
"treatment no less favourable"
201 of whether the conditions of competition have been modified.
6.1.5 Presumption of "likeness"
6.35. This appeal raises a further question with respect to the interpretation of "likeness" in
Articles II:1 and XVII:1 of the GATS, namely, whether, in order to establish "likeness", a
complainant must always have recourse to the relevant criteria for establishing "likeness" set out

195 Appellate Body Report, Japan – Alcoholic Beverages II, pp. 18-19 and 21, DSR 1996:I, pp. 111-112
and 114.
196 Panel Report, EC – Bananas III (Ecuador), para. 7.322.
197 The Panel in EC – Bananas III (Ecuador) referred to the CPC and relevant headnotes in addressing
the nature and characteristics of wholesale service transactions, as well as different subordinated services
mentioned in the headnote to section 6 of the CPC. (Panel Report, EC – Bananas III (Ecuador), paras. 7.322
and 7.346)
198 Panel Report, China – Electronic Payment Services, para. 7.706.
199 See Appellate Body Report, EC – Asbestos, para. 102.
200 See Panel Report, China – Electronic Payment Services, paras. 7.704 and 7.706.
201 See section 6.2 of this Report.

above, or whether a complainant may establish " likeness" by demonstrating that the measure at
issue makes a distinction between services and service suppliers based exclusively on origin
(we refer below to the latter as the "presumption approach").
6.36. In the context of trade in goods, several panels have found that, when a measure makes a
distinction between products based exclusively on the origin of the product, the likeness of such
products can be presumed. Panels have applied su ch a "presumption" of likeness with respect to
Article III:2 of the GATT 1994 202, Article III:4 of the GATT 1994 203, and Article I:1 of the
GATT 1994204. Panels have held that, rather than invariably establishing "likeness" on the basis of
the relevant criteria, a complainant may establish "likeness" by demonstrating that the measure at
issue makes a distinction based exclusively on the origin of the product.
205 In this respect, we note
that measures allowing the application of a presumption of "likeness" will typically be measures
involving a de jure distinction between products of different origin.
6.37. With respect to trade in services, we note that the measure at issue in China – Publications
and Audiovisual Products, for instance, prohibited "foreign-invested enterprises" from engaging in
the business of wholesale of imported reading ma terials, while permitting wholly Chinese-owned
enterprises to engage in the supply of this service. 206 With respect to that measure, the panel in
that dispute found:
When origin is the only factor on which a measure bases a difference of treatment
between domestic service suppliers and foreign suppliers, the "like service suppliers"
requirement is met, provided there will, or can, be domestic and foreign suppliers that
under the measure are the same in all material respects except for origin. We note
that similar conclusions have been reached by previous panels. We observe that in
cases where a difference of treatment is not ex clusively linked to the origin of service
suppliers, but to other factors, a more detailed analysis would probably be required to
determine whether service suppliers on either side of the dividing line are, or are not,
"like".
207
6.38. In our view, where a measure provides for a distinction based exclusively on origin, there
will or can be services and service suppliers that are the same in all respects except for origin and,
accordingly, "likeness" can be presumed and the complainant is not required to establish "likeness"
on the basis of the relevant criteria set out above. Accordingly, we consider that, under
Articles II:1 and XVII:1 of the GATS, a complainant is not required in all cases to establish
"likeness" of services and service suppliers on the basis of the relevant criteria for establishing
"likeness". Rather, in principle, a complainant may establish "likeness" by demonstrating that the
measure at issue makes a distinction between services and service suppliers based exclusively on
origin. However, we consider that, compared to trade in goods, the scope for such a presumption
under the GATS would be more limited, and establishing "likeness" based on the presumption may
often involve greater complexity in trade in services, due to the following reasons.
6.39. First, we have found above that the determination of "likeness" under Articles II:1
and XVII:1 involves consideration of both the service and the service supplier. Accordingly,
depending on the circumstances of the particular case, an origin-based distinction in the measure
at issue would have to be assessed not only with respect to the services at issue, but also with
regard to the service suppliers involved. Such consideration of both the services and the service

202 Panel Reports, Argentina – Hides and Leather, para. 11.168; China – Auto Parts, para. 7.216.
Wheat Exports and Grain Imports, para. 6.164; China – Publications and Audiovisual Products, para. 7.1447;
7.216; US – FSC (Article 21.5 – EC), paras. 8.132-8.135.
204 Panel Reports, Colombia – Ports of Entry, paras. 7.355-7.356; US – Poultry (China), paras. 7.424-
7.432.
205 See e.g. Panel Report, China – Publications and Audiovisual Products, paras. 7.1446-7.1447.
206 Panel Report, China – Publications and Audiovisual Products, para. 7.975.
207 Panel Report, China – Publications and Audiovisual Products, para. 7.975 (referring to Panel Reports,
Canada – Wheat Exports and Grain Imports, paras. 6.164-6.167; and Argentina – Hides and Leather,
paras. 11.168-11.169). (fn omitted) We note that, in this vein, the panel in China – Electronic Payment
Services determined that the distinction between the services and service suppliers at issue in that dispute was
not based exclusively on origin and thus assessed "likeness" on the basis of several relevant criteria.
(See Panel Report, China – Electronic Payment Services, para. 7.697)

suppliers may render more complex the analysis of whether or not a distinction is based
exclusively on origin, in particular, due to the role that domestic regulation may play in shaping,
for example, the characteristics of services and service suppliers and consumers' preferences.
6.40. In addition, we note the principles for determining origin set out in Article XXVIII of the
GATS. The definitions of the various terms set out in Article XXVIII(f), (g), and (k) through (n) of
the GATS provide an indication of the possible complexities of determining origin and whether a
distinction is based exclusively on origin in the context of trade in services.
208 An additional layer
of complexity stems from the existence of different modes of supply and their implications for the
determination of the origin of services and service suppliers.
6.41. While these complexities do not, as a matter of principle, render the presumption approach
inapplicable in the context of trade in services, the scope of this presumption is more limited than
i n t r a d e i n g o o d s . W h e t h e r a n d t o w h a t e x t e n t s u c h c o m p l e x i t i e s h a v e a n i m p a c t o n t h e
determination of whether a distinction is based exclusively on origin in a particular case will
depend on the nature, configuration, and operation of the measure at issue and the particular
claims raised.
6.42. Regarding the burden of proof in estab lishing "likeness" relying on the presumption
approach, we note that, in keeping with the genera l rule that the burden of proof rests upon the
party that asserts the affirmative of a particular claim
209, the complainant bears the burden of
making a prima facie case that a measure draws a distinction between services and service
suppliers based exclusively on origin. In this regard, a panel is required to assess objectively the
evidence and arguments forming the basis of such a contention.
6.43. If a panel finds that the complainant has failed to make a prima facie case that a measure
provides for differential treatment based exclusively on origin, then the panel must engage in an
analysis of "likeness" of services and service supp liers on the basis of the relevant criteria adapted
to trade in services, as addressed above, before it may proceed to the analysis of less favourable
treatment.
6.44. In contrast, if a complainant succeeds in making a prima facie case that a measure draws a
distinction between services and service suppliers based exclusively on origin, and this is not
rebutted by the respondent, the services and service suppliers at issue may be presumed to be
"like", and a panel may proceed with the analysis of less favourable treatment without the need to
assess the competitive relationship of the services and service suppliers at issue based on the
relevant criteria as adapted to trade in services.
6.45. Once a complainant has made a prima facie case that a measure draws a distinction
between services and service suppliers based exclus ively on origin, the respondent may rebut this
by demonstrating that origin is indeed not the exclusive basis for the distinction drawn by the
measure between the services and service suppliers at issue. Alternatively, or in addition, a
respondent may seek to rebut the prima facie case based on the presumption approach by
introducing arguments and evidence relating to the criteria for determining "likeness" adapted to
trade in services, as explained above, demonstrating that a certain factor affects the relevant
criteria for establishing "likeness", and that it therefore has an impact on the competitive
relationship between the services and service suppliers. In the event of a successful rebuttal based
on either option above, a panel cannot proceed to a finding of "likeness" on the basis of such a
presumption. Rather, it must engage in an analysis of "likeness" considering the relevant criteria in
order to determine whether the services and service suppliers at issue are "like" before proceeding
to an analysis of less favourable treatment.
6.1.6 Argentina's claims on appeal
6.46. With respect to Article II:1 of the GATS, Argentina requests us to reverse the Panel's finding
that services and service suppliers located in non-cooperative countries are "like" services and

208 See Article XXVIII of the GATS defining, inter alia, the terms "service of another Member", "service
supplier", "natural person of another Member", "juridical person", and "juridical person of another Member".
209 Appellate Body Report, US – Wool Shirts and Blouses, p. 14, DSR 1997:I, p. 335.

service suppliers located in cooperative countries 210 and, consequently, to reverse the Panel's
conclusion that measures 1-8 are inconsistent with Article II:1 of the GATS.211
6.47. With respect to Article XVII of the GATS, Argentina requests us to reverse the Panel's
finding that services and service suppliers located in non-cooperative countries are "like" services
and service suppliers of Argentine origin 212 and, consequently, to modify the legal basis for the
Panel's conclusion that measures 2, 3, and 4 are not inconsistent with Article XVII of the GATS.213
6.48. We begin by considering Argentina's claims relating to the Panel's finding under Article II:1
of the GATS. Thereafter, we turn to Argentina's claims relating to the Panel's finding under
Article XVII of the GATS.
6.1.6.1 Whether the Panel erred in its interp retation and application of Article II:1 of
the GATS
6.49. With regard to the Panel's analysis under Article II:1 of the GATS, Argentina alleges that the
Panel erred in its interpretation of Article II:1 in finding that services and service suppliers may be
considered "like" when a measure provides for diff erential treatment "exclusively on the basis of
origin".
214 Alternatively, in the event that we consider that a presumption of "likeness" is
warranted when a measure provides for differential treatment "exclusively on the basis of origin",
Argentina claims that the Panel erred in finding that the services and service suppliers at issue are
"like" in the absence of a finding that the measures at issue provide for differential treatment
"exclusively on the basis of origin".
215 In that event, Argentina further claims that the Panel erred
in placing the burden on Argentina to demonstrate that the services and service suppliers at issue
are not "like", rather than holding Panama to its burden of establishing that the services and
service suppliers at issue are "like"
216, and that the Panel acted inconsistently with Article 11 of the
DSU in finding that the services and service suppliers at issue are "like" for purposes of Article II:1
of the GATS.
217
6.50. We begin by considering Argentina's first claim of error, namely, that the Panel erred in its
interpretation of Article II:1 of the GATS in fi nding that services and service suppliers can be
considered "like" when a measure draws a dist inction between services and service suppliers
based exclusively on origin. 218 For Argentina, the fact that a measure affecting trade in services
provides for such a distinction is an insufficient basis for a finding that the services and service
suppliers are "like". Argentina argues that there is an important difference between the GATS and
the GATT 1994, in that the characteristics of a good are usually intrinsic to the good itself, while
the characteristics of services are often inseparable from the characteristics of the service
suppliers.
219
6.51. Panama disagrees with Argentina that "likeness" cannot be presumed where a measure
draws a distinction between services and servic e suppliers based exclusively on origin, and
requests us to affirm the Panel's finding in this regard. Panama submits that the Panel was correct
in concluding that the distinction drawn by the eight measures at issue between cooperative and
non-cooperative countries is due to origin, and that the services and service suppliers of
cooperative and non-cooperative countries are therefore "like" by reason of origin.220

210 Panel Report, paras. 7.185-7.186.
211 Panel Report, paras. 7.365, 7.367, and 8.2.b.
212 Panel Report, paras. 7.488-7.489.
213 Panel Report, paras. 7.523-7.525 and 8.2.c.
214 Argentina's other appellant's submission, paras. 50-63.
215 Argentina's other appellant's submission, paras. 66-67.
216 Argentina's other appellant's submission, paras. 68-79.
217 Argentina's other appellant's submission, paras. 101-123.
218 Argentina's other appellant's submission, para. 56.
219 Argentina's other appellant's submission, para. 58
220 Panama's appellee's submission, para. 5.16.

6.52. We are not persuaded by Argentina's contention that the relevance of criteria associated
with service suppliers in the determination of "likeness" in trade in services 221 compels the
conclusion that the presumption approach cannot be applied in trade in services. We have found
above that, under Articles II:1 and XVII:1 of the GATS, a complainant is not required, in all cases,
to establish "likeness" of services and service suppliers on the basis of an assessment of the
criteria for establishing "likeness" set out above. Instead, "likeness" may be presumed where the
complainant demonstrates that the measure at issue makes a distinction between services and
service suppliers based exclusively on origin. We ha ve found that, while the analysis of whether or
not a distinction is based exclusively on origin is more complex in the context of trade in services,
this does not render the presumption approach inapplicable in trade in services. In the light of
these considerations, we find that the Panel di d not err merely by employing the presumption
approach.
222
6.53. We now turn to Argentina's second claim of error. Argentina contends that the Panel erred
in its application of Article II:1 of the GATS in finding that the services and service suppliers at
issue are "like" in the absence of a finding that the measures at issue provide for differential
treatment "exclusively on the basis of origin".223
6.54. In examining this allegation of error raised by Argentina, we first review whether the Panel
indeed failed to make a finding that the distinctions in treatment under the measures at issue
between services and service suppliers of cooper ative countries and of non-cooperative countries
are based exclusively on origin.
6.55. We note that the Panel reasoned, in paragraph 7.166:
As regards the origin rule, as we have already mentioned, the eight measures
challenged by Panama distinguish betw een services and service suppliers of
cooperative and non-cooperative countries. In our view, the mere fact that differential
treatment is accorded depending on whether or not a country is included in a list is
closely linked to origin. This implies that any service supplier based in Panama – or in
any other country considered by the Argentine authorities to be a cooperative country
– is subject to the same treatment because it is based in that country. We therefore
consider that the difference in treatment between cooperative and non-cooperative
countries inherent in the eight measures at issue is due to origin. However, even
though the origin rule is applied in the form of a list of cooperative countries, it is not
origin per se which determines that certain countries are on the list and others not,
but the regulatory framework inextricably linked to such origin. This raises a doubt as
to whether the difference in treatment between cooperative and non-cooperative
countries inherent in the eight measures at issue is based exclusively on origin, as
asserted by Panama, or whether there is also some "other factor" explaining the
difference in treatment, as we shall consider below.
224
6.56. Thus, while the Panel noted that "the difference in treatment between cooperative and
non-cooperative countries inherent in the eight measures at issue is due to origin", it did not make
a finding that the difference in treatment is based exclusively on origin. On the contrary, having
stated that the difference in treatment is "due to origin", the Panel immediately attenuated this
statement by observing that the classification of a country as cooperative or non-cooperative is not
based on "origin per se", but on "the regulatory framework inextricably linked to such origin". For
the Panel, this raised a doubt as to whether the difference in treatment between cooperative and

221 In particular, Argentina argues that the criteria for determining "likeness" in trade in services,
relating to the service supplier, include factors such as: (i) whether the service supplier has particular skills,
certifications, or licences; (ii) the legal form of the service supplier (e.g. whether the service supplier is a
natural or juridical person); (iii) the commercial characteristics of the service supplier (e.g. assets, number of
employees, and prior experience supplying the service); and (iv) the manner and extent to which the service
supplier is subject to government regulation and oversight in its supply of the service. (Argentina's other
appellant's submission, para. 58)
222 Panel Report, para. 7.165.
223 Argentina's other appellant's submission, paras. 64-67.

non-cooperative countries inherent in the eight measures at issue is based exclusively on origin, or
"whether there is also some 'other factor' explaining the difference in treatment".225
6.57. Furthermore, the Panel considered that the possibility for Argentina to have access to tax
information could be taken into account in the Panel's "likeness" analysis, "provided that it is
reflected in the competitive relationship between services and service suppliers of cooperative and
non-cooperative countries".226 The Panel stated that it was for Argentina to prove that "this 'other
factor' affects the competitive relationship between services and service suppliers, for example, by
showing its effect on the characteristics of the service and consumers' preferences".227
6.58. Ultimately, the Panel considered that the factual situation in the present case made it
extremely difficult to undertake the required analys is of "likeness" considering also the possibility
for Argentina to have access to tax information. The Panel considered that the circumstances of
the case made it "impossible for [the Panel] to compare relevant services and service suppliers"
for the purpose of examining "likeness".228 The Panel then held, in paragraph 7.185:
[H]aving concluded that the difference in treatment between cooperative and
non-cooperative countries inherent in the eight measures at issue is due to origin, we
consider that Panama has proved that services and service suppliers of cooperative
and non-cooperative countries are like by reason of origin.
229
6.59. This finding provided the basis for the Pa nel's conclusion that, "for the purposes of the
claims made by Panama under Article II:1 of th e GATS, the services and service suppliers of
cooperative countries are like the services and service suppliers of non-cooperative countries."230
6.60. We understand the Panel's finding in paragraph 7.185 cited above ("having concluded that
the difference in treatment between cooperative and non-cooperative countries inherent in the
eight measures at issue is due to origin") to refer back to its statement in paragraph 7.166.
However, as we have noted above, the Panel did not make a finding, in paragraph 7.166, that the
distinction in the measures at issue is based exclusively on origin. Accordingly, paragraph 7.166
cannot serve as the basis for a conclusion that the distinction between cooperative and
non-cooperative countries in the measures at issue is based exclusively on origin. Indeed, in
paragraph 7.185, the Panel referred only to a difference in treatment between cooperative and
non-cooperative countries "due to origin", rather than one due exclusively to origin.
6.61. As we have explained above, the applicat ion of the presumption of "likeness" requires a
finding that a measure provides for a distinction based exclusively on origin. In the absence of
such a finding, the Panel was required to undertake an analysis of "likeness", considering various
criteria relevant for an assessment of the compet itive relationship of the services and service
suppliers of cooperative and non-cooperative countries as set out above. In this respect, we note
that, while in its first written submission Panama relied primarily on the proposition that the
measures at issue make a distinction based exclusively on origin, Panama presented arguments
and evidence with respect to various criteria for es tablishing "likeness" in relation to the relevant
services and service suppliers under the measures at issue in its second written submission.
231 In
the absence of a finding that the measures at issue provide for a distinction based exclusively on
origin, and by failing to conduct an analysis of "likeness" on the basis of the arguments and
evidence presented by Panama with respect to th e "likeness" criteria, the Panel erred in finding
"likeness" "by reason of origin".
232

225 Panel Report, para. 7.166.
226 Panel Report, para. 7.179.
227 Panel Report, para. 7.179.
228 Panel Report, para. 7.184.
229 Panel Report, para. 7.185.
230 Panel Report, para. 7.186.
231 In particular, Panama submitted before the Panel that the "likeness" criteria traditionally employed in
the context of trade in goods could be applied mutatis mutandis to determine "likeness" of services and service
suppliers, namely: (i) the nature of the services; (ii) the end use of the services; (iii) consumer preferences for
such services; and (iv) any possible government classification that could give an indication of likeness.
(Panama's second written submission to the Panel, paras. 2.131, 2.276, 2.421, 2.423, 2.524, 2.604, 2.736;
Panel Exhibit PAN-86)
232 Panel Report, para. 7.185.

6.62. We note Panama's additional argument that the possibility of Argentina having access to tax
information on foreign suppliers was merely the "reason" underlying the distinction drawn on the
basis of origin. Panama contends that there will always be a reason why Members differentiate in
their laws or regulations between services and service suppliers of different origin.
233 Panama
further argues that the existence of policy ration ales underlying origin-based distinctions does not
alter the fact that the measures on their face differentiate exclusively on the basis of origin.234
6.63. Assuming arguendo that, as Panama suggests, Panama indeed made a prima facie case that
the distinction between cooperative and non-cooper ative countries in the measures at issue is
based exclusively on origin, we consider that, because Argentina had introduced arguments and
evidence in order to demonstrate that the possibility of access to tax information had an impact on
the competitive relationship, the Panel would have been required to assess whether Argentina had
thus successfully rebutted such prima facie case based on the presumption approach. In this
respect, we note that Argentina had presented to the Panel arguments and evidence in support of
its contention that the possibility of access to tax information affected the criteria for establishing
"likeness", in particular consumers' preferences, in a way that had an impact on the competitive
relationship of services and service suppliers in the market.
235
6.64. We note that the Panel set out to a ssess whether the possibility of access to tax
information indeed affected the criteria for establishing "likeness" and, thus, had an impact on the
competitive relationship. The Panel stated that it would assess whether Argentina had established
that access to tax information on foreign suppliers affected the competitive relationship between
services and service suppliers, for example, by sh owing its effect on the characteristics of the
services and consumers' preferences.
236 However, the Panel ceased that analysis without reaching
a conclusion, stating merely that it was impossible for the Panel to compare relevant services and
service suppliers for purposes of examining "likeness".
237 Because Argentina had argued that
access to tax information on foreign suppliers affected the competitive relationship between
services and service suppliers and had presented evidence to that effect, the Panel was required to
examine this evidence and assess whether Argentina had indeed met its burden of showing that
the possibility of access to tax information on foreign suppliers had an impact on the competitive
relationship. The Panel did not do so. Moreover, if Argentina had met its burden, then the Panel
should have conducted a "likeness" analysis on the basis of the relevant criteria.
6.65. This brings us to Argentina's third claim, namely, that the Panel erred in its allocation of the
burden of proof by requiring Argentina to demons trate that the services and service suppliers at
issue are not "like". 238 Argentina asserts that Panama rested its case on the proposition that
"likeness" can be presumed when differential tr eatment is accorded exclusively on the basis of
origin. While Argentina disagrees with this proposition, it also submits that Panama failed to
establish that the measures at issue provide for di fferential treatment exclusively on the basis of
origin.239 Argentina argues that the Panel erred in stating that it lies with Argentina to prove that
the possibility to access tax information "affects the competitive relationship between services and
service suppliers, for example, by showing its ef fect on the characteristics of the service and
consumers' preferences".240
6.66. Panama responds that the Panel did not err in the allocation of the burden of proof under
Article II:1 of the GATS. Panama asserts that, to the extent it bore the burden of making a
prima facie showing of "likeness", it discharged this bu rden by showing that Argentina's measures
differentiate between services and service suppliers only on the basis of origin and that the
services and service suppliers covered by the meas ures are therefore "like" except for origin. If
Argentina wished to assert that there were "other factors" that were relevant to the determination,

233 Panama's appellee's submission, para. 5.22.
234 Panama's appellee's submission, para. 5.23.
235 In particular, Argentina had submitted to the Panel that, when traditional tax havens enter into tax
information exchange agreements, they lose business to the jurisdictions that have not entered into such
agreements. (Argentina's first written submission to the Panel, paras. 211-213; second written submission to
the Panel, paras. 48-50) In support of its contention, Argentina referred to three exhibits: Panel Exhibits
ARG-80, ARG-81, and ARG-129.
236 Panel Report, para. 7.179.
237 Panel Report, para. 7.184.
238 Argentina's other appellant's submission, para. 68.
239 Argentina's other appellant's submission, para. 69 (referring to Panel Report, para. 7.166).
240 Argentina's other appellant's submission, para. 72 (quoting Panel Report, para. 7.179).

or that countered Panama's prima facie showing of "likeness", it was for Argentina to establish
what those "other factors" were, and how they would undermine Panama's showing of
"likeness".
241
6.67. We have addressed above the allocation of the burden of proof under the presumption
approach. In the light of our previous finding that the Panel erred in its "likeness" analysis, we
consider it unnecessary to address separately Argentina's claim regarding the burden of proof.
6.68. Argentina further claims that the Panel committed legal error by making a prima facie case
of "likeness" for Panama under Article II:1 in the absence of evidence and legal argument. 242 For
Argentina, this constitutes an independent basis to reverse the Panel's finding of inconsistency
with Article II:1.
243
6.69. We have found above that the Panel erred in its "likeness" analysis, and we therefore
consider it unnecessary to address separately Argentina's claim that the Panel erred by making a
prima facie case of "likeness" for Panama in the absence of evidence and legal argument
presented by Panama under Article II:1 of the GATS.
6.70. Based on the considerations set out above, we reverse the Panel's finding, in
paragraph 7.186 of its Report, that services and se rvice suppliers of cooperative countries are like
services and service suppliers of non-cooperative countries.
6.71. Because the Panel's conclusion that measures 1-8 are inconsistent with Article II:1 of the
GATS was based on the Panel's finding in paragraph 7.186, we also reverse this conclusion of the
Panel in paragraphs 7.367 and 8.2.b of its Report.
6.1.6.2 Whether the Panel erred in its interp retation and application of Article XVII:1 of
the GATS
6.72. With respect to Article XVII:1 of the GATS , Argentina requests us to find that the Panel
erred by relying upon its "likeness" findings under Article II:1 of the GATS in its analysis of
"likeness" under Article XVII:1 244, and to sustain, on the basis of modified reasoning, the Panel's
conclusion that measures 2, 3, and 4 are not inconsistent with Article XVII:1 of the GATS.
6.73. Argentina submits that the Panel's reliance upon its "likeness" findings under Article II:1 in
its "likeness" analysis under Article XVII:1 constitutes legal error, because the findings under
Article II:1 are themselves in error. 245 Argentina alleges that the Panel further erred in relying on
these findings because they were not relevant to the Panel's analysis under Article XVII:1.
Argentina explains that, in its "likeness" analysis under Article II:1, the Panel compared services
and service suppliers in cooperative and non-cooperative countries, and that this comparison has
no bearing on the "likeness" analysis under Article XVII:1, which requires a comparison of services
and service suppliers in non-cooperative countries with Argentine services and service suppliers.
246
6.74. Panama, for its part, submits the same arguments with respect to Argentina's allegation of
error relating to the Panel's analysis under both Article II:1 and Article XVII:1 of the GATS.
Panama does not respond separately to arguments raised by Argentina specifically with respect to
the Panel's analysis under Article XVII:1.
6.75. We note that the Panel's conclusion under Article XVII:1 – that Argentine services and
service suppliers are like the services and se rvice suppliers of non-cooperative countries
247 – was
based on the Panel's earlier finding of the likeness of services and service suppliers of cooperative
and of non-cooperative countries under Article II:1. Indeed, the Panel considered that its

241 Panama's appellee's submission, para. 5.45.
242 Argentina's other appellant's submission, para. 98.
243 Argentina's other appellant's submission, para. 99.
244 Argentina's other appellant's submission, paras. 1 and 93.
245 Argentina's other appellant's submission, para. 85.
246 Argentina's other appellant's submission, para. 87.
247 Panel Report, para. 7.489.

"likeness" finding under Article II:1 of the GATS "can be transposed to the scope of Article XVII of
the GATS".248
6.76. We have found above that the Panel erred in finding that the services and service suppliers
of cooperative countries are like the services and service suppliers of non-cooperative countries for
p u r p o s e s o f A r t i c l e I I : 1 , a n d w e h a v e r e v e r s e d t h i s f i n d i n g . T h i s a l s o r e m o v e s t h e b a s i s o f t h e
Panel's finding that Argentine services and serv ice suppliers are like the services and service
suppliers of non-cooperative countries for purposes of Article XVII, because that finding was
dependent on the Panel's earlier finding of "liken ess" under Article II:1. Accordingly, we reverse
the Panel's finding, in paragraph 7.489 of its Report, that "Argentine services and service suppliers
are like the services and service suppliers of no n-cooperative countries for the purposes of [its]
analysis of Article XVII of the GATS."
6.77. Argentina further claims that the Panel committed legal error by making a prima facie case
of "likeness" for Panama under Article XVII in the absence of evidence and legal argument. 249 For
Argentina, this constitutes an independent basis for us to modify the legal basis of the Panel's
conclusion that measures 2, 3, and 4 are not inconsistent with Article XVII.250
6.78. We have found above that the Panel erred in its "likeness" analysis and we therefore
consider it unnecessary to address separately Argentina's claim that the Panel erred by making a
prima facie case of "likeness" for Panama in the absence of evidence and legal argument
presented by Panama under Article XVII of the GATS.
6.79. We have reversed the Panel's finding, in paragraph 7.489 of its Report, that Argentine
services and service suppliers are like the services and service suppliers of non-cooperative
countries. Because the Panel's conclusion that measures 2, 3, and 4 are not inconsistent with
Article XVII of the GATS was based on this finding, we also reverse this conclusion of the Panel in
paragraphs 7.525 and 8.2.c of its Report.
6.80. Finally, we wish to emphasize that, while we have reversed the Panel's findings of "likeness"
under Articles II:1 and XVII of the GATS for the reasons set out above, we have taken no view on
whether the services and service suppliers of cooperative countries are "like" the services and
service suppliers of non-cooperative countries, or "like" Argentine services and service suppliers.
6.1.6.3 Whether the Panel acted inconsistently with Article 11 of the DSU
6.81. Argentina alleges that the Panel failed to make an objective assessment of the matter, as
required under Article 11 of the DSU, by ig noring uncontested evidence on the record
demonstrating that the services and service suppliers at issue are not "like". Argentina raises this
claim only in the event that we find that Argent ina bore the burden of proving "likeness" under
Articles II:1 and XVII of the GATS, or that Panama had otherwise established a prima facie case of
"likeness".
251
6.82. We have found above that the Panel erred in its analysis of "likeness" and, consequently, we
have reversed the Panel's finding that the services and service suppliers of cooperative countries
are "like" the services and service suppliers of non-cooperative countries, as well as the Panel's
finding that the services and service suppliers of cooperative countries are "like" Argentine services
and service suppliers. We neither found that Argentina bore the burden of proving "likeness" under
Articles II:1 and XVII of the GATS, nor that Panama had established a prima facie case of
"likeness".
252 Consequently, the condition upon which Argentina's claim under Article 11 rests is

248 Panel Report, para. 7.488.
249 Argentina's other appellant's submission, para. 98.
250 Argentina's other appellant's submission, para. 99.
251 Executive summary of Argentina's other appellant's submission, Annex B-2 to this Report, para. 12;
see also Argentina's other appellant's submission, para 101 and fn 91 thereto. Argentina submits that, in
particular, the condition of its claim under Article 11 of the DSU would be fulfilled if we were to find that a
presumption of "likeness" was warranted because the measures at issue provide for differential treatment on
the basis of origin, or if we were to find, on any other basis, that Panama had established a prima facie case of
"likeness" before the Panel, thus requiring a rebuttal from Argentina.
252 We have addressed the latter situation above in paragraph 6.63, albeit on an arguendo basis.

not met. Therefore, neither this claim nor Argentina's request that we complete the legal analysis
is before us, and we make no findings in this respect.
6.83. We have found that the Panel's analysis was in error, and we have thus reversed the Panel's
finding that the services and service suppliers of cooperative countries are "like" the services and
service suppliers of non-cooperative countries under Article II:1 of the GATS. We have also
reversed the Panel's finding that Argentine services and service suppliers are "like" the services
and service suppliers of non-cooperative countries under Article XVII of the GATS. Our reversal of
these findings means that the Panel's findings on "treatment no less favourable" are moot because
they were based on the Panel's findings that the relevant services and service suppliers are "like".
Moreover, as a consequence of our reversal of the Panel's "likeness" findings, there remains no
finding of inconsistency with the GATS. This, in turn, renders moot the Panel's analysis of whether
measures 1, 2, 3, 4, 7, and 8 may be justified pursuant to Article XIV(c) of the GATS and whether
measures 5 and 6 may be justified pursuant to paragraph 2(a) of the GATS Annex on Financial
Services.
6.84. At the same time, we note that, for the most part, the claims of error raised by Panama
regarding the Panel's findings on "treatment no less favourable", as well as the Panel's findings
under Article XIV(c) and paragraph 2(a) of the Annex on Financial Services, concern "issues of law
covered in the panel report and legal interpretations developed by the panel", and hence fall within
the scope of appellate review under Article 17.6 of the DSU. Moreover, several of the issues raised
in Panama's appeal have implications for the interpretation of provisions of the GATS. With these
considerations in mind, we turn to address the issues raised in Panama's appeal.
6.2 Article II:1 and Article XVII of the GATS – "Treatment no less favourable"
6.85. Panama claims that the Panel erred in its interpretation of the term "treatment no less
favourable" under Articles II:1 and XVII of the GATS
253, and also erred in its application of the
term "treatment no less favourable" under Article XVII of the GATS. 254 Panama requests us to
sustain the Panel's finding that the measures at issue are inconsistent with Article II:1 of the GATS
on the basis of the Panel's preliminary findings under that provision. Panama further requests us
to reverse the Panel's finding that measures 2, 3, and 4 are not inconsistent with Article XVII of
the GATS and find, instead, that these measures are inconsistent with that provision.
255
6.86. Before analysing Panama's appeal, we consider it useful to begin by briefly setting out an
overview of the relevant findings of the Panel and the participants' claims and arguments on
appeal. Subsequently, we set out our interpretation of the term "treatment no less favourable" in
Articles II:1 and XVII of the GATS, and address the alleged interpretive errors by the Panel in the
light of our interpretation, before addressing the errors of application alleged by Panama.
6.2.1 The Panel's findings under Article II:1 of the GATS
6.87. As a starting point for discerning the ordinary meaning of the term "treatment no less
favourable" in Article II:1 of the GATS, the Panel referred to several dictionary definitions of the
words used in Article II:1.256 The Panel further noted two aspects that it considered relevant to its
interpretation, namely, the broad scope of the obligation under Article II of the GATS, and the
reference in Article II:1 to "services and service suppliers". In particular, the Panel considered that
the reference to "service suppliers" is linked to the nature of services and of trade in services, and
highlighted "some very special features" of services that "differentiate them from goods".
257
6.88. On this basis, the Panel considered that the regulatory framework in which service suppliers
operate may in certain circumstances be relevant in the context of the GATS due to its "direct
impact on the service".258 In the Panel's view, Members' right to regulate the supply of services to

253 Panama's appellant's submission, paras. 3.2 and 4.2 (referring to Panel Report, paras. 7.235
and 7.494).
254 Panama's appellant's submission, para. 4.33.
255 Unlike its claim under Article II:1 of the GATS, which concerned the measures at issue, Panama's
claim under Article XVII of the GATS concerned only measures 2, 3, and 4. (Panel Report, para. 7.436)
256 Panel Report, para. 7.205.
257 Panel Report, para. 7.212.
258 Panel Report, para. 7.212.

meet national policy objectives, "as enshrined in the preamble to the GATS", confirms the
relevance of the regulatory framework in the context of trade in services.259
6.89. The Panel went on to examine the co ntext afforded by Article XVII:3 of the GATS 260, and
considered that the concept of "treatment no less favourable" under Article II:1 also hinges on the
"conditions of competition". The Panel then review ed the context provided by relevant provisions
of the GATT 1994 and the Agreement on Technical Barriers to Trade (TBT Agreement), and
reviewed the Appellate Body's interpretations of the term "treatment no less favourable" under
those Agreements. The Panel further noted that th ere exist "some similarities between the GATS
and the TBT Agreement"
261, in that the preambles in both Agreements recognize Members' right to
regulate with a view to achieving certain policy objectives. The Panel emphasized, however, that
the reference to "service suppliers" differentiates the GATS from the other two Agreements, and
explained that this reference "has a decisive infl uence" on the relevance of the Appellate Body's
interpretations to the Panel's interpretive exercise in this dispute.262 In the Panel's view, therefore,
the interpretations developed under Article III:4 of the GATT 1994 and Article 2.1 of the
TBT Agreement cannot be transposed directly to Article II:1 of the GATS.
6.90. On the basis of the above considerations, th e Panel found, in its interpretation of the term
"treatment no less favourable", that the reference to "service suppliers" in Article II:1 "might lead
the interpreter" to take into account "the releva nt regulatory aspects concerning service suppliers
which have an impact on the conditions of competition". 263 In the Panel's view, "[c]onsideration of
these regulatory aspects could … mean that certain regulatory distinctions between service
suppliers established by a Member do not necess arily constitute" less favourable treatment under
Article II:1 of the GATS.
264
6.91. Thus, the Panel explained its approach as follows: first, it would determine whether, for
each of the eight measures at issue, Argentina accords different treatment to the two categories of
services and service suppliers (cooperative and non-cooperative countries); then, it would examine
whether the treatment is less favourable for services and service suppliers of non-cooperative
countries. The Panel considered that, in order to determine whether treatment is less favourable, it
was required to assess whether the measure modifies the conditions of competition. In addition,
the Panel stated that this assessment had to "take into account regulatory aspects relating to
services and service suppliers that may affect the conditions of competition; in particular, whether
Argentina is able to have access to tax information on foreign suppliers".
265
6.92. Following this approach, the Panel found, at the outset, that the treatment accorded to
services and service suppliers of cooperative countries under each of the measures at issue is
different from that accorded to like services and service suppliers of non-cooperative countries.
266
The Panel went on to find, as a preliminary matter, that each of the measures modifies the
conditions of competition to the detriment of like services and service suppliers of non-cooperative
countries.
267 The Panel then took into account the "regulatory aspects" in this dispute, namely, the
possibility for Argentina to access tax information on foreign suppliers. The Panel found that, due
to the design of Decree No. 589/2013, "the way in which Argentina classifies countries as
cooperative or non-cooperative is not consistent with the possibility for Argentina to have access
to tax information."
268
6.93. On this basis, the Panel concluded that Panama had demonstrated that the measures at
issue fail to accord "treatment no less favourable" to services and service suppliers of

259 Panel Report, para. 7.217.
260 Panel Report, para. 7.220. Article XVII:3 of the GATS provides:
Formally identical or formally different treatment shall be considered to be less favourable if it
modifies the conditions of competition in favour of services or service suppliers of the Member
compared to like services or service suppliers of any other Member.
261 Panel Report, para. 7.230.
262 Panel Report, para. 7.228.
263 Panel Report, para. 7.232.
264 Panel Report, para. 7.232.
265 Panel Report, para. 7.235.
266 Panel Report, paras. 7.237-7.273.
267 Panel Report, paras. 7.282, 7.300, 7.308, 7.318, 7.328, 7.338, 7.350, and 7.359. For all but
two measures (measures 4 and 6), the Panel's findings refer to "service suppliers" only.
268 Panel Report, para. 7.290. See also paras. 7.301, 7.309, 7.319, 7.329, 7.339, 7.351, and 7.360.

non-cooperative countries as compared to that accorded to like services and service suppliers of
cooperative countries.269
6.2.2 The Panel's findings under Article XVII of the GATS
6.94. The Panel considered that, like Article II of the GATS, Article XVII of the GATS refers not
only to like services, but also to like service suppliers . The Panel then reached the same
interpretation of "treatment no less favourable" under Article XVII as it did under Article II:1, and
adopted the same analytical approach as the one adopted under Article II:1.
270 Following this
approach, the Panel first found, on the basis of its findings under Article II:1, that measures 2, 3,
and 4 establish different treatment for services an d service suppliers of non-cooperative countries
in comparison with that accorded to Argentine like services and service suppliers. 271 Similarly, the
Panel referred to its "preliminary" conclusions of "treatment less favourable" under Article II:1 272
and found, "on a preliminary basis", that measures 2, 3, and 4 "do not accord treatment no less
favourable to services and service suppliers of non-cooperative countries in comparison with that
accorded to Argentine like services and service suppliers".
273
6.95. The Panel proceeded to determine whether its preliminary conclusions on less favourable
treatment could be confirmed after examining the impact on competitive conditions of the
possibility of Argentina to access tax information on service suppliers. The Panel considered that
measures 2, 3, and 4 are intended to "neutraliz e an 'unintended competitive advantage'" enjoyed
by service suppliers of non-cooperative countries owing to the lack of exchange with Argentina of
tax information on their suppliers.
274 Because this advantage is not available to Argentine service
suppliers whose tax information can be obtained by the Argentine authorities, the Panel considered
that none of these measures grants "favour" to Argentine services and service suppliers.275 Rather,
the Panel considered that measures 2, 3, and 4 are designed to guarantee that the competitive
relationship between Argentine services and service suppliers and those of non-cooperative
countries is "on an equal footing". 276 In the Panel's view, this is consistent with the objective of
Article XVII of the GATS, that is, "to ensure equal conditions of competition" between foreign and
domestic services and service suppliers.
277
6.96. On this basis, the Panel found that Panama had not proved that measures 2, 3, and 4
accord less favourable treatment to services and service suppliers of non-cooperative countries in
comparison with that accorded to Argentine like services and service suppliers.
278
6.2.3 Claims and arguments on appeal
6.97. Panama claims that the Panel erred in its interpretation of the term "treatment no less
favourable" in Articles II:1 and XVII of the GATS in finding that the assessment of whether a
measure modifies the conditions of competition under these provisions in this dispute also "has to
take into account regulatory aspects relating to services and service suppliers that may affect the
conditions of competition", that is, "whether Argentina is able to have access to tax information on
foreign suppliers."
279 Panama maintains that, in the contex t of both the GATT 1994 and the GATS,
WTO panels and the Appellate Body have consistently found that a measure accords "less
favourable treatment" when it modifies the conditions of competition in the relevant market
without taking into account any regulatory aspects. Panama contends that the Panel's
interpretation of the term "treatment no less favourable" in Article II:1 is erroneous, because the

269 Panel Report, para. 7.362. Having reached this conclusion, the Panel found it unnecessary "to pursue
[its] analysis by addressing the question of whether non-existent 'treatment no less favourable' is accorded
immediately and unconditionally to like services and service suppliers". (Ibid., para. 7.363)
270 See supra, paras. 6.90-6.91.
271 Panel Report, para. 7.499.
272 Panel Report, paras. 7.501-7.503.
273 Panel Report, para. 7.504. See also paras. 7.500-7.503.
274 Panel Report, para. 7.515 (quoting OECD Report (2013), Addressing Base Erosion and Profit Shifting
(Panel Exhibit ARG-22), p. 39).
275 Panel Report, para. 7.516.
276 Panel Report, para. 7.521.
277 Panel Report, para. 7.520.
278 Panel Report, para. 7.522.
279 Panama's appellant's submission, paras. 3.2 and 4.2; Panel Report, para. 7.235. See also Panel
Report, para. 7.494.

Panel misinterpreted the context of this term, mi sunderstood the object and purpose of the GATS,
and failed to take into account the relevant jurisprudence. Panama further submits that the Panel's
ultimate conclusion under Article II:1 should have been based entirely on its preliminary finding
that the measures at issue modify the conditions of competition to the detriment of services and
service suppliers of non-cooperative countries.
280
6.98. With respect to Article XVII of the GATS , Panama maintains that the Panel erred in its
interpretation of the term "treatment no less favourable" for the same reasons as those set out in
Panama's appeal under Article II:1. Panama adds that, in applying Article XVII to measures 2, 3,
and 4, the Panel "spelled out in somewhat mo re detail how regulatory aspects should be
approached when assessing 'less favourable treatment'". 281 More specifically, the Panel employed
an erroneous legal standard whereby, if a regulatory aspect provides an "unintended competitive
advantage" to services or service suppliers of ce rtain foreign origins, Members can impose higher
burdens or additional requirements on these servic es or service suppliers in order to "neutralize"
such an unintended competitive advantage. 282 Panama further contends that, in applying an
incorrect legal standard under Article XVII:1 to measures 2, 3, and 4, the Panel relied on
unsubstantiated assumptions and provided unreasoned and self-contradictory conclusions. On this
basis, Panama requests us to reverse the Panel's finding under Article XVII of the GATS, and to
complete the legal analysis and find that measures 2, 3, and 4 are inconsistent with Article XVII of
the GATS.
283
6.99. On appeal, Argentina submits no substantive arguments regarding the interpretation and
application of the term "treatment no less favourable" in Articles II:1 and XVII of the GATS.
Rather, Argentina contends that Panama's appeal, as well as Argentina's other appeal, should be
resolved on the grounds of "likeness". According to Argentina, the Panel did not err in its findings
concerning the importance of regulatory distinctions to a proper interpretation of Articles II:1
and XVII of the GATS. However, Argentina contends that regulatory differences that affect
competitive relationships among services and service suppliers should properly be examined, in
the first instance, as part of the evaluation of whether the services and service suppliers at issue
may be considered "like". To the extent they ca nnot be considered "like", the question of "less
favourable treatment" does not arise.
284
6.100. Argentina further contends that, had the Panel held Panama to its burden of proof in the
context of the "likeness" analysis, the Panel would have properly concluded that Panama had failed
to establish a prima facie case of "likeness". Thus, referring to the reasons set forth in its other
appellant's submission, Argentina requests us to reverse or modify the Panel's ultimate conclusions
under Articles II:1 and XVII of the GATS without the need to address Panama's claims of error
concerning the Panel's interpretation and application of the term "treatment no less favourable".
285
6.2.4 Whether the Panel erred in its interp retation of the term "treatment no less
favourable" in Article II:1 and Article XVII of the GATS
6.101. In this section, we set out our interpretation of the term "treatment no less favourable" in
Articles II:1 and XVII of the GATS, and review the alleged interpretive errors of the Panel in the
light of our interpretation. In reviewing the Panel's findings, we begin with the Panel's articulation
of its legal standard on the basis of its interpretation of Articles II:1 and XVII, including its analysis
of their text and context, as well as the object and purpose of the GATS.
286 Moreover, we note that
the Panel further elaborated on its approach to assessing "treatment no less favourable" in its
application of Articles II:1 and XVII to the facts of the case, and that, according to Panama, parts
of this application also reflect the Panel's alleged interpretive errors. In our analysis below,
therefore, we also examine the Panel's relevant findings in the application of Articles II:1 and XVII,
in order to examine the Panel's alleged errors of interpretation as manifested in such application.

280 Panama's appellant's submission, paras. 3.31-3.68.
281 Panama's appellant's submission, para. 4.25.
282 Panama's appellant's submission, paras. 4.13 and 4.41.a (referring to Panel Report,
paras. 7.514-7.516 and 7.520-7.521).
283 Panama's appellant's submission, para. 4.41.
284 Argentina's appellee's submission, paras. 39 and 45.
285 Argentina's appellee's submission, paras. 42 and 44.
286 Because the Panel's interpretation of the term "treatment no less favourable" in Article XVII is, to a
large extent, based on the same reasons it set out in interpreting the same term in Article II:1, our review of
the Panel's interpretation refers primarily to the Panel's relevant findings in relation to Article II:1 of the GATS.

6.2.4.1 Whether the Panel erred in its articu lation of the legal standard of "treatment
no less favourable"
6.102. Articles II:1 and XVII of the GATS state:
Article II
Most-Favoured-Nation Treatment
1. With respect to any measure covered by this Agreement, each 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.
Article XVII
National Treatment
1. In the sectors inscribed in its Schedule, and subject to any conditions and
qualifications set out therein, each Member shall accord to services and service
suppliers of any other Member, in respect of all measures affecting the supply of
services, treatment no less favourable than that it accords to its own like services and
service suppliers.[*]
2. A Member may meet the requirement of paragraph 1 by according to services and
service suppliers of any other Member, either formally identical treatment or formally
different treatment to that it accords to its own like services and service suppliers.
3. Formally identical or formally different treatment shall be considered to be less
favourable if it modifies the conditions of competition in favour of services or service
suppliers of the Member compared to like services or service suppliers of any other
Member.
[*fn original] 10 Specific commitments assumed under this Article shall not be construed to
require any Member to compensate for any inherent competitive disadvantages which result from
the foreign character of the relevant services or service suppliers.
6.103. Examining the text of these provisions, we note that the second and third paragraph of
Article XVII elaborate on the meaning of a Member's obligation to grant "treatment no less
favourable" pursuant to Article XVII:1. Specifical ly, Article XVII:2 recognizes that a Member may
meet this requirement by according to services and service suppliers "either formally identical
treatment or formally different treatment". Article XVII:3 stipulates that "[f]ormally identical or
formally different treatment shall be considered to be less favourable if it modifies the conditions
of competition in favour of services or service suppliers of the Member compared to like services or
service suppliers of any other Member."
287 In our view, while Article XVII:3 refers to the
modification of conditions of competition in favour of domestic services or service suppliers, the
legal standard set out in Article XVII:3 calls for an examination of whether a measure modifies the
conditions of competition to the detriment of services or service suppliers of any other Member.
Less favourable treatment of foreign services or service suppliers and more favourable treatment
of like domestic services or service suppliers are flip-sides of the same coin.
6.104. Footnote 10 to Article XVII:1 provides further insight as to the meaning of the obligation to
accord "treatment no less favourable" under Article XVII:1. Footnote 10 stipulates that specific
commitments assumed under Article XVII:1 "shall not be construed to require any Member to
compensate for any inherent competitive disadvantages which result from the foreign character of
the relevant services or service suppliers". As its text indicates, the "inherent competitive
disadvantages" referred to in footnote 10 result from the "foreign character" of the relevant
services or service suppliers, rather than from the contested measure adopted by the importing

287 Emphasis added.

Member.288 The "inherent competitive disadvantages" under footnote 10, therefore, must be
distinguished from the measure's impact on the conditions of competition in the marketplace. By
stating that a Member is not required to "compensate for" such "inherent competitive
disadvantages", footnote 10 thus makes clear that the national treatment obligation under
Article XVII:1 is not about the relative competitive advantages or disadvantages of the services
and service suppliers that are not caused by the contested measure. Rather, the standard of
"treatment no less favourable" must be based on the impact on the conditions of competition that
results from the contested measure.
289
6.105. Turning to Article II:1 of the GATS, we note that this provision does not further define the
term "treatment no less favourable". Furthermore, we recall that Article XVII:1 contains a national
treatment obligation, whereas Article II:1 contains a most-favoured-nation obligation.
Nonetheless, the operative parts of these provisions are similarly worded, in that a Member is
required to accord "treatment no less favourable " to "services and service suppliers of any other
Member". Both provisions serve the function of prohibiting discrimination against foreign services
and service suppliers vis-à-vis like services and service suppliers. Although the immediate context
of this term in Articles II:1 and XVII:1 is not expressed in identical words, and Article II does not
contain the elaboration of the "less favourable treatment" standard found in Articles XVII:2 and 3,
the Appellate Body has found that both provisions share the essential nature of anti-discrimination
provisions, and cover both de jure and de facto discrimination.
290 Thus, the elaboration on the
meaning of the term "treatment no less favourable" contained in Article XVII, and in particular in
Article XVII:3, should also be pertinent context to the meaning of the same term in Article II:1.
6.106. We note that, in EC – Bananas III , the Appellate Body upheld the panel's finding that the
EC licensing procedures in that dispute conferred less favourable treatment under both Article II
and Article XVII of the GATS. In so doing, the Appellate Body based its findings under both
provisions on the same notion of "less favourable treatment". Specifically, the Appellate Body
agreed with the panel that various aspects of the EC licensing procedures at issue created less
favourable conditions of competition for service suppliers of the complainants' origin.
291 The
Appellate Body's findings indicate that, on substance, the concept of "treatment no less
favourable" under both the most-favoured-nation and national treatment provisions of the GATS is
focused on a measure's modification of the conditio ns of competition. This legal standard does not
contemplate a separate and additional inquiry into the regulatory objective of, or the regulatory
concerns underlying, the contested measure. Inde ed, in prior disputes, the fact that a measure
modified the conditions of competition to the detriment of services or service suppliers of any
other Member was, in itself, sufficient for a finding of less favourable treatment under Articles II:1
and XVII of the GATS.
292
6.107. In the present dispute, the Panel also drew on the definition of "less favourable" treatment
in Article XVII:3 when interpreting the term "treatment no less favourable" in Article II:1, and

288 With regard to what may constitute such "inherent competitive disadvantages", the panel in
Canada – Autos noted that the supply of some repair and maintenance services on machinery and equipment
through supply modes 1 and 2 might not have been technically feasible for foreign suppliers, as they require
the physical presence of the supplier. (See Panel Report, Canada – Autos, para. 10.300)
289 See also infra, para. 6.146.
290 Appellate Body Report, EC – Bananas III, para. 233.
291 Appellate Body Report, EC – Bananas III, paras. 240-248. In that dispute, the Appellate Body stated
that the relevant findings under the most-favoured-nation obligation in Article I of the GATT 1994 would be of
greater pertinence in interpreting the most-favoured-nation obligation in Article II of the GATS. (See ibid.,
para. 231)
292 This is demonstrated by the panel and Appellate Body findings in EC – Bananas III, as discussed
above. (See Panel Report, EC – Bananas III (Ecuador), paras. 7.341, 7.353, 7.368, 7.380, 7.385, 7.393,
and 7.397; and Appellate Body Report, EC – Bananas III, paras. 244, 246, and 248) In addition, the panel in
EC – Bananas III (Article 21.5 – Ecuador) found that the import licensing measures at issue were inconsistent
with Article II:1 of the GATS because the complainant had shown that its service suppliers did not have
opportunities to obtain access to import licences on terms equal to those enjoyed by service suppliers of
EC/ACP origin. (See Panel Report, EC – Bananas III (Article 21.5 – Ecuador), para. 6.133) Following the
definition of less favourable treatment provided in Article XVII:3, the panels in both China – Electronic Payment
Services and China – Publications and Audiovisual Products found that certain measures by China modified the
conditions of competition to the detriment of like suppliers of other Members, and hence were inconsistent with
Article XVII:1 of the GATS. (See Panel Reports, China – Publications and Audiovisual Products, para. 7.979;
and China – Electronic Payment Services, paras. 7.712 and 7.714)

found "no impediment to using" that definition in the context of Article II:1. 293 The Panel thus
considered that the concept of "treatment no less favourable" in Article II:1 "also hinges on the
'conditions of competition'".
294 This element of the Panel's interpretation comports with our
analysis above, and with findings of panels and the Appellate Body in prior disputes in respect of
Articles II:1 and XVII of the GATS. 295 Besides the definition contained in Article XVII:3, however,
the Panel further found "two aspects in particular" in the text of Article II:1 to be relevant to its
interpretation of the term "treatment no less favourable".
296 As noted above, these aspects are the
broad scope of the obligation under Article II:1 and the reference to "services and service
suppliers".
6.108. Regarding the broad scope of the obligation under Article II:1, the Panel observed that this
provision applies with respect to "any measure covered by this Agreement", which is in turn
defined under Article I:1 as "measures by Members affecting trade in services". 297 The Panel
further noted that the word "affecting" "indicates a broad scope of application" 298, and highlighted
the broad definition of the word "measure" in Article XXVIII(a) of the GATS. According to the
Panel, the broad scope of the GATS is also reflected in the fact that trade in services is defined as
the supply of a service through four modes, an d that, under the first two modes, the service
supplier "may be located outside the territory of the Member 'importing' the service". 299 Beyond
these observations, however, the Panel did not elaborate on how the broad scope of the obligation
under Article II:1 informs the interpretation of the term "treatment no less favourable".300
6.109. In our view, the fact that a provision ha s a potentially broad scope of application is not
unique to Article II:1 or Article XVII of the GATS. As Panama rightly points out, Article III:4 of the
GATT 1994 also has an extensive scope of app lication, covering "all laws, regulations and
requirements affecting [the] internal sale, offering for sale, purchase, transportation, distribution
or use" of the products at issue.
301 The word "affecting" in both Article III:4 of the GATT 1994 and
Article I:1 of the GATS has been interpreted to me an that these provisions have a "broad scope of
application".302 The broad scope of Article III:4 of the GATT 1994 is also reflected in the fact that it
covers measures affecting the "internal sale, offering for sale, purchase, transportation,
distribution, or use" of products, thereby including measures affecting not only products
themselves but also producers or suppliers of goods. Nevertheless, the broad scope of Article III:4
of the GATT 1994 has not been perceived as a reason for requiring an analysis as to the
"regulatory aspects" relating to the products. Rather, pursuant to the legal standard for "treatment
no less favourable" under Article III:4 of the GATT 1994, the fact that a measure modifies the
conditions of competition to the detriment of imported products is, in itself, sufficient for a finding
that the measure confers "less favourable treatment".
303
6.110. With respect to the reference to "services and service suppliers", the Panel found this
aspect "particularly significant", especially in comparison with "other agreements such as the
GATT 1994 or the TBT Agreement, which only refer to products and not to producers".
304 The
Panel reasoned that "[t]heir intangible nature, and the relationship established between the
consumer and the supplier of the service and, in turn, between the service and its supplier, give
services some very special features which differentiate them from goods and which, in our opinion,
have a decisive influence on their production, marketing and use." 305 The Panel referred to the
"very special features" of services, but did not elaborate on how they affect the meaning of
"treatment no less favourable". Instead, having made the above observation, the Panel stated:

293 Panel Report, para. 7.220.
294 Panel Report, para. 7.220.
295 See Panel Reports, EC – Bananas III (Ecuador), paras. 7.341, 7.353, 7.368, 7.380, 7.385, 7.393,
and 7.397; EC – Bananas III (Article 21.5 – Ecuador), para. 6.133; China – Electronic Payment Services,
paras. 7.712 and 7.714; and China – Publications and Audiovisual Products, para. 7.979. See also
Appellate Body Report, EC – Bananas III, paras. 234, 244, 246, and 248.
297 Panel Report, paras. 7.209-7.210.
298 Panel Report, para. 7.210 (referring to Appellate Body Report, EC – Bananas III, para. 220).
300 See also Panama's appellant's submission, para. 3.35.
301 See Panama's appellant's submission, para. 3.36.
302 Appellate Body Reports, US – FSC (Article 21.5 – EC), paras. 208-210; EC – Bananas III, para. 220.
303 See infra, para. 6.119.
304 Panel Report, para. 7.211.

[T]his immediate context afforded by the actual text of Article II:1 of the GATS, in the
light of the special features of services and the importance given to suppliers of
services, appears to indicate that the regulatory framework in which service suppliers
operate may in certain circumstances be relevant in the context of the GATS since it
has a direct impact on the service through the natural or legal person supplying the
service. In this respect, it appears to us that the determination of the specific aspects
of the regulatory framework to be consid ered when examining "treatment no less
favourable" can only be made on a case-by-case basis.
306
6.111. We note that the reference to "service suppliers" is a particular feature of the GATS. This
can be seen from Article I:2, which defines "trade in services" as "the supply of a service" by a
supplier through four modes of supply. The definition of "trade in services" makes clear that the
supply of a service is inextricably linked with the service suppliers. Nonetheless, we do not see
how the mere reference to "service suppliers" in the GATS could alter the legal standard of
"treatment no less favourable", that is, whether the measure modifies the conditions of
competition to the detriment of like services or service suppliers of any other Member.
307
Specifically, as further discussed below, this legal standard does not contemplate a separate step
of analysis regarding whether the "regulatory aspects" relating to service suppliers could
"convert[]" the measure's detrimental impact on the conditions of competition into "treatment no
less favourable".
308
6.112. Our above interpretation of the legal stan dard of "treatment no less favourable", on the
basis of the text of Articles II:1 and XVII of the GATS, is also supported by the structure of the
GATS. Under this structure, Members can utilize certain flexibilities, available to them uniquely
under the GATS, when undertaking their GATS commitments, and their obligations are qualified by
exceptions or other derogations contained in the GATS and its Annexes. More specifically, pursuant
to Article XX of the GATS, a Member may undertake specific market access commitments and
national treatment obligations only in service sectors or subsectors, and only with respect to the
modes of supply that it wishes to liberalize and inscribe in its Schedule of GATS Commitments. In
the sectors and modes of supply that a Member ch ooses to include in its GATS Schedule, such
Member is permitted to subject national treatment obligations to conditions and qualifications, and
market access commitments to terms, limitations, and conditions.
309
6.113. Furthermore, the GATS sets out general exceptions and security exceptions from
obligations under that Agreement in the same ma nner as does the GATT 1994. In particular, both
Article XIV of the GATS and Article XX of the GATT 1994 affirm the right of Members to pursue
various regulatory objectives identified in the para graphs of these provisions even if, in doing so,
Members act inconsistently with obligations set out in other provisions of the respective
Agreements. Some of these objectives are the same under both provisions, such as protection of
public morals, protection of human, animal or plant life or health, and securing compliance with
WTO-consistent laws and regulations.
310 Article XIV of the GATS also contains exceptions not found
in the GATT 1994, covering measures "necessary … to maintain public order", "aimed at ensuring
the equitable or effective imposition or collection of direct taxes", and resulting from "an
agreement on the avoidance of double taxation".
311 The two exceptions relating to taxation, in
particular, reflect the fact that the GATS covers service suppliers, as the imposition of direct taxes
and agreements on the avoidance of double taxati on are particularly relevant for juridical and
natural persons, and thus service suppliers. In addition, the various Annexes to the GATS also
contain mechanisms that could allow for certain deviations from a Member's obligations, such as
paragraph 2(a) of the Annex on Financial Services.

307 Furthermore, as noted above, the fact that Article III:4 of the GATT 1994 covers measures affecting
the "internal sale, offering for sale, purchase, transportation, distribution, or use" of products indicates that
this provision also covers measures affecting producers or suppliers of goods. (See supra, para. 6.109)
308 Panel Report, para. 7.514.
309 We also note that the most-favoured-nation obligation under the GATS is subject to the Annex on
Article II Exemptions, although the Annex on Article II Exemptions does not allow for the scheduling of
additional exemptions after the entry into force of the Agreement for a Member.
310 See Article XIV(a), (b), and (c) of the GATS and Article XX(a), (b), and (d) of the GATT 1994,
respectively.
311 Article XIV(a), (d) (fn omitted), and (e) of the GATS, respectively. In particular, Article XIV(d) allows
for derogation from the national treatment obligation in Article XVII of the GATS, while Article XIV(e) allows for
derogation from the most-favoured-nation obligation in Article II of the GATS.

6.114. Through these flexibilities and exceptions , the GATS seeks to strike a balance between a
Member's obligations assumed under the Agreement and that Member's right to pursue national
policy objectives. A Member's right to pursue national policy objectives is recognized in the
preamble of the GATS, including the third and fourth recitals. The term "national policy objectives"
in the preamble, which is general and undefined, may cover a wide array of objectives, and
Members retain various means to pursue these objectives. To begin with, measures pursuing
national policy objectives may be taken outside the sectors or supply modes covered by GATS
Schedules. Furthermore, a Member may pursue a wide range of policy objectives while acting
consistently with its obligations or commitments assumed under the GATS. Indeed, a Member's
commitments under the GATS could in some cases se rve to further its national policy objectives.
Where measures are found to be inconsistent with a Member's obligations or commitments under
the GATS, the GATS provides for various mechanisms , such as Article XIV, which take account of
policy objectives underlying such measures.
6.115. This balance, too, reinforces the established legal standard for "treatment no less
favourable" under the non-discrimination provisions of the GATS, that is, whether a measure
modifies the conditions of competition to the detriment of like services or service suppliers of any
other Member. Where a measure is inconsistent with the non-discrimination provisions, regulatory
aspects or concerns that could potentially justify such a measure are more appropriately
addressed in the context of the relevant except ions. Addressing them in the context of the
non-discrimination provisions would upset the existing balance under the GATS.
6.116. The Panel observed that the third and four th recitals of the preamble recognize Members'
right to regulate trade in services in order to meet "national policy objectives", but that the
preamble does not define or enumerate the "national policy objectives". The Panel further stated
that the preamble does not reflect the "relatively few" exceptions contained in Article XIV
312, or the
other exceptions contained in the GATS, including Article XIV bis and paragraph 2(a) of the
Annex on Financial Services. The Panel expressed the concern that "equating the national policy
objectives … with the situations covered by the few general exceptions would mean that any
regulation adopted 'in order to meet national polic y objectives' would necessarily be a violation of
the basic principle of non-discrimination and would require justification under Articles XIV
and XIV bis."
313 The Panel therefore considered that the national policy objectives mentioned in
the preamble should not be "confined" to the si tuations covered by the "few general exceptions"
under Article XIV of the GATS and other provisio ns of the GATS that provide for exceptions. 314 On
this basis, the Panel stated:
It is our understanding that Members' right to regulate in accordance with their
national policy objectives, as enshrined in the preamble to the GATS, confirms the
relevance of the regulatory framework established to meet these objectives in the
area of trade in services.
315
6.117. As indicated above316, we agree that the scope of the "national policy objectives" referred
to in the preamble is broader than the objectives listed in the exceptions. As long as Members
comply with their GATS obligations and commitments, they are free to pursue national policy
o b j e c t i v e s t h a t t h e y c o n s i d e r a p p r o p r i a t e . I n t h i s r e g a r d , P a n a m a i s c o r r e c t i n s t a t i n g t h a t
"Members, on a daily basis, regulate services sectors and pursue a wide range of national policy
objectives without violating their obligations under the GATS", and that they only act inconsistently

312 Panel Report, para. 7.215. The Panel observed that the list of exceptions in Article XX of the
GATT 1994 is "much longer" than the "few" exceptions contained in Article XIV of the GATS, and that "fewer
exceptions are listed under Article XIV of the GATS than under Article XX of the GATT 1994". (Ibid., fn 403 to
para. 7.215, and para. 7.229) A comparison between the lists under Article XIV of the GATS and Article XX of
the GATT 1994 shows that the latter is longer in terms of the number of paragraphs it contains, and covers
exceptions relating to tangible goods, which are, by definition, relevant only to the GATT context. At the same
time, the Panel did not mention that the list in Article XIV of the GATS covers items not contained in Article XX
of the GATT 1994, such as those contained in paragraphs (d) and (e), which relate to taxation and are
particularly relevant to service suppliers.
313 Panel Report, para. 7.215.
314 Panel Report, paras. 7.215-7.216. These other provisions include Article XIV bis of the GATS
regarding security exceptions, and paragraph 2(a) of the GATS Annex on Financial Services concerning the
"prudential exception". (Ibid., para. 7.215)
315 Panel Report, para. 7.217.
316 See supra, para. 6.114.

with their non-discrimination obligations when they pursue policy objectives pursuant to
regulations that discriminate between like services or service suppliers. 317 The exceptions
contained in the GATS recognize a limited number of policy objectives that, under certain
conditions, may be pursued by measures that are otherwise inconsistent with the GATS. In other
words, the pursuit of a Member's national policy objectives is not equivalent to violation of a
Member's GATS obligations, and can be accommodated without the need to invoke exceptions.
Only when a Member, in pursuing its objectives, imposes measures that are inconsistent with its
GATS obligations – e.g. by modifying the conditions of competition to the detriment of like services
or service suppliers of any other Member – would the need to invoke exceptions arise.
6.118. Therefore, an interpretation of the term "treatment no less favourable" that is based on a
measure's detrimental impact on the conditions of competition does not prevent a Member from
pursuing a wide range of national policy objectives beyond those identified in the exceptions.
Moreover, a Member's right to pursue national policy objectives does not, as the Panel seemed to
suggest, confirm "the relevance of the regulatory framework established to meet these objectives"
for the purpose of analysing "treatment no less favourable".
318 For these reasons, we also disagree
with the Panel that the relevance of the "regulatory aspects concerning service suppliers" is
"confirmed by the object and purpose of the GATS".
319
6.119. Turning to the context provided by the non-discrimination provisions of the GATT 1994 and
the TBT Agreement, we note that our interpretati on of Articles II:1 and XVII of the GATS chimes
with the Appellate Body's interpretation of th e most-favoured-nation and national treatment
obligations in the context of the GATT 1994. As the Appellate Body found in EC – Seal Products ,
the most-favoured-nation obligation in Articl e I:1 of the GATT 1994 prohibits measures that
"modif[y] the conditions of competition between like imported products to the detriment of the
third-country imported products at issue".
320 Furthermore, the Appellate Body found that it is well
established in the jurisprudence that, if a measure "has a detrimental impact on the conditions of
competition for like imported products, then such detrimental impact will amount to treatment that
is 'less favourable' within the meaning of Article III:4" of the GATT 1994.321
6.120. The Appellate Body has adopted a different approach to the relevance of regulatory
concerns in determining "treatment no less favourable" under Article 2.1 of the TBT Agreement.
Article 2.1 of the TBT Agreement requires Memb ers to ensure that, in respect of technical
regulations, "products imported from the territory of any Member shall be accorded treatment no
less favourable than that accorded to like products of national origin and to like products
originating in any other country." The Appellate Body has identified a two-step legal test for
determining whether a technical regulation is inconsistent with the non-discrimination obligation
contained therein. The Appellate Body has held that , as a first step, "a panel examining a claim of
violation under Article 2.1 should seek to ascertain whether the technical regulation at issue
modifies the conditions of competition in the market of the regulating Member to the detriment of
the group of imported products vis-à-vis the group of like domestic products."
322 As a second step,
"a panel must further analyze whether the detrimental impact on imports stems exclusively from a
legitimate regulatory distinction rather than reflecting discrimination against the group of imported
products."
323
6.121. The Appellate Body explained in EC – Seal Products its reasons for finding that the
two-step analysis developed under Article 2.1 of the TBT Agreement does not form part of the
legal standard under Article III:4 of the GATT 1994. 324 One of the reasons identified by the
Appellate Body was that, whereas the obligations assumed by Members under Articles I:1 and
III:4 of the GATT 1994 are balanced by a Member's right to regulate in a manner consistent with
the requirements of the exceptions contained in Article XX, the TBT Agreement does not contain

317 Panama's appellant's submission, para. 3.55.
318 Panel Report, para. 7.217.
319 Panel Report, paras. 7.232 and 7.233, respectively.
320 Appellate Body Reports, EC – Seal Products, para. 5.90. See also paras. 5.87-5.88.
321 Appellate Body Reports, EC – Seal Products, para. 5.101 (referring to Appellate Body Reports, US –
Clove Cigarettes, para. 179; China – Publications and Audiovisual Products, para. 305; Korea – Various
322 Appellate Body Report, US – Clove Cigarettes, para. 180.
324 See Appellate Body Reports, EC – Seal Products, paras. 5.121-5.125.

such general exceptions. 325 This observation by the Appellate Body, in our view, has particular
resonance in the context of the GATS, where a Memb er's obligations are not only qualified by the
various exceptions listed therein, but also circ umscribed by the flexibilities unique to the GATS.
Thus, in the context of both the GATT 1994 an d the GATS, an interpretation of the term
"treatment no less favourable" that does not contemplate a separate inquiry into the regulatory
objectives of a measure sits well within the general structure of the respective Agreement.
6.122. In examining the context provided by th e non-discrimination obligations in the GATT 1994
and the TBT Agreement, the Panel summarized the Appellate Body's interpretations of the term
"treatment no less favourable" in Article III:4 of the GATT and Article 2.1 of the TBT Agreement
developed in Thailand – Cigarettes (Philippines), EC – Seal Products, and US – Clove Cigarettes.326
Although the Panel noted briefly that both the GATT 1994 and the GATS contain exception clauses,
whereas the TBT Agreement does not, and that this was "one of the aspects taken into account by
the Appellate Body" when interpreting Article 2.1 of the TBT Agreement 327, the Panel did not
further analyse the relevance of this aspect to its interpretive task. Also omitted from the Panel's
analysis were several cases involving Articles II:1 and XVII of the GATS, in which panels and the
Appellate Body have found less favourable treatment when a measure modifies the conditions of
competition to the detriment of services or service suppliers of any other Member, without
analysing any "regulatory aspects" of the measure.
328 The Panel did not engage with such past
jurisprudence even though the jurisprudence conc erns the same provisions and the same legal
issues.
6.123. At the end of its analysis, the Panel reached the following conclusion regarding the
interpretation of "treatment no less favourable" in Article II:1 of the GATS:
7.232. We realize that the mention of service suppliers might lead the interpreter, in
the light of the specific circumstances of each dispute, to take other aspects into
account in its interpretation of "treatment no less favourable", for example, the
relevant regulatory aspects concerning service suppliers which have an impact on the
conditions of competition. Consideration of these regulatory aspects could, depending
on the case, mean that certain regulatory distinctions between service suppliers
established by a Member do not necessarily constitute "treatment … less favourable"
within the meaning of Article II:1 of the GATS.
…
7.234. We consider likewise that the element concerning the conditions of
competition should also be taken into account in our interpretation of "treatment no
less favourable" under Article II:1 of the GATS, just as it is present in Article XVII of
the GATS and in Articles I:1 and III:4 of the GATT 1994 and Article 2.1 of the
TBT Agreement.
7.235. Below, we shall transpose this approach to the circumstances of the case
before us … . … In this connection, we consider that, in order to determine whether
treatment is less favourable, it must be assessed whether the measure modifies the
conditions of competition. We also consider that, in this particular case, such an
assessment has to take into account regulatory aspects relating to services and
service suppliers that may affect the conditions of competition; in particular, whether
Argentina is able to have access to tax information on foreign suppliers. …
329
As noted above, the Panel reached a similar interp retation in the context of Article XVII, after
referring to its interpretation under Article II:1.330

325 See Appellate Body Reports, EC – Seal Products, paras. 5.124-5.125.
326 Panel Report, paras. 7.221-7.227.
327 Panel Report, para. 7.229.
328 See e.g. Appellate Body Report, EC – Bananas III, paras. 244, 246, and 248; and Panel Reports,
EC – Bananas III (Ecuador), paras. 7.302, 7.341, 7.353, 7.368, 7.393, and 7.397; EC – Bananas III
(Article 21.5 – Ecuador), para. 6.133; China – Electronic Payment Services, paras. 7.712 and 7.714; and
China – Publications and Audiovisual Products, para. 7.979.
329 Emphasis added.
330 Panel Report, paras. 7.493-7.494. See also supra, para. 6.94.

6.124. In our view, the Panel's articulation of it s legal standard is ambiguous as to what role
precisely the "regulatory aspects" play in an analysis of "treatment no less favourable". For
example, in paragraph 7.232 of its Report, the Pa nel specified that the regulatory aspects that
may be relevant under its legal standard are those "concerning service suppliers which have an
impact on the conditions of competition ".
331 In addition, the Panel stated in paragraph 7.235 that,
in this dispute, "such an assessment" – that is, an assessment as to whether the measure modifies
the conditions of competition – "has to take into account regulatory aspects relating to services
and service suppliers that may affect the conditions of competition". These statements appear to
suggest that, under the Panel's legal standard for "treatment no less favourable", consideration of
the regulatory aspects forms part of the examination of whether the measure modifies the
conditions of competition.
6.125. At the same time, the Panel stated, in paragraph 7.232, that "[c]onsideration of these
regulatory aspects could … mean that certain regulatory distinctions between service suppliers
established by a Member do not necessarily cons titute" less favourable treatment. Subsequently,
in paragraph 7.234, the Panel stated that "the element concerning the conditions of competition
should also be taken into account in our interpretation of 'treatment no less favourable' under
Article II:1 of the GATS".
332 The words "should also" appear to suggest that evaluation of the
conditions of competition is separate from consideration of the regulatory aspects referred to in
paragraph 7.232. These statements of the Panel thus seem to indicate that consideration of the
regulatory aspects does not form part of the inquiry into whether the measure modifies the
conditions of competition, but, rather, constitutes a separate step in the analysis. The statements
further imply that, under this separate step, an analysis of the "regulatory aspects" could
potentially render a measure consistent with Articles II:1 and XVII, even if the measure modifies
the conditions of competition to the detriment of like services or service suppliers of any other
Member. If this is what the Panel meant, it would constitute an erroneous legal standard.
6.126. Furthermore, the Panel's articulation of its legal interpretation, when read together with its
application of Articles II:1 and XVII, makes clear to us that the Panel indeed employed such an
erroneous legal standard. As discussed in the next section, when applying Articles II:1 and XVII to
the facts of the case, the Panel further elaborat ed on the role of the regulatory aspects in
assessing "treatment no less favourable" within the meaning of these provisions. The Panel's
application of Articles II:1 and XVII shows that the Panel effectively employed an erroneous
standard whereby certain regulatory aspects can "convert" "less favourable treatment" into
"treatment no less favourable".
333 However, neither the text and context of Articles II:1 and XVII
of the GATS, nor the object and purpose of the GATS, provide a basis for such a legal standard.
6.127. Finally, we wish to point out that our analysis does not suggest that any evidence relating
to the regulatory aspects must a priori be excluded. Consistent with the established approach to
assessing "less favourable treatment" under the GATT 1994, an assessment of whether a
measure modifies the conditions of competition to the detriment of like services or service
suppliers of any other Member "must begin with careful scrutiny of the measure, including
consideration of the design, structure, and expected operation of the measure at issue".
334 In such
assessment, to the extent that evidence relating to the regulatory aspects has a bearing on the
conditions of competition, it might be taken into account, subject to the particular circumstances of
a case, and as an integral part of a panel's analysis of whether the measure at issue modifies the
conditions of competition to the detriment of like services or service suppliers of any other
Member.
6.2.4.2 Whether the Panel employed an erroneous legal standard in applying
Article II:1 and Article XVII of the GATS
6.128. Following the approach set out in paragraph 7.235 of its Report, as quoted above, the
Panel analysed whether, under Article II:1 of the GATS, each of the eight measures at issue
accords "treatment no less favourable" to like services and service suppliers of non-cooperative

331 Emphasis added. See also Panel Report, para. 7.493.
332 Emphasis added.
333 Panel Report, para. 7.514.
334 Appellate Body Report, Thailand – Cigarettes (Philippines), para. 134.

countries.335 For each of the measures, the Panel first found that it imposes a heavier burden or
additional requirements, or mandates stricter co nditions, on services and service suppliers of
non-cooperative countries in comparison to like services and service suppliers of cooperative
countries.
336
6.129. In the light of these findings, the Panel reached the "preliminary" conclusions that all of
the measures at issue either modify or alter the conditions of competition (measures 1, 3, 5, 7,
and 8) to the detriment of service suppliers of non-cooperative countries, or accord them less
favourable treatment (measures 2, 4, and 6). 337 T h i s s u g g e s t s t o u s t h a t , f o r p u r p o s e s o f i t s
preliminary conclusions under Article II:1, the Panel regarded as interchangeable the concepts of
modifying the conditions of competition to the detriment of the relevant service suppliers, on the
one hand, and according less favourable treatment to such suppliers, on the other hand. This, in
our view, is consistent with a correct interpretati on of the term "treatment no less favourable",
whereby a measure accords less favourable treatment if it modifies the conditions of competition
to the detriment of like services or service suppliers of any other Member.
6.130. Similarly, in examining Panama's claims under Article XVII, the Panel referred to its
preliminary conclusions of treatment less favourable under Article II:1
338, in particular, the findings
on the additional burden imposed under measures 2, 3, and 4 in cases of service suppliers of
non-cooperative countries. The Panel further found that no additional burden is imposed on
Argentine taxpayers when they contract with Argentine service suppliers. On this basis, the Panel
found, "on a preliminary basis", that measures 2, 3, and 4 "do not accord treatment no less
favourable to services and service suppliers of non-cooperative countries in comparison with that
accorded to Argentine like services and service suppliers".
339
6.131. Thus, for Panama's claims under both Article II:1 and Article XVII of the GATS, the Panel
came to the "preliminary" conclusions that all of the relevant measures modify the conditions of
competition to the detriment of like service suppliers of non-cooperative countries and that,
consequently, they fail to accord "treatment no less favourable" to such service suppliers.
Nonetheless, the Panel did not stop its analysis here. Rather, under both Article II:1 and
Article XVII, the Panel went on to conduct an addi tional step of analysis regarding the "regulatory
aspects" in this dispute, that is, "the possibility for Argentina to have access to tax information on
foreign suppliers providing services in Argentina".
340 As our review below indicates, in this
additional step of analysis, the Panel did not actu ally examine the regulatory aspects for purposes
of assessing how the measures modify the conditions of competition, but effectively employed an
erroneous legal standard under which the regulatory aspects could justify the detrimental impact
that it had already found in its preliminary conclusions described above.

335 Before this analysis, the Panel had first examined each of the eight measures in turn and found that
the treatment accorded to services and service suppliers of cooperative countries is different from that
accorded to like services and service suppliers of non-cooperative countries. (See Panel Report,
paras. 7.237-7.273) The Panel did not explain why it considered it necessary to conduct this first step of
analysis in which it examined whether "different" treatment is accorded to relevant services and service
suppliers. In any event, we do not consider that the legal standard of "treatment no less favourable" under
Article II:1 of the GATS imposes the requirement to examine, as a first and separate step, whether the
relevant treatment under the measure is "different".
336 See Panel Report, paras. 7.282, 7.299, 7.307-7.308, 7.318, 7.328, 7.336, 7.348, and 7.356-7.357.
337 Panel Report, paras. 7.282, 7.300, 7.308, 7.318, 7.328, 7.338, 7.350, and 7.359. With the exception
of measures 4 and 6, the Panel's preliminary conclusion refers only to "service suppliers", and does not
mention "services".
338 Panel Report, para. 7.501. See also paras. 7.502-7.503. Before this finding, the Panel had
considered that its findings of different treatment under Article II:1 also applied under Article XVII, because the
treatment of Argentine services and service suppliers is the same as that accorded to services and service
suppliers of cooperative countries. Therefore, based on its findings under Article II:1, the Panel concluded that
measures 2, 3, and 4 establish different treatment for services and service suppliers of non-cooperative
countries in comparison with that accorded to Argentine like services and service suppliers. (See ibid.,
para. 7.499) As noted in fn 335 above, we do not consider that the legal standard of "treatment no less
favourable" under Article XVII imposes the requirement to examine, as a first and separate step, whether the
relevant treatment under the measure is "different".
339 Panel Report, para. 7.504.

6.2.4.2.1 The Panel's consideration of the "r egulatory aspects" under Article II:1 of the
GATS
6.132. In examining the "regulatory aspects" in the context of Panama's claims under Article II:1
of the GATS, the Panel recalled that Decree No . 589/2013 is the "key piece of legislation"
establishing the conditions for a country to be considered cooperative. 341 The Panel recalled that,
under this Decree, cooperative country status is granted not only to countries that have signed an
agreement or convention with Argentina enabling the exchange of tax information, but also to
countries that are still in the process of ne gotiating an agreement on the exchange of
tax information. For the latter category of countries, Argentina does not have access to
tax information. At the same time, countries that have not initiated negotiations on tax information
exchange agreements are given non-cooperative country status.
342
6.133. The Panel found that, because Decree No. 589/2013 grants cooperative country status to
countries that have initiated negotiations but do not exchange tax information with Argentina, it
gives rise to certain "lack of consistency"
343, namely: (i) that Argentina treats countries that
provide access to tax information in the same way as countries that do not provide access to tax
information344; and (ii) that Argentina accords different treatment to countries with regard to
which it has no access to tax information. 345 The Panel further noted that the fact that the list of
cooperative countries is allegedly updated only once a year "may also cause distortion in the
treatment accorded to certain countries compared to others in the same situation".346
6.134. In the Panel's view, therefore, "the desi gn and operation of [the measures at issue],
pursuant to Decree No. 589/2013, create distortions with regard to: (i) granting cooperative status
to [countries] which have not signed an agreemen t and which, therefore, are not subject to the
exchange of tax information with Argentina; and (ii) the updating of the list of cooperative
countries."
347 The Panel thus considered:
[T]he design of [the measures at issue], pursuant to Decree No. 589/2013,
establishes different treatment according to whether the services and service suppliers
are from cooperative or non-cooperative countries. This difference in treatment is not
based, as Argentina argues, on whether or not Argentina has access to tax
information.
348
6.135. On this basis, the Panel concluded:
[T]he design and operation of [the eight measures at issue], pursuant to
Decree No. 589/2013, create distortions which modify the conditions of competition to
the detriment of services and service suppliers of non-cooperative countries and, thus,
accord them less favourable treatment than that accorded to like services and service
suppliers of cooperative countries.349
6.136. In our view, although the Panel used the words "modify the conditions of competition" in
the conclusion quoted above, the Panel's consideration of the relevant regulatory aspects does not

341 Panel Report, para. 7.285.
342 Panel Report, paras. 7.285-7.286.
343 Panel Report, para. 7.290.
344 The Panel noted e.g. that both Germany and Panama belong to the category of "cooperative
countries". Argentina signed a double taxation agreement with Germany that has been in force since
25 November 1979, giving it access to tax information. In the case of Panama, however, Argentina has no
access to tax information since it has not signed any agreement on exchange of tax information with Panama.
(Panel Report, para. 7.289)
345 The Panel noted e.g. that, according to Argentina, negotiations have begun on a double taxation
convention or information exchange agreement with Panama and Hong Kong, China. As no agreement has
been signed with these two jurisdictions, there is, in principle, no exchange of tax information between them
and Argentina. Panama, however, has cooperative country status, whereas Hong Kong, China does not.
(Panel Report, para. 7.288)
346 Panel Report, para. 7.291. The Panel noted that the current list was published on 1 January 2014
and had not been updated as of the issuance of the final Panel Report to the parties on 30 June 2015. (Ibid.)
347 Panel Report, para. 7.301. See also paras. 7.309, 7.319, 7.329, 7.339, 7.351, and 7.360.
348 Panel Report, para. 7.292. See also paras. 7.301, 7.309, 7.319, 7.329, 7.339, 7.351, and 7.360.
349 Panel Report, para. 7.293. (emphasis added) See also paras. 7.302, 7.310, 7.320, 7.330, 7.340,
7.352, and 7.361.

actually speak to the question of whether the measures at issue modify the conditions of
competition to the detriment of services and service suppliers of non-cooperative countries.
Indeed, as noted above, the Panel had already concluded that the measures at issue modify the
conditions of competition in such a manner.
350 In the Panel's analysis of the "regulatory aspects",
we do not find any assessment of the implications of these measures for the competitive
opportunities of the services and service suppliers of non-cooperative countries vis-à-vis those of
cooperative countries. Rather, in analysing the rele vant "regulatory aspects", the Panel appears to
have been looking at something akin to the second step of the analysis regarding "treatment no
less favourable" under Article 2.1 of the TBT Agreement, as developed in the relevant
jurisprudence. Although the Panel did not use su ch words to describe its analysis, statements
made by the Panel indicate that the Panel was effectively looking at whether the detrimental
impact on like services and service suppliers, which it had already established, "stems exclusively
from a legitimate regulatory distinction"
351, even though such an analyt ical step is not foreseen
under the GATS non-discrimination clauses.
6.137. Specifically, the Panel stated that, pursuant to Decree No. 589/2013, "the way in which
Argentina classifies countries as cooperative or non-cooperative is not consistent with the
possibility for Argentina to have access to tax information"
352, even though the possibility to have
access to tax information is the " raison d'être" of all of the measures at issue. 353 Similarly, the
Panel found that the "difference in treatment" under the measures at issue is not, as Argentina
argued, based on whether Argentina has access to tax information.
354 Thus, the Panel was
effectively reviewing whether the regulatory aspects in this dispute could somehow justify the
detrimental impact that the Panel had already found, and could render the measure not
inconsistent with Article II:1 of the GATS. Al though the Panel ultimately concluded that the
regulatory aspects in this dispute do not render the measures at issue consistent with Article II:1,
this conclusion does not change the fact that the Panel erroneously conducted an additional step of
inquiry not envisaged under the correct legal standard of "treatment no less favourable" under the
GATS.
6.2.4.2.2 The Panel's consideration of the "regulatory aspects" under Article XVII of the
GATS
6.138. In examining the "regulatory aspects" under Article XVII of the GATS, the Panel noted
Argentina's statement that measures 2, 3, and 4 are essential tools for equalizing the conditions of
competition on the international market for financial and other services. In several documents of
the G-20, the Global Forum, and the OECD, the Panel found support for Argentina's statement
concerning the importance of access to tax information for equalizing the conditions of
competition.
355 According to the Panel, the reference in these documents to "harmful tax
competition" highlights the "obvious link" between access to tax information (tax transparency)
and the conditions of competition.356 On this basis, the Panel considered:
[A] central issue in this dispute is whether the exchange of tax information between
Argentina and non-cooperative jurisdictions constitutes a regulatory aspect that
modifies the conditions of competition on the Argentine market in such a way that it
converts different and, in principle, less fa vourable treatment into "treatment no less
favourable".
357
6.139. In our view, under Article XVII of the GATS, a measure either modifies the conditions of
competition in the marketplace, thus according less favourable treatment, or it does not. However,
with this statement, the Panel effectively employed a standard whereby certain regulatory aspects,
as alleged by a Member in a particular dispute, could "convert" a measure that accords less
favourable treatment, and is therefore inconsistent with Article XVII of the GATS, into a measure
that is GATS-consistent. The Panel's statement confirms that it developed and applied an
erroneous legal standard for "treatment no less favourable", as noted in paragraph 6.126 above.

350 See supra, para. 6.129.
352 Panel Report, para. 7.290.
353 Panel Report, para. 7.286.
354 Panel Report, para. 7.292.
355 Panel Report, paras. 7.509-7.513.

6.140. Having set out "a central issue" for its analysis of whether measures 2, 3, and 4 are
inconsistent with Article XVII of the GATS358, the Panel made an overall finding on the objective of
all three measures, stating:
It is our understanding that measures 2, 3 and 4 are intended to "level a playing field"
which, as confirmed by the OECD and the G-20, is "not level" because of the lack of
tax transparency caused by the absence of exchange of tax information. From the
pronouncements of the competent international fora, we understand that what
measures 2, 3 and 4 do, rather than giving Argentine services and service suppliers
an advantage, is to neutralize an "unintended competitive advantage" enjoyed by
non-cooperative jurisdictions owing to the lack of exchange of tax information with
Argentina on their suppliers. This advantage is not available to Argentine service
suppliers, whose tax information can be obtained by the Argentine authorities.
359
6.141. In these statements, the Panel identified the objective of measures 2, 3, and 4 while
introducing certain concepts that are not defined in the WTO-context, including "a level playing
field"360, and "unintended competitive advantages". 361 The Panel did not develop definitions of
these concepts. The Panel went on to examine each of the three measures in turn, and found that
none of these measures modifies the conditions of competition "in favour of" Argentine service
suppliers, because the measures are designed to respond to risks perceived by Argentina to its tax
collection system resulting from the lack of tax transparency in other countries. 362 As discussed
above363, the less favourable treatment accorded to foreign services and service suppliers, on the
one hand, and the more favourable treatment to domestic services and service suppliers, on the
other hand, are flip-sides of the same coin under the legal standard of Article XVII. As a result of
its erroneous legal standard, however, the Panel reached findings that are irreconcilable.
Specifically, the Panel found that the measures acco rd "less favourable treatment" to services and
service suppliers of non-cooperative countries.
364 At the same time, the Panel found that such
measures do not accord "less favourable treatment" because they do not modify the conditions of
competition "in favour of" domestic like services and service suppliers.365
6.142. The Panel further found the context affo rded by Article III of the GATT 1994 to be
"particularly relevant". 366 Specifically, the Panel referred to the Appellate Body's statement in
Japan – Alcoholic Beverages II that "Article III protects expectations … of the equal competitive
relationship between imported and domestic products". 367 The Panel also referred to the
Appellate Body's statement in Canada – Periodicals that the purpose of Article III of the
GATT 1994 "is to ensure equality of competitive conditions between imported and like domestic
products".
368 The Panel reasoned that, similarly, "the objective of Article XVII of the GATS is to
ensure equal conditions of competition between Argentine services and service suppliers and those
of non-cooperative countries".369 The Panel then found:
In our view, measures 2, 3 and 4 are designed precisely to guarantee that the
competitive relationship between Argentine services and service suppliers and those of
any other Member (in this case, non-cooperative countries) is on an equal footing.370

358 Panel Report, para. 7.514.
359 Panel Report, para. 7.515. (emphasis added; fn omitted)
360 Panel Report, para. 7.511(quoting Global Forum on Transparency and Exchange Information,
Tax Cooperation 2009: Towards a Level Playing Field (OECD, 2009) (Panel Exhibit ARG-41), p. 9).
361 Panel Report, paras. 7.512 and 7.515 (both quoting OECD Report, Addressing Base Erosion and
Profit Shifting (2013) (Panel Exhibit ARG-22)). Subsequently, the Panel referred to the term "unintended
competitive advantages" again in analysing the objective pursued by measures 1, 2, 3, 4, and 7 under
Article XIV(c) of the GATS. (Panel Report, para. 7.669)
362 Panel Report, paras. 7.517-7.519.
363 See supra, para. 6.103.
364 Panel Report, para. 7.504.
365 Panel Report, para. 7.521.
366 Panel Report, para. 7.520.
367 Panel Report, para. 7.520 (quoting Appellate Body Report, Japan – Alcoholic Beverages II, p. 15,
DSR 1996:I, p. 110).
368 Panel Report, para. 7.520 (quoting Appellate Body Report, Canada – Periodicals, p. 18, DSR 1997:1,
p. 464).
369 Panel Report, para. 7.520.

This finding echoes the Panel's earlier statement that the objective of measures 2, 3, 4 is to "level
a playing field" and "to neutralize an 'unintended competitive advantage'".371

6.143. In its findings under Article XVII of the GATS, the Panel thus referred to the concepts of "a
level playing field", "unintended competitive advantages", and competitive relationship "on an
equal footing" in describing what it considered to be the objective of the measures at issue. Upon
identifying the objective of the measures, the Panel also referred to the relevant jurisprudence
under Article III of the GATT 1994 concerning the "equality of competitive conditions" in support of
its findings regarding measures 2, 3, and 4. This suggests to us that the Panel considered that a
measure that "neutralizes" an "unintended competitive advantage" is not inconsistent with
Article XVII, because it ensures equality of competitive conditions.
6.144. However, ensuring equal competitive conditions, which is required by the legal standard of
"treatment no less favourable", is not the same as guaranteeing that one group of services or
products does not have any competitive advantage over another group. As Panama rightly points
out, ensuring equal conditions of competition under the national treatment obligation means "to
guarantee equality of opportunities to compete in the marketplace", rather than to guarantee that
all like services and service suppliers are "equally competitive".372
6.145. Moreover, by specifying that a measure accords less favourable treatment when it
"modifies the conditions of competition", Article XVII of the GATS indicates that the national
treatment obligation requires a Member to refrain from upsetting or distorting the existing market
conditions and opportunities in favour of domestic services and service suppliers. Read in this
light, the Panel's references to the notion of "a level playing field" seem misguided
373, as this
would suggest that Article XVII allows a Member to pursue actively measures that redress certain
perceived "unfair" competition in the market. In deed, the legal standard developed by the Panel
would seem to allow a discriminatory measure to "neutralize" a "regulatory" competitive
advantage, namely, one that results from the regulatory framework in the country of origin of
certain foreign service suppliers. Yet, we do not see Article XVII as providing the basis for
permitting such discriminatory measures.
6.146. In its third participant's submission, the Un ited States contends that, "supplying a service
on terms that tax authorities will not be able to verify … is a disadvantage from the perspective of
law-abiding Argentine customers and Panamanian suppliers that seek to comply with Argentine
laws."
374 Thus, pursuant to footnote 10 to Articl e XVII of the GATS, "Argentina would not be
required to modify its tax measures to compensate for the competitive disadvantages of services
or service suppliers" resulting from the level of tax transparency of their home regulatory
regimes.
375 As discussed in our interpretation above 376, however, by referring to " inherent
competitive disadvantages which result from the foreign character", footnote 10 makes clear that
such disadvantages must be "inherent" to the services and service suppliers owing to their foreign
character, and must not be caused by the measure affecting trade in services adopted by the
importing Member . As the Panel found, the measures at issue impose an additional burden or
extra hurdles on services and service suppliers of non-cooperative countries vis-à-vis
Argentine like services and service suppliers. The Panel's findings, which are not disputed, indicate
that these foreign services and service supplie rs are placed in a disadvantageous position as a
result of the measures at issue. The "inherent competitive disadvantages" within the meaning of
footnote 10 do not include, and should not ma sk, the detrimental impact that is genuinely
attributable to the contested measure, such as what the Panel found in this dispute.
6.147. In sum, our review of the Panel's application of Article XVII of the GATS to the measures at
issue confirms that the Panel employed an erroneous legal standard with regard to "treatment no
less favourable". In its analysis regarding the "regulatory aspects", the Panel essentially relied on
what it perceived to be the regulatory objective of measures 2, 3, and 4 to convert "less
favourable treatment" under these measures into "treatment no less favourable". The Panel's

372 Panama's appellant's submission, para. 4.26. (emphasis original)
373 Panel Report, para. 7.511. See also paras. 7.510 and 7.515.
374 United States' third participant's submission, para. 48.
375 United States' third participant's submission, paras. 47 and 48.
376 See supra, para. 6.104.

approach finds no basis in the text or Article XV II, its context, or the object and purpose of the
GATS.
6.2.5 Whether the Panel erred in its application of Article XVII of the GATS
6.148. Panama submits that, in addition to adopting an incorrect legal standard, the Panel's
application of Article XVII of the GATS to the me asures at issue was based on "mere assumptions
and unreasoned conclusions". 377 Panama further contends that the Panel made contradictory
findings in concluding that the measures at issue do not favour Argentine services and service
suppliers vis-à-vis like services and service suppliers of non-cooperative countries.
6.149. Specifically, Panama contends that the Panel's analysis of "the impact on the conditions of
competition of Argentina's ability to access tax information of service suppliers" was "based on
general, abstract, non-country-specific, and non-measure-specific policy statements derived from
excerpts of OECD and G-20 reports", and that "there was no factual basis or reasoned hypotheses
related to the particular conditions of competition prevailing in the Argentine market."
378 Panama
further contends that the Panel reached two sets of contradictory findings. First, Panama maintains
that, in its "likeness" analysis, the Panel found that the exchange of tax information does not affect
the competitive relationship between services and service suppliers of different origin. Yet, in its
"less favourable treatment" analysis under Article XVII, it considered that the exchange of tax
information constitutes a regulatory aspect that modifies the conditions of competition in the
Argentine market in such a way that it converts different and, in principle less favourable
treatment into "treatment no less favourable".
379 According to Panama, these findings are
"irreconcilable".380 Second, Panama submits that the Panel's conclusions that measures 2, 3, and 4
do not favour Argentine services and service suppliers contradict its preliminary findings that these
measures modify the conditions of competition to the detriment of like foreign services and service
suppliers.
381
6.150. Having found that the Panel employed an erroneous legal standard of "treatment no less
favourable" under Article XVII, as manifested in both its interpretation and application of
Articles II:1 and XVII of the GATS, we do not consider it necessary to address these additional
allegations of errors regarding the Panel's application of its erroneous legal standard in this
dispute.
6.2.6 Conclusion
6.151. Under Article II:1 and Article XVII of the GATS, a measure fails to confer "treatment no
less favourable" if it modifies the conditions of competition to the detriment of services or service
suppliers of any other Member in comparison to like services or service suppliers of, respectively,
any other country or the Member imposing the contested measure. However, the Panel employed
an erroneous legal standard of "treatment no le ss favourable" whereby, depending on the analysis
of the "regulatory aspects", a measure that modifies the conditions of competition to the detriment
of services or service suppliers of any other Member could nonetheless be found to confer
"treatment no less favourable". In other word s, under the Panel's standard, the "regulatory
aspects" identified by the importing Member co uld convert "less favourable treatment" into
"treatment no less favourable". The Panel's interpretive errors are manifested in both its
articulation of the legal standard and its application of Articles II:1 and XVII to the facts of the
case.
6.152. In the light of the Panel's analysis of the "regulatory aspects" under Article II:1
382,
therefore, we find that the Panel erred in finding, in paragraph 7.235 of its Report, that an
assessment of "treatment no less favourable" under Article II:1 of the GATS in this dispute "has to
take into account regulatory aspects relating to services and service suppliers that may affect the
conditions of competition; in particular, whether Argentina is able to have access to tax

377 Panama's appellant's submission, para. 4.33.
378 Panama's appellant's submission, para. 4.37.
379 Panama's appellant's submission, para. 4.36 (referring to Panel Report, para. 7.514).
380 Panama's appellant's submission, para. 4.36.
381 Panama's appellant's submission, para. 4.39.
382 Panel Report, paras. 7.283-7.293, para. 7.300, second sentence, and paras. 7.301-7.302,
7.309-7.310, 7.319-7.320, 7.329-7.330, 7.339-7.340, 7.351-7.352, and 7.360-7.361.

information on foreign suppliers". Similarly, in the light of the Panel's analysis of the "regulatory
aspects" under Article XVII 383, we find that the Panel erred in finding, in paragraph 7.494 of its
Report, that an assessment of "treatment no less favourable" under Article XVII of the GATS in
this dispute "has to take into account regulatory aspects concerning the services and service
suppliers that might affect the conditions of competition … in particular … the possibility for
Argentina to access tax information on the relevant service suppliers".
6.153. As noted above, under both Article II:1 and Article XVII of the GATS, the Panel reached
the preliminary findings that the measures modify the conditions of competition to the detriment
of services and service suppliers of non-cooperative countries.
384 These preliminary findings are
consistent with a correct interpretation of the term "treatment no less favourable". Thus, had
"likeness" between services and service suppliers of cooperative and non-cooperative countries
been established in this dispute, the preliminary findings under Article II:1 would, in themselves,
be sufficient to sustain the Panel's conclusion that the measures at issue are inconsistent with
Article II:1 of the GATS.
385 In the same vein, had "likeness" been established between services
and service suppliers of non-cooperative countries and Argentine services and service suppliers,
such preliminary findings could have led to the conclusion that measures 2, 3, and 4 are
inconsistent with Article XVII of the GATS.
6.154. Nonetheless, the Panel's findings on "likeness" under both Article II:1 and Article XVII of
the GATS supplied a key basis for the Panel's conclusions under those two provisions. As a
consequence of our reversal of the Panel's find ings on "likeness", the Panel's findings on
"treatment no less favourable", set out in paragraphs 7.362 and 7.522 of its Report, lack a proper
basis and cannot stand. For these reasons, we also reverse the Panel's conclusion, in
paragraphs 7.367 and 8.2.b of its Report, that the eight measures at issue are inconsistent with
Article II:1 of the GATS, as well as its conclusion, in paragraphs 7.525 and 8.2.c of its Report, that
measures 2, 3, and 4 are not inconsistent with Article XVII of the GATS.
6.3 Article XIV(c) of the GATS
6.3.1 Introduction
6.155. Before the Panel, Argentina argued that, even if measures 1, 2, 3, 4, 7, or 8 were found to
be inconsistent with Argentina's obligations under the GATS, these measures are justified under
Article XIV(c) of the GATS because they are "necessary to secure compliance" with
GATS-consistent Argentine laws or regulations. Having found each of these measures to be
inconsistent with Article II:1 of the GATS, the Panel proceeded to consider Argentina's affirmative
defence and found, on a preliminary basis, that the measures are "necessary to secure compliance
with laws or regulations" within the meaning of Article XIV(c).
386 Ultimately, however, the Panel
concluded that measures 1, 2, 3, 4, 7, and 8 are not justified under Article XIV(c) because "their
application constitutes arbitrary and unjustifiable discrimination within the meaning of the chapeau
of Article XIV of the GATS".387
6.156. Neither participant has appealed the Panel's analysis of the conformity of Argentina's
measures with the chapeau of Article XIV of the GATS, nor the Panel's ultimate finding that
Argentina had not made out its defence. Panama, however, alleges that the Panel erred in finding
that measures 1, 2, 3, 4, 7, and 8 are provisionally justified under Article XIV(c).
388 For this
reason, Panama requests us "to reverse the Panel's findings that measures 1, 2, 3, 4, 7, and 8
were 'designed', and are 'necessary', to secure compliance with laws and regulations of Argentina
under Article XIV(c) of the GATS".
389 For its part, Argentina requests us to uphold the Panel's
finding, at paragraph 7.740 of its Report, that these measures are "necessary to secure

383 Panel Report, paras. 7.505-7.521.
384 The preliminary findings under Article II:1 are contained in Panel Report, paras. 7.282, 7.300
(first sentence), 7.308, 7.318, 7.328, 7.338, 7.350, and 7.359. The preliminary findings under Article XVII are
contained in Panel Report, paras. 7.500-7.504.
385 Panel Report, paras. 7.367 and 8.2.b.
386 Panel Report, para. 7.740.
388 Panama's appellant's submission, paras. 5.2-5.3 and 5.75.
389 Panama's appellant's submission, para. 7.1.c. See also paras. 5.147, 5.159, and 5.173. According to
Panama, these findings are "reflected in paragraphs 7.637-7.642, 7.646-7.648, 7.692, 7.695, 7.700, 7.703,
7.705, 7.706-7.717, 7.720-7.728, and 7.737-7.740 of the [Panel] Report". (Ibid., para. 7.1.c)

compliance with laws or regulations which are not inconsistent" with the GATS within the meaning
of Article XIV(c).390
6.157. Unlike its appeals relating to Articles II and XVII of the GATS and to paragraph 2(a) of the
GATS Annex on Financial Services, Panama does not allege any interpretive error in connection
with the Panel's analysis under Article XIV(c) of the GATS. For Panama, "there are well-developed
legal standards for panels addressing defences raised under the exceptions contained in Article XX
of the GATT 1994 and Article XIV of the GATS."
391 Panama does not argue that the Panel failed to
identify these standards. In Panama's view, ho wever, the Panel "failed to apply properly the
relevant legal standard for an Article XIV(c) defence to the measures before it".392
6.158. We understand Panama's appeal to comprise the following main parts. First, Panama
challenges the focus of the Panel's analysis of measures 1, 2, 3, 4, 7, and 8 under Article XIV(c) of
the GATS as compared to the focus of its analysis of those same measures under Article II:1 of the
GATS. In addition, Panama takes issue with certai n aspects of the Panel's reasoning in reaching
each of the following two sets of intermediate findings under Argentina's Article XIV(c) defence:
a. The Panel's findings that measures 1, 2, 3, and 4 are designed "to secure compliance
with" the relevant provisions of the Gains Tax Law, the Law on Tax Procedure, the
Criminal Tax Law
393 and the Constitution of the Republic of Argentina (Argentina's
Constitution); that measure 7 is designed to secure compliance with the relevant
provisions of the Commercial Companies Law 394 and the Resolution on Companies
Incorporated Abroad; and that measure 8 is designed to secure compliance with the
relevant provisions of the Law against Money Laundering
395; and
b. the Panel's findings that measures 1, 2, 3, 4, 7, and 8 are "necessary" to secure
compliance with these laws or regulations.396
6.159. Before turning to the specifics of Panama's appeal, we set out the text of Article XIV(c) of
the GATS and briefly summarize the Panel's underst anding of the legal standard to be applied
pursuant to that provision.
6.160. Article XIV(c) of the GATS reads:
Article XIV
General Exceptions
Subject to the requirement that such measures are not applied in a manner which
would constitute a means of arbitrary or unjustifiable discrimination between countries
where like conditions prevail, or a disguised restriction on trade in services, nothing in
this Agreement shall be construed to prev ent the adoption or enforcement by any
Member of measures:
…
(c) necessary to secure compliance with laws or regulations which are not
inconsistent with the provisions of this Agreement including those relating to:
(i) the prevention of deceptive and frau dulent practices or to deal with the
effects of a default on services contracts;
(ii) the protection of the privacy of individuals in relation to the processing
and dissemination of personal data and the protection of confidentiality of
individual records and accounts;
(iii) safety;

390 Argentina's appellee's submission, para. 159.a. See also paras. 6, 92, 133, 143, and 145-146.
391 Panama's appellant's submission, para. 5.1.
392 Panama's appellant's submission, para. 5.2.
393 Law No. 24.769.
394 Law No. 19.550 on Commercial Companies of 3 April 1972 (Panel Exhibits ARG-43 and PAN-34).
395 Law No. 25.246 of 5 May 2000 on Concealment and Laundering of Money of Criminal Origin. See
Panel Report, para. 7.655.
396 Panel Report, para. 7.740.

6.161. The Panel began its analysis under Article XIV(c) of the GATS by recalling the
Appellate Body's finding in US – Gambling that previous decisions under Article XX of the
GATT 1994 are relevant to the analysis under Article XIV of the GATS. 397 The Panel considered
that, similarly to Article XX of the GATT 1994, Arti cle XIV of the GATS provides for an analysis in
two stages: (i) whether the measure at issue is provisionally justified under one of the paragraphs
of Article XIV; and (ii) in the event that the me asure is provisionally justified under one of these
paragraphs, whether the measure satisfies the requirements in the chapeau of Article XIV.398
6.162. The Panel considered the legal standard set forth by the Appellate Body in Korea – Various
Measures on Beef in respect of Article XX(d) of the GATT 1994 to be relevant for its analysis of
Argentina's defence under Article XIV(c) of the GATS. 399 Accordingly, the Panel explained that, in
order to justify its measures under Article XIV(c), "Argentina should first demonstrate that
measures 1, 2, 3, 4, 7 and 8 are designed to secure compliance with the relevant Argentine laws
and regulations that are not in themselves inconsistent with the GATS; and secondly, that these
measures are 'necessary' to secure such compliance."
400
6.163. In the following sections, we address Panama's claims and arguments relating to the
Panel's application of Article XIV(c) of the GATS to measures 1, 2, 3, 4, 7, and 8. To the extent
that Panama's arguments touch on issues of interpretation, we will deal with them there. We begin
by examining Panama's claim that the Panel erred by failing to focus its analysis on the relevant
a s p e c t s o f t h e m e a s u r e s t h a t g a v e r i s e t o i t s f i n d i n g s o f i n c o n s i s t e n c y w i t h A r t i c l e I I : 1 o f t h e
GATS.
401 W e t h e n a d d r e s s , i n t u r n , P a n a m a ' s c l a i m s r e l a t i n g m o r e s p e c i f i c a l l y t o t h e P a n e l ' s
intermediate findings under Article XIV(c), namely: (i) that the Panel erred in finding that the
measures are designed to secure compliance with the laws and regulations identified by
Argentina402; and (ii) that the Panel erred in finding th at the measures are "necessary" to secure
such compliance.403
6.3.2 Whether the Panel erred by failing to fo cus its analysis on the relevant aspects of
the measures that gave rise to the findings of inconsistency with Article II:1 of the GATS
6.164. Panama argues that the Panel erred by failing to focus its analysis under Article XIV(c) of
the GATS on the relevant aspects of measures 1, 2, 3, 4, 7, and 8 that gave rise to the findings of
inconsistency with Article II:1 of the GATS. 404 According to Panama, in analysing whether these
measures are designed and necessary to secure compliance with the relevant Argentine laws and
regulations, the Panel did not examine "the diff erential treatment" accorded by Argentina to
services and service suppliers of non-cooperative countries that formed the basis of each of its
findings of inconsistency with Article II:1.
405 Panama relies, in particular, on the statement by the
Appellate Body in Thailand – Cigarettes (Philippines) that "what must be shown to be 'necessary'"
under Article XX(d) of the GATT 1994 "is the treatment giving rise to the finding of less favourable
treatment".406
6.165. Argentina agrees with Panama that the term "measures" in the chapeau of Article XIV of
the GATS directs panels to focus their analysis of a Member's defence on the particular aspects of
the challenged measure that gave rise to the finding of inconsistency with the GATS. 407 However,
Argentina contends that the Panel did focus its analysis on the aspects of the measures that gave
rise to its findings of inconsistency with Article II:1 of the GATS and, in particular, on "the

397 Panel Report, paras. 7.585 and 7.590 (referring to Appellate Body Report, US – Gambling,
para. 291).
398 Panel Report, para. 7.586 (referring to Appellate Body Report, US – Gambling, para. 292).
399 Panel Report, paras. 7.591-7.592 (referring to Appellate Body Reports, Korea – Various Measures on
400 Panel Report, para. 7.593.
401 Panama's appellant's submission, paras. 5.13-5.15, 5.77-5.80, 5.149-5.152, and 5.161-5.163.
402 Panel Report, paras. 7.595-7.656; Panama's appellant's submission, paras. 5.16-5.24, 5.81-5.114,
5.153, and 5.164-5.166. See section 6.3.3.2 below.
403 Panel Report, paras. 7.657-7.740; Panama's appellant's submission, paras. 5.25-5.37, 5.115-5.146,
5.154-5.158, and 5.167-5.172. See section 6.3.3.3 below.
404 Panama's appellant's submission, paras. 5.13, 5.15, 5.77, and 5.151.
405 Panama's appellant's submission, para. 5.77. See also paras. 5.78, 5.150, and 5.162.
406 Panama's appellant's submission, para. 5.77 (quoting Appellate Body Report, Thailand – Cigarettes
(Philippines), para. 177).
407 Argentina's appellee's submission, para. 64; Panama's appellant's submission, paras. 5.13 and 5.75;
Argentina's and Panama's responses to questioning at the oral hearing.

differential treatment accorded under measures 1 to 4, 7 and 8 to services and service suppliers of
non-cooperative [countries]" as compared to that accorded to like services and service suppliers of
cooperative countries.
408
6.3.2.1 The appropriate focus in the analysis of the "measures" under Article XIV(c) of
the GATS
6.166. We begin by recalling that, with respect to the relevant aspects of the measures to be
examined under Article XIV(c) of the GATS, the Pa nel stated that, in applying Article XIV(c) to
measures 1, 2, 3, 4, 7, and 8 409, it would take into account the Appellate Body's observation in
EC – Seal Products that, by virtue of the express text of the chapeau, the general exceptions of
Article XX of the GATT 1994 apply to "measures", rather than to any inconsistency with the
GATT 1994 that might arise from such measures.
410 The Panel also took note of the
Appellate Body's explanation that the aspects of a measure to be provisionally justified under the
paragraphs of Article XX "are those that give rise to the finding of inconsistency under the
GATT 1994", and resolved to apply the same approach in its analysis under Article XIV(c) of the
GATS.
411
6.167. As already observed, Panama does not contest that the Panel correctly identified the
approach to be taken in the assessment of whether the six measures could be provisionally
justified under Article XIV(c) of the GATS. Panama's appeal alleges, instead, that, notwithstanding
the Panel's statement that it would focus on the aspects of the measures that gave rise to the
findings of inconsistency with Article II:1 of the GATS, the Panel erred by in fact focusing on
different aspects of these measures in its Article XIV(c) analysis.
6.168. We note that the import of the statement made by the Appellate Body in Thailand –
Cigarettes (Philippines )
412, and relied on by Panama in its appeal, was already discussed, and
clarified, by the Appellate Body in EC – Seal Products . In the latter dispute, the Appellate Body
explained that the aspects of a measure to be provisionally justified under the paragraphs of
Article XX "are those that give rise to the finding of inconsistency under the GATT 1994". 413 The
relevant aspects of the measure are typically those that specify the treatment that such measure
gives to imported goods or services in specific circumstances, often including in comparison to the
treatment accorded to like goods or services. It is these aspects of the measure providing for
differences in treatment that form the starting point of the analysis under, and ultimately lead to
findings of inconsistency with, the GATT 1994 or the GATS. When analysing provisional
justification under a general exception, the focus of the analysis should be on the relevant aspects
of the measure itself, rather than on how, for example, the measure affects the conditions of
competition in the relevant market.
414
6.169. Indeed, in order for a panel properly to conduct its assessment under Article XIV of the
GATS, it should be clear from the panel's analysis that, with respect to each individual measure,
the aspects of the measure addressed are the same as those that gave rise to its earlier finding of
inconsistency. This is because a respondent may not justify the inconsistency of a measure by
basing its defence on aspects of that measure different from those that were found by the panel to
be inconsistent with a provision of the GATS. At the same time, the mere fact that a panel does
not repeat, in its Article XIV analysis, the entirety of its discussion of the measure from its
inconsistency analysis does not, in itself, mean that that panel erred and based its assessment of
the measure's justification under Article XIV on di fferent aspects of the measure. Nor does such a
conclusion necessarily follow from the mere fact that a panel's discussion of aspects of a measure
in the course of its assessment of a defence includes more than the particular aspects that it
discussed in reaching its finding of inconsistency. Indeed, it is normally to be expected that, when
examining the claims and defences raised in respect of a measure, a panel's analysis in a later part
of its report will build upon and reflect the analysis in earlier parts of its report dealing with the
same measure. Therefore, on appeal, the burden w ill be on the party raising the claim of error to

408 Argentina's appellee's submission, para. 63.
409 Panel Report, para. 7.587.
410 Panel Report, para. 7.588 (referring to Appellate Body Reports, EC – Seal Products, para. 5.185).
411 Panel Report, para. 7.588 (referring to Appellate Body Reports, EC – Seal Products, para. 5.185).
412 See para. 6.164 above.
413 Appellate Body Reports, EC – Seal Products, para. 5.185 (referring to Appellate Body Reports, US –
Gasoline, pp. 13-14, DSR 1996:I, pp. 12-13; and Thailand – Cigarettes (Philippines), para. 177).
414 Appellate Body Report, US – Gasoline, pp. 13-14, DSR 1996:I, pp. 12-13.

demonstrate that the panel committed legal error. To discharge such burden, an appellant must
establish that the panel's analysis reveals that the aspects of the measure that were the focus of
the panel's Article XIV analysis are distinct from those that formed the basis of its finding of
inconsistency.
6.170. We note that, in its appellant's submission, Panama does not identify clearly any specific
part of the Panel's analysis under Article XIV(c) of the GATS where the Panel is alleged to have
focused on different aspects of the relevant measures than those that formed the basis of its
Article II:1 findings. Furthermore, while Panama raises this allegation of error with respect to the
Panel's analysis of six individual measures, its submission contains only very brief supporting
arguments.
415 Panama does not indicate, or provides only very limited explanations of, the aspects
of the measures that the Panel should have examined under Article XIV(c), or how the aspects of
the measures that the Panel did examine in its Article XIV analysis differ from the aspects it
analysed under Article II:1 of the GATS.
6.171. Having expressed our concerns about the paucity of Panama's arguments in support of its
allegation that the Panel erred by failing to focus properly in its analysis under Article XIV(c) of the
GATS on the relevant aspects of the six measures, we nevertheless examine below the relevant
parts of the Panel's analysis of the individual measures. We recall in this connection that it is the
duty of a panel, in its analysis under a general exception, to address clearly the same aspects of
each measure that formed the basis of its finding of inconsistency. With this consideration in mind,
we proceed to examine the Panel's analysis of the individual measures and to compare, for each of
the six measures, the aspects of the measure that the Panel identified as giving rise to its findings
of inconsistency with Article II:1 of the GATS with the aspects of the measure it examined in the
context of its Article XIV(c) analysis.
6.3.2.2 The relevant aspects of measures 1, 2, 3, 4, 7, and 8 examined by the Panel
under Article II:1 and Article XIV(c) of the GATS
6.172. Panama contends that, in its application of Article XIV(c) of the GATS, the Panel failed to
focus its analysis on the relevant aspects of the measures that gave rise to the findings that those
measures are inconsistent with Article II:1 of the GATS.
416 Rather, in Panama's view, the Panel
erroneously focused on: (i) the burdens imposed by measures 1, 2, 3, and 4 417; (ii) the purpose
and requirements of measure 7 418; and (iii) the function and purpose of measure 8. 419 Argentina
responds that the Panel examined the "additional information requirements" and more onerous tax
and inspection burdens that apply exclusively to transactions with service suppliers of
non-cooperative countries under the relevant measures, and thereby correctly focused on the
aspects of the measures that gave rise to its findings of inconsistency with Article II:1.
420
6.173. In analysing measure 1 421 under Article XIV(c) of the GATS, the Panel focused on the
"higher tax" resulting from the irrebuttable presum ption of a 100% net gain provided for in this
measure.422 We understand that the Panel focused on the same aspect of measure 1 in its
Article XIV(c) analysis as it did in its Article II:1 analysis, namely, the "heavier tax burden" that
has a negative impact on the profitability of service suppliers of non-cooperative countries in the
Argentine market.
423
6.174. In examining measure 2 424 under Article XIV(c) of the GATS, the Panel focused on the
"additional information requirements" resulting fr om the rebuttable presumption of an unjustified
increase in wealth provided for in that measure. 425 Thus, it seems that the Panel focused its

415 Panama dedicates just two paragraphs of its appellant's submission to this claim with respect to
measures 1 to 4 (paras. 5.78-5.79), and another two paragraphs with respect to measure 7 (para. 5.150) and
measure 8 (para. 5.162).
416 Panama's appellant's submission, paras. 5.15 and 5.75.
417 Panama's appellant's submission, para. 5.78 (referring to Panel Report, para. 7.637).
418 Panama's appellant's submission, para. 5.150 (referring to Panel Report, para. 7.646).
419 Panama's appellant's submission, paras. 5.161-5.162 (referring to Panel Report, para. 7.647).
420 Argentina's appellee's submission, para. 70.
421 Measure 1 is described in more detail in section 5.2 of this Report.
422 Panel Report, para. 7.637.
423 Panel Report, para. 7.282.
424 Measure 2 is described in more detail in section 5.3 of this Report.
425 Panel Report, para. 7.637.

analysis under Article XIV(c) on the same aspect of measure 2 that gave rise to its finding of
inconsistency with Article II:1, namely, the "additional requirement" or "additional step" of having
to rebut the legal presumption.
426 This consists, in essence, of an additional requirement imposed
on Argentine taxpayers to provide certain information to the AFIP in order to prove conclusively
that the entry of funds originated from activities actually carried out, or from placements of duly
declared funds.427
6.175. In its analysis of measure 3 428 under Article XIV(c) of the GATS, the Panel focused on the
"additional information requirements" associated with the application of the transfer pricing regime
provided for in that measure. 429 We understand that the Panel focused its Article XIV(c) analysis
on the same aspect of measure 3 that formed the basis of its Article II:1 finding, namely, the fact
that the transfer pricing regime is "more burdensome" for the Argentine taxpayer because it
"requires more work" and "involves higher costs". 430 This more burdensome and costly valuation
method constitutes in essence an additional requirement imposed on taxpayers to provide the
information that is required for purposes of complying with the rules and procedures on transfer
pricing, and this allows the Argentine authorities to establish the value of the transactions and the
legitimately tax-deductible expenses.431
6.176. In its examination of measure 4 432 under Article XIV(c) of the GATS, the Panel focused on
the "additional information requirements" resulting from the application of the payment received
rule.433 I t s e e m s t o u s t h a t t h e P a n e l l o o k e d a t t h e s a m e a s p e c t o f m e a s u r e 4 i n b o t h i t s
Article XIV(c) and Article II:1 analyses, namely, the fact that the measure entails a reduction in
the real value of the expenditure deducted and ma y create an "additional burden" or "additional
costs" for companies.
434 For the Panel, the additional burden imposed on Argentine taxpayers, and
costs incurred thereby, aim to ensure that Argentine authorities have sufficient information
concerning the authenticity of the transaction.
435 Thus, the "additional information requirement" is,
in essence, the very requirement for taxpayers to apply the payment received rule, which, in turn,
requires them to provide information about the payment that enables the authorities to ensure
correspondence between the payment and the expe nditure deducted by the Argentine taxpayer
from its tax base. This also entails, as adverse consequences, the reduced value of the expenses
deducted and possible additional costs.
6.177. In its analysis of measure 7 436 under Article XIV(c) of the GATS, the Panel focused on the
"additional information" required of companies located in non-cooperative countries for purposes
of registering a branch of a foreign company in Argentina. 437 This indicates to us that the Panel
focused on the same aspect of the measure that gave rise to the finding of inconsistency with
Article II:1 of the GATS, namely, the General Justice Inspectorate's mandate to assess compliance
with a series of registration requirements "restrictively" in the case of companies of
non-cooperative countries and to conduct "closer scrutiny", which could result in a requirement to
submit "a larger number of documents".
438 We therefore consider it clear that the purpose of the
General Justice Inspectorate's closer scrutiny is to gather and verify certain additional information
related to the company's effective engagement in economic activities and its legitimate commercial
purpose.

426 Panel Report, para. 7.298.
427 Law on Tax Procedure (Panel Exhibits ARG-45 and PAN-9), Article 18, para. 3.
428 Measure 3 is described in more detail in section 5.4 of this Report.
429 Panel Report, para. 7.637.
430 Panel Report, paras. 7.307-7.308 (referring to Argentina's first written submission to the Panel,
para. 104; and Panama's first written submission to the Panel, paras. 4.218 and 4.238).
431 See Panel Report, paras. 2.20, 7.306-7.308, and 7.696-7.697. Furthermore, Article 15, paragraph 3
of the Gains Tax Law sets out five transfer-price valuation methods, the application of any of which would
require the Argentine taxpayer to provide certain additional information. (See Gains Tax Law (Panel Exhibits
432 Measure 4 is described in more detail in section 5.5 of this Report.
434 Panel Report, paras. 7.317-7.318.
435 See Panel Report, paras. 7.637, 7.698, 7.700, and 7.721.
436 Measure 7 is described in more detail in section 5.8 of this Report.
437 Panel Report, para. 7.646 (referring to Commercial Companies Law (Panel Exhibits ARG-43 and
PAN-34), Article 118.3; and Resolution on Companies Incorporated Abroad (Panel Exhibits ARG-33 and
PAN-62), Article 188).
438 Panel Report, paras. 7.348-7.349.

6.178. In examining measure 8 439 under Article XIV(c) of the GATS, the Panel focused on the
"closer scrutiny" given to the repatriation of direct investments in Argentina to service suppliers in
non-cooperative countries that the measure requires from the Argentine Central Bank, and the
"additional information requirements" enabling the Argentine authorities to verify that such
repatriation of capital does not cover up a money laundering operation.
440 We understand that the
Panel focused its Article XIV(c) analysis on the same aspect of the measure that formed the basis
of its Article II:1 finding, namely, the fact that the prior authorization application that service
suppliers in non-cooperative countries must complete and file with the Argentine Central Bank "in
itself implies an additional administrative burden" and entails "a certain cost" in terms of the time
required and "a risk" that it may ultimately be rejected.
441 The "additional information
requirements" consist of the requirement for serv ice providers of non-cooperative countries to
communicate certain additional information to the Argentine Central Bank. This information, in
turn, constitutes the "additional administrative burden" imposed on those service providers,
involving time costs in terms of preparation, as well as risks of rejection.
442
6.3.2.3 Conclusion
6.179. It is true that, in analysing measures 1, 2, 3, 4, 7, and 8 under Article XIV(c) of the GATS,
the Panel's identification of the aspects of those measures that were relevant to its assessment
was at times rather brief or imprecise, notably its across-the-board reference to "additional
information requirements". Yet, overall, for the re asons set out above, we consider that the Panel
did not fail to focus on the same aspects of measures 1, 2, 3, 4, 7, and 8 in both its Article II:1
and Article XIV(c) analyses.
6.3.3 Necessary to secure compliance with laws or regulations
6.180. We now turn to the two remaining alleged errors that Panama raises in connection with the
Panel's findings that measures 1, 2, 3, 4, 7, and 8 are provisionally justified under Article XIV(c) of
the GATS.
443 First, Panama contends that the Panel erred in finding that measures 1, 2, 3, 4, and
8 are designed to secure compliance with laws or regulations. 444 Second, Panama contends that
the Panel erred in finding that measures 1, 2, 3, 4, 7, and 8 are "necessary" to secure compliance
with such laws or regulations. 445 Below, we summarize the relevant Panel findings. Thereafter, we
examine the various arguments raised by Panama in respect of each of these intermediate
findings.
6.3.3.1 The Panel's findings
6.181. According to the Panel, in order to establish successfully a defence under Article XIV(c) of
the GATS, a respondent must demonstrate two elements.
446 First, a respondent must show that
the measure at issue is designed "to secure compliance with laws or regulations which are not
inconsistent" with the GATS, pursuant to the following legal standard:
[T]he Member invoking such a defence must (i) identify the laws and regulations with
which the challenged measure is intended to secure compliance, and prove …
(ii) [that] those laws and regulations are not in themselves inconsistent with WTO

439 Measure 8 is described in more detail in section 5.9 of this Report.
440 Panel Report, para. 7.647.
441 Panel Report, para. 7.357.
442 Panel Report, para. 7.357. In this respect, as identified in Panama's first written submission to the
Panel, the template for a request of prior authorization from the Argentine Central Bank lists the information
that must be provided, including: identification of parties involved; details of the investment; and conditions of
the repatriation. (Panama's first written submission to the Panel, para. 4.443; Annex to Communication "B"
No. 7953 of the Central Bank of the Argentine Republic of 15 August 2003 (Panel Exhibit PAN-72))
443 Panama's appellant's submission, paras. 5.2-5.3, 5.75, 5.148, and 5.160.
444 Panama's appellant's submission, paras. 5.75, 5.93, and 5.147.a (measures 1-4), and paras. 5.160
and 5.173.a (measure 8).
445 Panama's appellant's submission, paras. 5.75 and 5.147.b (measures 1-4), paras. 5.148 and 5.159.b
(measure 7), and paras. 5.160 and 5.173.b (measure 8).
446 Panel Report, paras. 7.591-7.593 (referring to Appellate Body Reports, Korea – Various Measures on
Beef, para. 157; and Thailand – Cigarettes (Philippines), para. 177; and Panel Report, US – Gambling,
paras. 6.536-6.537 and fn 990 thereto).

law; and (iii) that the measure challenged is designed to secure compliance with those
laws or regulations.447
6.182. Second, a respondent must demonstrate that the measure at issue is "necessary" to
secure such compliance. In this regard, the Panel referred to the Appellate Body reports in US –
Gambling and EC – Seal Products, and relied upon the following summary of the proper analysis of
"necessity" set out in the latter report448:
As the Appellate Body has explained, a necessity analysis involves a process of
"weighing and balancing" a series of factors, including the importance of the objective,
the contribution of the measure to that obje ctive, and the trade-restrictiveness of the
measure. The Appellate Body has further explained that, in most cases, a comparison
between the challenged measure and possible alternatives should then be undertaken.
As the Appellate Body has stated, "[i]t is on the basis of this 'weighing and balancing'
and comparison of measures, taking into account the interests or values at stake, that
a panel determines whether a measure is 'necessary' or, alternatively, whether
another, WTO-consistent measure is 'reasonably available'". Such an analysis, the
Appellate Body has observed, involves a "holistic" weighing and balancing exercise
"that involves putting all the variables of the equation together and evaluating them in
relation to each other after having examined them individually, in order to reach an
overall judgement".
449
6.183. The Panel then turned to apply this standard to measures 1, 2, 3, 4, 7, and 8. The Panel
noted that Argentina had identified a number of "laws or regulations" for purposes of its defence
under Article XIV(c) of the GATS. In its analysis, the Panel focused on the following:
a. in connection with measures 1, 2, 3, and 4450:
i. Articles 1 and 5 of the Gains Tax Law;
ii. Article 46 of the Law on Tax Procedure;
iii. Article 1 of the Criminal Tax Law; and
iv. Article 16 of Argentina's Constitution;
b. in connection with measure 7451:
i. Article 118.3 of the Commercial Companies Law; and
ii. Article 188 of the Resolution on Companies Incorporated Abroad; and
c. in connection with measure 8452:
i. Articles 20, 20bis, and 21 of the Law against Money Laundering.
6.184. In examining whether the laws or regulations identified by Argentina are not in themselves
inconsistent with the GATS, the Panel first noted that, while Argentina was responsible for
establishing that the conditions for its defence were met, the legislation of a WTO Member is to be
considered WTO-consistent until proven otherwise. 453 With respect to the Gains Tax Law, the Law

447 Panel Report, paras. 7.595-7.596 (referring to Panel Reports, Colombia – Ports of Entry, para. 7.514;
and US – Shrimp (Thailand), para. 7.174; and Appellate Body Report, Korea – Various Measures on Beef,
para. 157).
448 Panel Report, paras. 7.658-7.661 (referring to Appellate Body Reports, US – Gambling, para. 304;
and EC – Seal Products, paras. 5.169 and 5.214).
449 Appellate Body Reports, EC – Seal Products, paras. 5.169 and 5.214. (fns omitted)
450 We note that, before the Panel, Argentina also identified the following provisions as relevant for its
defence under Article XIV(c) of the GATS: Articles 2, 17, 80, 91, 92, 127, and 129 of the Gains Tax Law (Panel
Exhibits ARG-42 and PAN-4); Articles 33, 38, 39, and 45 of the Law on Tax Procedure (Panel Exhibits ARG-45
and PAN-9); and Articles 4, 17, and 75 (second paragraph) of Argentina's Constitution. (Panel Report,
paras. 7.597, 7.608-7.610, 7.617, and 7.632-7.635)
451 Panel Report, paras. 7.597, 7.612, 7.614-7.617, and 7.646.
452 Panel Report, paras. 7.597, 7.613-7.617, and 7.647.
453 Panel Report, paras. 7.620 and 7.625.

on Tax Procedure, and the Resolution on Companies Incorporated Abroad 454, the Panel noted that
measures 1, 2, 3, 4, and 7, which were found to be inconsistent with Article II:1 of the GATS, are
themselves specific provisions of these same legal instruments that Argentina invoked as the
GATS-consistent laws or regulations with which these measures secure compliance.
455
Nonetheless, the Panel observed that Panama ha d not challenged the GATS-consistency of these
legal instruments as a whole. For the Panel, the GATS-inconsistency of certain provisions of these
three legal instruments does not mean that their remaining provisions are also
GATS-inconsistent.
456 Thus, the Panel concluded that, for purposes of its defence under
Article XIV(c) of the GATS, Argentina had identified laws or regulations that are not inconsistent
with the provisions of the GATS.
457
6.185. The Panel found that measures 1, 2, 3, 4, 7, and 8 are designed to secure compliance with
the laws or regulations identified by Argentina. In particular, the Panel found that, by making
transactions with a high risk of tax evasion subj ect to additional information requirements (as per
measures 2, 3, and 4) or a higher tax (as per measure 1), these measures discourage harmful tax
practices and enable the authorities to ensure that Argentine residents are taxed on all their
earnings (as provided for in Article 1 of the Gains Tax Law) and that earnings from activities
performed in Argentina by domestic or foreign service suppliers are subject to taxation in
Argentina (as provided for in Article 5 of the Gains Tax Law).
458
6.186. With respect to measures 1, 2, 3, and 4, the Panel also found that these measures are
designed to secure compliance with Article 46 of the Law on Tax Procedure and Article 1 of the
Criminal Tax Law by enabling tax authorities to prevent the use of transactions with service
suppliers of non-cooperative countries to defraud the treasury by means of misleading declarations
or wilful concealment. 459 The Panel further found that these measures are designed to secure
compliance with Article 16 of Argentina's Constitu tion, which provides that taxpayers with the
same tax-paying capacity are to pay the same tax. The Panel considered that, by mitigating the
risks of tax evasion, measures 1, 2, 3, and 4 contribute to ensuring that, given equal tax-paying
capacity, honest taxpayers do not pay higher taxes than dishonest taxpayers.
460
6.187. Turning to measure 7, the Panel recalled that this measure imposes additional information
requirements on companies of non-cooperative countries intending to set up branches in the City
of Buenos Aires. The Panel found that this additional information enables Argentine authorities to
obtain the relevant information to apply the requirements to register branches of foreign
companies in Argentina set forth in Article 118.3 of the Commercial Companies Law and
Article 188 of the Resolution on Companies Incorporated Abroad. Thus, the Panel concluded that
measure 7 is designed to secure compliance with these provisions of the Commercial Companies
Law and the Resolution on Companies Incorporated Abroad.
461
6.188. With respect to measure 8, the Panel noted that Articles 20, 20 bis, and 21 of the Law
against Money Laundering set out the duty of certain entities, including the Argentine Central
Bank, to provide information on any suspicious operation to the Financial Intelligence Unit. The
Panel found that, by requiring the Argentine Central Bank to conduct closer scrutiny of transfers to
non-cooperative countries so as to ensure that operations are of genuine origin, measure 8 is
designed to secure compliance with these provisions of the Law against Money Laundering.
462

454 The Panel observed that Panama did not assert the GATS-inconsistency of the Criminal Tax Law,
Argentina's Constitution, the Commercial Companies Law, and the Law against Money Laundering.
(Panel Report, paras. 7.621 and 7.623-7.624)
455 Measures 1, 3, and 4 are applied and maintained pursuant to certain provisions of the Gains Tax
Law; measure 2 is applied and maintained pursuant to a provision of the Law on Tax Procedure; and
measure 7 is applied and maintained pursuant to a provision of the Resolution on Companies Incorporated
Abroad.
456 Panel Report, paras. 7.621-7.623 and 7.625.
457 Panel Report, para. 7.626.
458 Panel Report, para. 7.637.
459 Panel Report, para. 7.638.
460 Panel Report, para. 7.639.
461 Panel Report, paras. 7.646 and 7.648.
462 Panel Report, paras. 7.647-7.648.

6.189. The Panel next took into account the prevailing circumstances at the time that the
measures were implemented. 463 The Panel accepted that the evidence submitted by Argentina
demonstrates that transactions with entities of non-cooperative countries make tax evasion
possible because the lack of transparency characterizing such countries facilitates fraudulent
manoeuvres intended to evade Argentine taxes.
464 The Panel also took note of the evidence
submitted by Argentina showing that the efficacy of defensive tax measures – such as those at
issue in this dispute – in preserving the integrit y of national tax systems has been recognized in
relevant international fora, in particular, the OECD and the G-20.465
6.190. In the light of the foregoing, the Panel found that Argentina had demonstrated that
measures 1, 2, 3, 4, 7, and 8 are designed to secure compliance with Argentine laws or
regulations that are not in themselves inconsistent with the GATS.
466
6.191. The Panel then turned to examine whet her these measures are "necessary" to secure
compliance with the laws or regulations identified by Argentina. With respect to the importance of
the objective pursued by measures 1, 2, 3, 4, and 7, the Panel found that the objective "to protect
the tax collection system against the risks posed by the harmful tax practices of jurisdictions that
are non-cooperative for tax transparency purposes" is of vital importance.
467 With respect to
measure 8, the Panel found that the protection of Argentina's tax collection system and the fight
against harmful tax practices and money laundering are "objectives, interests or values of the
utmost importance for Argentina".468
6.192. With respect to the contribution made by these six measures to the end pursued, the Panel
explained that it would examine the design, stru cture, and operation of each of the measures,
focusing in particular on determining whether there is an ends-and-means relationship between
the objective pursued and the measure. 469 The Panel assessed the contribution made by each of
measures 1, 2, 3, 4, and 7, and found that each measure individually contributes to protecting
Argentina's tax collection system and ensuring the collection of taxes in accordance with the
relevant laws or regulations. 470 The Panel also underlined the contribution made to these ends by
measures 1, 2, 3, 4, and 7 operating in conj unction with each other in the context of a
comprehensive tax collection policy. The Panel considered that the application of a single measure
would not make sense in terms of combating harmful tax practices, given that these practices may
utilize various channels, and that the "combined effect of the measures … corresponds to more
than the simple sum of [the effects of] each measure taken separately."
471 With respect to
measure 8, the Panel found that it contributes to preventing money laundering operations
inasmuch as the measure makes it compulsory to declare, inter alia, the origin of the funds to be
repatriated for the purpose of preventing such operations.472
6.193. The Panel went on to underline the ex ante effect of these measures. Specifically, the
Panel found that the mere existence of these measures may influence the future behaviour of
taxpayers and dissuade them from resorting to fraudulent practices and money laundering
operations. For this reason, too, the Panel considered that measures 1, 2, 3, 4, 7, and 8 contribute
to safeguarding Argentina's tax collection system and preventing money laundering.
473

463 Panel Report, para. 7.649.
464 Panel Report, para. 7.650.
465 Panel Report, paras. 7.651-7.654.
466 Panel Report, para. 7.655.
467 Panel Report, para. 7.664 (quoting Argentina's first written submission to the Panel, para. 289), and
para. 7.671.
468 Panel Report, para. 7.682. The Panel noted that combating money laundering is an internationally
established priority shared by many countries, and has been recognized in relevant international fora, in
particular, the FATF, the OECD, and the G-20. (Ibid., paras. 7.673-7.676)
469 Panel Report, para. 7.688.
470 Panel Report, para. 7.706. See also paras. 7.692 and 7.707 (measure 1), paras. 7.695 and 7.708
(measure 2), paras. 7.697 and 7.709 (measure 3), paras. 7.700 and 7.710 (measure 4), and paras. 7.703
and 7.711 (measure 7).
471 Panel Report, para. 7.714.
472 Panel Report, paras. 7.704-7.705 and 7.712.
473 Panel Report, para. 7.713. The Panel reiterated, in this connection, the significance that it attached
to the fact that the use of defensive measures has been recognized in relevant international fora – in
particular, the OECD and the G-20 – as a legitimate tool to protect tax systems and prevent harmful tax
practices. (Ibid., paras. 7.715-7.716)

6.194. For all of these reasons, the Panel conclude d that "measures 1, 2, 3, 4, 7 and 8 contribute
to achieving the objectives pursued".474
6.195. The Panel then turned to address the trade-re strictiveness of each of measures 1, 2, 3, 4,
7, and 8. 475 The Panel noted that none of these measures prevents the supply of services by
service suppliers of non-cooperative countries or entails a ban on trade in services in the sectors
and modes of supply concerned. 476 The Panel considered that these measures, except for
measure 1, have relatively little restrictive impact on international trade. Even in the case of
measure 1 with its irrefutable presumption of enrichment, the effect on international trade is not
equivalent to a ban. 477 The Panel then found that all of these measures have a limited restrictive
effect on international trade in services. The Panel also recalled Appellate Body jurisprudence to
the effect that a measure with a relatively slight impact on imported products may more easily be
considered "necessary" than a measure with intense or broader restrictive effects.
478
6.196. The Panel then considered whether it could compare measures 1, 2, 3, 4, 7, and 8 with
possible alternative measures identified by Panama. The Panel noted that Panama had not
identified specific measures reasonably available to Argentina that would be less trade restrictive
and would achieve the same level of protection as measures 1, 2, 3, 4, 7, and 8 in respect of the
objectives pursued.
479
6.197. As a final step in its analysis of whether measures 1, 2, 3, 4, 7, and 8 are "necessary" to
secure compliance with the relevant laws or regulations, the Panel sought to weigh and balance
the importance of the common interests or values protected by the laws or regulations in question,
the contribution of the measures to the end pursue d, and the effect of the measures on trade in
services. In so doing, the Panel bore in mind that no reasonably available alternative measures
had been identified by Panama. Taking account of its prior analysis of these factors, the Panel
reached the conclusion that measures 1, 2, 3, 4, 7, and 8 are "necessary to secure compliance
with laws or regulations which are not inconsistent" with the GATS within the meaning of
Article XIV(c).
480
6.3.3.2 Whether the Panel erred in finding that the measures are designed to secure
compliance with laws or regulations
6.198. Panama contends that the Panel erred in finding that measures 1, 2, 3, 4, 7, and 8 are
designed to secure compliance with laws or re gulations under Article XIV(c) of the GATS, and
requests us to reverse these findings. 481 Overall, Panama makes tw o main arguments. First,
Panama argues that the Panel wrongly based its analysis on whether measures 1, 2, 3, and 4
secure compliance with the objectives, rather than with the specific provisions, of the relevant laws
or regulations. 482 Second, Panama argues that the Panel failed to examine properly whether
measures 1, 2, 3, 4, and 8 are designed to secure compliance with the relevant laws or
regulations.483
6.199. Argentina requests us to reject Panama's claim of error on appeal. 484 Argentina contends
that Panama selectively quotes and mischaracterizes the Panel's analysis. 485 In Argentina's view,
after reviewing the normative content of each of th e specific provisions of the relevant laws or
regulations, the Panel correctly found that measures 1, 2, 3, and 4 secure compliance with the

474 Panel Report, para. 7.717.
475 Panel Report, paras. 7.718-7.727.
476 Panel Report, paras. 7.718 and 7.725.
477 Panel Report, paras. 7.719 and 7.725.
478 Panel Report, para. 7.727 (referring to Appellate Body Report, Korea – Various Measures on Beef,
para. 163).
479 Panel Report, paras. 7.732-7.736.
480 Panel Report, paras. 7.737-7.740.
481 Panama's appellant's submission, paras. 5.81-5.82, 5.93, 5.153, and 5.164. See also Panel Report,
paras. 7.642, 7.648, and 7.655.
482 Panama's appellant's submission, paras. 5.81-5.82.
483 Panama's appellant's submission, paras. 5.94-5.97, 5.104, 5.106, 5.109-5.110, 5.112,
and 5.164-5.165.
484 Argentina's appellee's submission, paras. 6 and 92.
485 Argentina's appellee's submission, paras. 74 and 83.

obligations contained in those specific provisions.486 Argentina also submits that the Panel properly
examined whether measures 1, 2, 3, 4, and 8 are designed to secure compliance with the relevant
laws or regulations.
487 Argentina contends that Panama's multiple allegations of error in connection
with the Panel's assessment of the design of measures 1, 2, 3, and 4 relate to the Panel's
assessment of the evidence before it and, therefor e, should have been made in connection with a
claim under Article 11 of the DSU. Argentina considers that Panama's failure to raise such a claim
is dispositive of these allegations of error.
488
6.200. We recall that the Panel's findings that measures 1, 2, 3, 4, 7, and 8 are designed to
secure compliance with the relevant laws or regulations were based on the following three
intermediate findings: (i) that Argentina had identified the laws or regulations with which it seeks
to secure compliance for purposes of Article XIV(c) of the GATS
489; (ii) that such laws or
regulations are not inconsistent with the provisions of the GATS 490; and (iii) that the six
measures are designed to secure compliance with the relevant provisions of these laws or
regulations.
491
6.201. Panama's appeal is confined to the Panel's finding concerning the last of these three
elements. In this dispute, Panama did not assert the GATS-inconsistency of the Gains Tax Law, the
Law on Tax Procedure, or the Resolution on Companies Incorporated Abroad as a whole. Panama
also has not raised on appeal the issue of whether specific provisions identified by Argentina in
these legal instruments can be found to be GATS-c onsistent notwithstanding that such provisions
are contained within the same legal instruments as the inconsistent measures themselves. We
note, however, that there may be circumstances in which the GATS-inconsistency of certain
provisions of a legal instrument could affect or taint the GATS-consistency of other parts of the
same instrument or of the instrument as a whole.
6.202. In considering the arguments raised by Panama, we begin by recalling that, in Korea –
Various Measures on Beef , the Appellate Body explained that, for a respondent to justify
provisionally a measure under Article XX(d) of the GATT 1994, the following two elements must be
shown. First, the measure must be one designed to secure compliance with laws or regulations
that are not themselves inconsistent with some provision of the GATT 1994. Second, the measure
must be "necessary" to secure such compliance.
492
6.203. With respect to the first element, the phrase "to secure compliance" circumscribes the
scope of Article XIV(c) of the GATS, as it speaks to the function of the measures that a Member
can seek to justify under this provision. This phrase calls for an initial examination of the
relationship between the inconsistent measure and the relevant laws or regulations 493 and, for this
purpose, directs panels assessing whether a measure secures compliance with laws or regulations
to scrutinize the design of the measures sought to be justified. 494 A measure can be said "to
secure compliance" with laws or regulations when its design reveals that it secures compliance
with specific rules, obligations, or requirements under such laws or regulations
495, even if the
measure cannot be guaranteed to achieve such result with absolute certainty. 496 The more
precisely a respondent is able to identify specific rules, obligations, or requirements contained in
the GATS-consistent laws or regulations, the more likely it will be able to elucidate how and why
the inconsistent measure secures compliance with such laws or regulations. Yet, where the
assessment of the design of the measure, includ ing its content and expected operation, reveals
that the measure is incapable of securing compliance with specific rules, obligations, or

486 Argentina's appellee's submission, para. 81.
487 Argentina's appellee's submission, paras. 83-89.
488 Argentina's appellee's submission, para. 91.
489 Panel Report, para. 7.616.
490 Panel Report, para. 7.626.
491 Panel Report, para. 7.655.
492 Appellate Body Report, Korea – Various Measures on Beef, para. 157.
493 We note that this relationship between the inconsistent measure and the relevant laws or regulations
is further analysed under the second element of the Article XIV(c) analysis, i.e. whether the measure is
"necessary" to secure compliance with the relevant laws or regulations.
494 Appellate Body Report, Mexico – Taxes on Soft Drinks, para. 72.
495 In this regard, the objectives of, or the common interests or values protected by, the relevant law or
regulation may assist in elucidating the content of specific rules, obligations, or requirements in such law or
regulation.
496 Appellate Body Report, Mexico – Taxes on Soft Drinks, para. 74.

requirements under the relevant law or regulation, as identified by a respondent, further analysis
with regard to whether this measure is "necessary" to secure such compliance may not be
required. This is because there is no justification under Article XIV(c) for a measure that is not
designed to "secure compliance" with a Member's laws or regulations.
497 A panel must not,
however, structure its analysis of the first element in such a way as to lead it to truncate its
analysis prematurely and thereby foreclose consideration of crucial aspects of the respondent's
defence relating to the "necessity" analysis.
6.204. The second element entails a more in-depth, holistic analysis of the relationship between
the inconsistent measure and the relevant laws or regulations. In particular, this element entails
an assessment of whether, in the light of all relevant factors in the "necessity" analysis, this
relationship is sufficiently proximate, such that the measure can be deemed to be "necessary" to
secure compliance with such laws or regulations.
498
6.205. We see these two elements as conceptually distinct, yet related, aspects of the overall
inquiry to be undertaken into whether a respondent has established that the measure at issue is
"necessary to secure compliance with laws or regulations" under Article XIV(c) of the GATS. We do
not see the content of these two elements of the an alysis as entirely separate. Nor do we see the
structure of each analysis as one that must foll ow a rigid path. Rather, the analyses of these two
elements may overlap in the sense that some considerations may be relevant to both elements of
the Article XIV(c) defence. The way in which a panel organizes its examination of these elements
in scrutinizing a defence in any given dispute will be influenced by the measures and laws or
regulations at issue, as well as by the way in which the parties present their respective arguments.
6.3.3.2.1 General or cross-cutting allegations by Panama
6.206. We now turn to examine Panama's arguments on appeal with respect to the first element
in the Article XIV(c) analysis explained above. Panama first argues that the Panel improperly
focused its analysis on whether measures 1, 2, 3, and 4 secure compliance with the objectives of
the relevant laws or regulations, rather than on whether those measures secure compliance with
specific provisions of such laws or regulations.
499 Argentina disagrees with Panama and contends
that, after reviewing the normative content of each of the relevant laws or regulations, the Panel
properly focused on specific obligations contained in such laws or regulations in its analysis of
whether the measures are designed to secure compliance with those laws or regulations.
500
6.207. In analysing whether measures 1, 2, 3, and 4 are designed to secure compliance with the
relevant laws or regulations, the Panel began by examining each of the four instruments identified
by Argentina, namely, the Gains Tax Law, the Law on Tax Procedure, the Criminal Tax Law, and
Argentina's Constitution, including specific provisions within each of these instruments.
501 Having
done so, the Panel opined that these instruments form the backbone of the regulatory framework
for collecting taxes in Argentina.502 The Panel considered the obligations imposed by these laws or
regulations to be interlinked. According a particular focus to the Gains Tax Law and the Law on Tax
Procedure, the Panel stated that the relevant parts of these laws develop the tax principles
established in Argentina's Constitution, including the principle of tax equality in Article 16 of the
Constitution.
503 Thus, the Panel considered that these laws oblige Argentine authorities to levy tax
on the earnings of natural and legal persons residi ng in Argentina according to their capacity to
pay, ensuring that taxpayers with equal capacity pay the same amount of tax.504
6.208. On appeal, Panama raises arguments with respect to the Panel's analysis of whether
measures 1, 2, 3, and 4 are designed to secure compliance with the Gains Tax Law, the Law on
Tax Procedure, the Criminal Tax Law, and Argentina's Constitution. Clearly, a respondent seeking
to justify an inconsistent measure may choose, as Argentina did in this dispute, to identify several

497 Appellate Body Report, Mexico – Taxes on Soft Drinks, para. 72.
498 Appellate Body Report, Korea – Various Measures on Beef, para. 161.
499 Panama's appellant's submission, paras. 5.81-5.82.
500 Argentina's appellee's submission, paras. 74-75 and 81.
(Criminal Tax Law), and para. 7.635 (Argentina's Constitution).
502 Panel Report, para. 7.636.
503 Panel Report, paras. 7.635-7.636.
504 Panel Report, para. 7.636.

relevant laws or regulations for purposes of its Article XIV(c) defence. 505 When confronted with
such defence, it may well be appropriate for a panel to rule on more than one law or regulation.
6.209. We nevertheless consider that a respondent would succeed in its Article XIV(c) defence
when it is able to demonstrate that the inconsistent measure is designed and necessary to secure
compliance with at least one GATS-consistent law or regulation. In our view, it follows from this
that, in the circumstances of this appeal, if we sustain the Panel's findings that the measures are
designed and necessary to secure compliance with Articles 1 and 5 of the Gains Tax Law, further
review of the Panel's findings that the same meas ures are also designed and necessary to secure
compliance with other laws or regulations may not be required.
506 Thus, we first examine
Panama's arguments relating to the Gains Tax Law. To the extent that we find that Panama has
not established error with respect to the Panel's findings that measures 1, 2, 3, and 4 are designed
and necessary to secure compliance with the Gains Tax Law, we need not examine Panama's
remaining arguments concerning the Panel's findings regarding the Law on Tax Procedure, the
Criminal Tax Law, and Argentina's Constitution.
6.210. We note that, with respect to the Gains Tax Law, it is true, as Panama highlights
507, that
the Panel observed that measures 1, 2, 3, and 4 are designed to secure compliance with the
overall objective of the Gains Tax Law. The Panel did not, however, limit its analysis to this
observation. Indeed, in the very next sentence of its reasoning, the Panel explained that
measures 1, 2, 3, and 4 "are also designed to secure compliance with certain key provisions of the
[Gains Tax Law]".
508 The Panel then proceeded to examine the content of specific provisions of the
Gains Tax Law that had been identified by Argentina. 509 In particular, the Panel observed that
Article 1 of the Gains Tax Law defines who is subject to this tax. 510 The Panel also observed that
Article 5 of the Gains Tax Law "enshrines the principle of source or territoriality as the criterion for
attribution of the taxable subject matter, according to which any sums originating in activities
conducted within Argentine territory, by either Argentine or foreign service suppliers, are deemed
to be gains of Argentine source."
511 Subsequently, the Panel addressed whether measures 1, 2, 3,
and 4 are designed to secure compliance with Articles 1 and 5 of the Gains Tax Law. The Panel
found that measures 1, 2, 3, and 4 "discourage harmful tax practices and enable the authorities to
ensure that Argentine residents are taxed ' on all their gains earned in the country or abroad ', as
provided in Article 1 of the [Gains Tax Law] ".512 In addition, the Panel found that these measures
"are also designed to secure compliance with Article 5 of the [Gains Tax Law], which considers
earnings from activities performed in Argentine territory, by either Argentine or foreign service
suppliers, to be gains of Argentine source (and thus subject to taxation in Argentina)". 513 Thus,
contrary to Panama's contention, the Panel did not base its analysis only on whether measures 1,
2, 3, and 4 secure compliance with the objectiv e of the Gains Tax Law; rather, the Panel also
examined whether these measures secure compliance with the specific obligation set forth in
Articles 1 and 5 of the Gains Tax Law, namely, to establish properly the tax base for purposes of
the gains tax.
6.211. We now turn to examine Panama's second set of arguments with respect to the first
element in the Article XIV(c) analysis explained above. Panama argues that the Panel failed to
examine properly whether measures 1, 2, 3, 4, and 8 are designed to secure compliance with the
relevant laws or regulations. In this respect, Panama first contends that the demonstration that a

505 In doing so, a respondent may choose to justify its inconsistent measure by showing that such
measure is designed and necessary to secure compliance with at least one GATS-consistent law or regulation,
or it may choose to demonstrate that the measure is designed and necessary to secure compliance with an
obligation or obligations arising from several laws or regulations operating together as part of a comprehensive
framework.
506 We highlight that Panama has not challenged on appeal the Panel's finding that the provisions of the
different legal instruments identified by Argentina work together as part of a common regulatory framework for
collecting taxes in Argentina. (See Panel Report, para. 7.714)
507 Panama's appellant's submission, para. 5.82 (referring to Panel Report, para. 7.637).
508 Panel Report, para. 7.637.
509 The Panel examined Articles 1, 2, 5, 17, 80, 91, 127, 129, and 130 of the Gains Tax Law.
(See Panel Report, para. 7.632)
510 Panel Report, para. 7.632 and fn 804 thereto (referring to Gains Tax Law (Panel Exhibits ARG-42
and PAN-4), Article 1).
511 Panel Report, para. 7.632 and fn 806 thereto (quoting Gains Tax Law (Panel Exhibits ARG-42
and PAN-4), Article 5).

specific measure secures compliance with laws or regulations requires identification of an
underlying risk of non-compliance with such laws or regulations that the measure is intended to
address.
514 In Panama's view, the Panel found that measures 1, 2, 3, and 4 are meant to
discourage simulated transactions between related parties.515 Panama contends, however, that the
Panel failed to assess whether these related-party transactions are inconsistent – or pose a threat
of non-compliance – with the relevant provisions of the Gains Tax Law, the Law on Tax Procedure,
the Criminal Tax Law, or Argentina's Constitution. Panama submits that, absent such a finding, the
Panel had no legal basis to conclude that measures 1, 2, 3, and 4 are designed to secure
compliance with the provisions of the identified Argentine laws or regulations.
516
6.212. Argentina contends that the Panel did not assume that transactions between related
parties are per se inconsistent with Argentina's tax laws, or otherwise raise compliance concerns.
Argentina submits that, in fact, the legality of such transactions was immaterial to the Panel's
finding under Article XIV(c) of the GATS. 517 In Argentina's view, the Panel's findings that
measures 1, 2, 3, and 4 are designed to secure compliance with Argentina's tax laws were based
on evidence indicating that transactions betw een Argentine taxpayers and service suppliers of
non-cooperative countries pose a particular risk of non-compliance with Argentina's tax laws.
Argentina highlights that this is because, in such circumstances, it is not possible for Argentine
authorities to determine whether a transaction reflects a legitimate business purpose or is simply a
means to reduce tax liabilities in Argentina.
518
6.213. We understand Panama's argument to be based on the assumption that the Panel found
that Argentina's concern, in connection with measures 1, 2, 3, and 4, is limited to simulated
transactions between related parties. Yet, in ou r view, the Panel did not find that the types of
practices that measures 1, 2, 3, and 4 are meant to discourage are only simulated transactions
between related parties. Rather, the Panel framed the practices that are the subject of Argentina's
concern more broadly as "transactions which cover up harmful tax practices".
519 Thus, the
assumption on which Panama bases its argument is not supported by the Panel Report.
6.214. Moreover, we understand Panama's argument to refer to the fact that, in Panama's view,
measures 1, 2, 3, and 4 apply both to transactions with legitimate purposes (i.e. transactions
between unrelated parties or transactions between related parties at arm's length) and to
transactions with fraudulent purposes (i.e. simulated transactions between related parties to evade
taxes). In essence, Panama argues that measures 1, 2, 3, and 4 go beyond what is necessary to
secure compliance with such laws or regulations in respect of fraudulent transactions, because the
measures also capture legitimate transactions. We note that the Panel examined, and did not
consider relevant, Panama's argument that measures 1, 2, 3, and 4 also cover situations other
than simulated transactions between related parties
520 when it assessed the trade-restrictiveness
of measures 1, 2, 3, and 4. There, the Panel ob served that these measures must be designed to
cover all transactions because they apply ex ante, and their purpose is to detect fraudulent
transactions. In the Panel's view, "[i]f the Argentine authorities could distinguish ex ante between
transactions with a legitimate purpose and those which involve fraudulent manoeuvres, the
measures in question would not be necessary."
521 We agree with the Panel's reasoning. In our
view, Panama's argument would hold true only with the benefit of hindsight because it cannot be
known in advance, without scrutiny, which transaction has a legitimate or a fraudulent purpose.
6.215. In addition to the argument above that measures 1, 2, 3, and 4 are overly broad in
addressing tax evasion, Panama also argues that the Panel did not take proper account of the
broad scope of measure 2, because it failed to consider that: (i) certain transactions excluded from

514 Panama's appellant's submission, paras. 5.22-5.24 (referring to Panel Reports, Korea – Various
515 Panama's appellant's submission, paras. 5.94-5.96 (referring to the Panel's contribution analysis set
out in Panel Report, paras. 7.691, 7.693, 7.697, and 7.700).
516 Panama's appellant's submission, para. 5.97.
517 Argentina's appellee's submission, para. 83.
518 Argentina's appellee's submission, para. 84.
519 Panel Report, para. 7.732. See also paras. 7.637 and 7.715.
520 We note that Panama makes the same argument on appeal. (See Panama's appellant's submission,
paras. 5.100, 5.104.c, 5.109, and 5.112.c)
521 Panel Report, para. 7.726.

the scope of measure 1 are covered by measure 2; and (ii) in addition to the gains tax, measure 2
also has implications for the collection of sales tax and internal taxes.522
6.216. In our view, the grounds relied upon by Panama do not establish error in respect of the
Panel's assessment of the design of measure 2. Panama has not explained why the fact that
measure 2 may have a broader scope than measure 1, or the fact that measure 2 may also have
implications for the collection of other types of taxes, would, in itself, preclude a finding that
measure 2 is designed to secure compliance with Articles 1 and 5 of the Gains Tax Law. We also
do not consider that this is necessarily so.
6.217. We further observe that Panama's various arguments that the scope of certain of the
measures at issue is overly broad in terms of addressing tax evasion appear to us to be more
pertinent to the analysis of whether the measures concerned are "necessary" to secure compliance
with the Gains Tax Law, in particular to the identification of reasonably available alternative
measures, than to the question of whether they secure compliance with relevant Argentine laws or
regulations.
6.3.3.2.2 Remaining errors alleged by Panama
6.218. Panama also alleges that the Panel made multiple discrete errors in assessing the design of
each of measures 1, 2, 3, 4, and 8.
523 We observe that Panama offers few arguments in support of
these allegations. Panama's arguments appear to have us reassess these measures, and to attach
more significance to isolated elements of these measures than did the Panel. We also note that
these allegations relate to findings made by the Panel, in the context of Argentina's defence under
Article XIV(c) of the GATS, that have been rendered moot in the light of our reversal of the Panel's
finding on "likeness". Addressing them would also not assist in clarifying the requirements imposed
by Article XIV(c). For these reasons, we have decided not to rule on these allegations on appeal.
6.3.3.3 Whether the Panel erred in finding th at the measures are "necessary" to secure
compliance with the relevant laws or regulations
6.219. Panama claims that the Panel erred in finding that measures 1, 2, 3, 4, 7, and 8 are
"necessary" to secure compliance with the relevant Argentine laws or regulations under
Article XIV(c) of the GATS. Panama's appeal cha llenges only the following aspects of the Panel's
"necessity" analysis: (i) the Panel's assessment of the contribution of these measures to the end
pursued; (ii) the Panel's assessment of the trade-restrictiveness of these measures; and (iii) the
Panel's weighing and balancing of the relevant factors in its "necessity" analysis.
524 Panama
requests us to reverse the Panel's findings that measures 1, 2, 3, 4, 7, and 8 are "necessary" to
secure compliance with the relevant Argentine laws or regulations.525
6.220. Argentina requests us to dismiss this ground of Panama's appeal. Argentina stresses that
this claim by Panama relates to the Panel's assessment of the evidence, yet Panama has not
invoked Article 11 of the DSU. 526 In any event, Argentina argues that Panama has failed to
establish that the Panel committed legal error in findin g that each of measures 1, 2, 3, 4, 7, and 8
contributes to securing compliance with the relevant laws or regulations. 527 Argentina further
contends that Panama's challenge to the Panel's assessment of the trade-restrictiveness of these
measures mischaracterizes the Panel's analysis, and that the Panel did not err in finding that these
measures have a limited restrictive effect on international trade in services.
528 Argentina also
submits that Panama's allegation concerning the Panel's weighing and balancing of the relevant

522 Panama's appellant's submission, paras. 5.106.a and 5.106.b.
523 Panama's appellant's submission, paras. 5.104, 5.106, 5.109-5.110, 5.112, and 5.164-5.165.
524 Panama does not challenge the Panel's finding on the importance of the objectives pursued, or the
Panel's assessment of the alternative measures proposed by Panama.
525 Panama's appellant's submission, paras. 5.3, 5.147.b, 5.159.b, 5.173.b, and 7.1.c. See Panel Report,
para. 7.740.
526 Argentina's appellee's submission, paras. 96-103.
527 Argentina's appellee's submission, paras. 104-133.
528 Argentina's appellee's submission, paras. 134-143.

factors is entirely dependent on the other purpor ted errors alleged by Panama and, like them,
must fail.529
6.221. Before turning to the issues raised by Panama, we note that, in analysing whether the six
measures are "necessary" to secure compliance, the Panel first considered the importance of the
objectives pursued.530 The Panel then considered the contribution made by the six measures to the
end pursued. 531 Next, the Panel looked at the trade-restrictiveness of the six measures. 532 The
Panel subsequently addressed whether any reason ably available alternative measures had been
identified by Panama. 533 Finally, the Panel conducted a single weighing and balancing exercise of
these factors for all six measures, collectively. 534 The way in which the Panel structured its
"necessity" analysis with respect to these six measures has not been appealed. While there is no
single correct way to structure a multi-faceted analysis of multiple measures, we have some
concerns with the approach adopted by the Panel. The initial parts of the reasoning are somewhat
disaggregated and compartmentalized in that, for any given measure, the Panel's consideration of
each of the relevant "necessity" factors is found in separate parts of its reasoning. The separation
of the different parts of the Panel's analysis, combined with its collective weighing and balancing
exercise, renders it somewhat difficult to ascertain whether, for each measure, the Panel
conducted the holistic analysis of all of the rele vant elements that is called for, and properly
weighed and balanced the relevant elements and compared them against any proposed alternative
measures.
6.3.3.3.1 General or cross-cutting allegations by Panama
6.222. Panama alleges that the Panel committed multiple errors in assessing whether
measures 1, 2, 3, 4, 7, and 8 are "necessary" to secure compliance with the relevant
Argentine laws or regulations.
535 We first examine several general or cross-cutting allegations
made by Panama, and then turn to an examinatio n of Panama's remaining arguments. At the end
of our analysis, we examine Panama's challenge to the Panel's weighing and balancing of the
relevant "necessity" factors with respect to these measures.
6.223. A first general theme raised in many of Panama's arguments appears to us to challenge
the Panel's assessment of the facts and evidence on the record. In particular, Panama submits that
there is no evidentiary basis for the following: (i) that measure 1 discourages the undeclared
outflow of capital and the false payment of intere sts that can be deducted from the gains tax by
the Argentine taxpayer 536; (ii) that, by making the entry of undeclared funds more burdensome,
measure 2 mitigates the erosion of the tax base 537; (iii) that measure 3 discourages ex ante
harmful tax practices and protects Argentina's tax base 538; and (iv) that measure 4 may serve to
deter Argentine companies from contracting services with suppliers of non-cooperative
countries.539 Panama also contends that the Panel failed to take into account the only evidence
referring to the actual trade-restrictive effect of measure 1540 and, in the light of Argentina's failure
to provide sufficient evidence, that the Panel failed to substantiate its findings that measures 7 and
8 have a limited trade-restrictive effect on international trade.541
6.224. The Appellate Body has held in previous disputes that, while an appellant may frame its
claims of error as it sees fit, "important consequences flow from that choice, including the

529 Argentina's appellee's submission, paras. 144-145.
530 Panel Report, paras. 7.662-7.682.
531 Panel Report, paras. 7.690-7.717.
532 Panel Report, paras. 7.718-7.727.
533 Panel Report, paras. 7.729-7.736.
534 Panel Report, paras. 7.737-7.740.
535 Panama's appellant's submission, paras. 5.75 and 5.147.b (measures 1-4), paras. 5.148 and 5.159.b
(measure 7), and paras. 5.160 and 5.173.b (measure 8).
536 Panama's appellant's submission, para. 5.116.e and f (referring to Panel Report, para. 7.691).
537 Panama's appellant's submission, para. 5.130 (referring to Panel Report, paras. 7.694-7.695).
538 Panama's appellant's submission, para. 5.137.d (quoting Panel Report, para. 7.697).
539 Panama's appellant's submission, para. 5.145.a (referring to Panel Report, para. 7.318).
540 Panama's appellant's submission, para. 5.124 (referring to Notarized sworn statement of 14 March
2014 prepared by a legal expert on banking matters (Panel Exhibit PAN-7)).
541 Panama's appellant's submission, paras. 5.156-5.157 (referring to Panel Report, para. 7.722), and
para. 5.169.

standard of review that will apply in adjudicating" those claims. 542 In this regard, the Appellate
Body has declined to consider claims that consist solely of a challenge to the objectivity of the
panel's assessment of the evidence in the absence of a claim under Article 11 of the DSU.
543 The
Appellate Body has also held that allegations implicating a panel's assessment of the facts and
evidence before it, rather than the characteriza tion of the consistency or inconsistency of a
measure with the requirements under a certain prov ision, should be raised under Article 11 of the
DSU.544
6.225. As Argentina observes, Panama's arguments mentioned above do not fall within the scope
of our review in this appeal, in particular in the absence of any claim by Panama that the Panel
failed to comply with its duties under Article 11 of the DSU.
545 Accordingly, we do not address
them further.
6.226. A second general theme in the arguments advanced by Panama concerns the Panel's
assessment of the contribution made by measures 1, 2, 3, 4, and 7. In Panama's view, the Panel
improperly based its assessment of the contribution of measures 1, 2, 3, 4, and 7 on whether
these measures contribute to attaining the objectives of the relevant laws or regulations, rather
than on whether they contribute to securing compliance with specific provisions of such laws or
regulations.546
6.227. In considering Panama's argument, we are mindful that, in Korea – Various Measures on
Beef, the Appellate Body explained that one factor to be considered in the weighing and balancing
of the relevant factors when evaluating whether a measure is "necessary" under Article XX(d) of
the GATT 1994 is "the extent to which the measure contributes to the realization of the end
pursued, the securing of compliance with the law or regulation at issue."
547 As we have explained
above548, the more precisely a respondent is able to identify specific rules, obligations, or
requirements contained in the GATS-consistent laws or regulations, the more likely it will be able
to elucidate how and why the inconsistent measure secures compliance with such laws or
regulations. Similarly, a panel's assessment of the contribution of a measure to securing
compliance with the law or regulation at issue sh ould focus on specific rules, obligations, or
requirements set out in such law or regulation. This is not to say that the objective of, or the
common interest or value protected by, the "laws or regulations" at issue is irrelevant to the
analysis of a measure's contribution. Indeed, in many instances, the specific obligations and
individual provisions of a law or regulation will reflect and be closely tied to the objective(s) of the
instrument within which they are contained.
6.228. In its analysis of "necessity", the Panel set out to examine each measure's contribution to
the objectives pursued by the relevant Argentine laws or regulations under Article XIV(c) of the
GATS.
549 The Panel stated that, with respect to measures 1, 2, 3, 4, and 7, the objective pursued
is to protect the tax collection system against the risks posed by harmful tax practices of
non-cooperative countries for tax transparency purposes. The Panel then said it would examine the

542 Appellate Body Report, US – Large Civil Aircraft (2nd complaint), para. 956 (referring to
Appellate Body Reports, EC and certain member States – Large Civil Aircraft, para. 872; Canada – Wheat
543 Appellate Body Reports, US – Large Civil Aircraft (2nd complaint), para. 956 and Mexico –
Anti-Dumping Measures on Rice, para. 274.
544 Appellate Body Reports, China – Rare Earths, paras. 5.173-5.175 and EC – Seal Products,
para. 5.243.
545 See Argentina's appellee's submission, paras. 101 and 135.
546 Panama's appellant's submission, paras. 5.86, 5.116.a, 5.129, 5.137.a, 5.144, and 5.155.
547 Appellate Body Report, Korea – Various Measures on Beef, para. 163.
548 See paras. 6.203-6.204 above.
549 Panel Report, paras. 7.661-7.662. The Panel's analysis appears at times to conflate the objective of
the measures, on the one hand, with the objectives of the relevant laws or regulations, on the other hand.
While the Panel stated that it would assess the objectives pursued by the relevant Argentine laws or
regulations, it later seemed to refer to the objective of the inconsistent measures. We note, however, that
Argentina invoked Articles 1 and 5 of the Gains Tax Law and Article 188 of the Resolution on Companies
Incorporated Abroad in its Article XIV(c) defence. In addition, we note that measures 1 to 4 and 7 are specific
provisions of these same legal instruments. Thus, although the Panel might have been clearer, we understand
the Panel to have referred interchangeably to the objective of these measures and the objectives of the
relevant laws or regulations.

design, structure, and operation of each measure, focusing in particular on whether there is an
ends-and-means relationship between the objective pursued and the measure in question.550
6.229. We note that the Panel made several general statements to the effect that it would
examine the contribution made by the measures to the objective of protecting Argentina's tax
collection system.551 We have some reservations about the Panel's identification of how it intended
to assess the contribution made by each of the measures. To the extent that the Panel's
statements may imply that it would not consider the contribution of these measures to the
relevant end pursued – that is, the securing of compliance with specific rules, obligations, or
requirements contained in the relevant laws or regulations – the Panel's analytical framework
would, in our view, be flawed. With this consideration in mind, we turn to assess whether, in
applying Article XIV(c) of the GATS to the measur es in question, the Panel erroneously focused on
whether these measures contribute to attaining the objectives of the relevant laws or regulations,
at the expense of an examination of whether th ese measures contribute to securing compliance
with specific rules, obligations, or requirements contained in the relevant laws or regulations and,
if so, whether this amounted to reversible error.
6.230. Argentina relied on Articles 1 and 5 of the Gains Tax Law in its Article XIV(c) defence. The
Panel found that Article 1 of the Gains Tax Law defines the subjects of the gains tax. This provision
sets forth the obligation of Argentine taxpayers to pay tax on all gains earned in Argentina or
abroad. The Panel also found that Article 5 of the Gains Tax Law attributes to the taxable subject
matter any sums originating from activities conducted within Argentina, by either Argentine or
foreign service suppliers.
552
6.231. With respect to measure 1, the Panel found that, by taxing the profits earned from certain
financial services supplied by service suppliers of non-cooperative countries at a higher rate than
like services from service suppliers of cooperative countries, this measure contributes to protecting
the tax base because it discourages the undeclare d outflow of capital and the false payment of
interest.
553 With respect to measure 2, the Panel found that the rebuttable presumption in this
measure discourages tax evasion by Argentine taxp ayers, contributes to combating the erosion of
Argentina's tax base, and allows Argentine authorities to adjust a taxpayer's tax base and restore
tax equality among all Argentine taxpayers. 554 With respect to measure 3, the Panel found that
this measure helps ex ante to discourage harmful tax practices and protect Argentina's tax base by
correctly identifying the value of transactions and the expenses that are legitimately
tax-deductible.555 With respect to measure 4, the Panel considered that this measure enables
Argentine authorities to ensure that there have actually been payments made that correspond to
the expenditures deducted by Argentine taxpayers from their tax base. 556 W e c o n s id e r t h a t , b y
addressing the measures' contribution to safeguar ding the tax base of Argentine taxpayers, the
Panel indeed conducted an examination of the contribution of these measures to securing
compliance with the obligation to establish properly the tax base subject to the gains tax, as
provided for in Articles 1 and 5 of the Gains Tax Law.
6.232. With respect to measure 7, Argentina relied on Article 188 of the Resolution on Companies
Incorporated Abroad and Article 118.3 of the Commercial Companies Law in its Article XIV(c)
defence.
557 These provisions specify the documents that companies incorporated abroad must
submit in order to register a branch with the Pu blic Trade Register of the City of Buenos Aires. 558
We note that the Panel found that, "in assessing compliance with the requirements of Article 188,
the [General Justice Inspectorate] also seeks to determine whether the company is effectively
engaged in economically significant business activities". 559 In assessing the contribution of
measure 7, we understand the Panel to have focu sed on the requirements in Article 118.3 of the
Commercial Companies Law and Article 188 of the Resolution on Companies Incorporated Abroad
when referring to the need to verify that bran ches of foreign companies have "a legitimate

550 Panel Report, paras. 7.664 and 7.688-7.689.
551 See Panel Report, paras. 7.664 and 7.689. See also the heading that precedes para. 7.683.
552 Panel Report, para. 7.632 (referring to Gains Tax Law (Panel Exhibits ARG-42 and PAN-4)).
553 Panel Report, paras. 7.691-7.692 and 7.707.
554 Panel Report, paras. 7.694-7.695 and 7.708.
555 Panel Report, paras. 7.697 and 7.709.
556 Panel Report, paras. 7.698, 7.700, and 7.710.
557 Panel Report, paras. 7.597, 7.612, 7.614-7.615, and 7.646.
558 Panel Report, para. 2.50.
559 Panel Report, para. 7.347.

commercial purpose, have genuine activities, and have not been set up … solely for the purpose of
simulating transactions with Argentine taxpayers".560
6.233. Thus, despite our reservations with the Panel's analytical framework for its contribution
analysis, pursuant to which it apparently set out to address each measure's contribution to
attaining the general policy objectives of the relevant laws or regulations, we consider that the
Panel in fact included an appropriate analysis of the contribution made by measures 1, 2, 3, 4, and
7 to securing compliance with specific rules, obligations, or requirements. For this reason, we
disagree with Panama's contention that the Panel erred by basing its contribution analysis of
measures 1, 2, 3, 4, and 7 merely on whether these measures contribute to attaining the
objectives of the relevant laws or regulations.
6.234. In addition, we wish to sound a note of caution concerning the way in which the Panel
expressed its findings with respect to each measure's contribution. Specifically, the Panel found,
for each measure, that it "contributes to" the objective pursued. Yet, in an analysis of "necessity",
a panel's duty is to assess, in a qualitative or quantitative manner, the extent of the measure's
contribution to the end pursued, rather than merely ascertaining whether or not the measure
makes any contribution. This is because "[t]he greater the contribution, the more easily a measure
might be considered to be 'necessary'."
561 The same is true with respect to a measure's
trade-restrictiveness – a panel must seek to assess the degree of a measure's
trade-restrictiveness, rather than merely ascertaining whether or not the measure involves some
restriction on trade. Without having undertaken such analyses, a panel would be unable to
undertake a proper weighing and balancing of all of the relevant factors.
6.235. Panama raises a third cross-cutting allegation in connection with the Panel's assessment of
the contribution made by measures 1 and 3
562, and the Panel's assessment of the
trade-restrictiveness of measures 1, 2, 3, and 4. 563 Panama contends that the Panel failed to
consider that these measures affect not only si mulated transactions between related parties, but
also legitimate transactions that, according to Panama, are not at the core of Argentina's
concern.
564 We have examined, and rejected, this argument above 565, in the context of Panama's
allegation concerning the Panel's assessment of th e design of measures 1, 2, 3, and 4. For the
same reasons, we reject it here.566
6.236. The fourth general argument raised by Panama concerns the Panel's statement that none
of the measures entails a ban on trade in services. 567 Panama contends that the Panel failed to
explain why the absence of a ban automatically implies that measures 1, 2, and 3 do not have a
trade-restrictive effect. Panama argues that measures not containing a total prohibition may
nonetheless have a significant trade-restrictive effect, and that any measure imposing a limiting
condition on international trade should be considered as having a trade-restrictive effect.
568
6.237. Argentina responds that the Panel did not find that, in the absence of a total ban on trade
in services, a measure cannot be deemed to be trade restrictive.569
6.238. As the Appellate Body has explained, an import ban is, by design, the most
trade-restrictive form that a measure could take. 570 Yet, as Panama correctly asserts, measures
other than an import ban may also have restrictive effects on international trade, and such effects
may be significant. We do not consider, however, that the Panel Report stands for the proposition
that the absence of a ban automatically implies that a measure has no trade-restrictive effect. As
summarized above, the Panel began its analysis by noting that none of the measures in question

560 Panel Report, para. 7.711. See also paras. 7.702-7.703.
561 Appellate Body Report, Korea – Various Measures on Beef, para. 163.
562 Panama's appellant's submission, paras. 5.116.f and 5.137.c.
563 Panama's appellant's submission, paras. 5.119, 5.123, 5.132, 5.140, and 5.145.b and c.
564 Panama's appellant's submission, paras. 5.123, 5.132, 5.140, and 5.145.b and c.
565 See paras. 6.213-6.214 above.
566 As explained above, we understand Panama's allegation to be based on an assumption that is not
supported by the Panel Report. Thus, our rejection of Panama's allegation is not on the basis of the legal
standard to be applied under Article XIV(c) of the GATS.
567 See Panel Report, paras. 7.718 and 7.725.
568 Panama's appellant's submission, paras. 5.121-5.122, 5.134, and 5.141.
569 Argentina's appellee's submission, para. 141.
570 Appellate Body Report, Brazil – Retreaded Tyres, para. 150.

entails a ban on trade in services in the sectors and modes of supply concerned. 571 The Panel then
examined the structure, operation, and effect of each measure. Based on this assessment, the
Panel reached separate findings on the trade-restrictiveness of each measure.
572 In particular, the
Panel found that measure 1 could potentially deter trade with non-cooperative countries by
imposing higher taxes. 573 For measures 2 and 3, the Panel considered that these do not have
"a very high level of trade restriction". 574 Ultimately, the Panel concluded that measures 1, 2,
and 3 have "a limited restrictive effect on international trade in services". 575 Thus, contrary to
Panama's contention, the Panel took a more nuanced position with respect to the
trade-restrictiveness of each measure, and did not consider that the absence of a ban
automatically implies that the measure does not have a trade-restrictive effect.
6.3.3.3.2 Remaining errors alleged by Panama
6.239. We now turn to the multiple discrete errors that Panama alleges that the Panel made in
assessing the contribution and trade-restri ctiveness of measures 1, 3, 7, and 8.
576 As we did with
respect to Panama's arguments concerning the Panel's assessment of the design of the measures,
we observe that Panama offers little in the way of supporting argument for each such allegation.
For the same reasons as those set out above 577, we have decided not to examine further these
allegations on appeal.
6.3.3.3.3 The weighing and balancing of the relevant factors in the necessity analysis
6.240. Finally, we turn to examine Panama's challenge to the Panel's weighing and balancing of
the relevant factors in its "necessity" analysis. 578 We note that Panama makes no independent
argument concerning the alleged errors in the Panel's weighing and balancing of the various
elements to be considered in assessing "necessity". Instead, Panama's allegation, for each
measure, is entirely dependent on Panama's arguments that the Panel erred in its assessment of
the contribution and trade-restrictiveness of each measure. Thus, having rejected Panama's
allegations in connection with the Panel's assessment of the contribution and trade-restrictiveness
of each measure, we need not consider further Panama's assertion that the Panel also erred in
weighing and balancing the relevant factors.
6.3.4 Overall conclusion on Article XIV(c) of the GATS
6.241. In the light of all of the above, we find that Panama has not demonstrated that the Panel
erred in its application of Article XIV(c) of the GATS to measures 1, 2, 3, 4, 7, and 8 by failing to
focus its analysis on the relevant aspects of the measures that gave rise to the findings of
inconsistency with Article II:1 of the GATS. In addition, we find that Panama has not demonstrated
that the Panel erred in its application of Article XIV(c) to measures 1, 2, 3, 4, 7, and 8 by finding,
in paragraph 7.655 of its Report, that these measures are designed to secure compliance with the
relevant Argentine laws or regulations under Article XIV(c). Finally, we find that Panama has not
demonstrated that the Panel erred in its application of Article XIV(c) to measures 1, 2, 3, 4, 7, and
8 by finding, in paragraph 7.740 of its Report, that these measures are "necessary" to secure
compliance with the relevant Argentine laws or regulations under Article XIV(c) of the GATS.

571 Panel Report, para. 7.718.
572 Panel Report, paras. 7.719-7.725 and 7.727.
573 Panel Report, paras. 7.719 and 7.724.
574 Panel Report, paras. 7.720-7.721.
575 Panel Report, para. 7.727.
576 Panama's appellant's submission, paras. 5.116.c, 5.116.e, 5.137.b, 5.157, and 5.167.b.
577 See para. 6.218 above.
578 Panama's appellant's submission, paras. 5.126, 5.135, 5.142, 5.146, 5.158, and 5.172.

6.4 Paragraph 2(a) of the GATS Annex on Financial Services
6.4.1 Introduction
6.242. Panama requests us to reverse the Panel's finding that paragraph 2(a) of the GATS Annex
on Financial Services "covers all types of measures affecting the supply of financial services within
the meaning of paragraph 1(a)" of this Annex.
579
6.243. We recall that, before the Panel, Arge ntina invoked paragraph 2(a) of the Annex on
Financial Services with respect to two measures. Argentina argued that, in the event that the
Panel were to find measure 5 (requirements re lating to reinsurance services) and measure 6
(requirements for access to the Argentine capital market) to be inconsistent with Argentina's
obligations under the GATS, both measures would be justified pursuant to paragraph 2(a) of the
Annex on Financial Services.
580 Having found measures 5 and 6 to be inconsistent with Article II:1
of the GATS, the Panel proceeded to examine Ar gentina's defence under paragraph 2(a) of the
Annex on Financial Services and, ultimately, concluded that measures 5 and 6 are not justified
under paragraph 2(a).
581
6.244. We briefly summarize the Panel's findings under paragraph 2(a). The Panel observed that,
as a preliminary requirement, measures falling wi thin the scope of paragraph 2(a) must be those
"affecting the supply of financial services" pursuant to paragraph 1(a) of the Annex on Financial
Services.582 The Panel noted that Panama had proposed a further preliminary requirement,
namely, "that the respondent must demonstrate that the measure [at issue] constitutes a
'domestic regulation'."
583 The Panel rejected Panama's argument in this respect and, in doing so,
reached the interpretation with which Panama take s issue on appeal. Specifically, the Panel stated
that "paragraph 2(a) of the Annex on Financial Se rvices covers all types of measures affecting the
supply of financial services within the meaning of paragraph 1(a) of [this] Annex and not only
those measures that could be characterized as 'domestic regulations' within the meaning of
Article VI of the GATS."
584
6.245. Having found that measures 5 and 6 fall within the scope of paragraph 2(a) 585, the Panel
went on to examine whether these measures were taken "for prudential reasons" within the
meaning of paragraph 2(a). The Panel divided its analysis into two steps. As a first step, the Panel
found that the reasons identified by Argentin a for adopting the measures were "prudential
reasons".586 As a second step, the Panel focused on the word "for" and found that a Member
invoking paragraph 2(a) must demonstrate that there is "a rational relationship of cause and
effect" between the measure that the Member seeks to justify under paragraph 2(a) and the
prudential reason provided for taking it. 587 The Panel found that measures 5 and 6 do not have
such a rational relationship with the prudential reasons identified by Argentina and, accordingly,
that these measures were not taken "for" prudential reasons within the meaning of paragraph
2(a).588 Upon making these findings, the Panel did not go on to examine, under the second
sentence of paragraph 2(a), whether the measures were not being used as a means of avoiding
Argentina's commitments or obligations under the GATS.589 On this basis, the Panel concluded that
measures 5 and 6 "are not covered by paragraph 2(a) of the Annex on Financial Services". 590
These findings and conclusion of the Panel are not subject to appeal.
6.246. This is the first dispute in which a WTO Member has invoked paragraph 2(a) of the Annex
on Financial Services. As the Panel noted, paragraph 2(a) contains three requirements that must

579 Panama's appellant's submission, para. 6.33.a (quoting Panel Report, para. 7.847).
580 Panel Report, para. 7.781.
581 Panel Report, para. 7.949.
582 Panel Report, para. 7.825.
583 Panel Report, para. 7.826 (quoting Panama's second written submission to the Panel, para. 2.651).
584 Panel Report, para. 7.847.
585 Panel Report, para. 7.858.
586 Panel Report, paras. 7.904 and 7.937. See also para. 7.946.
587 The Panel reasoned that "[a] central aspect of this rational relationship of cause and effect is the
adequacy of the measure to the prudential reason, that is, whether the measure, through its design, structure
and architecture, contributes to achieving the desired effect." (Panel Report, para. 7.891. See also para. 7.889)
588 Panel Report, paras. 7.919-7.920 and 7.944. See also paras. 7.947-7.949.
589 Panel Report, para. 7.945.
590 Panel Report, para. 7.949.

be fulfilled for a measure to be justified under this provision. First, there is the threshold, or
preliminary, question of what types of measures may potentially fall within the scope of
paragraph 2(a). Second, a measure must have been taken "for prudential reasons". Finally, under
the second sentence of paragraph 2(a), the measure "shall not be used as a means of avoiding the
Member's commitments or obligations under the Agreement". Only when a measure falls within
the scope of paragraph 2(a) will there be a need to evaluate whether it was taken "for prudential
reasons" and whether it fulfils the requiremen t in the second sentence of paragraph 2(a).
591 We
note that Panama's appeal is limited to the th reshold question identified above. In examining
Panama's appeal, we begin with an overview of the participants' claims and arguments on appeal.
In this context, we will refer to paragraph 2(a) of the Annex on Financial Services as either the
"prudential exception" or the "prudential carve-ou t", depending on the terminology chosen by the
participants and the Panel.
592 We will then set out our interpretation of the scope of
paragraph 2(a), and our examination of Panama's claims and arguments on appeal.
6.4.2 Claims and arguments on appeal
6.247. Panama requests us to reverse the Panel's finding that paragraph 2(a) of the Annex on
Financial Services "covers all types of measures affecting the supply of financial services within the
meaning of paragraph 1(a) of the … Annex".
593 Panama alleges that the Panel failed to give
meaning to the term "domestic regulation" in the title of the prudential exception, and in doing so,
the Panel failed to interpret the prudential exception correctly. 594 For Panama, the reference to
"domestic regulation" in the title of the prudential exception is "key" because it delimits the scope
of the provision, or, in other words, it defines the type of measures that may be covered by the
provision.595 Panama considers that market access restrictions are dealt with in Article XVI of the
GATS, whereas domestic regulations are addressed "predominantly" in Article VI of the GATS 596,
and only the latter type of measures could potentially be justified under the prudential
exception.597
6.248. Panama alleges that the Panel erred in the identification of the interpretive issue before it.
Specifically, instead of analysing the meaning of the title of paragraph 2(a), the Panel wrongly
considered that it had to decide whether the prudential exception covers only measures that
constitute a "domestic regulation" within the meaning of Article VI of the GATS. 598 Panama further
contends that, in analysing the introductory clause of paragraph 2(a) – "Notwithstanding any other
provisions of the Agreement" – the Panel confused the type of measures covered by the prudential
exception with the provisions of the GATS that can be violated for prudential reasons.
599 Panama
adds that the Panel misunderstood Panama's position with respect to Article VI by stating that,
under Panama's interpretation, the prudential exception would cover only violations of that
provision. Panama reiterates that, under its interpretation, the prudential exception could cover
inconsistencies with any provision of the GATS, as long as the prudential measure taken was a
"domestic regulation".
600
6.249. In response, Argentina observes that Pa nama does not seem to take the position that
measures 5 and 6 are not measures of general application affecting trade in services of the kind
that would qualify as a domestic regulation under Article VI of the GATS. Therefore, Argentina
contends that Panama's claim of error does not appear to have any consequence for the resolution
of this dispute.
601 Argentina further considers that Panama's proposition that the title of the
prudential carve-out exhaustively defines the types of measures within its purview is untenable. In
Argentina's view, the text of paragraph 2(a) indica tes that the drafters of the GATS established no

591 See Panel Report, paras. 7.818-7.825.
592 The participants refer to paragraph 2(a) of the Annex on Financial Services as either the "prudential
exception" or the "prudential carve-out". In its Report, the Panel used the term "prudential exception". When
referring to the participants' submissions and the Panel's findings, we use the terminology that they employed,
without adopting either of the terminologies ourselves.
593 Panama's appellant's submission, para. 6.33.a (quoting Panel Report, para. 7.847).
594 Panama's appellant's submission, para. 6.16.
595 Panama's appellant's submission, para. 6.17.
596 Panama's appellant's submission, para. 6.27.
597 Panama's appellant's submission, paras. 6.27-6.28.
598 Panama's appellant's submission, para. 6.21.
599 Panama's appellant's submission, para. 6.22.
600 Panama's appellant's submission, paras. 6.25-6.26.
601 Argentina's appellee's submission, para. 152.

limitations on the types of measures covered by the exception other than the prudential rationale
that leads to their adoption.602
6.250. Argentina further maintains that Panama's attempt to define "domestic regulations", as
opposed to market access measures under Article XVI of the GATS, is contradicted by the text of
the provision and would lead to "absurd" results. 603 According to Argentina, Panama's
interpretation would exclude from the scope of the exception, for example, market access
limitations that may clearly serve a prudential purpose, such as measures falling under
Article XVI:2(e) of the GATS.
604 Argentina considers that Panama's interpretation would improperly
upset the carefully negotiated balance of rights and obligations by narrowing the scope of
application of the prudential carve-out.
605
6.4.3 The scope of paragraph 2(a) of the Annex on Financial Services
6.251. As noted above, Panama's appeal is limi ted to the threshold question of what types of
measures may potentially fall within the scope of paragraph 2(a) of the Annex on Financial
Services. Panama's appeal does not concern the interpretation of the other requirements of
paragraph 2(a) and, therefore, we do not address them in our analysis.
6.252. Paragraph 2(a) of the Annex on Financial Services provides:
2. Domestic Regulation
(a) Notwithstanding any other provisions of the Agreement, a Member shall not be
prevented from taking measures for prudential reasons, including for the
protection of investors, depositors, policy holders or persons to whom a
fiduciary duty is owed by a financial service supplier, or to ensure the integrity
and stability of the financial system. Where such measures do not conform with
the provisions of the Agreement, they sh all not be used as a means of avoiding
the Member's commitments or obligations under the Agreement.
6.253. We note that the word "measures" appears in both sentences of this provision. On its face,
neither sentence identifies a particular type of measure that may fall within the scope of paragraph
2(a). Furthermore, we note that paragraph 1(a) of the Annex on Financial Services establishes the
scope of all provisions in this Annex, and, as a result, it assists in establishing the scope of the
measures that are covered under paragraph 2(a). Paragraph 1(a) stipulates that the Annex
"applies to measures affecting the supply of financial services". The use of the phrase "measures
affecting the supply of financial services" in paragraph 1(a) supports the view that paragraph 2(a)
does not impose specific restrictions on the types of measures falling within its scope.
6.254. The introductory clause "[n]otwithstanding any other provisions of the Agreement" in the
first sentence of paragraph 2(a) is also relevant to our understanding of the scope of measures
covered by this provision. The ordinary meaning of the term "notwithstanding", on the basis of its
relevant dictionary definition, is "in spite of, without regard to or prevention by".
606 This means
that, under paragraph 2(a), a Member shall not be prevented from taking measures for prudential
reasons despite its obligations under "any other provisions of the Agreement", provided that such
measures fulfil all of the re quirements of paragraph 2(a).607 This understanding of the meaning of

602 Argentina's appellee's submission, para. 153.
603 Argentina's appellee's submission, paras. 154-155.
604 Argentina's appellee's submission, para. 155. Article XVI:2(e) applies to "measures which restrict or
require specific types of legal entity or joint venture through which a service supplier may supply a service".
605 Argentina's appellee's submission, para. 155.
606 Shorter Oxford English Dictionary, 6th edn, A. Stevenson (ed.) (Oxford University Press, 2007),
Vol. 2, p. 1952.
607 We note that the Appellate Body interpreted a similar phrase in the same way in EC – Tariff
Preferences, finding that the phrase "[n]otwithstanding the provisions of Article I of the General Agreement"
"permits Members to provide 'differential and more favourable treatment' to developing countries in spite of
the [most-favoured-nation obligation] of Article I:1" of the GATT 1994. (Appellate Body Report, EC – Tariff
Preferences, para. 90) The Appellate Body also noted that paragraph 1 of the Enabling Clause "thus excepts
Members from complying with the obligation contained in Article I:1 for the purpose of providing differential
and more favourable treatment to developing countries, provided that such treatment is in accordance with the
conditions set out in the Enabling Clause". (Ibid.)

the introductory clause of paragraph 2(a) is confirmed by the second sentence of paragraph 2(a).
Specifically, the second sentence states that "[w]here such measures do not conform with the
provisions of the Agreement , they shall not be used as a means of avoiding the Member's
commitments or obligations under the Agreement." 608 The reference to "the provisions of the
Agreement" suggests that this sentence also relates to inconsistencies with any other provision of
the GATS.
6.255. The fact that paragraph 2(a) covers violations of obligations under " any other provisions of
the Agreement" means that it could be invoked to justify inconsistencies with all of a Member's
obligations under the GATS. 609 These include, for example , a Member's most-favoured-nation
treatment obligation under Article II, market a ccess commitments under Article XVI, or national
treatment obligation under Article XVII. This indicates that, for example, measures which are of
the types listed in Article XVI:2, and which impose market access restrictions for prudential
reasons, could potentially fall within the scope of paragraph 2(a). The type of measure taken by a
Member (such as market access restrictions) and the provision of the GATS contravened by such
measure (such as Article XVI) are distinct, but rela ted, concepts. For this reason, we do not agree
with Panama that the permission granted by the in troductory clause of paragraph 2(a) to depart
from the obligations set out in "any provisions of" the GATS "has no implication on the type of
measures that may be inconsistent with any provision of the GATS and also covered by the
prudential exception".610
6.256. In this respect, we also note Panama's argument that "[m]arket access restrictions are
dealt with in Article XVI of the GATS, whereas domestic regulations are addressed predominantly
in Article VI of the GATS", and that "measures will either fall within the category of 'market access'
limitation or 'domestic regulation'". 611 According to Panama, "measures justifiable for prudential
reasons must take the form of 'domestic regula tions' … as opposed, for example, to 'market
access' barriers".612 In our view, however, by excluding ma rket access restrictions from the scope
of paragraph 2(a), Panama's interpretation effectively means that paragraph 2(a) cannot be
invoked to justify inconsistencies with Article XVI. Such exclusion is contrary to the introductory
clause of paragraph 2(a), which states "[n]otwithstanding any other provisions" of the GATS.613
6.257. With respect to the title of paragraph 2(a) of the Annex on Financial Services, "Domestic
Regulation", we note that the title forms part of the text of paragraph 2. In our view, the meaning
and function to be attributed to the title should be consistent with a proper interpretation of
paragraph 2(a) itself. In this respect, we note th at the Appellate Body has, in prior cases, referred
to the title of a provision to reinforce its interpretation of the text of that provision.
614 Neither the
Annex on Financial Services nor the GATS itself contains a definition of the term "domestic
regulation".
6.258. Nonetheless, the context provided by Ar ticle VI of the GATS, which is also entitled
"Domestic Regulation", may shed some light on the meaning and function of the title of
paragraph 2(a). The provisions of Article VI refer to a variety of measures, ranging from
"measures of general application affecting trade in services" in Article VI:1, "administrative
decisions affecting trade in services" in Article VI:2, and "authorization … for the supply of a
service" in Article VI:3, to licensing requirements, qualification requirements and procedures, and
technical standards in Articles VI:4 and VI:5(a), and "adequate procedures to verify the

608 Emphasis added.
609 In interpreting the phrase "[n]othing in this Agreement" in Article XX of the GATT 1994, the
Appellate Body in US – Gasoline considered that the exceptions listed in Article XX "thus relate to all of the
obligations under the General Agreement: the national treatment obligation and the most-favoured-nation
obligation, of course, but others as well." (Appellate Body Report, US – Gasoline, p. 24, DSR 1996:I, p. 22
(emphasis added))
610 Panama's appellant's submission, para. 6.23. (italics original; underlining added)
611 Panama's appellant's submission, para. 6.27. (emphasis added)
612 Panama's appellant's submission, para. 6.26.
613 Emphasis added.
614 E.g. in US – Carbon Steel, after reviewing the text of Articles 11.9 and 21.3 of the Agreement on
Subsidies and Countervailing Measures and the context contained in the eleven paragraphs of Article 11 of that
Agreement, the Appellate Body noted that the various paragraphs of Article 11 "set forth rules of a mainly
procedural and evidentiary nature" and that "[a]ll of them relate to the authorities' initiation and conduct of a
countervailing duty investigation." The Appellate Body noted that this understanding is consistent with "the
overall title of Article 11 – 'Initiation and Subsequent Investigation'." (Appellate Body Report, US – Carbon
Steel, para. 67 (emphasis original))

competence of professionals of any other Member" in Article VI:6. In our view, the broad scope of
measures potentially covered by Article VI indicate s that its title, "Domestic Regulation", should
also be construed in a broad sense and should no t serve the function of restricting the types of
measures falling under that provision. Similarly, the title of paragraph 2(a), like that of Article VI,
in our view, does not serve such a function.
6.259. Additionally, as an annex to the GATS, the Annex on Financial Services forms "an integral
part of [the GATS]" pursuant to Article XXIX thereo f, and, as a result, the definitions provided in
Article XXVIII of the GATS also provide useful co ntext for interpreting the Annex. In particular,
according to Article XXVIII(a), for the purpose of the GATS, the word "measure" means " any
measure by a Member, whether in the form of a law, regulation, rule, procedure, decision,
administrative action, or any other form".615 The use of the word "any" in the terms "any measure"
and "any other form" suggests that Article XXVIII(a) contains no a priori exclusion of the type or
form that a measure may take under the GATS, including under the Annex on Financial Services.
Thus, the text of paragraph 2(a) of the Annex on Financial Services, read in the light of the scope
and definition of the term "measure" in both paragraph 1(a) of the Annex and Article XXVIII(a) of
the GATS, indicates no restrictions on the type or form of a "measure" falling under
paragraph 2(a) of the Annex.
6.260. Turning to the object and purpose of the GATS, we note that both the third and fourth
recitals of the preamble of the GATS refer to Members' "national policy objectives". The third
recital refers to the desire "for the early achievement of progressively higher levels of liberalization
of trade in services through successive rounds of multilateral negotiations aimed at … securing an
overall balance of rights and obligations, while giving due respect to national policy objectives".
The fourth recital recognizes "the right of Member s to regulate, and to introduce new regulations,
on the supply of services within their territories in order to meet national policy objectives". The
"national policy objectives" referred to in the pr eamble could be pursued through various means,
including through measures taken pursuant to paragraph 2(a) of the Annex on Financial Services,
provided that the measures "affect[] the supply of financial services", are taken "for prudential
reasons", and are not "used as a means of av oiding" the Member's GATS commitments or
obligations. An interpretation limiting the types of measures that could potentially fall under
paragraph 2(a) would not be in consonance with the balance of rights and obligations that is
expressly recognized in the preamble of the GATS.
6.261. As our analysis above indicates
616, the meaning and function to be attributed to the title
should be consistent with a proper interpretation of paragraph 2(a) itself. An interpretation of
paragraph 2(a) on the basis of its text, read in the light of its context and the object and purpose
of the GATS, indicates that paragraph 2(a) does no t impose specific restrictions on the types of
"measures affecting the supply of financial services" falling within its scope, provided that they
also fulfil the other requirements of paragraph 2(a). We therefore disagree with Panama's
argument that the title of paragraph 2(a) "delimits the scope of this provision" or "defines the type
of measures that may be covered by the prudential exception".
617
6.262. On this basis, we consider that the Panel's interpretation, that paragraph 2(a) of the
Annex on Financial Services "covers all types of measures affecting the supply of financial services
within the meaning of paragraph 1(a)" of the Annex 618, comports with our interpretation of
paragraph 2(a). We note, however, that Panama alleges certain errors regarding discrete aspects
of the Panel's analysis in reaching this interpretation. We turn to address these alleged errors in
the next section.
6.4.4 Specific errors alleged by Panama in the Panel's interpretation of paragraph 2(a)
of the Annex on Financial Services
6.263. Panama claims on appeal that the Panel failed to identify correctly the interpretive issue
before it.
619 Specifically, Panama contends that the Panel appears to have erroneously believed
that it had to decide whether paragraph 2(a) of the Annex on Financial Services covers only

615 Emphasis added.
616 See supra, para. 6.257.
617 Panama's appellant's submission, para. 6.17.
618 Panama's appellant's submission, para. 6.33.a (quoting Panel Report, para. 7.847).
619 Panama's appellant's submission, para. 6.21. See also paras. 6.16. and 6.31.

measures that constitute a "domestic regulation" within the meaning of Ar ticle VI of the GATS. 620
In order to determine whether the Panel erred in identifying the interpretive issue before it in this
dispute, we consider it useful to begin by recalling the arguments that Panama submitted before
the Panel.
6.264. Panama argued before the Panel that, in order to invoke paragraph 2(a), "a responding
Member must prove that the measure in ques tion qualifies as a 'domestic regulation'."
621 To this
end, Panama considered that it must be prov ed that the measure is "a supplier's technical
standard, qualification or licence, such as those 'relating to, for instance, the quality of the service
supplied or the ability of the supplier to supply the service'". 622 In support of this contention,
Panama referred to the title of paragraph 2 of the Annex on Financial Services, "Domestic
Regulation", and submitted that this title info rms the interpretation of paragraph 2(a) "by
confining it to the type of measures envisaged in Article VI of the GATS, also entitled 'Domestic
Regulation'".
623 On the basis of these arguments, the Panel considered that Panama's arguments
confronted it with two separate issues:
[O]n the one hand, whether the reference to "domestic regulation" in the heading of
paragraph 2 of the Annex on Financial Services has the same significance as the
similar reference in the title of Article VI of the GATS; and, on the other, whether the
concept of "domestic regulation", referred to in Article VI of the GATS and also –
according to Panama – in paragraph 2 of the Annex on Financial Services, covers only
measures relating to qualifications, technical standards and licensing.
624
6.265. The Panel began with the second issue iden tified above. The Panel found that "[a] careful
reading of Article VI of the GATS reveals that measures relating to qualifications, technical
standards and licensing are mentioned only in paragraphs 4 and 5 of Article VI" 625, and that
Article VI refers to other "domestic regulations" in the other paragraphs of that Article. The Panel
therefore considered that "the universe of 'domestic regulation' is, for Article VI of the GATS itself,
broader than that relating to technical standards, licensing and qualifications." 626 The Panel's view
comports with our analysis above that Article VI of the GATS refers to a broad scope of measures,
which includes "measures of general application affecting trade in services" in Article VI:1, as well
as a variety of measures described in the other paragraphs of Article VI. 627 Indeed, despite what it
argued before the Panel 628, Panama states on appeal that it does not take issue with the Panel's
finding that the universe of domestic regulations is broader than the qualification procedures,
technical standards, and licensing requirements listed in Articles VI:4 and VI:5 of the GATS.629
6.266. The Panel proceeded to analyse the first issue identified in paragraph 6.264 above,
namely, "whether the reference to 'domestic regulation' in the heading of paragraph 2 of the
Annex on Financial Services has the same significance as the similar reference in the title of
Article VI of the GATS".630 The Panel rephrased this issue as "whether paragraph 2(a) of the Annex
on Financial Services covers only measures that should be regarded as 'domestic regulation' within
the meaning of Article VI of the GATS". 631 Referring to this statement of the Panel, Panama
contends that the Panel "appears to have erroneously believed that it had to decide whether the
prudential exception covers only 'domestic regulations' within the meaning of Article VI of the
GATS".
632
6.267. As indicated by our review of the argume nts that Panama submitted before the Panel, the
Panel identified the issue above in response to Panama's contention that the title of

620 Panama's appellant's submission, para. 6.21.
621 Panel Report, para. 7.828 (quoting Panama's second written submission to the Panel, para. 2.651).
622 Panel Report, para. 7.828 (quoting Panama's second written submission to the Panel, para. 2.651).
623 Panel Report, para. 7.828 (referring to Panama's second written submission to the Panel,
paras. 2.640 and 2.642-2.643).
624 Panel Report, para. 7.836.
625 Panel Report, para. 7.837.
627 See supra, para. 6.258.
628 See supra, para. 6.264.
629 Panama's appellant's submission, para. 6.19 (referring to Panel Report, para. 7.838).
630 Panel Report, para. 7.836.
631 Panel Report, para. 7.839.
632 Panama's appellant's submission, para. 6.21. (emphasis original)

paragraph 2(a) of the Annex on Financial Services, "Domestic Regulation", informs the scope of
paragraph 2(a) "by confining it to the type of measur es envisaged in Article VI of the GATS , also
entitled 'Domestic Regulation'". 633 While the Panel rephrased the issue before it, its
two formulations of the issue, as quoted in pa ragraph 6.266 above, concern the same substantive
point raised by Panama, that is, whether the scope of paragraph 2(a) of the Annex on Financial
Services is limited to the types of measures envi saged in Article VI of the GATS, given that both
provisions are entitled "Domestic Regulation". Thus, contrary to Panama's argument, the Panel did
not erroneously identify the issue before it; rather, the Panel tailored its analysis to the arguments
that Panama had raised concerning the scope of paragraph 2(a) of the Annex on Financial
Services.
6.268. Having identified the issue in the light of the arguments before it, the Panel went on to
analyse the text of paragraph 2(a). The Panel considered that, if it were to interpret
paragraph 2(a) as referring solely to measures that constitute a domestic regulation under
Article VI of the GATS, as Panama had argued, it could render certain parts of paragraph 2(a)
inutile. Specifically, the explicit reference to "[n]otwithstanding any other provisions of the
Agreement" in the introductory clause of paragraph 2(a) would be reduced merely to
"[n]otwithstanding Article VI of the Agreement".
634 In the same vein, the Panel expressed the
concern that Panama's interpretation "would drastically reduce the scope of the prudential
exception, since it would provide an escape valve only for those 'domestic regulations' which do
not conform with Article VI of the GATS and not for those measures which may be covered by
other provisions of the GATS (such as those rela ting to market access, national treatment or
MFN treatment)".
635
6.269. Panama contends that the Panel confused the scope of violations that paragraph 2(a) could
potentially justify, which is the subject of the introductory clause of paragraph 2(a), with the types
of measures that could fall under paragraph 2(a). 636 Further, noting the concern expressed by the
Panel that Panama's interpretation would "drastically reduce" the scope of paragraph 2(a) 637,
Panama submits that the Panel misunderstood its position with regard to Article VI of the GATS.
According to Panama, it did not argue that paragraph 2(a) covers only violations of Article VI ;
rather, its argument "was always that the prudential exception could cover inconsistencies with
any provision of the GATS, as long as the prudential measure taken was a 'domestic regulation'",
as opposed to, for example, a market access restriction.
638
6.270. We recall Panama's argument before the Panel that the title of paragraph 2(a) informs the
interpretation of this provision by confining it to the type of measures envisaged in Article VI of the
GATS, which is also entitled "Domestic Regulation".
639 Thus, it appears that Panama did not
maintain before the Panel that the measures falling within the scope of paragraph 2(a) must be in
violation of Article VI of the GATS. Rather, its position before the Panel was that such measures
must be measures of the type constituting "domes tic regulation" within the meaning of Article VI,
irrespective of which provision of the GATS it violates.
6.271. Nonetheless, we recall our analysis abov e that the type of measure taken by a Member
(such as market access restrictions) and the provision violated by such measure (such as
Article XVI) are distinct, but related, concepts.
640 We further recall Panama's argument that
paragraph 2(a) covers only measures that qualify as a "domestic regulation", as opposed to, for
example, a market access restriction. 641 As noted above 642, however, by excluding market access
restrictions from the scope of paragraph 2(a), Panama's interpretation effectively means that
paragraph 2(a) cannot be invoked to justify inconsistencies with Article XVI, contrary to the

633 Panel Report, para. 7.828 (referring to Panama's second written submission to the Panel,
paras. 2.640 and 2.642-2.643). (emphasis added)
634 Panel Report, para. 7.841.
635 Panel Report, para. 7.848.
636 Panama's appellant's submission, para. 6.22.
637 Panel Report, para. 7.848.
638 Panama's appellant's submission, para. 6.26 (referring to Panama's second written submission to the
Panel, para. 2.649).
639 Panel Report, para. 7.828 (referring to Panama's second written submission to the Panel,
paras. 2.640 and 2.642-2.643).
640 See supra, para. 6.255.
641 Panama's appellant's submission, para. 6.26. See also supra, paras. 6.256 and 6.269.
642 See supra, para. 6.256.

introductory clause of paragraph 2(a). Therefore, even if, as Panama alleges, the Panel may have
failed to appreciate Panama's position regarding Article VI, the Panel did not err in ultimately
rejecting Panama's interpretation of paragraph 2(a) of the Annex on Financial Services.
6.4.5 Conclusion
6.272. We have found that an interpretation of paragraph 2(a) of the Annex on Financial Services
on the basis of its text, read in the light of it s context and the object and purpose of the GATS,
supports the view that paragraph 2(a) does not impose specific restrictions on the types of
"measures affecting the supply of financial services" that fall within its scope, provided that such
measures fulfil all of the requirements of para graph 2(a). We have also reviewed, and disagreed
with, Panama's arguments concerning the alleged e rrors in the Panel's interpretation of paragraph
2(a). In the light of the above, we find that the Panel did not err in finding, in paragraph 7.847 of
its Report, that "paragraph 2(a) of the Annex on Financial Services covers all types of measures
affecting the supply of financial services within the meaning of paragraph 1(a)" of the Annex.
7 FINDINGS AND CONCLUSIONS
7.1. For the reasons set out in this Report, the Appellate Body:
a. with respect to Article II:1 of the GATS:
i. finds that the Panel erred in its analysis of the term "like services and service
suppliers", and therefore reverses the Panel's finding, in paragraph 7.186 of the
Panel Report, that services and service suppliers of cooperative countries are like
services and service suppliers of non-cooperative countries;
ii. finds that the Panel erred in finding, in paragraph 7.235 of the Panel Report, that an
assessment of "treatment no less favourable" in this dispute "has to take into
account regulatory aspects relating to services and service suppliers that may affect
the conditions of competition; in particular, whether Argentina is able to have access
to tax information on foreign suppliers"; and
iii. reverses the Panel's conclusion, in paragraphs 7.367 and 8.2.b of the Panel Report,
that measures 1 to 8 are inconsistent with Article II:1 of the GATS;
b. with respect to Article XVII of the GATS:
i. finds that the Panel erred in its analysis of the term "like services and service
suppliers", and therefore reverses the Panel's finding, in paragraph 7.489 of the
Panel Report, that Argentine services and service suppliers are like services and
service suppliers of non-cooperative countries;
ii. finds that the Panel erred in finding, in paragraph 7.494 of the Panel Report, that an
assessment of "treatment no less favourable" under Article XVII of the GATS in this
dispute "has to take into account regulatory aspects concerning the services and
service suppliers that might affect the conditions of competition … in particular … the
possibility for Argentina to access tax information on the relevant service suppliers";
and
iii. reverses the Panel's conclusion, in paragraphs 7.525 and 8.2.c of the Panel Report,
that measures 2, 3, and 4 are not inconsistent with Article XVII of the GATS;
c. with respect to the Panel's application of Article XIV(c) of the GATS to measures 1, 2, 3,
4, 7, and 8:
i. finds that Panama has not demonstrated that the Panel failed to focus its analysis on
the relevant aspects of the measures that gave rise to the findings of inconsistency
with Article II:1 of the GATS;

APPENDIX

The distinction between cooperative and non-cooperative countries is established in
Decree No. 589/2013. Article 1 of Decree No. 589/2013 is set out below in relevant part1:
Article 1 – ...
Countries, dominions, jurisdictions, territories, associate States or special tax regimes which have
signed with the Government of the ARGENTINE REPUBLIC an agreement on exchange of tax
information or a convention for the avoidance of international double taxation with a broad
information exchange clause shall be considered cooperative for tax transparency purposes,
provided that there is an effective exchange of information.
This status shall lapse in cases where the signed agreement or convention is denounced or
becomes inoperative for any reason of nullity or termination governing international agreements
or if it is found that there is a lack of effective exchange of information.
A country may also be recognized as cooperative for tax transparency purposes if the
government concerned has initiated the required negotiations with the Government of the
ARGENTINE REPUBLIC with a view to signing an agreement on exchange of tax information or a
convention for the avoidance of international doub le taxation with a broad information exchange
clause.
The agreements and conventions referred to in this Article shall as far as possible comply with
the international standards on transparency adop ted by the Global Forum on Transparency and
Exchange of Information for Tax Purposes so that by virtue of the application of their domestic
rules, the respective countries, dominions, jurisdictions, territories, associate States or special tax
regimes with which such agreements or conventions have been signed may not invoke banking,
stock market or any other form of secrecy in response to specific requests for information from
the ARGENTINE REPUBLIC.
The FEDERAL PUBLIC REVENUE ADMINISTRATION, an autonomous body within the MINISTRY OF
THE ECONOMY AND PUBLIC FINANCE, shall establish the criteria for determining whether or not
there is effective exchange of information and the necessary requirements for initiating
negotiations on the signing of the aforementioned agreements and conventions.
Measure 1 is applied pursuant to Article 93(c) of the Gains Tax Law, which is set out below in
relevant part2:
When beneficiaries abroad are paid amounts under the headings indicated below, a net gain shall
be presumed against any evidence to the contrary:
…
(c) Interest or remuneration paid on credits, loan s or placements of funds of any origin or type
obtained abroad:
1. Forty-three per cent (43%) when the borrower or loan or fund recipient is an entity governed
by Law No. 21.526 or if the transactions involve th e financing of imports of depreciable movables
– except automobiles – provided by the suppliers.
The presumption established in this section shall also apply if the borrower is one of the other
persons covered by Article 49 of this Law, a natural person or undivided estate, provided that the
creditor is a banking or financial entity based in a jurisdiction not considered to have no or low
taxes
3 in accordance with the rules in this Law and its implementing regulations or in a
jurisdiction that has signed an information exch ange agreement with the Argentine Republic and
also, by application of its domestic rules, may not involve banking, stock market or any other
form of secrecy in response to request for information from the competent tax authority. The
financial entities covered by this paragraph are those subject to supervision by the respective
central bank or equivalent institution.

1 Panel Report, para. 2.5 (quoting Decree No. 589/2013 (Panel Exhibits ARG-35 and PAN-3)).
2 Panel Report, para. 2.13 (quoting Gains Tax Law (Panel Exhibits ARG-42 and PAN-4)). (fn omitted)
3 "Countries with low or no taxes" should be understood to mean non-cooperative countries. (See fn 57
on p. 16 of this Report)

The same treatment shall apply if the interest or remuneration consists of debt bonds presented
in countries with which there is a reciprocal ag reement on protecting investment, provided that
their registration in the Argentine Republic, in accordance with the provisions of Law No. 23.576
and the amendments thereto, takes place within two (2) years following their issuance.
2. One hundred per cent (100%) when the borrower or loan or fund recipient is a person covered
by Article 49 of this Law, excluding the enti ties governed by Law No. 21.526 and amendments
thereto, a natural person or undivided estate, and the creditor does not meet the condition and
requirement specified in the second paragraph of the preceding section.
Measure 2 is applied pursuant to the unnumbered provision added after Article 18 of the Law on
Tax Procedure, which is set out below4:
In the case of funds from countries with low or no taxes – as indicated in Article 15 of the Gains
Tax Law (consolidated text of 1997 and amendments thereto) – irrespective of their nature or
purpose or the type of transaction involved, it shall be considered that such funds constitute
unjustified increases in wealth for the local borrower or recipient.
Unjustified increases in wealth referred to in the preceding paragraph amounting to over
TEN PER CENT (10%) in the form of income di sposed of or consumed as non-deductible
expenditure, represent net gains during the financ ial year in which they occur, for the purposes
of determining the gains tax and, where applicable, the basis for estimating the taxable
transactions omitted from the respective market ing year in terms of value added and internal
taxes.
Notwithstanding the provisions in the preced ing paragraphs, the Federal Public Revenue
Administration shall consider as justified such entries of funds as are conclusively proven by the
interested party to have originated from activities actually carried out by the taxpayer or by a
third party in those countries or from placements of duly declared funds.
Measure 3 is applied pursuant to Article 8, fifth paragraph, and Article 15, second paragraph, of
the Gains Tax Law, which are set out below5:
Article 8
Operations covered by this article that are conducted with natural or legal persons domiciled,
incorporated or located in [non-cooperative countries] shall not be considered as consistent with
normal arm's-length market practices or prices, in which case the rules of the aforementioned
Article 15 shall apply.
Article 15
Where stable institutions domiciled or located in the country or companies covered by
subparagraphs (a) and (b) and trust funds referred to in the subparagraph added after
subparagraph (d) of the first paragraph of Articl e 49, respectively, conduct transactions with
natural or legal persons domiciled, incorporated or located in [non-cooperative countries], as
referred to exhaustively in the regulations, such transactions shall not be considered to be in line
with normal arm's-length market practices or prices.
Measure 4 is applied pursuant to the last paragraph of Article 18 of the Gains Tax Law, which is
set out below6:
In the case of outlays by local companies which result in profits of Argentine source for foreign
persons or entities with which these companies are related or for persons or entities located,
incorporated, based or domiciled in jurisdictions with low or no taxes, the allocation to the tax
balance may only be made at the time of paymen t or in any of the cases covered by the sixth
paragraph of this Article or, in their absence, if one of the situations indicated arises within the
period allowed for submission of the sworn declaration that the respective outlay has been
accrued.

4 Panel Report, para. 2.17 (quoting Law on Tax Procedure (Panel Exhibits ARG-45 and PAN-9)).
(fn omitted)
5 Panel Report, para. 2.19 (quoting Gains Tax Law (Panel Exhibits ARG-42 and PAN-4)). (fn omitted)
6 Panel Report, para. 2.21 (quoting Gains Tax Law (Panel Exhibits ARG-42 and PAN-4)). (fn omitted)

Measure 5 is applied pursuant to points 18 and 20(f) of Annex I to SSN Resolution
No. 35.615/2011, as amended by Articles 1 and 2 of SSN Resolution No. 38.284/2014, which are
set out below7:
ARTICLE 1: Replace point 18 of ANNEX I to SSN Resolution No. 35.615/2011 by
the following:
"Branches of foreign companies must prove that the parent company:
(a) Has been incorporated and registered in countries, dominions, jurisdictions,
territories or associate States considered 'cooperative for tax transparency purposes',
in accordance with the provisions of Decree No. 589/2013 and supplementary
regulations.
If the parent company of the branch of the foreign company has not been
incorporated and registered in accordance with the terms of the preceding paragraph,
it must prove that it is subject to the control and supervision of a body which fulfils
functions similar to those of the NATI ONAL INSURANCE SUPERVISORY AUTHORITY,
and with which a memorandum of understanding on cooperation and exchange of
information has been signed.
(b) Has been incorporated and registered in countries, dominions, jurisdictions,
territories or associate States that cooperate in the global fight against money
laundering and terrorist financing offences in accordance with the criteria defined in
the public documents issued by the FINANCIAL ACTION TASK FORCE (FATF).
If the parent company of the branch of the foreign company has not been
incorporated and registered in accordance with the terms of the preceding paragraph,
the assessment of the request for authorization shall be subject to enhanced due
diligence, proportionate to the risks, and the counter-measures indicated in
Recommendation 19 of the FINANCIAL ACTION TASK FORCE (FATF) and the
Interpretive Note thereto may be applied."
ARTICLE 2 - Replace subparagraph (f) of point 20 of ANNEX I to SSN Resolution
No. 35.615 by the following:
"(f) Prove that they have been incorporated and registered in:
I. Countries, dominions, jurisdictions, territories or associate States considered
'cooperative for tax transparency purposes', in accordance with the provisions of
Decree No. 589/2013 and supplementary regulations.
If they have not been incorporated and regi stered in accordance with the terms of the
preceding paragraph, they must prove th at they are subject to the control and
supervision of a body which fulfils functions similar to those of the NATIONAL
INSURANCE SUPERVISORY AUTHORITY, and with which a memorandum of
understanding on cooperation and exchange of information has been signed.
II. They have been incorporated and register ed in countries, dominions, jurisdictions,
territories or associate States that cooperate in the global fight against money
laundering and terrorist financing offences in accordance with the criteria defined in
the public documents issued by the FINANCIAL ACTION TASK FORCE (FATF).
If they have not been incorporated and regi stered in accordance with the terms of the
preceding paragraph, the assessment of the request for authorization shall be subject
to enhanced due diligence, proportionate to the risks, and the counter-measures
indicated in Recommendation 19 of the FINANCIAL ACTION TASK FORCE (FATF) and
the Interpretive Note thereto may be applied."

7 Panel Report, para. 2.30 (quoting Articles 1 and 2 of SSN Resolution No. 38.284/2014 (Panel Exhibit
ARG-47), which, respectively, replace the text of points 18 and 20(f) of Annex I to SSN Resolution
No. 35.615/2011). See also SSN Resolution No. 35.615/2011 (Panel Exhibit ARG-27).

Measure 6 is applied pursuant to Title XI, Section III, Article 5 of the Rules of the National
Securities Commission, which is set out below8:
All the persons indicated in Article 1 above may only engage in transactions involving the public
offering of negotiable securities, forward contra cts, futures or options of any nature or other
financial instruments or products, when they ar e conducted or ordered by persons incorporated,
domiciled or residing in dominions, jurisdictions, territories or associate States included in the list
of cooperative countries set forth in Article 2, subparagraph (b), of Decree No. 589/2013.
If such persons are not included in the above-mentioned list and in their home jurisdiction have
the status of intermediaries registered with an entity under the control and supervision of a body
fulfilling functions similar to those of the Commission, such transactions shall go forward only if it
is certified that the aforementioned body in their home jurisdiction has signed a memorandum of
understanding on cooperation and exchange of information with the NATIONAL SECURITIES
COMMISSION.
Measure 7 is applied pursuant to Article 192 of the Resolution on Companies Incorporated
Abroad, which is set out below9:
The General Justice Inspectorate shall closely review compliance with the requirements of
Article 188, paragraph 3, subparagraphs (b) and (c) by companies which, without being offshore
or from offshore jurisdictions, have been set up, registered or incorporated in jurisdictions
considered as having low or no taxes and/or classified as not collaborating in the fight against
"money laundering" and transnational crime.
Accordingly:
1. Certification that the company is effectively engaged in economically significant business
activities in the place where it was set up, registered or incorporated and/or in third countries
shall be required, for which the company may have to provide:
(a) The relevant documents showing its latest approved accounting statements;
(b) A deed describing the main operations conducted during the financial year to which the
accounting statements correspond or during the immediately preceding year if the accounting
frequency is less, indicating the dates, parties, purpose and economic volume concerned, to be
signed by the competent authority in the country of origin or by an officer of the company
possessing duly accredited status and authority;
(c) The deeds of ownership of the non-current (fixed) assets or the contracts conferring operating
rights in such assets, if the document referred to in subparagraph (b) is considered insufficient;
(d) Any other document deemed necessary for the purposes indicated.
2. Information in addition to that indicated in subparagraph 3 of 188 may be required for the
purpose of obtaining personal particulars of the partners with a view to verifying their
background, including information on their economic and tax status.
If the jurisdictions referred to in this Article are "offshore" jurisdictions, Article 193 shall apply.
Measure 8 is applied pursuant to Section I of Communication "A" No. 4940 of the Argentine
Central Bank, which is set out below10:
Prior authorization from the Central Bank shall be required for access to the foreign exchange
market in order to purchase foreign currency for the repatriation of direct and portfolio
investments by non-residents covered by points 1.13 and 1.14 of Communication "A" 4662,
amended by Communication "A" 4692, respectively, if the beneficiary abroad is a natural or legal
person residing or incorporated or domiciled in dominions, jurisdictions, territories or associate
States included in the list in Decree No. 1.344/98 regulating the Gains Tax Law No. 20.628 and
amendments thereto.

ARG-33 and PAN-62)). (fn omitted)
10 Panel Report, para. 2.39 (quoting Communication "A" No. 4940 (Panel Exhibits ARG-31 and PAN-71)).