ARGENTINA - MEASURES RELATING TO TRADE IN GOODS AND SERVICES REPORT OF THE PANEL
Document: REPORT OF THE PANEL
Date: 30 September 2015
Document codes: WT/DS453/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
REPORT OF THE PANEL

LIST OF ANNEXES
ANNEX A
WORKING PROCEDURES OF THE PANEL
Contents Page
Annex A Working Procedures of the Panel A-1
ANNEX B
ARGUMENTS OF THE PARTIES
PANAMA
Contents Page
Annex B-1 First part of the executive su mmary of the arguments of Panama B-2
Annex B-2 Second part of the executive summary of the arguments of Panama B-16

ARGENTINA
Contents Page
Annex B-3 First part of the executive su mmary of the arguments of Argentina B-31
Annex B-4 Second part of the executive summary of the arguments of Argentina B-44
ANNEX C
ARGUMENTS OF THIRD PARTIES
Contents Page
Annex C-1 Executive summary of the arguments of the Kingdom of Saudi Arabia C-2
Annex C-2 Executive summary of the arguments of Brazil C-4
Annex C-3 Executive summary of the arguments of the United States C-6
Annex C-4 Executive summary of the arguments of the European Union C-11

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, and Corr.1, adopted

Argentina – Import Measures Appellate Body Reports, Argentina – Measures Affecting the Importation of
Goods, / / , adopted

Argentina – Import Measures Panel Reports, Argentina – Measures Affecting the Importation of Goods,
 and Add.1 / and Add.1 / and Add.1,
adopted 26 January 2015, as modified () and upheld
( / ) by Appellate Body Reports /

Argentina – Textiles and Apparel Appellate Body Report, Argentina – Measures Affecting Imports of Footwear,
Textiles, Apparel and Other Items, WT/DS56/AB/R and Corr.1, adopted
22 April 1998
Australia – Salmon Appellate Body Report, Australia – Measures Affecting Importation of
Salmon, WT/DS18/AB/R, adopted 6 November 1998
Brazil - Retreaded Tyres Appellate Body Report, Brazil – Measures Affecting Imports of Retreaded
Tyres, WT/DS332/AB/R, adopted 17 December 2007
Canada — Aircraft Appellate Body Report, Canada – Measures Affecting the Export of Civilian
Aircraft, WT/DS70/AB/R, adopted 20 August 1999
Canada — Autos Appellate Body Report, Canada – Certain Measures Affecting the Automotive
Industry, WT/DS139/AB/R, WT/DS142/AB/R, adopted 19 June 2000
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
Canada — Periodicals Appellate Body Report, Canada – Certain Measures Concerning Periodicals,
WT/DS31/AB/R, adopted 30 July 1997
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
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
Chile — Price Band System Appellate Body Report, Chile – Price Band System and Safeguard Measures
Relating to Certain Agricultural Products, WT/DS207/AB/R, adopted
23 October 2002
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
China — Electronic Payment
Services
Panel Report, China – Certain Measures Affecting Electronic Payment
Services, WT/DS413/R and Add.1, adopted 31 August 2012
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
China — Raw Materials Appellate Body Reports, China – Measures Related to the Exportation of
Various Raw Materials, WT/DS394/AB/R / WT/DS395/AB/R /
WT/DS398/AB/R, adopted 22 February 2012

Short title Full case title and citation
China – Raw Materials Panel Reports, China – Measures Related to the Exportation of Various Raw
Materials, WT/DS394/R, Add.1 and Corr.1 / WT/DS395/R, Add.1 and Corr.1
/ WT/DS398/R, Add.1 and Corr.1, adopted 22 February 2012, as modified by
Appellate Body Reports WT/DS394/AB/R / WT/DS395/AB/R /

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
Dominican Republic – Import
and Sale of Cigarettes
Appellate Body Report, Dominican Republic – Measures Affecting the
Importation and Internal Sale of Cigarettes, WT/DS302/AB/R, adopted
19 May 2005
Dominican Republic – Import
and Sale of Cigarettes
Panel Report, Dominican Republic – Measures Affecting the Importation and
Internal Sale of Cigarettes, WT/DS302/R, adopted 19 May 2005, as modified
by Appellate Body Report WT/DS302/AB/R
EC — Asbestos Appellate Body Report, European Communities – Measures Affecting
Asbestos and Asbestos-Containing Products, WT/DS135/AB/R, adopted
5 April 2001
EC — Asbestos Panel Report, European Communities – Measures Affecting Asbestos and
Asbestos-Containing Products, WT/DS135/R and Add.1, adopted
5 April 2001, as modified by Appellate Body Report WT/DS135/AB/R
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
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

EC – Bananas III (US) Panel Report, European Communities – Regime for the Importation, Sale
and Distribution of Bananas, Complaint by the United States,
WT/DS27/R/USA, adopted 25 September 1997, as modified by Appellate
Body Report WT/DS27/AB/R
EC — Bananas III
(Guatemala and Honduras)
Panel Report, European Communities – Regime for the Importation, Sale
and Distribution of Bananas, Complaint by Guatemala and Honduras,
WT/DS27/R/GTM, WT/DS27/R/HND, adopted 25 September 1997, as
modified by Appellate Body Report WT/DS27/AB/R
EC — Bananas III (Mexico) Panel Report, European Communities – Regime for the Importation, Sale
and Distribution of Bananas, Complaint by Mexico, WT/DS27/R/MEX,
adopted 25 September 1997, as modified by Appellate Body Report

EC — Commercial Vessels Panel Report, European Communities – Measures Affecting Trade in
Commercial Vessels, WT/DS301/R, adopted 20 June 2005
EC — Seal Products Appellate Body Reports, European Communities – Measures Prohibiting the
Importation and Marketing of Seal Products, WT/DS400/AB/R /

EC — Tariff Preferences Panel Report, European Communities – Conditions for the Granting of Tariff
Preferences to Developing Countries, WT/DS246/R, adopted 20 April 2004,
as modified by Appellate Body Report WT/DS246/AB/R
Guatemala – Cement I Appellate Body Report, Guatemala – Anti-Dumping Investigation Regarding
Portland Cement from Mexico, WT/DS60/AB/R, adopted 25 November 1998
India – Autos Panel Report, India – Measures Affecting the Automotive Sector,
WT/DS146/R, WT/DS175/R, and Corr.1, adopted 5 April 2002
India – Quantitative Restrictions Panel Report, India – Quantitative Restrictions on Imports of Agricultural,
Textile and Industrial Products, WT/DS90/R, adopted 22 September 1999,
upheld by Appellate Body Report WT/DS90/AB/R
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

Short title Full case title and citation
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
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
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
Mexico – Telecoms Panel Report, Mexico – Measures Affecting Telecommunications Services,
WT/DS204/R, adopted 1 June 2004
Thailand – Cigarettes
(Philippines)
Appellate Body Report, Thailand – Customs and Fiscal Measures on
Cigarettes from the Philippines, WT/DS371/AB/R, adopted 15 July 2011
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
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
US – Clove Cigarettes Panel Report, United States – Measures Affecting the Production and Sale of
Clove Cigarettes, WT/DS406/R, adopted 24 April 2012, as modified by
Appellate Body Report WT/DS406/AB/R
US – Continued Suspension Appellate Body Report, United States – Continued Suspension of Obligations
in the EC – Hormones Dispute, WT/DS320/AB/R, adopted
14 November 2008
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
US – Countervailing and
Anti-Dumping Measures (China)
Appellate Body Report, United States – Countervailing and Anti-Dumping
Measures on Certain Products from China, WT/DS449/AB/R and Corr.1,
adopted 22 July 2014
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
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
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
US – Gasoline Appellate Body Report, United States – Standards for Reformulated and
Conventional Gasoline, WT/DS2/AB/R, adopted 20 May 1996
US – Offset Act
(Byrd Amendment)
Appellate Body Report, United States – Continued Dumping and Subsidy
Offset Act of 2000, WT/DS217/AB/R, WT/DS234/AB/R, adopted
27 January 2003
US — Poultry (China) Panel Report, United States – Certain Measures Affecting Imports of Poultry
from China, WT/DS392/R, adopted 25 October 2010
US — Section 211 Appropriations
Act
Appellate Body Report, United States – Section 211 Omnibus Appropriations
Act of 1998, WT/DS176/AB/R, adopted 1 February 2002
US — Shrimp Appellate Body Report, United States – Import Prohibition of Certain Shrimp
and Shrimp Products, WT/DS58/AB/R, adopted 6 November 1998
US - Shrimp (Article 21.5 -
Malaysia)
Appellate Body Report, United States – Import Prohibition of Certain Shrimp
and Shrimp Products – Recourse to Article 21.5 of the DSU by Malaysia,
WT/DS58/AB/RW, adopted 21 November 2001
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

Short title Full case title and citation
US – Softwood Lumber IV Appellate Body Report, United States – Final Countervailing Duty
Determination with Respect to Certain Softwood Lumber from Canada,
WT/DS257/AB/R, adopted 17 February 2004
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
US — Upland Cotton Panel Report, United States – Subsidies on Upland Cotton, WT/DS267/R,
Add.1 to Add.3 and Corr.1, adopted 21 March 2005, as modified by
Appellate Body Report WT/DS267/AB/R
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
US – Zeroing (EC)
(Article 21.5 – EC)
Appellate Body Report, United States – Laws, Regulations and Methodology
for Calculating Dumping Margins ("Zeroing") – Recourse to Article 21.5 of
the DSU by the European Communities, WT/DS294/AB/RW and Corr.1,
adopted 11 June 2009
US – 1916 Act Appellate Body Report, United States – Anti-Dumping Act of 1916,
WT/DS136/AB/R, WT/DS162/AB/R, adopted 26 September 2000

EXHIBITS REFERRED TO IN THIS REPORT
Exhibit Short title Full title
ARG-5 OECD, Harmful Tax
Competition – An Emerging
Global Issue (1998)
OECD, Harmful Tax Competition – An Emerging Global
Issue, 1998
ARG-6 OECD, Towards Global Tax
Co-operation (2000)
OECD, Towards Global Tax Co-operation. Report to the
2000 Ministerial Council Meeting and Recommendations
by the Committee on Fiscal Affairs. Progress in
Identifying and Eliminating Harmful Tax Practices
ARG-7 OECD, 2001 Report OECD, The OECD's Project on Harmful Tax Practices:
The 2001 Progress Report
ARG-8 Note from the Minister of the
Economy and Finance of
Panama to the
Secretary-General of the OECD
(2002)
Note from the Minister of the Economy and Finance of
Panama to the Secretary-General of the OECD,
15 April 2002
ARG-9 OECD, 2004 Report OECD, The OECD's Project on Harmful Tax Practices:
The 2004 Progress Report
ARG-10 Global Forum, A Process for
Achieving a Global Level
Playing Field (2004)
OECD, A Process for Achieving a Global Level Playing
Field, Global Forum on Taxation, Berlin, 3-4 June 2004
ARG-14 G-20, Declaration, Summit on
Financial Markets and the
World Economy (2008)
G-20, Declaration, Summit on Financial Markets and
the World Economy, 15 November 2008
ARG-15 G-20, Leader's Statement
(2009)
G-20, Leader's Statement, The Pittsburgh Summit,
24-27 September 2009
ARG-17 OECD, Global Forum, Moving
Forward on the Global
Standards of Transparency and
Exchange of Information for
Tax Purposes (2009)
OECD, Global Forum, Moving Forward on the Global
Standards of Transparency and Exchange of
Information for Tax Purposes, Mexico,
1-2 September 2009
ARG-19 G-20, Cannes Summit Final
Declaration: Building our
Common Future (2011)
G-20, Cannes Summit Final Declaration: Building our
Common Future: Renewed Collective Action for the
Benefit of All, 2011
ARG-20 G-20, Leaders Declaration
(2012)
G-20, Leaders Declaration, Los Cabos, Mexico, 2012
ARG-21 Action Plan on Base Erosion
and Profit Shifting (2013)
OECD, Action Plan on Base Erosion and Profit Shifting,
2013
ARG-22 OECD, Addressing Base Erosion
and Profit Shifting (2013)
OECD, Addressing Base Erosion and Profit Shifting
(BEPS), 2013
ARG-24 OECD, Behind the Corporate
Veil – Using Corporate Entities
for Illicit Purposes (2001)
OECD, Behind the Corporate Veil – Using Corporate
Entities for Illicit Purposes, 2001
ARG-25 FATF, The FATF
Recommendations (2012)
FATF, International Standards on Combating Money
Laundering and the Financing of Terrorism &
Proliferation, The FATF Recommendations,
February 2012
ARG-26 GAFISUD, Recomendaciones
del GAFI (2012)
GAFI, February 2012
ARG-32 Law on concealment and
laundering of money of criminal
origin
Law No. 25.246 of 5 May 2000 on concealment and
laundering of money of criminal origin

Exhibit Short title Full title
ARG-36 Global Forum, Tax
Transparency 2013
Global Forum on Transparency and Exchange of
Information for Tax Purposes, Tax Transparency 2013:
Report on Progress, 2013
ARG-40 Global Forum, Terms of
Reference (2010)
OECD, Global Forum on Transparency and Exchange of
Information for Tax Purposes, Terms of Reference to
Monitor and Review Progress Towards Transparency
and Exchange of Information for Tax Purposes, 2010
ARG-41 OECD, Tax Co-operation 2009
– Towards a level playing field
OECD, Tax Co-operation 2009 – Towards a level playing
field - 2009 Assessment by the Global Forum on
Transparency and Exchange of Information
ARG-44 AFIP, Offshore companies –
Fraudulent manœuvres and
harmful tax planning
Federal Administration of Public Revenue (AFIP),
Sociedades Off-shore – Maniobras fraudulentas y
planificación fiscal nociva (Offshore companies –
Fraudulent manœuvres and harmful tax planning),
2013
ARG-47 SSN Resolution
No. 38.284/2014
Resolution No. 38.284 of the National Insurance
Supervisory Authority (SSN) of 21 March 2014
ARG-64 IGJ Resolution No. 1/2014 General Resolution No. 1/2014 of the General Justice
Inspectorate (IGJ) of 8 April 2014
ARG-71 Communication "C" No. 65366 Communication "C" No. 65366 of the Central Bank of
the Argentine Republic of 26 February 2014
ARG-75 Communication "A" No. 5237 Communication "A" No. 5237 of the Central Bank of the
Argentine Republic of 28 October 2011
ARG-85 G-20 Statement on
Transparency and Exchange of
Information for Tax Purposes
(2004)
G-20 Statement on Transparency and Exchange of
Information for Tax Purposes, 21 November 2004
ARG-87 G-20 Declaration, Saint
Petersburg Summit (2013)
G-20 Declaration, Saint Petersburg Summit,
5-6 September 2013
ARG-88 ASSAL, General solvency
criteria – Reinsurance
operations
Latin American Association of Insurance Supervisors
(ASSAL), Criterios generales de solvencia –
Operaciones de reaseguro (General solvency criteria –
Reinsurance operations), August 1999
ARG-90 G-20 Toronto Summit
Declaration (2010)
G-20 Toronto Summit Declaration, 26-27 June 2010
ARG-94 ITIO, Leveling the playing field
(2005)
International Trade and Investment Organization
(ITIO), Leveling the playing field, OECD Global Tax
Forum, Melbourne, 15-16 November 2005
ARG-114 Communiqué, Meeting of
Finance Ministers and Central
Bank Governors (2009)
Communiqué, Meeting of Finance Ministers and Central
Bank Governors, United Kingdom, 2009
ARG-128 Meeting of G-20 Finance
Ministers and Central Bank
Governors (2014)
Meeting of G-20 Finance Ministers and Central Bank
Governors, Cairns, 20-21 September 2014
ARG-135 SSN Resolution
No. 38.708/2014
Resolution No. 38.708 of the National Insurance
Supervisory Authority (SSN) and the Annex thereto:
General Regulations for Insurance Activities (RGAA), of
6 November 2014
ARG-140 IAIS, Systemic Risk and the
Insurance Sector (2009)
International Association of Insurance Supervisors
(IAIS), Systemic Risk and the Insurance Sector,
25 October 2009
PAN-1 RIG (Implementing Regulations
for the Gains Tax Law)
Decree No. 1344 of 19 November 1998 establishing the
Implementing Regulations for the Gains Tax Law
PAN-19 Argentina - Schedule of
Specific Commitments
Argentina - Schedule of Specific Commitments,
GATS/SC/4, 15 April 1994

Exhibit Short title Full title
PAN-35 Mapfre Foundation, An
Introduction to Reinsurance
MAPFRE Foundation, An Introduction to Reinsurance,
https://www.mapfre.com/documentacion/publico/i18n/
catalogo_imagenes/grupo.cmd?path=1074274
(http://www.mapfre.com/documentacion/publico/i18n/
catalogo_imagenes/grupo.cmd?path=1062314)
PAN-47 Note by the WTO Secretariat
on economic needs tests
(2001)
Note by the WTO Secretariat on economic needs tests,
S/CSS/W/118, 30 November 2001
PAN-83 Constitutional Principles on Tax
Matters
Principios de Derecho Constitucional Argentino en
Materia Tributaria (Principles of Argentine Constitutional
Law on Tax Matters)
PAN-3 / ARG-35 Decree No. 589/2013 Decree No. 589 of the Federal Administration of Public
Revenue (AFIP) of 27 May 2013
PAN-3 / ARG-37 AFIP Resolution
No. 3.576/2013
General Resolution No. 3.576 of the Federal
Administration of Public Revenue (AFIP) of
27 December 2013
PAN-4 / ARG-42 Gains Tax Law (LIG) Law No. 20.628 on Gains Tax of 29 December 1973
PAN-9 / ARG-45 Law on Tax Procedure (LPT) Law No. 11.683 on Tax Procedure of 13 July 1998
PAN-34 / ARG-43 Law on Commercial Companies
(LSC)
Law No. 19.550 on Commercial Companies of
3 April 1972
PAN-36 / ARG-27 SSN Resolution
No. 35.615/2011
Resolution No. 35.615 of the National Insurance
Supervisory Authority (SSN) of 11 February 2011
PAN-40 / ARG-48 SSN Resolution
No. 35.794/2011
Resolution No. 35.794 of the National Insurance
Supervisory Authority (SSN) of 19 May 2011
PAN-45 / ARG-39 2001 Guidelines Guidelines for the Scheduling of Specific Commitments
under the General Agreement on Trade in Services
(GATS) - Adopted by the Council for Trade in Services
on 23 March 2001, S/L/92
PAN-46 / ARG-79 1993 Guidelines Scheduling of Initial Commitments in Trade in Services:
Explanatory Note, MTN.GNS/W/164, 3 September 1993
PAN-48 / ARG-49 Capital Market Law Law No. 26.831 on the Capital Market of
27 December 2012
PAN-58 / ARG-50 CNV Rules 2013 Rules of the National Securities Commission, New Text
2013 (Title XI), approved by means of General
Resolution No. 622
PAN-62 / ARG-33 IGJ Resolution No. 7/2005 General Resolution No. 7 of the General Justice
Inspectorate (IGJ) of 25 August 2005 (Book III,
Title III)
PAN-67 / ARG-69 Communication "A" No. 4662 Communication "A" No. 4662 of the Central Bank of the
Argentine Republic of 11 May 2007
PAN-68 / ARG-70 Communication "A" No. 4692 Communic ation "A" No. 4692 of the Central Bank of the
Argentine Republic of 31 July 2007
PAN-71 / ARG-31 Communication "A" No. 4940 Communication "A" No. 4940 of the Central Bank of the
Argentine Republic of 12 May 2009

ABBREVIATIONS USED IN THIS REPORT
Abbreviation Description
AEOI Automatic Exchange of Information
AFIP Federal Public Revenue Administration
AML/CFT Anti-money laundering/Combating the financing of terrorism
ASSAL Association of Latin American Insurance Supervisors
BCRA Central Bank of the Argentine Republic
BEPS Base Erosion and Profit Shifting
CDD Customer due diligence
CNV National Securities Commission
Cooperative country Country cooperatin g for tax transparency purposes
DSB Dispute Settlement Body
DSU Understanding on Rules and Procedures Governing the Settlement of Disputes
EOIR Exchange of information on request
FATF Financial Action Task Force
FSRB FATF-style regional body
G-20 Group of Twenty
GAFILAT Financial Action Task Force of Latin America
GATS General Agreement on Trade in Services
GATT 1994 General Agreement on Tariffs and Trade 1994
Global Forum Global Forum on Transparency an d Exchange of Information for Tax Purposes
IAIS International Association of Insurance Supervisors
ICJ International Court of Justice
IGJ General Justice Inspectorate
IMF International Monetary Fund
IOSCO Organization of Securities Commissions
LIG Gains Tax Law
LPT Law on Tax Procedure
LSC Law on Commercial Companies
MFN Most Favoured Nation
MULC Single Free Foreign Exchange Market
Non-cooperative country Country not cooperating for tax transparency purposes
N.T. 2013 New Text of 2013 CNV Rules
OECD Organisation for Economic Co-operation and Development
PRP Peer review process
RAE Real Academia Española [Spanish Royal Academy]
RIG Regulation to the Gains Tax Law
SSN National Insurance Supervisory Authority
TBT Agreement Agreement on Technical Barriers to Trade
WTO World Trade Organization
Vienna Convention Vienna Convention on the Law of Treaties

1 INTRODUCTION
1.1 Complaint by Panama
1.1. On 12 December 2012, Panama requested consultations with Argentina pursuant to Article 4
of the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU),
Article XXII of the General Agreement on Tariffs and Trade 1994 (GATT 1994) and Article XXII of
the General Agreement on Trade in Services (GATS) with respect to the measures and claims set
out below.
1
1.2. Consultations were held in Geneva on 5 February 2013 but failed to resolve the dispute.2
1.2 Panel establishment and composition
1.3. On 13 May 2013, Panama requested the esta blishment of a panel pursuant to Article 6
of the DSU, with standard terms of reference.
3 At its meeting on 25 June 2013,
the Dispute Settlement Body (DSB) established a panel pursuant to the request of Panama in
document WT/DS453/4, in accordance with Article 6 of the DSU.4
1.4. The Panel's terms of reference are the following:
To examine, in the light of the relevant pr ovisions of the covered agreements cited by
the parties to the dispute, the matter refe rred to the DSB by Panama in document
WT/DS453/4 and to make such findings as will assist the DSB in making the
recommendations or in giving the rulings provided for in those agreements.5
1.5. On 30 October 2013, Panama requested the Director-General to determine the composition
of the Panel, pursuant to Article 8.7 of the DSU. On 11 November 2013, the Director-General
accordingly composed the Panel as follows:
Chairperson: Mr Pierre Pettigrew
Members: Mr Gonzalo de las Casas
Mr Rodrigo Valenzuela
1.6. Australia, Brazil, China, Ecuador, the Eu ropean Union, Guatemala, Honduras, India, Oman,
the Kingdom of Saudi Arabia, Singapore, and the United States notified their interest in
participating in the Panel proceedings as third parties.
6
1.3 Panel proceedings
1.7. On 12 December 2013, after consultation with the parties, the Panel adopted its Working
Procedures7 and timetable, which were subsequently revised on 24 March and 23 May 2014,
respectively.
1.8. The Panel held a first substantive meetin g with the parties on 23 and 24 September 2014.
A session with the third parties took place on 24 September 2014. The Panel held a second
substantive meeting with the parties on 27 and 28 January 2015. On 27 March 2015, the Panel
issued the descriptive part of its Report to the pa rties. The Panel issued its Interim Report to the
parties on 22 May 2015. The Panel issued its Final Report to the parties on 30 June 2015.

1 Panama's request for consultations (WT/DS453/1).
2 Panama's request for the establishment of a panel (WT/DS453/4).
3 Panama's request for the establishment of a panel.
4 See the Minutes of the Meeting of the Dispute Settlement Body held in the Centre William Rappard on
25 June 2013 (WT/DSB/M/333).
5 Constitution of the Panel established at the request of Panama (WT/DS453/5), para. 2.
6 Constitution of the Panel established at the request of Panama, para. 5.
7 See the Working Procedures of the Panel in Annex A.

2 FACTUAL ASPECTS
2.1 Introduction
2.1. This dispute concerns eight financial, taxa tion, foreign exchange and registration measures
imposed by Argentina, mostly
8 on services and service suppliers from countries which Argentina
terms "countries not cooperating for tax transparency purposes" 9 (hereinafter, non-cooperative
countries).10 The classification of a country as a "country cooperating for tax transparency
purposes" (hereinafter, cooperative country) is provided for in Decree No. 589/2013.11
2.2. In this section of the Report, the Panel will begin by describing Decree No. 589/2013, which
is the common denominator for the eight measures challenged by Panama. The eight measures at
issue will then be described, together with their broader factual context, which includes the
relevant Argentine legislation applicable to cooperative countries, the tax transparency standards
of the Global Forum on Transparency and Exchange of Information for Tax Purposes (hereinafter,
the Global Forum) and the recommendations of the Financial Action Task Force (FATF).
2.3. Where the parties disagree on any factual i ssue that needs to be resolved, the Panel will
address it in its findings.
2.2 Decree No. 589/2013
2.4. Decree No. 589/2013 is the key element of the eight measures challenged by Panama
inasmuch as they all refer to services and service suppliers
12 of countries not classified as
cooperative under the said Decree.13
2.5. Decree No. 589/2013, which is not one of the measures at issue, lays down the requirements
for Argentina to grant a country, dominion, jurisdiction, territory, associate State or special tax
regime the status of cooperative country. 14 Article 1 of the Decree stipulates as follows in
relevant part:
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

8 Panama has claimed that two of the eight measures at issue (measures 2 and 3 described below) also
affect trade in goods.
9 The Panel notes that, in its arguments, Panama refers to "beneficiary countries" and "excluded
countries" when referring to what Argentina calls "cooperative countries" and "non-cooperative countries",
respectively. The Panel has, however, decided to use the terminology employed in Decree No. 589/2013.
10 Certain requirements in measure 5 (requirements relating to reinsurance services) apply to all foreign
countries, whether cooperative or non-cooperative.
11 Decree No. 589 of the Federal Public Revenue Administration of 27 May 2013 (Decree No. 589/2013),
(Exhibits PAN-3 / ARG-35).
12 See footnote 8 above.
13 See footnote 10 above.
14 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'". See Article 1 of Decree No. 589/2013, (Exhibits PAN-3 / ARG-35).

information or a convention for the avoidance of international double 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 adopted 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 REVENU E 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.
2.6. Article 2 of Decree No. 589/2013 empowers the Federal Public Revenue Administration (AFIP)
"to draw up the list of countries, dominions, jurisdictions, territories, associate States and special
tax regimes considered cooperative for tax transparency purposes, to publish it on its website
(http://www.afip.gob.ar) and to keep the publication up to date in accordance with the provisions
of this Decree".
15 According to Argentina, this list is updated annually at the beginning of the fiscal
year.16
2.7. At the time of issuing this Report to the pa rties, the list of countries considered by Argentina
to be cooperative continues to be the one published on the AFIP website on 1 January 2014
pursuant to AFIP's General Resolution No. 3.576/2013
17 and comprises the following countries:
Albania, Andorra, Angola, Anguilla, Armenia, Arub a, Australia, Austria, Azerbaijan, Bahamas,
Belgium, Belize, Bermuda, Bolivia, Brazil, British Virgin Islands, Canada, Cayman Islands, Chile,
China, Colombia, Costa Rica, Croatia, Cuba, Curaçao, Czech Republic, Denmark, Dominican
Republic, Ecuador, El Salvador, Estonia, Faroe Islands, Finland, France, Georgia, Germany, Ghana,
Greece, Greenland, Guatemala, Guernsey, Haiti, Holy See, Honduras, Hungary, Iceland, India,
Indonesia, Ireland, Isle of Man, Israel, Italy, Ja maica, Japan, Jersey, Kazakhstan, Kenya, Republic
of Korea, Kuwait, Latvia, Liechtenstein, Lit huania, Luxembourg, Macao, Macedonia, Malta,
Mauritius, Mexico, Moldova, Monaco, Monten egro, Montserrat, Morocco, Netherlands, New
Zealand, Nicaragua, Nigeria, Norway, Panama, Paraguay, Peru, Philippines, Poland, Portugal,
Qatar, Romania, Russia, San Marino, Saudi Arabia , Singapore, Sint Maarten, Slovakia, Slovenia,
South Africa, Spain, Sweden, Switzerland, T unisia, Turks and Caicos Islands, Turkey,
Turkmenistan, Ukraine, United Arab Emirates , United Kingdom, United States, Uruguay,
Venezuela, and Viet Nam.
2.8. Pursuant to Article 1 of AFIP Resolution No. 3.576/2013, these cooperative countries are
classified into three categories: (a) cooperative countries which have signed a double taxation
convention or an information exchange agreement, with a positive assessment of effective
exchange of information; (b) cooperative countries with which a double taxation convention or
information exchange agreement has been signed but it has not been possible to assess effective
exchange; and (c) cooperative countries with which the process of negotiating or ratifying a double
taxation convention or information exchange agreement has been initiated.
18

15 Article 2(b) of Decree No. 589/2013, (Exhibits PAN-3 / ARG-35).
16 Argentina's response to Panel questions No. 9(b), para. 14, and No. 10(b)(ii) and opening statement
at the second meeting of the Panel, para. 41. At the second substantive meeting, Argentina stated that
"[i]n view of Panama's current position of not negotiating an agreement with Argentina, the AFIP is reviewing
whether to maintain this country's [Panama's] status as a country cooperating for tax transparency purposes.
This review is part of the ongoing adjustment to include and remove countries from the list of cooperative
countries in this year's update, in accordance with the criteria laid down in the legislation". See Argentina's
opening statement at the second meeting of the Panel, paras. 42 and 43.
17 General Resolution No. 3.576 of the Federal Public Revenue Administration (AFIP Resolution
No. 3.576/2013), of 27 December 2013, (Exhibits PAN-3 / ARG-37).
18 AFIP Resolution No. 3.576/2013. (Exhibits PAN-3 / ARG-37).

2.3 The measures at issue
2.3.1 Introduction
2.9. Panama challenges the following eight measures in this dispute
19:
Measure No. Description
1 Tax treatment in the collection of gains tax on certain transactions involving non-cooperative
countries (hereinafter withholding tax on payments of interest or remuneration)
2 Tax treatment imposed on entry of funds from non-cooperative countries (hereinafter
presumption of unjustified increase in wealth)
3 Valuation of transactions with persons from non-cooperative countries
(hereinafter transaction valuation based on transfer prices)
4 Criteria for applying deductions (hereinafter payment received rule20 for the allocation of
expenditure)
5 Measures affecting trade in reinsurance and retrocession services21
(hereinafter requirements relating to reinsurance services)
6 Measures affecting trade in financial instruments (hereinafter requirements for access to the
Argentine capital market)
7 Requirements for the registration of companies, branches and shareholders of certain foreign
service suppliers (hereinafter requirements for the registration of branches)
8 Measures affecting the repatriation of investments (hereinafter foreign exchange authorization
requirement)

2.10. The eight measures challenged by Panama and described below reflect the distinction
between cooperative and non-cooperative co untries established by Decree No. 589/2013.
22 For
example, the withholding tax on payments of interest or remuneration (measure 1), the
presumption of unjustified increase in wealth (measure 2), transaction valuation based on transfer
prices (measure 3) and the payment received rule for the allocation of expenditure (measure 4)
contain explicit references to "jurisdictions wi th low or no taxes", a reference that has been
replaced by "jurisdictions not considered 'cooperative for tax transparency purposes'", pursuant to
Decree No. 589/2013. In the case of measure 2, whose legal basis is the unnumbered article
following Article 18 of the Law on Tax Procedure (LPT), there is a specific link to the Gains Tax Law
(LIG) in the text of this provision.
2.11. The requirements relating to reinsurance services (measure 5) and access to the Argentine
capital market (measure 6) contain a specific reference to Decree No. 589/2013. As regards the
requirements for the registration of branches (measure 7), Article 192 of IGJ Resolution
No. 7/2005 of the General Justice Inspectorate (IGJ) refers to "jurisdictions considered to have low
or no taxes". The wording of this Article was up dated by Article 1 of IGJ Resolution No. 1/2014,
which introduces the expression "countries, dominions, jurisdictions, territories, associate States
and special tax regimes considered non-cooperative for tax transparency purposes".
23 Lastly, the
foreign exchange authorization requirement (m easure 8) in Communication "A" 4940 of the
Central Bank of the Argentine Republic (BCRA) refe rs to "dominions, jurisdictions, territories or
associate States included in the list in Decree No. 1.344/98 regulating the Gains Tax Law

19 Panama's request for the establishment of panel.
20 Argentina also refers to this rule as the "payment received rule". See Argentina's first written
submission, Explanatory Annex No. 1, para. 109. Panama, for its part, refers to the measure in abbreviated
form as the rule on "deduction of costs at the time of payment". See Panama's second written submission,
paras. 2.498, 2.524, 2.525-2.527, 2.533, 2.535, 2.540, 2.542, 2.544 and 2.571.
21 The parties disagree on the inclusion of retrocession services within the scope of measure 5. The
Panel will address this matter in its findings.
22 We recall that certain requirements in measure 5 (requirements relating to reinsurance services)
apply to all foreign countries, whether cooperative or non-cooperative. See footnote 10 above.
23 General Resolution No. 1/2014 of the General Justice Inspectorate, of 8 April 2014 (IGJ Resolution
No. 1/2014), (Exhibit ARG-64).

No. 20.628 and amendments thereto". This expressi on was replaced by means of Communication
"C" 65366 of the BCRA, which introduces the terminology specific to Decree No. 589/2013.24
2.12. Below we shall examine the eight measures at issue.
2.3.2 Measure 1: Withholding tax on payments of interest or remuneration
2.13. Measure 1 consists of a legal presumption that payments made to creditors
25 located in
non-cooperative countries as consideration for the granting of credits or loans or the placement of
funds abroad represent a net gain of 100% for the purpose of determining the tax base for gains
tax. Argentina applies this measure pursuant to Article 93(c) of the LIG
26, which stipulates as
follows in relevant part:
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, loans 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 the 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
27 in accordance with the rules in this Law and
its implementing regulations or in a jurisdiction that has signed an information
exchange agreement with the Argentine Re public 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 thos e subject to supervision by the respective
central bank or equivalent institution.
The same treatment shall apply if the interest or remuneration consists of debt bonds
presented in countries with which there is a reciprocal agreement 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 entities governed by Law
No. 21.526 and amendments thereto, a natural person or undivided estate, and the
creditor does not meet the conditio n and requirement specified in the
second paragraph of the preceding section.
2.14. Accordingly, the rule presumes, against an y possibility of evidence to the contrary, a net
gain in the case of interest or remuneration paid on credits, loans or placements of funds of any
origin or type obtained abroad. In order to determine the tax base for purposes of the gains tax,
the rule determines the percentage to be applied according to whether the creditor
28 delivering the
service to the Argentine consumer is located in a cooperative or non-cooperative country: (i) if the
creditor is located in a cooperative country, the net gain is presumed to be 43%; (ii) if, on the

24 Communication "C" No. 65366 of the Central Bank of the Argentine Republic, of 26 February 2014
(Communication "C" No. 65366), (Exhibit ARG-71).
25 Panama specifies that "[t]his category includes services provided by banks or financial entities in
[non-cooperative] countries to consumers in Argentina which are not banking or financial entities". See
Panama's first written submission, para. 4.9. See also first written submission, para. 4.10.
26 Law No. 20.628 on Gains Tax, of 29 December 1973 (Gains Tax Law), (Exhibits PAN-4 / ARG-42).
27 "Countries with low or no taxes" should be understood to mean non-cooperative countries. See
footnote 14 above.
28 See footnote 25 above.

other hand, the creditor is located in a non-cooperative country, the presumed net gain is 100%.
On these bases, Argentina applies a rate of 35% in both cases.29
2.15. The presumption of a net gain of 100% only applies when the recipient of the credit or loan
or the investor of the funds is a person covered by Article 49 of the LIG, a natural person or an
undivided estate, but not if it is a financial entity governed by Law No. 21.526.30
2.16. The measure applies to interest or remunera tion paid on credits, loans or placements of
funds of any origin or type obtained abroad. 31 Argentina points out that "[t]he compensation, cost
recovery, commissions and similar payments which creditors may receive as a result of or when
granting loans or credits or placing funds in the country are covered by the same regime as is
applicable to the corresponding interest."
32
2.3.3 Measure 2: Presumption of unjustified increase in wealth
2.17. Measure 2 consists of the presumption of unj ustified 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. Argentina applies this measure pursuant to the unnumbered article added after
Article 18 of the Law on Tax Procedure (LPT).
33 This article provides as follows:
In the case of funds from countries with low or no taxes 34 - 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 disposed of or consumed as
non-deductible expenditure, represent net gains during the financial 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 marketing
year in terms of value added and internal taxes.
Notwithstanding the provisions in the pr eceding 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 pa rty in those countries or from placements
of duly declared funds.
2.18. This presumption of unjustified increase in wealth, therefore, affects gains "irrespective of
their nature or purpose or the type of transact ion involved" and may be rebutted if the taxpayer
"conclusively proves that the funds originated from activities actually carried out by the taxpayer
or by a third party in those countries or from placements of duly declared funds".
35

29 Article 91 of the LIG, (Exhibits PAN-4 / ARG-42).
30 We note that, in Panama's opinion, if the borrower is an Argentine bank or financial entity, there is no
difference in treatment pursuant to Article 93(c)(1), first sentence, of the LIG. See Panama's first written
submission, footnote 68 and Exhibits PAN-4 / ARG-42.
31 Pursuant to Article 91 of the LIG, Argentine natural or legal persons which pay taxable profits to
beneficiaries abroad act as withholding agents for the tax. For beneficiaries abroad, the tax withheld is a single
and final payment and fully discharges their tax obligation. See Exhibits PAN-4 / ARG-42.
32 Argentina's first written submission, Explanatory Annex No. 1.1, para. 14.
33 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), (Exhibits PAN-9 / ARG-45). Panama refers to the 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) as Law No. 11.683 on Tax Procedure, of 13 July 1998. See Exhibits PAN-9 / ARG-45.
34 "Countries with low or no taxes" should be understood to mean non-cooperative countries. See
footnote 14 above.
35 Unnumbered article added after Article 18 of the LPT, (Exhibits PAN-9 / ARG-45).

2.3.4 Measure 3: Transaction valuation based on transfer prices
2.19. Measure 3 consists of applying methods for valuing transactions based on transfer prices in
order to determine the tax base for the gains tax payable by Argentine taxpayers. The measure
provides that this valuation method applies to transactions between Argentine taxpayers
36 and
persons from non-cooperative countries i rrespective of whether they are related. 37 Argentina
applies this measure pursuant to Article 8, fifth paragraph, and Article 15, second paragraph, of
the LIG.
38 The relevant parts of these two provisions are reproduced below:
Article 8
Operations covered by this article that are conducted with natural or legal persons
domiciled, incorporated or located in countries with low or no taxes 39 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 Article 49, respectively, conduct
transactions with natural or legal persons domiciled, incorporated or located in
countries with low or no taxes
40, 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.
2.20. Accordingly, in order to determine the net gain subject to gains tax of Argentine taxpayers'
transactions between the latter and persons domiciled, incorporated or located in non-cooperative
countries shall be valued following the rules and procedures for transfer prices between related
parties.
2.3.5 Measure 4: Payment received rule for the allocation of expenditure
2.21. Measure 4 also concerns determination of the tax base for gains tax payable by Argentine
taxpayers. In this instance, the measure consists of applying the rule of payment received when
allocating expenditure for transactions between Argentine taxpayers and persons from
non-cooperative countries. Argentina applies this measure pursuant to the last paragraph of
Article 18 of the LIG
41, which provides as follows:
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

36 Specifically, the second paragraph of Article 15 of the LIG refers to "stable establishments domiciled
or located in the country or companies covered by subparagraphs (a) and (b) and the trust funds referred to in
the subparagraph added after subparagraph (d) of the first paragraph of Article 49". The companies covered by
subparagraphs (a) and (b) are those which meet the following requirements: "(a) Having a genuine presence
in the territory of residence, having then a commercial establishment where the business is managed and
meeting the legal requirements on incorporation and registration and the submission of accounting statements.
The assets, risks and functions assumed by the international intermediary must be commensurate with the
volume of business; (b) their main activity must not consist of receiving unearned income or of intermediation
in marketing goods from or to the Argentine Republic or with other members of the economically related
group". With regard to the trust funds mentioned in the second paragraph of Article 15, the regulations
mention "trust funds in which the trustor is a beneficiary, except for financial trust funds or where the
trustor-beneficiary is a person covered by Title V". See Exhibits PAN-4 / ARG-42.
37 The measure concerns transactions with "natural or legal persons domiciled, incorporated or located"
in non-cooperative countries. See the second paragraph of Article 15 of the LIG.
38 Gains Tax Law, (Exhibits PAN-4 / ARG-42).
39 "Countries with low or no taxes" should be understood to mean non-cooperative countries. See
footnote 14 above.
40 "Countries with low or no taxes" should be understood to mean non-cooperative countries. See
footnote 14 above.
41 Gains Tax Law, (Exhibits PAN-4 / ARG-42).

taxes42, the allocation to the tax balance may only be made at the time of payment 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.
2.22. Accordingly, outlays by Argentine entities which constitute profits of Argentine source for
persons located, incorporated, based or domiciled in non-cooperative countries shall be allocated
to the fiscal year in which payment for the transaction actually takes place (payment received
rule).
2.3.6 Measure 5: Requirements relating to reinsurance services
2.23. Measure 5 consists of Argentina's imposition on foreign service suppliers and service
suppliers of non-cooperative countries of requirements that they must meet in order to be able to
gain access to Argentina's reinsurance services market.
43 This measure is applied pursuant to SSN
Resolution No. 35.615/201144, as indicated by Panama in its request for the establishment of a
panel.45
2.24. SSN Resolution No. 35.615/201146 has been developed and amended on several occasions:
(i) in May 2011, by means of Article 4 of SSN Resolution No. 35.794/2011 47, which develops
point 19 of Annex I to SSN Resolution No. 35.615/2011; (ii) in March 2014, by means of SSN
Resolution No. 38.284/201448, which replaces points 18 and 20(f) of Annex I to SSN Resolution
No. 35.615/2011; and (iii) in November 2014, by means of SSN Resolution No. 38.708/2014,
which, according to Argentina, provides for a regulatory reform of the reinsurance sector.
49
2.25. Points 18, 19 and 20(f) of SSN Resolution No. 35.615/2011 as set out by Panama in its
first written submission, hence, prior to the amendment introduced in March 2014 by means of
SSN Resolution No. 38.284/2014, read as follows:
Point 18 of Annex I to SSN Resolution No. 35.615/2011
No authorization may be given to branches of foreign companies based in countries
where the rate of gains or similar tax is less than twenty per cent (20%) or where
domestic legislation imposes secrecy in regard to the corporate structure of legal
persons, or in jurisdictions, territories or States with low or no taxes, so-called "tax
havens", and/or countries or territories that do not cooperate in the global fight
against money laundering and terrorist financing offences according to the criteria
defined by the Financial Action Task Force (FATF).
Point 19 of Annex I to SSN Resolution No. 35.615/2011
The National Insurance Supervisory Author ity, by means of a special reasoned
resolution on certain reinsurance transactions duly specified by the requesting insurer,
may allow authorized entities to carry out insurance operations in the country, enter
into reinsurance contracts with foreign reinsurance entities which conduct their
operations from their head office when the magnitude or characteristics of the ceded
risks make it impossible to cover such reinsurance transactions on the national
reinsurance market. The request shall be submitted prior to entering into the contract
and shall be accompanied by all the evidence needed to justify the special criterion.

42 "Countries with low or no taxes" should be understood to mean non-cooperative countries. See
footnote 14 above.
43 The Panel will address the question of whether retrocession services are covered by measure 5 in its
findings.
44 Resolution No. 35.615 of the National Insurance Supervisory Authority, of 11 February 2011 (SSN
Resolution No. 35.615/2011), (Exhibits PAN-36 / ARG-27).
45 Panama's request for the establishment of a panel, pp. 5 and 6.
46 SSN Resolution No. 35.615/2011, (Exhibits PAN-36 / ARG-27).
47 Resolution No. 35.794 of the National Insurance Supervisory Authority, of 19 May 2011 (SSN
Resolution No. 35.794/2011), (Exhibits PAN-40 / ARG-48).
48 Resolution No. 38.284 of the National Insurance Supervisory Authority, of 21 March 2014 (SSN
Resolution No. 38.284/2014), (Exhibit ARG-47).

Point 20(f) of Annex I to SSN Resolution No. 35.615/2011
No authorization for registration as foreign reinsurance entities accepting reinsurance
transactions from their country of origin may be given to establishments based in
countries where the rate of gains or similar tax is less than twenty per cent (20%) or
where domestic legislation imposes secrecy in regard to the corporate structure of
legal persons, or in jurisdictions, territories or States with low or no taxes, so-called
"tax havens", and/or countries or territories that do not cooperate in the global fight
against money laundering and terrorist financing offences according to the criteria
defined by the Financial Action Task Force (FATF).
2.26. Accordingly, the wording of points 18 and 20(f) of Annex I to SSN Resolution
No. 35.615/2011 prior to the March 2014 amendment imposed a ban on the supply of reinsurance
services by (i) branches of companies in countries not cooperating for the purposes of tax
transparency and the global fight against money laundering and terrorist financing offences
according to the criteria defined by the FATF (point 18); and (ii) reinsurance establishments which
deliver their services from their country of origin which is a non-cooperating country for the
purposes of tax transparency and the global fight against money laundering and terrorist financing
offences according to the criteria defined by the FATF (point 20(f)).
2.27. Point 19 of Annex I to SSN Resolution No. 35.615/2011, however, provides that the SSN
may authorize reinsurance contracts with foreign reinsurance establishments which 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.
2.28. On 19 May 2011, Argentina issued SSN Resolution No. 35.794/2011, which develops the
provisions in point 19 of Annex I to SSN Resolution No. 35.615/2011. Article 4 of this Resolution,
in particular, provides as follows:
Article 4 of SSN Resolution No. 35.794/2011
For the purposes of point 19 of Annex I to SSN Resolution No. 35.615, it is stipulated
that individual risks exceeding US$50,000,000 (FIFTY MILLION UNITED STATES
DOLLARS) may be reinsured with the reinsurance entities mentioned in point 20 of the
aforementioned regulations ("approved reinsurers"), for that portion which exceeds
the aforementioned amount.
2.29. Consequently, Article 4 of SSN Resolution No. 35.794/2011 develops point 19 of Annex I to
SSN Resolution No. 35.615/2011 by stipulating that reinsurance with foreign reinsurance entities
which conduct their operations from their head office may be authorized provided that the
individual risks exceed US$50,000,000 (fifty millio n United States dollars). In such cases, the
reinsurance will be "for that portion which exceeds the aforementioned amount".
2.30. On 25 March 2014, the date on which Panama submitted its first written submission,
Argentina published SSN Resolution No. 38.284/2014, Articles 1 and 2 of which order the
replacement of the text of points 18 and 20(f) of Annex I to SSN Resolution No. 35.615/2011,
respectively, by the text set out below:
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, proportionat e to the risks, and the counter-measures
indicated in Recommendation 19 of the FI NANCIAL ACTION TASK FORCE (FATF) and
the Interpretive Note thereto may be applied."
2.31. Point 19 of Annex I to SSN Resolution No. 35.615/2011 and Article 4 of SSN Resolution
No. 35.794/2011 were not affected by this amendment introduced by SSN Resolution
No. 38.284/2014.
2.32. Accordingly, following the amendment of 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 accept 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 cooperative countries (in the case of branches, this
proof applies to the parent company); and (ii) prove that they have been incorporated and
registered in countries 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
FATF (in the case of branches, such proof relates to the parent company).
2.33. If incorporation and registration of service suppliers in a cooperative country is not proven,
points 18 and 20(f) provide that they must pr ove that they are subject to the control and
supervision of a body (i) which 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. If it is not proven that they have been incorporated and

registered in countries that cooperate in the global fight against the money laundering and
terrorist financing offences in accordance with the criteria defined by the FATF, points 18 and 20(f)
provide that the assessment of the request for authorization shall be subject to enhanced due
diligence, proportionate to the risks, and that the counter-measures indicated in Recommendation
19 of the FATF and the Interpretive Note thereto may be applied.
2.34. On 6 November 2014, Argentina issued SSN Resolution No. 38.708/2014 approving the
General Regulations of the Insurance Business.
50 According to Argentina, SSN Resolution
No. 38.708/2014 provides for regulatory reform of the reinsurance sector. 51 Argentina explains
that this Resolution includes in its "Annex in point 2.1.1 … the whole body of legislation that was
previously contained in the following Re solutions: No. 35.615, No. 35.726, No. 35.794,
No. 36.266, No. 36.332, No. 36.859 and No. 38.284".
52
2.3.7 Measure 6: Requirements for access to the Argentine capital market
2.35. Measure 6 consists of imposing requirements on stock market intermediaries 53 for them to
be able to engage in transactions ordered by persons from non-cooperative countries. Argentina
applies this measure pursuant to Title XI ("Prevention of money laundering and financing of
terrorism"), Section III, Article 5 of the Rules of the National Securities Commission (CNV)54, which
provides as follows:
All the persons indicated in Article 1 above 55 may only engage in transactions
involving the public offering of negotiable securities, forward contracts, futures or
options of any nature or other financial instruments or products, when they are
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 juri sdiction has signed a memorandum of
understanding on cooperation and exchange of information with the NATIONAL
SECURITIES COMMISSION.
2.36. Consequently, the following requirements mu st 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 of any nature, or other financial instruments or products, when
conducted or ordered by persons incorporated, domiciled or residing in non-cooperative countries:
(i) the persons incorporated, domiciled or residing in non-cooperative countries that give the order
to the stock market intermediary must have the stat us of intermediaries registered with an entity
under the control and supervision of a body fulf illing functions similar to those of the Argentine
C N V ; a n d ( i i ) t h e b o d y i n q u e s t i o n m u s t h a v e s i g n e d a m e m o r a n d u m o f u n d e r s t a n d i n g o n
cooperation and exchange of information with the Argentine CNV.

50 Article 1 of SSN Resolution No. 38.708/2014, (Exhibit ARG-135).
52 Argentina's response to Panel question No. 66(a), footnote 25. Argentina clarifies in response to this
question from the Panel that "[a]lthough the aforementioned SSN Resolution No. 38.708 does not specifically
mention SSN Resolution No. 38.284, it should be understood that, in the first place, it has been tacitly repealed
as it is a resolution partially amending SSN Resolution No. 35.615 and hence follows the fortunes of the main
Resolution, to which it made amendments. Secondly, the text of Resolution No. 38.284 was incorporated into
the new Regulation".
53 "Stock market intermediaries" means the persons indicated in Article 1 of the Rules of the National
Securities Commission (CNV), including "bargaining agents, liquidation and compensation agents, distribution
and placement agents, and collective investment management agents". See Exhibits PAN-58 / ARG-50.
54 Rules of the National Securities Commission, New Text 2013 (Title XI), approved by General
Resolution No. 622 (CNV Rules 2013), (Exhibits PAN-58 / ARG-50).
55 See footnote 53 above.

2.3.8 Measure 7: Requirements for the registration of branches
2.37. Measure 7 consists of imposing additional requirements on branches of companies from
non-cooperative countries for the purpose of regi stration in the Public Trade Register of the
Autonomous City of Buenos Aires. Argentina maintains this measure pursuant to Article 192 of IGJ
Resolution No. 7/200556, which reads in relevant part:
The General Justice Inspectorate shall closely review compliance with the
requirements of Article 188, subpara graph 3, subsections (b) and (c) 57 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 58
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 indica ted 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.

56 General Resolution No.7 of the General Justice Inspectorate (IGJ), of 25 August 2005 (IGJ Resolution
No. 7/2005), (Exhibits PAN-62 / ARG-33).
57 Subparagraphs 3(b) and 3(c) of Article 188 of IGJ Resolution No. 7/2005 provide as follows:
The following shall be submitted for the purpose of the registration provided for in Article 118,
third paragraph, of Law No. 19.550:
…
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.
See IGJ Resolution No. 7/2005, (Exhibits PAN-62 / ARG-33).
58 "Countries with low or no taxes" should be understood to mean non-cooperative countries. See
footnote 14 above.

If the jurisdictions referred to in this Article are "offshore" jurisdictions, Article 193
shall apply.
2.38. Accordingly, apart from the requirements applicable to companies in cooperative countries,
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", for
which the IGJ may require additional documents. The IGJ may also request additional documents
in order to verify the records of the company's partners.
2.3.9 Measure 8: Foreign exchange authorization requirement
2.39. Measure 8 consists of imposing on service suppliers from non-cooperative countries the
requirement to obtain prior authorization from the Central Bank of the Argentine Republic (BCRA)
in order to be able to repatriate their direct investments. Argentina maintains this measure
pursuant to Communication "A" 4940, Section I of the BCRA
59, which provides the following:
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.
2.40. This means that prior authorization from the BCRA is needed in order to repatriate the
investment "when the beneficiary abroad is a natural or legal person residing or incorporated or
domiciled in" a non-cooperative country.
2.4 Factual context
2.4.1 Introduction
2.41. In this section we outline certain topics which, although they do not form part of the
measures at issue, have been addressed by th e parties in their submissions and may be of
relevance for the purposes of this Panel's findings.
2.4.2 Relevant Argentine legislation applicable to cooperative countries
2.42. The purpose of this section is to describe the relevant legislation applicable to cooperative
countries in respect of the matters regulated by measures 2, 3, 4, 7 and 8 applicable to
non-cooperative countries. For measures 1, 5 and 6, the treatment accorded to cooperative
countries is set out in the text of the measures challenged by Panama.
60
2.4.2.1 Presumption of unjustified increase in wealth
2.43. The Argentine regulation applicable to determining the taxable subject matter for Argentine
taxpayers is contained in Article 11 of the LPT, which provides that it is the taxpayers themselves,
through their sworn declarations, who determine what is subject to taxation.
61 If no sworn
declarations have been submitted or those submi tted are contested, the AFIP shall determine the
taxable subject matter ex officio. This ex officio determination may be made directly, as a result of
certain knowledge of the taxable su bject matter, or by estimation. 62 In the latter case, Article 18

59 Communication "A" No. 4940 of the Central Bank of the Argentine Republic, of 12 May 2009
(Communication "A" No. 4940), (Exhibits PAN-71 / ARG-31).
60 See paras. 2.13, 2.30 and 2.35 above.
61 Article 11 of the LPT provides that "[t]he determination and collection of taxes under this Law shall be
based on sworn declarations to be submitted by those responsible for paying taxes in the form and within the
time-limits to be established by the FEDERAL PUBLIC REVENUE ADMINISTRATION". See the Law on Tax
Procedure, (Exhibits PAN-9 / ARG-45).
62 In this connection, Article 16 of the LPT provides as follows:

of the LPT applies, which contains the presumptions to be used by the AFIP when estimating the
taxable subject matter ex officio, and section (f) of which includes the presumption of unjustified
increase in wealth.63
2.44. We recall that measure 2, contained in the unnumbered article added after Article 18 of the
LPT, presumes that any entry of funds from non-cooperative countries constitutes an unjustified
increase in wealth – a presumption which may be rebutted if the taxpayer "conclusively proves
that the funds originated from activities actually carried out by the taxpayer or by third parties in
those countries or from placements of duly declared funds" – as explained in section 2.3.3 above.
2.4.2.2 Valuation of transactions
2.45. Article 14 of the LIG establishes as a rule that transactions between an Argentine taxpayer
and a foreigner shall be considered arm's-length transactions "if their services and conditions are
in line with normal arm's-length market practices".
64 Where that is not the case, such services and
conditions shall be governed by the provisions of Article 15 of the LIG, which empowers the AFIP
"to determine the net taxable income by using averages, indices or coefficients established for this
purpose on the basis of the performance of independent companies engaged in the same or similar
activities".
2.46. As regards profits earned from exporting goods produced, manufactured, processed or
purchased in Argentina, the second paragraph of Article 8 of the LIG provides that "the net profit
shall be established by deducting from the selling price the cost of the goods, transport and
insurance costs to the destination, commission and sales costs and costs incurred in the Argentine
Republic as necessary in order to obtain the taxabl e profit". In such cases, Article 8 provides that
the rules and procedures contained in Article 15 of the LIG shall apply when the transactions are
with related persons or entities and the prices and conditions are not in line with arm's-length
market practices.
65
2.47. We recall that measure 3 in Article 8, paragraph 5 and Article 15, paragraph 2 of the LIG
prescribes the application of methods for valuing transactions with persons from non-cooperative
countries based on transfer prices in order to determine the basis of assessment for gains tax
payable by Argentine taxpayers, as described in section 2.3.4 above.

If no sworn declarations have been submitted or those submitted are contested, the FEDERAL
PUBLIC REVENUE ADMINISTRATION shall determine ex officio the taxable subject matter or the
tax loss carry forward, where applicable, and assess the corresponding tax, either directly, as a
result of certain knowledge of the tax object, or by estimation if the known elements only allow
the existence and amount of the tax to be presumed.
See the Law on Tax Procedure, (Exhibits PAN-9 / ARG-45).
63 Article 18(f) of the LPT: "Unjustified increases in wealth are:
(1) In the case of gains tax:
Net profits determined by an amount corresponding to unjustified increases in wealth, plus
TEN PER CENT (10%) under the heading of income disposed of or consumed as non-deductible
expenditure.
(2) In the case of value added tax:
Amounts of omitted sales determined according to the sum total of the elements stemming from
the preceding point.
In these circumstances, payment of the tax shall not give rise to any tax credit.
(3) The method described in point 2 shall apply to the corresponding internal tax headings."
See the Law on Tax Procedure (LPT), (Exhibits PAN-9 / ARG-45).
64 The third paragraph of Article 14 of the LIG 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 -.
See (Exhibits PAN-4 / ARG-42). See also Panama's first written submission, para. 4.210 and Argentina's
first written submission, Explanatory Annex No. 1.3, para. 90.
65 Paragraph 4 of Article 8 of the LIG, (Exhibits PAN-4 / ARG-42).

2.4.2.3 Rule for the allocation of expenditure
2.48. Article 18 of the LIG provides that expend iture, in the same way as profits, shall be
allocated to the fiscal year in which it accrues. 66 Accordingly, the "accrual" rule is considered to be
the general rule for allocating income and expenditure "for third category income67".68
2.49. We recall that measure 4 in the last paragraph of Article 18 of the LIG provides for
application of the rule of payment received when allocating expenditure for transactions between
Argentine taxpayers and persons from non-cooper ative countries, as described in section 2.3.5
above.
2.4.2.4 Requirements for the registration of branches
2.50. Article 118 of Law No. 19.550 on Commercial Companies (LSC), applicable to companies
incorporated abroad, specifies the requirements to be met by a foreign company "[i]n order to
engage in the customary exercise of the acts includ ed in its social purpose, set up a branch or any
other form of permanent representative office".
69 One of these requirements is to register the
company incorporated in Argentina. In the Autono mous City of Buenos Aires, companies must be
registered in the Public Trade Register of the Ci t y o f B u e n o s A i r e s , w h i c h i s g o v e r n e d b y I G J
Resolution No. 7/2005. 70 Article 188 of this IGJ Resolution, when referring to the registration
requirement in Article 118 of the LSC, specifies the documents which companies incorporated
abroad must submit in order to be registered:
Certificate proving the existence of the company and that it is not subject to
liquidation or any legal proceedings involving restrictions on its assets and/or
activities
71;

66 Article 18 of the LIG: "… 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." See Exhibits PAN-4 /
ARG-42.
67 Third category income is that described in Article 18 of the LIG as "the profits referred to in
Article 49" of the LIG. The types of income listed in Article 49 of the LIG are considered third category income,
namely:
(a) Income received by the persons listed in Article 69 -.
(b) All income earned from any other type of company incorporated in the country or single
person enterprises located there.
(c) Income earned from acting as commission agent, auctioneer, consignee or other trade
auxiliaries not specifically included in the fourth category.
(d) Income earned from lots for urban planning purposes, income from building and sale of
property under the regime of Law No. 13512.
Income earned from trust funds in which the trustor is a beneficiary, except in the case of
financial trust funds or when the trustor-beneficiary is a person covered by Title V (Incorporated
by Law 25063, Article 4).
(e) Other income not included in other categories.
Compensation in cash or kind, per diem, etc. received when carrying out activities covered by
this Article shall also be considered income if it exceeds the amount deemed reasonable by the
Directorate-General of Taxation for the reimbursement of expenses incurred.
Where the professional or official activity referred to in Article 79 is supplemented by a business
activity or vice versa (sanatoriums, etc.), the total income earned from all these activities shall
be considered third category income.
See Exhibits PAN-4 / ARG-42.
68 Panama's first written submission, para. 4.300; Argentina's first written submission, Explanatory
Annex No. 1.4, para. 110. See also Argentina's first written submission, Explanatory Annex No. 1.4, para. 119
prestatario: condiciones APRA la deducción del gasto" [Treatment of gains tax from the standpoint of the
borrower], Práctica y Actualidad Tributaria, Errepar, XIII, December 2006).
69 Article 118 of Law No. 19.550 lays down three requirements: (1) prove the existence of the company
in accordance with its country's legislation; (2) establish a domicile in Argentina, complying with the
publication and registration required by law for companies incorporated in Argentina; (3) 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. See the Law on Commercial
Companies, (Exhibits PAN-34 / ARG-43).
70 IGJ Resolution No. 7/2005, (Exhibits PAN-62 / ARG-33).
71 Article 188.1 of IGJ Resolution No. 7/2005, (Exhibits PAN-62 / ARG-33).

Documents from abroad containing (a) the contract or deed of incorporation of the
company and amendments thereto; (b) decision of the governing body deciding to set
up the seat, branch or permanent representative office in Argentina; (c) date of
closure of its financial books; (d) head office in the Autonomous City of Buenos Aires;
(e) capital allocated – if applicable; and (f) designation of the representative, who
must be a natural person
72;
Documents from abroad drawn up by an officer of the company proving (a) that in the
place it was set up, incorporated or registered, there is no ban or restriction on the
company engaging in all its activities or the most important among them; (b) that it
has one or more agencies, branches or representative offices in operation and/or
non-current (fixed) assets or operating rights in 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; and (c) particulars of the persons who are
partners at the time of the decision to request registration
73;
Original proof of the publication requir ed by Article 118, third paragraph,
subparagraph (2) of Law No. 19.550 if it is a joint stock company, a limited liability
company or a company of a type not covere d by the laws of the Argentine Republic,
specifying (a) with regard to the branch, agency or representative office, its head
office, assigned capital where applicable and the date of closure of its financial books;
(b) with regard to the representative, his/her personal data, established special
domicile, period of representation if applicable, restrictions on mandate, if any, and
nature of activities if more than one repres entative is designated; and (c) with regard
to the company abroad, the information indicated in Article 10, subparagraphs (a) and
(b) of Law No. 19.550 in respect of the ar ticles of incorporation and amendments
thereto, if any, in effect at the time of the request for registration
74;
Document signed by the designated repres entative, authenticated by a notary or
personally ratified prior to registration, in which the representative (a) provides
his/her personal data; (b) indicates the site of the head office; and (c) the establishes
a special domicile within the area of the Autonomous City of Buenos Aires.
75
2.51. We recall that measure 7 in Article 192 of IGJ Resolution No. 7/2005 76 imposes additional
requirements on branches of companies from non- cooperative countries for their registration in
the Public Trade Register, as described in section 2.3.8 above.
2.4.2.5 Foreign exchange authorization requirement
2.52. Point 1.13 of Communication "A" 466277, as amended by Communication "A" 4692, provides
that prior authorization by the BCRA is not needed "in order to purchase foreign currency for
transfer abroad if the transactions are conducted by or correspond to payments in the country … of
repatriation of direct investment in the non-financial private sector, in companies that do not
control local financial institutions and/or in immovable property", provided that the investment has
remained in Argentina for a minimum of 365 consecutive days.
78
2.53. Point 4 of Communication "A" 4662 provides that, before proceeding with transactions
exempt from prior authorization by the BCRA, the en tities authorized to deal in foreign exchange
must meet certain requirements. 79 In this connection, Communication "A" 5237 includes as a

72 Article 188.2 of IGJ Resolution No. 7/2005, (Exhibits PAN-62 / ARG-33).
73 Article 188.3 of IGJ Resolution No. 7/2005, (Exhibits PAN-62 / ARG-33).
74 Article 188.4 of IGJ Resolution No. 7/2005, (Exhibits PAN-62 / ARG-33).
75 Article 188.5 of IGJ Resolution No. 7/2005, (Exhibits PAN-62 / ARG-33).
76 IGJ Resolution No. 7/2005, (Exhibits PAN-62 / ARG-33).
77 Communication "A" No. 4662, (Exhibits PAN-67 / ARG-69).
78 Point 1.13 of Communication "A" No. 4662, as amended by Communication "A" No. 4692, specifies
the circumstances that may give rise to repatriation, namely: sale of the direct investment, definitive
liquidation of the direct investment, capital reduction decided by the local company, and refund of irrevocable
contributions by the local company. See Exhibits PAN-68 / ARG-70.
79 The following are the requirements laid down in point 4 of Communication "A" No. 4662:
(a) verification of the purpose declared for access to the foreign exchange market; (b) possession of

requirement for access to the local foreign exchange market for the repatriation of direct
investment "proof of the entry of funds throug h the local foreign exchange market for all new
investment derived from new contributions or purchases of shares in local companies and real
estate effected in foreign currency as of 28 October 2011 by the foreign investor". Point 4 of this
BCRA Communication adds that the "transactions for the repatriation of direct investment which
are subject to the established requirements but ca nnot be shown to be compliant therewith at the
date of access to the local foreign exchange market must have prior authorization from the
Central Bank".
80
2.54. We recall that measure 8, in Communication "A" No. 4940, Section I, of the BCRA requires
service suppliers from non-cooperative countries to obtain prior authorization from the BCRA in
order to be able to repatriate their direct investments, as described in section 2.3.9 above.
2.4.3 Global Forum on Transparency and Exchange of Information for Tax Purposes
2.55. The Global Forum is an intergovernmental body which emerged – under another name –
within the Organisation for Economic Co-operation and Development (OECD) in 2001 and which in
2009, after being reorganized, adopted its current title. It is open to any jurisdiction, whether or
not a member of the OECD, which commits to implementing the Global Forum's tax transparency
and information exchange standards and agrees to take part in the peer review process (PRP).
These reviews are currently the Global Forum's main activity.
81
2.56. According to the Global Forum's 2014 report on progress, it has 123 members composed of
122 jurisdictions and the European Union. 82 Of the 123 members, 97 are also Members of the
WTO. The WTO does not have observer status in the Global Forum.83
2.57. The Global Forum's terms of reference co nsist of promoting rapid implementation of tax
transparency standards among its members. In part icular, it undertakes to ensure application of
the international "Exchange of information on request" standard, or EOIR for short. 84 According to
the EOIR standard, there should be exchange – upon request – of foreseeably relevant information
for carrying out the provisions of a tax convention or for the administration or enforcement of the
domestic tax laws of a requesting party.
85 By October 2014, 89 jurisdictions members of the
Global Forum had undertaken to implement a ne w international standard between 2017 and 2018

documents proving that the resident debtor has had access to the foreign exchange market for the purpose
and amount paid to the non-resident of the country (in cases of payment in the country for imports, services,
income and other current transfers from abroad and commercial and financial debts abroad); (c) sworn
declaration by the customer or his/her representative in the country stating that there has been no previous
transfer for the same transaction; (d) assurance that the funds received have not been used for other
investment in the country from the date they were paid in the country for the purpose declared until the date
of access to the local foreign exchange market; (e) certificate of prior settlement of such payments on the
foreign exchange market in cases where, as a result of the sale of the investment or the payment of the credit,
part or all of the payments have been received in foreign currency; (f) possession (on the part of the authority
authorized to conduct foreign exchange dealings) of all the elements needed to certify the reasonableness and
authenticity of the transaction and the documents required under foreign exchange regulations; and (g)
verification of compliance with the other applicable foreign exchange regulations. See Exhibits PAN-67 /
ARG-69.
80 Communication "A" No. 5237, (Exhibit ARG-75).
81 Global Forum on Transparency and Exchange of Information for Tax Purposes, Tax Transparency –
2014 – Report on Progress, p. 24.
82 Global Forum on Transparency and Exchange of Information for Tax Purposes, Tax Transparency –
2014 – Report on Progress, p. 17.
83 The observers include the African Tax Administration Forum, the Asian Development Bank, the
Caribbean Community (CARICOM), the Commonwealth Secretariat, the European Bank for Reconstruction and
Development, the European Investment Bank, the Inter-American Development Bank, the International
Finance Corporation, the International Monetary Fund, the United Nations, the World Bank and the World
Customs Organisation (WCO). See Global Forum on Transparency and Exchange of Information for Tax
Purposes, Tax Transparency – 2014 – Report on Progress, pp. 48 and 77.
84 Global Forum on Transparency and Exchange of Information for Tax Purposes, Tax Transparency –
2014 – Report on Progress, p. 24.
85 Global Forum on Transparency and Exchange of Information for Tax Purposes, Tax Transparency –
2014 – Report on Progress, p. 25.

to complement the EOIR standard 86: this is a global standard on automatic (and reciprocal)
exchange of financial account information, or AEOI for short.87
2.58. The PRP is voluntary and evaluates the capaci ty of each Global Forum member's jurisdiction
to comply with the international EOIR standard. 88 The process consists of two phases: (i) phase 1
reviews the legal framework of the jurisdiction concerned in the light of the EOIR standard; and (ii)
phase 2 looks into the review of application of th e EOIR standard in practice in the jurisdiction
concerned. Argentina completed both phases of the PRP in June 2012 and is now classified as
"largely compliant" with the EOIR international standard. 89 Panama comes under the category of
jurisdictions unable to move to phase 2, given that it has not amended its regulatory framework in
the light of the recommendations arising from phase 1, carried out in 2010.
2.59. The Global Forum lacks the power to impose sanctions on jurisdictions which do not apply
tax transparency standards. Nor, to date has it issued any recommendations to its members either
on the potential adoption of special defensive measures to counter non-application of its tax
transparency standard.
90 I t s h o u l d b e p o i n t e d o u t , h o w e v e r , that both the OECD and the G-20
have recognized the importance of defensive measures relating to tax transparency as a way of
protecting public revenue and creating a level playing field.91
2.4.4 Financial Action Task Force (FATF)
2.60. The Financial Action Task Force (FATF) is an intergovernmental body established in 1998 by
its member jurisdictions. Its mandate is to set standards and promote effective implementation of
legal, regulatory and operational measures for combating money laundering, financing of terrorism
and the proliferation of weapons of mass destructio n, among other threats to the integrity of the
financial system.
92 Currently, 34 jurisdictions are members, together with the Gulf Cooperation
Council and the European Commission. Argentina is an FATF member, but Panama is not.93
2.61. The FATF Recommendations are recognized as the international standard against money
laundering and the financing of terrorism. 94 The text of these recommendations in force at the
time of drafting this Report is that of 2012. The measures established in the FATF
Recommendations must be applied by all its members and by the FATF-Style Regional Bodies

86 Global Forum on Transparency and Exchange of Information for Tax Purposes, Tax Transparency –
2014 – Report on Progress, p. 81.
87 According to the AEOI (automatic exchange of information) standard, the exchange will be on a
regular basis (for example, yearly) and will cover a previously defined type of information. Argentina is one of
the jurisdictions that will commence the first phase of this exchange of information in 2017. Panama is one of
the jurisdictions that has not yet indicated whether it will commence this exchange in 2017 or 2018 or has not
yet committed to this automatic exchange. See Global Forum on Transparency and Exchange of Information for
Tax Purposes, Tax Transparency – 2014 – Report on Progress, p. 38.
88 Global Forum on Transparency and Exchange of Information for Tax Purposes, Tax Transparency –
2013 – Report on Progress, (Exhibit ARG-36), p. 17.
89 In phase 2, each of the components of the EOIR standard is given one of the following classifications:
compliant, largely compliant, partially compliant or non-compliant. See Global Forum on Transparency and
Exchange of Information for Tax Purposes, Tax Transparency – 2013 – Report on Progress, (Exhibit ARG-36),
pp. 17 and 20.
90 Argentina's response to Panel question No. 46(a), para. 2.
91 Argentina's response to Panel question No. 46(a), para. 4 (citing the 2000 OECD report Towards
Global Tax Co-operation, (Exhibit ARG-6), available at http://www.oecd.org/tax/transparency/44430257.pdf
(exhibit provided in English; Spanish text available at
http://www.ief.es/recursos/publicaciones/libros/informes_OCDE.aspx). See also Argentina's response to Panel
question No. 46(a), paras. 5, 6 and 9 (referring to OECD, OECD's Project on Harmful Tax Practices, The 2001
Progress Report, (Exhibit ARG-7), available at http://www/oecd.org/ctp/harmful/2664450.pdf (exhibit provided
in English; Spanish text available at http://www.ief.es/recursos/publicaciones/libros/informes_OCDE.aspx);
Communiqué, Meeting of Finance Ministers and Central Bank Governors, UK, 2009, (Exhibit ARG-114); OECD,
OECD's Project on Harmful Tax Practices, The 2004 Progress Report, (Exhibit ARG-9), available at
http://www/oecd.org/ctp/harmful/2664450.pdf (exhibit provided in English; Spanish text available at
http://www.ief.es/recursos/publicaciones/libros/informes_OCDE.aspx); and Argentina's response to Panel
question No. 71 (citing OECD, Towards a Level Playing Field, Global Forum on Taxation, Berlin, 3-4 June 2004,
Exhibit ARG-10, para. 28).
92 FATF, International Standards on Combating Money Laundering and the Financing of Terrorism and
Proliferation – The FATF Recommendations (FATF Recommendations), February 2012, (Exhibit ARG-25), p. 7.
93 http://www.fatf-gafi.org/pages/aboutus/membersandobservers.
94 FATF, FATF Recommendations, (Exhibit ARG-25), p. 7.

(FSRBs), including the Financial Action Task Force of Latin America (GAFILAT), previously known
as GAFISUD, of which Argentina and Panama are members.95
2.62. Implementation of the FATF Recommendations is assessed rigorously through mutual
evaluation processes and by the IMF and the Wo rld Bank on the basis of the FATF's common
assessment methodology.96
3 PARTIES' REQUESTS FOR FINDINGS AND RECOMMENDATIONS
3.1. Panama requests that the Panel find that:
a. Measure 1 (withholding tax on payments of interest or remuneration) is inconsistent with
Argentina's obligations under Article II:1 of the GATS inasmuch as it alters the
conditions of competition between like services and service suppliers by according less
favourable treatment to services and service suppliers of non-cooperative countries.
97
b. Measure 2 (presumption of unjustified increase in wealth) is inconsistent with
Argentina's obligations under:
i. Article II:1 of the GATS, inasmuch as it constitutes a disincentive to contracting
services that imply a transfer of funds from non-cooperative countries, thus
modifying the conditions of competition and according less favourable treatment to
services and service suppliers of non-cooperative countries than that granted to like
services and service suppliers of cooperative countries;
ii. Article XVII of the GATS, inasmuch as it constitutes a disincentive to contracting
services that imply a transfer of funds from non-cooperative countries, thus altering
the conditions of competition between like services and service suppliers of Argentina
and those of non-cooperative countries;
iii. Article I:1 of the GATT 1994, inasmuch as the advantage, favour, privilege or
immunity accorded to payments received from cooperative countries for exports to
those countries is not accorded to exports of like products to non-cooperative
countries (which entail payments from non-cooperative countries).
98
c. Measure 3 (transaction valuation based on transfer prices) is inconsistent with
Argentina's obligations under:
i. Article II:1 of the GATS, inasmuch as it creates disincentives that imply less
favourable treatment for services and service suppliers from non-cooperative
countries;
ii. Article XVII of the GATS, inasmuch as, with regard to the full commitments made by
Argentina on national treatment, it leads to a disincentive to purchase or contract
from suppliers of non-cooperative countries, placing them in a less favourable
position than like domestic suppliers;
iii. Article I:1 of the GATT 1994, inasmuch as imports/exports of products from/to
cooperative countries may be valued as transactions in line with normal market
practices or prices, unlike imports/exports from/to non-cooperative countries, which
are subject to the transfer pricing valuation regime;

95 GAFISUD – International Standards on Combating Money Laundering and the Financing of Terrorism
and Proliferation, FATF Recommendations, February 2012, (Exhibit ARG-26). See also
http://www.gafilat.org/content/observadores.
96 FATF, FATF Recommendations, (Exhibit ARG-25), p. 8.
97 Panama's first written submission, para. 5.1.a; second written submission, para. 3.1.a. See also
Panama's request for establishment of a panel, p. 2.
98 Panama's first written submission, para. 5.1.b; second written submission, para. 3.1.b. See Panama's
request for establishment of a panel, p. 3.

iv. Article III:4 of the GATT 1994, inasmuch as the measure places products imported
from non-cooperative countries in a less favourable position than that of like
domestic products; and
v. Alternatively, Article XI:1 of the GATT 1994, inasmuch as the measure establishes
limiting conditions on the import/export of products from/to non-cooperative
countries.
99
d. Measure 4 (payment received rule for the allocation of expenditure) is inconsistent with
Argentina's obligations under:
i. Article II:1 of the GATS, inasmuch as it li mits the possibility of deducting payments
for services provided by service suppliers of non-cooperative countries, according
them less favourable treatment than that accorded to like service suppliers of
cooperative countries; and
ii. Article XVII of the GATS, inasmuch as, with regard to the full commitments made by
Argentina on national treatment, the current restriction on deducting payments for
services provided by service suppliers of non-cooperative countries accords them less
favourable treatment than that accorded to domestic like services and service
suppliers.
100
e. Measure 5 (requirements relating to reinsurance and retrocession services) 101 is
inconsistent with Argentina's obligations under:
i. Article II:1 of the GATS, inasmuch as access to the Argentine reinsurance market for
suppliers of non-cooperative countries is subject to compliance with conditions, and
this gives rise to uncertainty that alters the conditions of competition between
reinsurance service suppliers of non-cooperative countries and those of cooperative
countries
102;
ii. Article XVI:1 and XVI:2(a) of the GATS, inasmuch as Argentina restricts the number
of foreign service suppliers and accords them treatment less favourable than that
specified in its Schedule of Commitments.
103
f. Measure 6 (requirements for access to the Argentine capital market) is inconsistent with
Argentina's obligations under Article II:1 of the GATS, inasmuch as it accords to service
suppliers of non-cooperative countries seekin g access to the Argentine capital market in

99 Panama's first written submission, para. 5.1.c; second written submission, para. 3.1.c. See also
Panama's request for establishment of a panel, pp. 4 and 5. It should be pointed out, however, that in
Panama's request for establishment of a panel, reference is made to Article II:2 instead of Article II:1 of the
GATS, owing to a typographical error.
100Panama's first written submission, para. 5.1.d; second written submission, para. 3.1.d. See also
Panama's request for establishment of a panel, p. 5.
101 The changes to measure 5 and their impact on the Panel's terms of reference, as well as the disputed
inclusion of retrocession services in this measure, will be addressed in the section of the Report containing the
Panel's findings.
102 Panama's second written submission, para. 2.612. It should be pointed that Panama indicates that,
although SSN Resolution No. 38.284/2014 amended SSN Resolution No. 35.615/2011 in March 2014 by lifting
the ban on access to the Argentine reinsurance market by service suppliers of non-cooperative countries, the
discrimination persists and, therefore, Panama's claims under Article II:1 of the GATS are maintained. See
Panama's response to Panel question No. 60.
103 Panama's first written submission, para. 5.1.e; second written submission, para. 3.1.e. See also
Panama's request for establishment of a panel, p. 6. It should be pointed out in this connection that Panama
has indicated that it withdraws its claims under Articles XVI:2(a) and XVI:1 of the GATS in respect of the
supply of reinsurance services by suppliers of non-cooperative countries under mode 3 (point 18 of Annex I to
SSN Resolution No. 35.615/2011) and mode 1 (point 20(f) of Annex I to SSN Resolution No. 35.615/2011).
Likewise, Panama has emphasized that it maintains its claims "under Article XVI of the GATS in respect of
point 19 of Annex I to SSN Resolution No. 35.615". See Panama's response to Panel question No. 60.

order to provide their services treatment less favourable than that accorded to like
service suppliers of cooperative countries.104
g. Measure 7 (requirements for the registration of branches) is inconsistent with
Argentina's obligations under Article II:1 of the GATS, inasmuch as it establishes
additional requirements which alter the conditions of competition and accords less
favourable treatment to service suppliers of non-cooperative countries compared to
service suppliers of cooperative countries.
105
h. Measure 8 (foreign exchange authorization requirement) is inconsistent with Argentina's
obligations under Article II:1 of the GATS, inasmuch as it accords service suppliers of
non-cooperative countries seeking to repatriate their investments in Argentina less
favourable treatment than that accorded to like service suppliers of non-cooperative
countries.
106
3.2. Panama further requests, pursuant to Article 19.1 of the DSU, that:
a. The Panel recommend that Argentina bring its measures into conformity with its WTO
obligations107, and that
b. The Panel make suggestions regarding implementation of the recommendations made
pursuant to the authority given by the second sentence of Article 19.1 of the DSU 108
and, more concretely, suggest "the elimination of the less favourable treatment of the
goods and services" of non-cooperative countries as the most appropriate way of
bringing the challenged measures into conformity with Argentina's obligations under the
GATS and the GATT 1994.
109
3.3. Argentina requests that the Panel reject Panama's claims in this dispute in their entirety.110
4 ARGUMENTS OF THE PARTIES
4.1. The arguments of the parties are reflecte d in their executive summaries, provided to the
Panel in accordance with paragraph 20 of th e Working Procedures adopted by the Panel
(see Annexes B-1 and B-2).
5 ARGUMENTS OF THE THIRD PARTIES
5.1. The arguments of the Kingdom of Saud i Arabia, Brazil, the United States and the
European Union are reflected in their executive summaries provided to the Panel in accordance
with paragraph 21 of the Working Procedures adopted by the Panel (see Annexes C-1, C-2, C-3
and C-4). Australia, China, Ecuador, Guatemala, Honduras, India, Oman and Singapore did not
submit written arguments to the Panel.
6 INTERIM REVIEW
6.1 Introduction
6.1. On 22 May 2015, the Panel submitted its Interim Report to the parties. On 5 June 2015,
Panama informed the Panel that it did not intend to request a review of any precise aspects of the
Interim Report. Argentina did submit a written re quest for the review of precise aspects of the

104Panama's first written submission, para. 5.1.f; second written submission, para. 3.1.f. See also
Panama's request for establishment of a panel, p. 7.
105 Panama's first written submission, para. 5.1.g; second written submission, para. 3.1.g. See also
Panama's request for establishment of a panel, p. 6.
106 Panama's first written submission, para. 5.1.h; second written submission, para. 3.1.h. See also
Panama's request for establishment of a panel, p. 7.

Interim Report. Neither party requested an interim review meeting. On 12 June 2015, Panama
submitted comments on Argentina's request for review.
6.2. In accordance with Article 15.3 of the DSU, this section of the Report contains the Panel's
response to Argentina's request, made at the interim review stage, that precise aspects of the
Report should be reviewed. The Panel modified aspects of its Report in the light of the parties'
comments where it considered it appropriate, as explained below. The Panel also corrected a
number of typographical and other non-substantive errors, including those identified by Argentina.
References to sections, paragraph numbers and footnotes in this section relate to the
Interim Report. Where appropriate, references to the paragraphs and footnotes to the Panel
Report to be circulated to Members are included.
6.2 The question of whether measure 5 covers retrocession services
6.3. With regard to paragraph 7.37, Argentina requests the inclusion of part of its response to
Panel question No. 64. Argentina argues that the Panel had not added this response to the
paragraph despite having addressed the question of retrocession services and the scope of the
Note contained in Chapter III of SSN Resolution No. 35.615. Panama makes no objection in this
regard. The Panel notes that paragraph 7.37 does include part of Argentina's response to this
question from the Panel, as indicated in footnote 149. Nevertheless, the Panel sees no impediment
to expanding the summary of Argentina's response to Panel question No. 64, as reflected below in
paragraph 7.37 of its Report.
6.3 Panama's claims under Article II:1 of the GATS
6.4. With regard to paragraph 7.45, Argentina co nsiders that there is an error of syntax in the
Spanish text of the paragraph's second sentence and suggests alternative wording. Panama has no
objections in this regard. The Panel notes that the text in question is in the third sentence of
paragraph 7.45. To avoid confusion, the Panel ha s modified the wording of that sentence in
paragraph 7.45 of its Report.
6.5. Concerning paragraphs 7.142 and 7.280, Argentina requests that additional text be included
to reflect the scope of its arguments. Panama considers that the text added by Argentina is
repetitive because it is already contained in paragraph 7.141. The Panel agrees with Panama that
the inclusion of all of the text suggested by Arge ntina could be redundant. Accordingly, the Panel
will complete the first sentence of paragraph 7.141 of its Report along the lines of the relevant text
in Argentina's first written submission. The Panel considers, however, that the text of
paragraph 7.280 should not be modified because it refers solely to the no less favourable
treatment obligation in Article II:1 of the GATS.
6.6. With regard to paragraph 7.164, and footnotes 324 and 325 in particular, Argentina requests
the inclusion of references to its responses to Panel questions. Panama makes no objection in this
regard. The Panel considers Argentina's request to be pertinent and therefore adds the references
requested to footnotes 325 and 326 of its Report.
6.7. Regarding paragraph 7.189, and footnote 361 in particular, Argentina requests the Panel to
add another paragraph to the reference in this footnote. Panama makes no objection in this
regard. The Panel accepts the request and, therefore, modifies footnote 362 of its Report.
6.8. With reference to paragraph 7.355, Argentina requests the addition of a sentence and
accompanying footnote explaining its position wi th respect to the application of the GATS to
measure 8. Panama makes no objection in this regard. The Panel considers that the second
sentence of paragraph 7.355 already adequately reflects Argentina's position in this respect.
Nevertheless, the Panel deems it useful to supplement the relevant references in footnote 528 of
its Report.
6.9. With regard to paragraphs 7.280, 7.296, 7.305, 7.313, 7.325, 7.333, 7.343 and 7.355,
Argentina considers that its arguments have not been reproduced in full and asks the Panel to add
an identical phrase (and the corresponding footnote ) on the relevance of the legitimate regulatory
distinctions, for the purpose of examining no less favourable treatment, to each and every one of
the aforementioned paragraphs. Panama makes no objection in this regard. The Panel notes that

the reference cited by Argentina in the footnote it wishes to add refers to an entire section of its
first written submission (Section III.D), without specifying any paragraph in particular, and to
paragraph 7.142 of the Panel's Report. The Panel considers that this paragraph adequately reflects
Argentina's arguments in this respect and that it is therefore not necessary to repeat them, as
requested by Argentina.
6.10. As regards paragraphs 7.292, 7.301, 7.309, 7.319, 7.329, 7.339, 7.351 and 7.360,
Argentina asks that the last sentence of these paragr aphs in relation to the updating of the list of
cooperative countries be modified. Panama considers that such a change is not appropriate
because the wording proposed by Argentina refers to the way in which the Panel assessed the
facts and not to Argentina's arguments. The Panel shares Panama's view and does not therefore
consider it appropriate to make the modifications suggested by Argentina.
6.4 Panama's claims under Article XVII of the GATS
6.11. With reference to paragraph 7.524, Argentina requests that the text of the Panel's
conclusion be modified. Panama considers that the modification requested by Argentina is of
dubious value from the syntactical standpoint even though it is not opposed to changes in the
wording of this paragraph to make it easier to understand. The Panel understands the confusion
which its conclusion might cause because of the us e of the terminology of Article XVII ("treatment
no less favourable") and agrees with Argentina on the need to make the modification requested.
The Panel is therefore modifying paragraph 7.524 of its Report.
6.5 Argentina's defence under Article XIV(c) of the GATS
6.12. As regards paragraph 7.526, Argentina requests that a sentence be added concerning the
Panel's findings under Article XVII of the GATS. Panama objects to such an insertion because
Argentina is proposing to add a finding by the Panel to a paragraph which explains Argentina's
arguments on its defence under Article XIV(c) of the GATS. The Panel agrees with Panama and
hence does not consider the modification requested by Argentina to be pertinent.
6.13. With regard to paragraphs 7.635, 7.636 and 7.639, Argentina requests modifications to the
text in order to clarify the principle of tax equality. Panama is opposed because it considers that in
these paragraphs the Panel is examining an ex hibit submitted by Panama and Argentina is
attempting to introduce an assessment of the facts that differs from that of the Panel. The Panel
agrees with Panama and hence does not consider the modifications requested by Argentina to be
pertinent.
6.14. Concerning paragraph 7.753, and footnote 916 in particular, Argentina requests that the
reference be completed in order to reflect fully its arguments on the designation of countries that
have initiated negotiations on the signature of a tax information exchange agreement as
cooperative countries. Panama makes no objection in this regard. The Panel sees no problem in
adding the reference requested and therefore amends footnote 918 of its Report.
6.6 Argentina's defence under Article XIV(d) of the GATS
6.15. With respect to paragraphs 7.780 and 8.5, Argentina requests the Panel to modify the
explanation of its conclusion on the irrelevance of the analysis of Argentina's defence under
Article XIV(d) of the GATS. Panama makes no objections in this regard. The Panel agrees with
Argentina on the relevance of the suggested ch ange to these paragraphs, but prefers to use
slightly different language to that proposed. Th e Panel therefore modifies paragraphs 7.780 and
8.5 of its Report.
6.7 Argentina's defence under paragraph 2(a) of the Annex on Financial Services (the
prudential exception)
6.16. As regards paragraph 7.781 and footnote 949, Argentina requests that the wording of this
paragraph be modified to clarify the scope of Arge ntina's defence in relation to measures 5 and 6
under the prudential exception. Argentina also requests that the existing reference in footnote 949
be supplemented. Panama does not object to th is. The Panel therefore considers the suggested

changes by Argentina to be pertinent and thus modifies paragraph 7.781 and footnote 951 of its
Report.
6.17. With regard to paragraph 7.787, Argentina requests the addition of its arguments under the
prudential exception in relation to the claims under Articles XVI:1 and XVI:2(a) of the GATS.
Panama considers that this amendment interrupts the flow of the text. The Panel considers the
amendment proposed by Argentina in order to complete its arguments to be pertinent and
therefore adds a new paragraph 7.788 to its Report.
6.18. In connection with paragraph 7.898 and footnote 1129, Argentina requests that "to
guarantee the integrity of the market" be included as a prudential reason for measure 5. Panama
makes no comments in this regard. The Panel accepts Argentina's suggestion and therefore
amends paragraph 7.899. and footnote 1134 of its Report.
6.19. With regard to paragraph 7.900, Argentina requests that a reference be added in a footnote
where the Panel cites the Association of Latin American Insurance Supervisors (ASSAL). Panama
makes no objection in this regard. The Panel ag rees to Argentina's request and includes a new
footnote 1140 in its Report.
6.8 Panama's claims under Article I:1 of the GATT 1994
6.20. Concerning paragraph 7.960, Argentina requests the Panel to clarify its position with regard
to the nature of measure 2. Panama does not make any comments in this regard. The Panel
accepts Argentina's suggestion and therefore modifies paragraph 7.961, adding footnote 1215 to
its Report.
6.21. With regard to paragraph 7.967 and footnote 1228, Argentina requests the Panel to
complete the references in footnote 1228 of its Interim Report. Panama does not make any
comments in this regard. The Panel accepts Ar gentina's suggestion and therefore amends
footnote 1236 of its Report.
6.22. As regards paragraph 7.985, Argentina requests the Panel to modify its reading of certain
case law. Panama objects to the modification suggested by Argentina, which it does not consider
to be pertinent. The Panel considers that the modification requested by Argentina alters the Panel's
reading of the case law in question and therefore rejects the modification of this paragraph.
6.23. Argentina requests the Panel to amend certain terms in paragraphs 7.988 and 7.996.
Panama objects to the change suggested by Ar gentina, considering it unnecessary. The Panel
considers that the changes proposed by Argentina are appropriate as they make the Panel's
reasoning clearer. The Panel therefore amends paragraphs 7.989 and 7.997 of its Report.
6.24. As regards paragraph 7.989, Argentina requests the inclusion of a footnote so that its
arguments on the requirement to keep supporting documents for transactions are reflected in full.
Panama submits no comments in this regard. Th e Panel accepts Argentina's request and therefore
inserts footnote 1264 in its Report.
6.9 Argentina's request for editorial and typographical amendments
6.25. Argentina requests a series of editorial and typographical amendments to paragraphs 7.191,
7.244 and 7.621, 7.568, 7.617, 7.869 (and footnote 1084) and 7.1054. Panama does not object to
Argentina's request regarding the aforemention ed paragraphs. The Panel accepts Argentina's
request in respect of most of the aforemention ed paragraphs, except for the references to
Article 15 of the LIG for practical reasons, and paragraph 7.191 the wording of which remains
unchanged for grammatical reasons.
7 FINDINGS
7.1 Preliminary issues
7.1. Before starting to examine the various claims submitted by Panama and the defence put
forward by Argentina, the Panel wishes to clarify the scope of its terms of reference in these

proceedings. We shall begin by examining the claim made by Argentina in its first written
submission according to which Panama, in its first written submission, allegedly brought up a new
dispute, different from the one that was the subject of its request for consultations.
7.2. We shall continue with two questions that concern one of the measures at issue, measure 5
(requirements relating to reinsurance services). The Panel considers, in particular, that it should
pronounce itself on what aspects of measure 5 fall within its terms of reference and whether or not
retrocession services are included in this measure.
7.3. We shall commence by examining whether, as asserted by Argentina, Panama raised a new
issue in its first written submission.
7.1.1 The question of whether Panama raised a new issue in its first written submission
7.4. In its first written submission, Argentina alleges that "[i]n its first written submission,
Panama decided to bring up a new dispute, diff erent from the one that was the subject of the
request for consultations".
111 According to Argentina, the disp ute that was the subject of the
request for consultations "referred to 'certain measures imposed by Argentina that affect trade in
goods and services. These measures only apply to trade conducted with specific countries listed in
Decree No. 1344/1998 as amended by Decree No. 1037/00, which include Panama (hereinafter
the 'listed countries')".
112 Even though Argentina does not appear to argue anything more in this
respect, we consider that this matter should be clarified.
7.5. It is our understanding that this allegation by Argentina refers to the fact that the request for
consultations (and the panel request) mentions Decree No. 1344/1988, as amended by Decree
No. 1037/2000, which regulated the distinction between cooperative and non-cooperative
countries
113, before being replaced by Decree No. 598/2013, which is the Decree that currently
regulates this distinction. Panama refers to the latter in its written submissions and other
pleadings.
7.6. We shall therefore consider whether this ch ange in the reference to the system regulated by
Decree No. 1037/2000, which came to be regulated by Decree No. 589/2013 in the period
between the request for consultations (and the pa nel request) and the submissions presented by
Panama, means that Panama brought up "a new dispute, different from the one that was the
subject of the request for consultations".
114
7.7. We begin by considering what the change in the Argentine regulations involved. In the
first instance, Argentina excluded countries from its general regime by means of a positive
exclusion system, in other words, those countries specifically mentioned in a list were excluded
from the general treatment habitually granted by Argentina and were, therefore, made subject to
the eight measures at issue in this dispute. Non-cooperative countries were listed in Decree
No. 1344/1998.115 This was the situation at the time the Panel was established. 116 At that time,
Panama was one of the non-cooperative countries.
7.8. However, in early 2014, after this Panel had been established 117 and composed118, Argentina
amended Decree No. 1344/1998 119, introducing a negative exclusion system such that only the
countries included in a list – cooperative countries – would receive general treatment. Argentina
thus moved from a system of positive exclusion lists (i.e. listing non-cooperative countries) to one

111 Argentina's first written submission, para. 13.
112 Argentina's first written submission, para. 13. (emphasis original)
113 We recall that the term used in Decree No. 1344/1998, as amended by Decree No. 1037/2000, is
"countries with low or no taxes". Decree No. 589/2013 replaces this term by "countries not considered
'cooperative for tax transparency purposes'". See Exhibits PAN-1 and PAN-3 / ARG-35.
114 Argentina's first written submission, para. 13.
115 Decree No. 1344 establishing the Regulation to the Gains Tax Law, of 19 November 1998 (RIG),
(Exhibit PAN-1).
116 See para. 1.3 above.
117 See para. 1.3 above.
118 See para. 1.5 above.
119 Decree No. 589/2013, amended Argentina's positive list system by replacing the
seventh unnumbered article incorporated by Decree No. 1037/2000 after Article 21 of the RIG by a rule which
defines countries considered cooperative for tax transparency purposes.

of negative exclusion lists (listing cooperative countries). The list of cooperative countries in effect
at the time its first written submission was presented included Panama, so it was not excluded
from general treatment as it had been at the time of the request for consultations (and the
establishment of this Panel).
7.9. We therefore agree with Argentina that the regulations governing determination of the
categories of cooperative and non-cooperative countries in effect at the time of the request for
consultations (and the panel request) were not the same as those referred to by Panama in its
first written submission (and in its subsequent arguments). We shall now consider whether this
change signifies, as Argentina claims, that Panama has brought up a new and different dispute. By
"new dispute" we understand that Argentina means a new "matter referred to the DSB".
7.10. The legal provision governing what a "matter referred to the DSB" consists of is Article 7.1
of the DSU.
120 This provision specifically refers to the document containing the panel request,
governed by Article 6.2 of the DSU.121 The Appellate Body has explained that the "matter" consists
of two elements: the measures at issue and the legal basis of the complaint.122
7.11. We recall that Decree No. 589/2013 is not a measure at issue. As explained in section 2.2
above, however, Decree No. 589/2013 is the key element of the eight measures challenged by
Panama because they all include the distinct ion between cooperative and non-cooperative
countries established pursuant to that Decree.
7.12. In our view, this key role is the same as that performed by its predecessor, Decree
No. 1037/2000, which is mentioned in the request for consultations and the panel request,
although in that case the measures referred to the list of non-cooperative countries contained
therein.
7.13. The foregoing leads us to the following conclusions. On the one hand, as it does not concern
measures at issue or obviously, the legal basis of the complaint, it is not possible to conclude that
Panama's reference to Decree No. 589/2013 in its first written submission means that the matter
has changed and that there is a new dispute. On the other hand, if we analyse the change that
occurred in Argentina's regulations as a result of Decree No. 589/2013, this consists simply of the
transition from a system of positive exclusion to one of negative exclusion. In other words, there is
still one group of cooperative countries versus another group of non-cooperative countries. One
additional element to be taken into account is th at this change in Argentina's legislation did not
involve any change to the substance of the eight measures at issue, but merely adjustments of
form to replace references to "jurisdictions with low or no taxes" in Decree No. 1037/2000 by
"jurisdictions not considered 'cooperative for tax transparency purposes'" in Decree
No. 589/2013.
123
7.14. We therefore consider that the change to the rules governing the system for deciding which
countries are cooperative or non-cooperative did not involve any substantive change in the
formulation of the eight measures at issue and, consequently, does not mean that in its first
written submission Panama brought up "a new dispute, different from the one that was the subject
of the request for consultations". Likewise, bearin g in mind our terms of reference, we consider
that the change in this legislation does not prevent us from examining the eight measures at issue
in the light of the system introduced by De cree No. 589/2013 inasmuch as it distinguishes
between cooperative and non-cooperative countries.

120 Article 7.1 of the DSU provides as follows:
Panels shall have the following terms of reference unless the parties to the dispute agree
otherwise within 20 days from the establishment of the panel:
"To examine, in the light of the relevant provisions in (name of the covered agreement(s)
cited by the parties to the dispute), the matter referred to the DSB by (name of party) in
document ... and to make such findings as will assist the DSB in making the
recommendations or in giving the rulings provided for in that/those agreement(s)."
121 See paragraph 7.23 below.
122 Appellate Body report, Guatemala – Cement I, para. 72.
123 Decree No. 589/2013 replaces the references to "countries with low or no taxes" contained in the
Gains Tax Law and the Regulation thereto by "countries 'not considered cooperative for tax transparency
purposes'". Article 1 of Decree No. 589/2013, (Exhibits PAN-3 and ARG-35).

7.15. In view of the foregoing, we conclude that the replacement of Decree No. 1344/1998, as
amended by Decree No. 1037/2000, by Decree No. 589/2013 does not prevent us from examining
the eight measures at issue in the light of the system introduc ed by Decr ee No. 589/2013
inasmuch as it distinguishes between cooperative and non-cooperative countries.
7.1.2 Aspects of measure 5 included in our terms of reference
7.1.2.1 Introduction
7.16. Measure 5 has been the subject of development and legislative amendments which occurred
before and after the establishment of this Panel. In this section, we shall examine these changes
and decide to what extent they are relevant for the purposes of our terms of reference.
7.1.2.2 Development and amendment of measure 5
7.17. In its panel request, Panama states that measure 5 is applied pursuant to SSN Resolution
No. 35.615/2011.
124 In its first written submission, Panama also refers to SSN Resolution
No. 35.794/2011, which is not mentioned in its panel request. As explained in the descriptive part
of this Report
125, Article 4 of SSN Resolution No. 35.794/2011 develops point 19 of Annex I to SSN
Resolution No. 35.615/2011, allowing cross-border su pply (mode 1) of reinsurance services in the
Argentine market for individual risks exceeding US$50 million but only for the portion which
exceeds that amount.
126 In response to a question from the Panel, both parties agreed that SSN
Resolution No. 35.794/2011 is a relevant legal instrument for evaluating the measure challenged
by Panama and thus forms part of this Panel's terms of reference.127
7.18. On 21 March 2014, after this Panel had been established, Argentina amended SSN
Resolution No. 35.615/2011 by means of SSN Resolution No. 38.284/2014, replacing points 18
and 20(f) of Annex I to SSN Resolution No. 35.615/2011. 128 The new wording of these points, as
amended, is explained in detail in th e descriptive part of this Report. 129 In its second written
submission, Panama explains that its panel request identified SSN Resolution No. 35.615/2011 and
"any possible amendments, extensions or additions", for which reason, in its opinion, the
amendment to SSN Resolution No. 35.615/2011 in troduced by SSN Resolution No. 38.284/2014
forms part of this Panel's terms of reference.130 Consequently, as of its second written submission,
Panama adapted its arguments with respect to this measure, taking into account the amendments
introduced by SSN Resolution No. 38.284/2014. Argentina, for its part, does not object to the
inclusion of SSN Resolution No. 38.284/2014 in the Panel's terms of reference and refers to this
Resolution in its arguments.
131
7.19. On 6 November 2014, Argentina adopted SSN Resolution No. 38.708/2014 which, according
to Argentina, provides for a regulatory reform of the reinsurance sector. 132 In its responses to
questions from the Panel in connection with the second substantive meeting, Argentina explained
that point 2.1.1 of the Annex to this Resolution includes the rules contained in SSN Resolutions
Nos. 35.615, 35.726, 35.794, 36.266, 36.332, 36.859 and 38.284. 133 In its comments on

124 Panama's request for the establishment of a panel, pp. 5 and 6.
125 See paras. 2.28-2.29 above.
126 Panama's second written submission, paras. 2.585 and 2.586. See also SSN Resolution
No. 35.794/2011, (Exhibits PAN-40 / ARG-48).
127 Panama's response to Panel question No. 61 and Argentina's response to the same question.
128 See para. 2.30 above.
129 See para. 2.30 above.
130 Panama's second written submission, para. 2.576 (referring to its request for the establishment of a
panel, p. 7).
131 We note that Argentina was in fact the first to mention this Resolution when clarifying that "in order
to adapt the regulations on reinsurance to the new rule established by Decree No. 589/2013, the SSN issued
Resolution No. 38.284/2014, which partly amends Resolution No. 35.615/2011, challenged by Panama as of
25 March 2014". See Argentina's first written submission, para. 411.
132 Argentina's response to Panel questions Nos. 61, 64 and 66.
133 Argentina's response to Panel question No. 66(a), footnote 25. Argentina clarifies in response to this
question from the Panel that "[a]lthough the aforementioned SSN Resolution No. 38.708 does not specifically
mention SSN Resolution No. 38.284, it should be understood that, in the first place, it has been tacitly repealed
as it is a resolution partially amending SSN Resolution No. 35.615 and hence follows the fortunes of the main
Resolution, to which it made amendments. Secondly, the text of Resolution No. 38.284 was incorporated into
the new Regulation".

Argentina's responses relating to the second su bstantive meeting, Panama did not challenge the
explanation given by Argentina, nor did it request the Panel to include SSN Resolution
No. 38.708/2014 in its terms of reference. The Pane l, therefore, will not consider this latest
amendment in its analysis of Panama's claims relating to measure 5.
134
7.20. We therefore identify the two legal instruments which develop or amend SSN Resolution
No. 35.615/2011, which are not mentioned in the panel request and which, according to Panama's
arguments, form part of our terms of reference: SSN Resolution No. 35.794/2011 and SSN
Resolution No. 38.284/2014.
7.21. Although Argentina is not opposed to the inclusion of these instruments in our terms of
reference, given that the identification of the me asure is of key relevance to our jurisdiction, we
are duty bound to examine whether the measures at issue have been identified with sufficient
precision, in the light of Article 6.2 of the DSU
135, to enable both Resolutions to be included in our
terms of reference, as is requested by Panama.
7.22. Before considering the appropriateness of including these provisions in our terms of
reference, we begin by examining the relevant legal provision.
7.1.2.3 The relevant legal provision
7.23. Article 6.2 of the DSU provides in relevant part:
The request for the establishment of a panel shall be made in writing. It shall indicate
whether consultations were held, identify the specific measures at issue and provide a
brief summary of the legal basis of the complaint sufficient to present the problem
clearly.
7.24. The language of Article 6.2 of the DSU reveals "two key requirements" that a complainant
must satisfy in its panel request, namely, the identification of the specific measures at issue, and
the provision of a brief summary of the legal basis of the complaint (i.e. the claims) that is
sufficient to present the problem clearly.
136 This provision, therefore, serves a "pivotal function" 137
in WTO dispute settlement by defining "the scope of the dispute between the parties, thereby
establishing and delimiting the panel's jurisdic tion and serving the due process objective of
notifying the respondent and third parties of the nature of the case".
138 As stated by the Appellate
Body in US – Carbon Steel , compliance with the requirements of Article 6.2 "must be determined
on the merits of each case, having considered th e panel request as a whole, and in the light of
attendant circumstances".139 The Appellate Body added in this connection that the examination of
the panel request must be based "on its face as it existed at the time of its filing".140
7.25. In the present case, our examination focuses on compliance with the first key requirement
in respect of the two measures not included in the panel request but which, in principle, develop or
amend one of the measures included in the request.

134 In any event, the Panel points out that the evidence on this new SSN Resolution No. 38.708/2014
was included on the record of these proceedings after the second substantive meeting, so the parties had no
opportunity to put forward their arguments in this regard.
135 Appellate Body Report, US – Carbon Steel, para. 123. We also recall that the Appellate Body has
clarified that "it is a widely accepted rule that an international tribunal is entitled to consider the issue of its
own jurisdiction on its own initiative, and to satisfy itself that it has jurisdiction in any case that comes before
it". See Appellate Body Report, US – 1916 Act, footnote 30. We agree with the panel in US – Upland Cotton
that the specific identification of the measures at issue is a question which goes to our jurisdiction and does not
depend on whether a party requests a ruling in a timely manner. See Panel Report, US – Upland Cotton,
para. 7.153.
136 Appellate Body Report, China – Raw Materials, para. 219. Article 6.2 of the DSU also requires that
the panel request be made in writing and indicate whether any consultations were held.
137 Appellate Body Report, China – Raw Materials, para. 219.
138 Appellate Body Report, Argentina – Import Measures, para. 5.39 (citing Appellate Body Report,
US - Countervailing and Anti-Dumping Measures (China), paras. 4.6 and 4.7).
139 Appellate Body Report, US – Carbon Steel, para. 127.
140 Appellate Body Report, Argentina – Import Measures, para. 5.48 (citing Appellate Body Report,
US - Countervailing and Anti-Dumping Measures (China), para. 4.9).

7.26. The Appellate Body has explained that, in order for changes introduced into a measure after
establishment of a panel to be considered as part of its terms of reference, such changes must not
have altered the "essence" of the measure. The Ap pellate Body considered that "[i]f the terms of
reference in a dispute are broad enough to include amendments to a measure … and if it is
necessary to consider an amendment in order to secure a positive solution to the dispute … then it
is appropriate to consider the measure as amended in coming to a decision in a dispute."141
7.27. In this connection, as pointed out by Panama with regard to SSN Resolution
No. 38.284/2014, its panel request refers to "any possible amendments, extensions or additions".
We shall therefore examine whether this referenc e to "any possible amendments, extensions or
additions" is sufficient for the changes introduced by SSN Resolution No. 35.794/2011 and SSN
Resolution No. 38.284/2014 to be considered within our terms of reference, in the light of the
circumstances of this case in particular, and whether the resolutions in question do not alter the
essence of SSN Resolution No. 35.615/2011.
7.28. We start by examining the relationship between SSN Resolution No. 35.794/2011 and SSN
Resolution No. 35.615/2011. As explained in the descriptive section
142, Article 4 of SSN Resolution
No. 35.794/2011, in particular, provides as follows:
For the purposes of point 19 of Annex I to SSN Resolution No. 35.615, it is stipulated
that individual risks exceeding US$50,000,000 (FIFTY MILLION UNITED STATES
DOLLARS) may be reinsured with the reinsurance entities mentioned in point 20 of the
aforementioned regulations ("approved reinsurers"), for that portion which exceeds
the aforementioned amount.
7.29. We note that this provision, which contains an explicit reference to point 19 of Annex I to
SSN Resolution No. 35.615/2011, develops this point by introducing the magnitude of the
individual risk which may be reinsured with foreign reinsurance entities: US$50,000,000
(fifty million United States dollars). Article 4 also provides that the reinsurance shall be "for that
portion which exceeds the aforementioned amount". It is our understanding that this development
does not alter the "essence" of measure 5 because it continues to regulate the cross-border supply
of reinsurance services, in other words, the delivery of a service in the same sector, and through
the same mode of supply (i.e. cross-border supply or mode 1).
7.30. As regards the relationship between SSN Resolution No. 38.284/2014 and SSN Resolution
No. 35.615/2011, the text of the former stipulates in relevant part:
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 to be '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 previous paragraph, it
must prove that it is subject to the cont rol 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).

141 Appellate Body Report, Chile – Price Band System, para. 144. (emphasis original)
142 See para. 2.28 above.

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, proportionat e to the risks, and the counter-measures
indicated in Recommendation 19 of the FI NANCIAL ACTION TASK FORCE (FATF) and
the Interpretive Note thereto may be applied."
7.31. We note that Articles 1 and 2 of the aforementioned Resolution replace the text of points 18
and 20(f) of Annex I to SSN Resolution No. 35.615/2011. The remainder of SSN Resolution
No. 35.615/2011 remains unchanged, except for the development introduced by SSN Resolution
No. 35.794/2011.
7.32. As explained in the descriptive part of this Report, the new text of points 18 and 20(f) of
SSN Resolution No. 35.615/2011 lifts the ban on supplying reinsurance services through
cross-border trade and commercial presence for entities of countries that do not cooperate for the
purposes of tax transparency and the global fight against money laundering and terrorist financing
offences according to the FATF's criteria. Instead, the new text of points 18 and 20(f) provides for
the possibility of supplying such services provided that the parent companies of the branches of
companies of non-cooperative countries (mode 3) and the reinsurance entities that deliver their
services directly from non-cooperative countries (mode 1) comply with certain requirements. It is
our understanding that such an amendment made by means of SSN Resolution No. 38.284/2014
does not alter the "essence" of measure 5 becaus e it continues to regulate the delivery of the
same service in the same sector and through the same modes of supply.
7.33. Consequently, we consider it appropriate for us to rule on measure 5, as developed by
Article 4 of SSN Resolution No. 35.794/2011 and in accordance with the amendment introduced by
SSN Resolution No. 38.284/2014 in order to "secure a positive solution to the dispute" and to
make "sufficiently precise recommendations and rulings so as to allow for prompt compliance".
143
Furthermore, as we have already indicated, the parties to this dispute do not object to our doing
so.
144

143 Appellate Body Report, Chile – Price Band System, para. 143.
144 See paras. 7.20-7.21 above.

7.34. In the light of the foregoing, we conclude that measure 5, as developed by Article 4 of SSN
Resolution No. 35.794/2011 and in accordance with the amendment introduced by SSN Resolution
No. 38.284/2014, forms part of this Panel's terms of reference.
7.1.3 The question of whether measure 5 covers retrocession services
7.35. We shall now consider the scope of the services covered by measure 5. The parties
disagree, in particular, on the scope of measure 5 with regard to retrocession services. On the one
hand, Panama considers that such services are governed by measure 5 and relies in this regard on
a note contained in Chapter III of SSN Resolution No. 35.615/2011, which provides that
"[h]ereinafter, the scope of the terms reinsurance and reinsurer shall extend to the terms
retrocession and retrocessionaire at all levels" for the purposes of that Resolution.
145 We recall that
only points 18, 19 and 20(f) in Chapter IV of Annex I to SSN Resolution No. 35.615/2011 are part
of measure 5. According to Panama, the note applies to the whole of SSN Resolution
No. 35.615/2011.146
7.36. Argentina, on the other hand, in its first written submission, contends that retrocession
services are not included within the scope of measure 5, as "the retrocession regime … is regulated
in SSN Resolution No. 35794, which was not contested by Panama in this case".147 This statement,
however, appears to contradict Argentina's response to a question from the Panel in which it
explains, in connection with measure 5, that the "measure identified by Panama refers specifically
to the delivery of reinsurance and retrocession services" 148 and confirms that "Argentina considers
that, by virtue of the measure identified by Panama in its panel request …, SSN Resolution
No. 35794 forms part of the Panel's terms of reference".
149
7.37. Despite the foregoing, in response to a question from the Panel, Argentina explained that
the note contained in Chapter III of Annex I to SSN Resolution No. 35.615/2011 only applies to
that Chapter, which deals exclusively with intermediaries.
150 Argentina explains that Chapter III,
including the aforementioned note, was entirely incorporated into SSN Resolution No. 35.615/2011
by SSN Resolution No. 36.266/2011. Thus, according to Argentina, the content of this note does
not inform the provisions of Chapter IV, which include the relevant points in relation to measure 5.
7.38. Our work, therefore, consists of decidi ng whether the note contained in Chapter III of
Annex I to SSN Resolution No. 35.615/2011 informs not only the provisions of Chapter III but also
those which compose measure 5 and which are included in Chapter IV. The scope of that note will,
therefore, determine whether retrocession services fall within the scope of measure 5.
7.39. In US – Carbon Steel , the Appellate Body clarified what elements a panel must examine in
order to determine the meaning of the municipal la w and indicated that those elements vary from
one case to another. 151 The Appellate Body explained that, whereas in some cases the text of the
relevant legislation may suffice to clarify the scope and meaning of the relevant legal instruments,
in other cases the complainant will also need to support its understanding of the scope and
meaning of such legal instruments with "evidence of the consistent application of such laws, the

145 Panama's first written submission, footnote 311 (citing Exhibit PAN-36).
146 Panama contends that "according to the Note contained in Chapter III of SSN Resolution No. 35.615
… 'the scope of the terms reinsurance and reinsurer exte nds to the terms retrocession and retrocessionaire at
all levels', for the purposes of that Resolution. See Panama's first written submission, footnote 311 (citing
Exhibit PAN-36). (emphasis added)
147 Argentina's first written submission, para. 443. (footnote omitted)
148 Argentina's response to Panel question No. 61.
149 Argentina's response to Panel question No. 61. (footnote omitted)
150 Argentina's response to Panel question No. 64.
151 The Appellate Body found as follows:
The party asserting that another party's municipal law, as such, is inconsistent with relevant
treaty obligations bears the burden of introducing evidence as to the scope and meaning of such
law to substantiate that assertion. Such evidence will typically be produced in the form of the
text of the relevant legislation or legal instruments, which may be supported, as appropriate, by
evidence of the consistent application of such laws, the pronouncements of domestic courts on
the meaning of such laws, the opinions of legal experts and the writings of recognized scholars.
The nature and extent of the evidence required to satisfy the burden of proof will vary from case
to case.
See Appellate Body Report, US – Carbon Steel, para. 157. (footnote omitted) See also Appellate Body
Report, US – Countervailing and Anti-Dumping Measures (China), para. 4.92. (footnote omitted)

pronouncements of domestic courts on the meaning of such laws, the opinions of legal experts and
the writings of recognized scholars".152 In the present case, Panama has only provided us with the
text of the Argentine legislation in question. We shall therefore consider whether the actual
wording of the legislation is sufficiently clear to determine whether measure 5 covers retrocession
services.
7.40. We start by considering the note at the beginning of Chapter III of Annex I to SSN
Resolution No. 35.615/2011153, which, as we have already stated, stipulates the following:
CHAPTER III. INTERMEDIARIES
(Chapter replaced by Article 1 Resolution No. 36.266/2011 of the National Insurance
Supervisory Authority, O.J. 23/11/2011)
Note: Hereinafter the scope of the terms reinsurance and reinsurer shall extend to the
terms retrocession and retrocessionaire at all levels.
7.41. We observe that the note in question is pl aced just below the title of Chapter III which, by
its own terms, is intended to regulate intermediaries, and below a clarification in brackets
concerning the latest regulatory developments affecting Chapter III. We also observe that the
Chapter in question is found within the Regulatory Framework for Reinsurance contained in
Annex I to SSN Resolution No. 35.615/2011, which only consists of four chapters. After
Chapter III, entitled "Intermediaries", there is only one more chapter, Chapter IV, entitled
"General Provisions", in which the provisions composing measure 5 are to be found.
7.42. The Panel notes that the terms retrocession and retrocessionaire are not defined in SSN
Resolution No. 35.615/2011. Among the exhibits furnis hed by the parties, we find a definition of
the concept of retrocession in the "Introduction to Reinsurance" of the MAPFRE Foundation. This
document defines retrocession as "reinsurance ceded by a reinsurer to another insurance or
reinsurance company in order to release a part of the risks it has written and, in this way,
stabilizing its results and homogenizing its liabilities. It is reinsurance for the reinsurer".
154
7.43. In considering the wording of the note at the beginning of Chapter III, we understand that
the pertinent question is the interpretation of the words " en adelante " (hereinafter). The
Diccionario panhispánico de dudas of the Spanish Royal Academy defines "en adelante" as "a partir
del momento que se toma como referencia" [from the moment taken as reference].155 We see that
the note in question does not limit the extens ion of the scope of the terms reinsurance and
reinsurer to the terms retrocession and retrocessionaire at all levels. The note could, for example,
explicitly limit this extension to the purposes of Chapter III or some of its provisions. Accordingly,
the note in itself appears to indicate that it applies to Annex I as from the moment it appears in
the text, which would give cause to think that it could also include Chapter IV. In this connection,
Panama's interpretation that this note applies to the whole of SSN Resolution No. 35.615/2011,
which would also include the chapters preceding Chapter III, does not appear to us to be correct.
On the contrary, the note in question applies "hereinafter", in other words, from the moment it
appears in the text of SSN Resolution No. 35.615/2011. We therefore have to decide whether the
note applies only up to the end of Chapter III or, on the contrary, whether "hereinafter" also
means that it applies to the provisions in Chapter IV and, hence, measure 5.
7.44. In order to resolve this question, we deem it useful to examine the title of Chapter III,
which is "Intermediaries". In our view, the location of this note below the title and not in another
part of the text indicates that its purpose is to sh ed light on the subject dealt with in this Chapter,

152 Appellate Body Report, US – Carbon Steel, para. 157. In US – Countervailing and Anti-Dumping
Measures (China), referring to its report in US – Carbon Steel, the Appellate Body explained that
"in determining the meaning of municipal law, a panel may need to evaluate several elements, including the
text of the law on its face, the pronouncements of domestic courts, and the practice of administering
agencies". See Appellate Body Report, US – Countervailing and Anti-Dumping Measures (China), para. 4.92.
153 Annex I to SSN Resolution No. 35.615/2011 contains the "Regulatory Framework for Reinsurance",
as established by Article 1 of that Resolution. See SSN Resolution No. 35.615/2011, (Exhibits PAN-36 /
ARG-27).
154 MAPFRE Foundation, Introduction to reinsurance, (Exhibit PAN-35), p. 18.
155 Diccionario panhispánico de dudas, 1st edition, Real Academia Española (Santillana, 2005), available
at http://lema.rae.es/dpd/?key=adelante.

namely, "intermediaries", from the moment (hereinafter) it appears in the text. We thus consider
that the note in question applies to Chapter III an d Chapter IV inasmuch as it concerns regulation
of the activities of "intermediaries". It is our opinion that this focus would make possible an
harmonious interpretation of Chapters III and IV. Accordingly, although we agree with Argentina
that the extension of the scope of the terms reinsurance and reinsurance to include the terms
retrocession and retrocessionaire at all levels pursuant to the note is limited to regulation of the
intermediaries
156, we do not share its view that this conclusion would restrict the note to
Chapter III.
7.45. Indeed, Chapter IV also includes provisio ns which mention the term "intermediary". As an
example, point 10, entitled "Additional informatio n" refers to the solvency of the "registered
intermediary". A reading of Chapter IV in its entirety shows that it does not include rules governing
the registration of intermediaries. On the other hand, points 5 and 8 of Chapter III do include rules
governing the registration of intermediaries in th e Register kept for the purpose by the Argentine
National Insurance Supervisory Authority. In our view, in order to be able to understand the
meaning of the concept of "registered intermediary" in point 10 of Chapter IV, it is necessary to
look at the rules governing the registration of intermediaries in Chapter III. The inclusion of the
reference to a "registered intermediary" in Chapter IV leads us to consider that the logical
conclusion would be that the intermediaries referred to in relation to reinsurance in the general
provisions of Chapter IV are the same as those regulated by Chapter III. We do not think it
reasonable to interpret the note in a way which would suggest that Chapter III regulates the
registration of intermediaries in respect of reinsurance and retrocession services, pursuant to the
note, while Chapter IV applies only to intermediaries registered in accordance with Chapter III in
respect of reinsurance services, excluding those registered in accordance with Chapter III in
respect of retrocession services.
7.46. The note in question therefore informs th e provisions in Chapter IV, whose purpose is to
regulate the activities of intermediaries. Consequently, in order to determine whether the note
applies to the provisions of Chapter IV which compose measure 5, we need to ascertain whether
the purpose of those provisions is to regulate the activities of intermediaries.
7.47. First of all, we note that the "intermediar ies" referred to in both Chapter III and Chapter IV
are not, in fact, direct suppliers of reinsuranc e or retrocession services. They are "agents"
(referred to in point 6(l)(a) of Annex I to SSN Resolution No. 35.615/2011 and "brokers"
(specifically mentioned in the preamble and points 5(d) and 5(f) of Annex I to SSN Resolution
No. 35.615/2011, as well as in Annex II). In this connection, one of the preambular paragraphs
specifically provides that "it is necessary to establish an appropriate regulatory framework for
reinsurance brokers".
157
7.48. This is not the case, however, for the provisions composing measure 5. Point 18 of Annex I
to SSN Resolution No. 35.615/2011 concerns "branches of foreign companies", while points 19 and
20(f) of the same Resolution refer to "foreign reinsurance entities". In both cases, the provisions
composing measure 5 regulate entities which provide reinsurance services directly.
7.49. Secondly, and as background to this discussion, we note that SSN Resolution
No. 35.794/2011, Article 4 of which forms part of the Panel's terms of reference 158, establishes a
specific regulatory framework for the direct supply of retrocession services, which differs from the
provisions on reinsurance services in points 18, 19 and 20(f) of SSN Resolution
No. 35.615/2011.
159
7.50. In the light of the foregoing, we conclude that measure 5 applies only to reinsurance
services and does not, therefore, cover retrocession services.

156 Argentina's response to Panel question No. 64.
157 SSN Resolution No. 35.615/2011, (Exhibits PAN-36 / ARG-27).
158 See the decision of the Panel in this regard in para. 7.33 above.
159 Argentina's first written submission, paras. 443-446; and Argentina's response to Panel question
No. 18.

7.2 Order of analysis
7.51. Having established the boundaries of measure 5 in relation to our terms of reference, and
before continuing with the claims put forwar d by Panama and the related defence arguments
invoked by Argentina, we shall consider the order of our analysis.
7.52. As we explain in the descriptive part of this Report, in its panel request Panama presented
claims under the GATS and the GATT 1994 relating to eight measures applied by Argentina.
Panama considers that each of the challenged measures violates one or more specific provisions of
the GATS and/or the GATT 1994. The provisio ns invoked by Panama under the GATS are
Articles II:1, XVI:1, XVI:2(a) and XVII. Under the GATT 1994, Panama alleges that certain
measures are inconsistent with Articles I:1, III:4 and XI:1.
7.53. In its defence, Argentina replies, inter alia, that its measures are justified by the exceptions
relating to services in Articles XIV(c) and XIV( d) of the GATS and paragraph 2(a) of the GATS
Annex on Financial Services, which contains the so-called "prudential exception"; as well as the
exception in Article XX(d) of the GATT 1994 with regard to the claims under this Agreement.
160
7.54. The possibility that a measure may be inconsistent with the GATS and the GATT 1994 at the
same time has already been accepted by the Appellate Body in previous disputes. Indeed, the
Appellate Body considered that obligations under the GATS and the GATT 1994 may coexist
161 and
that a measure may fall simultaneously within the scope of both Agreements, even though the
specific aspects of the measure that are to be examined under each Agreement may differ.162
7.55. One issue we must resolve in regard to the legal claims is whether there is a specific
sequence to be followed when examining Panama's claims and Argentina's response. Inasmuch as
Panama made claims under both the GATS and the GATT 1994, the first thing we have to decide is
whether we should start our analysis by examin ing the claims made under the GATS or those
made under the GATT 1994. We note that both pa rties began their arguments with the claims and
corresponding defences under the GATS, before turning to the claims and defences under the
GATT 1994. Once it is decided which Agreement to examine first, we have to settle the order of
precedence of the provisions to be considered under each Agreement.
7.56. Together with the decision on which prov isions of which Agreement are to be examined
first, we also face the task of deciding on the approach to be followed in our analysis. Panama
urges us to examine its claims and Argentina's corresponding defences separately in relation to
each measure at issue, which would lead us to repe at a large part of our analysis. In its view, this
approach would give the Panel a better understanding of the facts and would help it to identify the
relevance of the legal arguments. Panama also raised considerations of due process, arguing that
it has requested findings, rulings, recommendations and, where applicable, suggestions for each of
the measures at issue.
163 Argentina considers that, in view of the nature of Panama's claims in this
dispute, it would be appropriate for the Panel to follow the order of analysis proposed by
Panama.
164
7.57. We start by considering the order of analysis that we must follow with regard to the claims
under the GATS and the GATT 1994. As we have already indicated, both parties commence their
arguments by referring to Panama's claims under the GATS. We see no problem in following the
order proposed by the parties, particularly bearing in mind that Panama's claims under the GATS
are more numerous and cover all the measures at issue.
7.58. As is explained in detail in section 7.3.1 below, even though Panama contends that the eight
measures at issue are covered by the GATS, Argentina maintains that Panama has not established
a prima facie case that the measures at issue are covered by the GATS as it has not proved that

160 Argentina's first written submission, paras. 237-400, 551-568 and 745-751. See also first written
submission, Explanatory Annex No. 2, paras. 52-73.
161 Appellate Body Report, Canada – Periodicals, p. 20 (confirming the statement of the Panel; see Panel
Report, Canada – Periodicals, para. 5.17).
162 Appellate Body Report, EC – Bananas III, para. 221.
163 Panama's response to Panel question No. 5.
164 Argentina's response to Panel question No. 5.

there is "trade in services" within the meaning of Article I:2 of the GATS. 165 We shall therefore
begin by examining as a threshold issue whether the GATS is applicable to each of the eight
measures at issue. 166 Should this be the case, we would continue our analysis by examining
Panama's claims under the GATS, followed by Argentina's defences under the same Agreement.
After completing our analysis under the GATS, we would address Panama's claims and Argentina's
corresponding defences under the GATT 1994.
7.59. As regards the order of analysis of Panama's claims under the GATS and the corresponding
defences, the parties' arguments have as a rule dealt first with the claims regarding
most-favoured-nation treatment (Article II:1) and, depending on the measure, national treatment
(Article XVII), followed, where appropriate, by claims relating to market access (Articles XVI:1 and
XVI:2(a)). Following on from the corresponding claim, the parties' arguments, where relevant,
have concerned the exceptions invoked by Argentina under Articles XIV(c) and XIV(d) of the GATS
and paragraph 2(a) of the Annex on Financial Services (the so-called "prudential exception").
7.60. If we examine the various provisions invoked by Panama under the GATS, we see how
Article II of the GATS contains a general obligation, applicable to all the sectors covered by the
GATS. On the other hand, the other provisions in voked by Panama under the GATS, Articles XVI
and XVII, contain obligations that only concer n the sectors and subsectors included in the
Members' Schedules of Commitments, under the modes indicated, and subject to the "terms,
limitations and conditions" (for Article XVI) and "conditions and qualifications" (for Article XVII) set
out in the Schedules of Commitments. The order followed by the parties therefore appears to us to
be appropriate.
7.61. After examining the claims under the GATS, we shall turn to the defences put forward by
Argentina. We also think it appropriate to follow the order proposed by the parties and to
commence our analysis of these defences under Article XIV(c), followed by Article XIV(d) of the
GATS, inasmuch as the latter defence has been invoked in the alternative.
167 We shall go on to
examine the "prudential exception" in paragraph 2(a) of the Annex on Financial Services
hereunder.
7.62. As regards the order of analysis of Pana ma's claims under the GATT 1994, the question of
the order of precedence would arise only in relati on to measure 3 (transaction valuation based on
transfer prices), as Panama has made only one claim in relation to measure 2 (presumption of
unjustified increase in wealth) under Article I:1 of the GATT 1994. As regards measure 3, Panama
has put forward claims of inconsistency with Articles I:1 and III:4 and, in the alternative, under
Article XI:1 of the GATT 1994.
7.63. Concerning the order of analysis between Articles I:1 and III:4 of the GATT 1994, we note
that both provisions contain two different expressions of the fundamental principle of
non-discrimination: most-favoured-nation treatment (Article I:1) and national treatment
(Article III:4). We do not find in the text of these two provisions or in the case law any indication
of the existence of a relationship between them wh ich would determine the order of analysis to be
f o l l o w e d . W e m u s t b e a r i n m i n d t h a t t h e o r d e r w e c h o o s e m a y a l s o h a v e a n i m p a c t o n t h e
potential to apply judicial economy when making our determinations in this case.
168 Nonetheless,
the difference in the nature of the two provisions means that a finding of violation of the MFN
treatment obligation does not result in securing a positive solution to the dispute with regard to
the national treatment obligation. The order of prec edence does not, therefore, in principle, have
an impact in terms of the exercise of judicial economy. Consequently, there do not appear to be
any reasons preventing the Panel from following the order of analysis indicated by the complaining
party, which consists in first examining the claim under Article I:1 and then the claim under
Article III:4 of the GATT 1994. After our analysis under Article III:4 of the GATT 1994 has been

165 Argentina's first written submission, paras. 139-141.
166 This sequence appears to us to coincide with the comments of the Appellate Body in Canada – Autos.
In that dispute, the parties disagreed on whether the measures in question were covered by the GATS. The
Appellate Body indicated that "… here, the fundamental structure and logic of Article I:1, in relation to the rest
of the GATS, require that determination of whether a measure is, in fact, covered by the GATS must be made
before the consistency of that measure with any substantive obligation of the GATS can be assessed". See
Appellate Body Report, Canada – Autos, para. 151. (emphasis original)
167 Argentina's first written submission, paras. 353-400.

completed and only if we find that measure 3 is not inconsistent with that provision, we shall
examine the claim under Article XI:1, which has been submitted in the alternative.
7.64. Once the claims under the GATT 1994 have been examined and if there is a finding of
inconsistency with Articles I:1, III:4 or, alternatively, XI:1 of the GATT 1994, we shall examine the
defence put forward by Argentina under Article XX(d) of the GATT 1994.
7.65. After our order of analysis has been decided in relation to the order of precedence of claims
and defences, it remains for us to decide whether we shall undertake this analysis measure by
measure, i.e., analyse all the relevant claims and defences under the GATS and the GATT 1994
presented in connection with a single measure at issue; or, on the contrary, if we shall examine
each of the provisions invoked by Panama in respect of all the measures it has challenged, as the
case may be.
7.66. The Panel has carefully reviewed the reasons put forward by Panama for proceeding
measure by measure. In the circumstances of this dispute, where there are claims common to
more than one measure, including a principal claim under Article II:1 of the GATS which concerns
all the measures at issue, we are not convinced that the measure-by-measure approach suggested
by Panama would contribute to a better understanding of the facts or help to identify the relevance
of the legal arguments in comparison with the claim-by-claim approach. Nor do we consider that a
claim-by-claim approach would have an effect on due process in the terms proposed by Panama
since, in our opinion, it would not prevent find ings being reached for each of the measures at
issue, as Panama has requested. What does concern us, on the other hand, is preparing
excessively long and repetitive findings if we were, for example, to analyse Panama's claims under
Article II:1 of the GATS separately for each of the eight measures. This would lead us to our
repeating our analysis over and over again, as the complainant has done in its second written
submission or, to avoid this, introducing an excessive number of cross references, which would
complicate the reading and understanding of the text.
7.67. In our view, our task will be fulfilled more effectively if we opt for a claim-by-claim analysis
in which, after establishing the legal standard to be applied in our interpretation of a specific
provision, we then apply it to our examination of the consistency of each of the measures
challenged with that provision. The same procedure would apply when examining the defences put
forward by Argentina. The Panel recalls that it has the autonomy to decide on the order of its
analysis
169 and, therefore, may opt for an order that is different to the one proposed by Panama.
In our view, the interpretation or correct application of the legal provisions concerned does not
require a measure-by-measure examination of Panama's claims and the corresponding
defences.
170
7.68. We therefore begin our analysis with th e threshold question of whether the GATS is
applicable to the measures at issue.

169 The Appellate Body recognized this autonomy in Canada – Wheat Exports and Grain Imports when it
stated that "[a]s a general principle, panels are free to structure the order of their analysis as they see fit. In
so doing, panels may find it useful to take account of the manner in which a claim is presented to them by a
complaining Member." See Appellate Body Report, Canada – Wheat Exports and Grain Imports, para. 126.
170 Appellate Body Report, US – Zeroing (EC) (Article 21.5 – EC), para. 277. In India – Autos, the panel
clarified that the order of analysis could also have an impact on the exercise of judicial economy. See in this
connection Panel Report, India – Autos, para. 7.161.

7.3 Findings under the GATS
7.3.1 The question of whether the GATS is applicable to the measures at issue
7.3.1.1 Main arguments of the parties
7.3.1.1.1 Panama
7.69. Panama asserts that the GATS is applicable to the eight measures at issue.
171 As regards
the applicable legal standard under Article I:1 of the GATS, Panama asserts that in order to
determine whether a measure "affect[s] trade in services" two key legal questions have to be
examined, namely: (i) whether there is "trade in se rvices" within the meaning of Article I:2 of the
GATS; and (ii) whether the measure "affect[s]" su ch trade in services within the meaning of
Article I:1 of the GATS.
172 As regards the first question, Panama argues that "trade in services" is
defined as the "supply of a service" through one of the four modes specified in subparagraphs (a)
to (d) of Article I:2 of the GATS. Consequently, for trade in services to exist a service must be
supplied under one of the four modes. 173 As far as the second question is concerned, Panama
contends that the word "affect", in its ordinary meaning, denotes a measure that has "an effect
on" a service, which implies a "broad scope of application". According to Panama, nothing in the
GATS suggests that its scope is limited.174
7.70. Panama considers that Argentina's argument to the effect that Panama has failed to
demonstrate that there is effective trade between Panama and Argentina has no legal support in
the text of the GATS. In Panama's opinion, neit her Articles I and XXVIII of the GATS nor the case
law make application of the GATS conditional in all cases on the exhaustive enumeration of each
and every one of the services possibly affected by a measure. According to Panama, imposing such
a requirement would run counter to the object and purpose of the GATS. Panama considers that,
as there may exist measures of a cross-cutting nature which affect a whole range of services or
even all services on which a Member has made a commitment (for example, a general ban on
setting up branches in the national territory), it would not be necessary to require that the
applicability of the GATS be subject to separate identification of each and every one of the services
that might be affected by such a measure. Panama also points out that, in its first written
submission, Argentina submitted a table of the se rvices and modes of supply relevant to this
dispute, which, in Panama's opinion, shows that Argentina has fully understood the scope of its
claims in connection with trade in services.
175
7.71. According to Panama, accepting Argentina's argument would mean that any illegal measure
would be immune from the disciplines of the GATS , because in preventing effective transactions
between the complaining party's suppliers and th e defending party's consumers, the GATS would
never be applicable.176 Panama adds that the context provided by other GATS rules and the history
of its negotiation show that it was the negotiators' intention to give the GATS the broadest possible
scope and it also recalls that the Appellate Body has already stated that nothing in the GATS
suggests that its scope is limited.
177
7.72. Panama argues that Argentina's pretension to require proof of effective transactions is
based on an erroneous reference to the Appellate Body Reports in Canada – Autos and EC –
Bananas III inasmuch as, in both cases, the Appellate Body did not establish a general rule that
the existence of specific transactions binding on the complainant had to be proven as a
requirement for applicability of the GATS, but examin ed specific factual situations relating to the
specific markets in question. Panama points out that the Appellate Body's reference in Canada –
Autos to whether there is "trade in services" has to be understood as an obligation to explain

171 Panama's first written submission, paras. 4.13 and 4.14 (measure 1); 4.106-4.109 (measure 2);
4.245 (measure 3); 4.308 (measure 4); 4.336 and 4.337 (measure 5); 4.393-4.395 (measure 6); 4.418-4.420
(measure 7); and 4.446-4.448 (measure 8).
172 Panama's first written submission, para. 4.13; and second written submission, para. 2.28.
173 Panama's first written submission, para. 4.13 (citing Appellate Body Report, Canada – Autos,
para. 156).
174 Panama's first written submission, para. 4.13 (referring to Appellate Body Reports, Canada – Autos,
175 Panama's second written submission, paras. 2.10 and 2.11.
176 Panama's second written submission, paras. 2.12 and 2.13.
177 Panama's second written submission, paras. 2.15-2.17.

which services and modes of supply would be relevant in the light of the actual measure being
challenged. In Panama's opinion, the fact that there are suppliers in the complaining Member
which, at the time of the dispute, are supplyin g the services in question to consumers in the
respondent Member is one element that could assist such identification, but it is not a requirement
for application of the GATS.
178 In any event, Panama states that, even accepting Argentina's
contention for the sake of argument, it has presented proof of the specific impact on Panama's
service suppliers, as regards both the services supplied and the modes of supply used.
7.73. Panama maintains that, while Argentina admi ts that the coverage of the GATS extends to
potential suppliers, it is unable to explain what would be the difference between the effect of the
measures on potential suppliers – which it does consider acceptable – and the "theoretical effect"
of the measures on the same type of suppliers. Panama claims that Argentina's argument is purely
rhetorical as there is no way of showing the effect on potential suppliers which, by definition, are
not present on the market in question, other than by means of a theoretical explanation of how
the measures in question exert their effects. In any event, Panama contends that it has explained,
measure by measure, how each of them has an effect on the services and service suppliers in
question, and has put before the Panel for its consideration evidence concerning the actual effect
on certain service suppliers. According to Panama, its rights as a WTO Member are being seriously
affected and it cannot accept that observance of the most-favoured-nation clause by Argentina is
made subject to compliance with certain conditions imposed unilaterally.
179
7.74. With regard to the foreign exchange authorization requirement (measure 8), Panama
considers that it has an ex ante impact on business planning in Argentina because it affects the
decision on whether to establish a commercial presence in Argentina. Panama argues that,
although the additional requirement for repatriation of investments does not directly affect the
inflow of investment into Argentine territory, by affecting the outflow of such investment the
measure has an effect on the business planning of any company and on the decision to supply
services through a commercial presence in Argentina.
180
7.3.1.1.2 Argentina
7.75. Argentina contends that Panama has not established a prima facie case that the measures
at issue are covered by the GATS as it has not shown that there is "trade in services" within the
meaning of Article I:2 of the GATS
181 and puts forward its claims purely on the basis of the
"theoretical" effect of the measures at issue on alleged services and service suppliers of
non-Panamanian origin.182
7.76. According to Argentina, Panama has not provided sufficient evidence to show that there is
trade in any of these services under the modes of supply identified. Referring to the Appellate
Body Report in Canada – Autos, Argentina considers that Panama has the obligation to prove that
the relevant services are supplied to the territory of the Argentine Republic from the territory of
Panama, in the case of mode 1, or by a service supplier of Panamanian origin through a
commercial presence in Argentina, in the case of mode 3. It is Argentina's opinion that, even if the
threshold for application of the GATS could be es tablished on the basis of services and service
suppliers of an origin other than that of the complainant, Panama has failed to show that there is
trade in any of the relevant services in the modes of supply identified. Argentina considers that
Panama's case is based solely on the theoretical impact of the measures at issue on trade in
services; an impact which Panama has not even shown to exist.
183
7.77. Argentina argues that, since Panama has failed to show that the relevant services are
actually supplied through cross-border trade (mode 1) or commercial presence (mode 3), Panama
has not demonstrated that there is trade in services that might be "affected" by the measures
challenged in this dispute. Argentina recognizes that the Appellate Body has taken a broad view of
what constitutes a measure "affecting trade in services" and that at least one panel has held that

178 Panama's second written submission, paras. 2.20-2.24; and response to Panel question No. 24.
179 Panama's second written submission, paras. 2.25-2.27.
180 Panama's second written submission, paras. 2.780 and 2.783.
181 Argentina's first written submission, paras. 139-141.
182 Argentina's second written submission, para. 14.
183 Argentina's first written submission, paras. 143 and 144 (citing Appellate Body Report, Canada –
Autos, para. 157); and opening statement at the first meeting of the Panel, paras. 23-27.

GATS coverage extends to potential service suppliers. Argentina explains, however, that it is not
aware of any dispute in the GATS context in whic h any Member has attacked a national regulatory
system on the basis of its theoretical effect on potential service suppliers. In Argentina's opinion,
allowing a Member to invoke the GATS solely on the basis of the theoretical effect of the measures
in question could have serious repercussions.
184
7.78. With regard to measure 8, Argentina ar gues that the foreign exchange authorization
requirement is not covered by the GATS. Accord ing to Argentina, the measures affecting the
repatriation of investment are not directly related to trade in services and, therefore, do not affect
trade in services within the meaning of Articles I:1 and XXVIII of the GATS. In Argentina's view,
this measure does not affect the establishment of a company in the country or the delivery of
services by that company, but implies closer scrutiny of access to the local foreign exchange
market for the transfer of equity funds invested in the country if it is decided to repatriate them.
185
7.3.1.2 Assessment by the Panel
7.3.1.2.1 Introduction
7.79. Panama has submitted a number of claims under the GATS with regard to the eight
measures at issue, contending that that Agreement applies to all of them.
186 Argentina, however,
argues that Panama has not established a prima facie case that the measures at issue are covered
by the GATS as it has not demonstrated that ther e is "trade in services" within the meaning of
Article I:2 of the GATS.187
7.80. As we also explained in section 7.2 above, in order to determine whether the GATS is the
agreement which covers the eight measures at issue specifically and in more detail, we must first
examine whether the GATS is applicable to each of them. To do so, in the manner established by
the Appellate Body, as a preliminary matter we shall examine the question of the applicability of
the GATS to the measures at issue before evaluating their consistency with the substantive
obligations invoked by Panama.
188
7.81. We start by examining the relevant legal provision.
7.3.1.2.2 The relevant legal provision
7.82. Article I of the GATS, entitled Scope and Definition, provides as follows:
1. This Agreement applies to measures by Members affecting trade in services.
2. For the purposes of this Agreement, trade in services is defined as the supply of
a service:
(a) from the territory of one Member into the territory of any other Member;
(b) in the territory of one Member to the service consumer of any other Member;

184 Argentina's first written submission, paras. 144 and 145.
185 Argentina's first written submission, Explanatory Annex No. 2, paras. 27-35; and response to Panel
question No. 71.
186 We note that Panama does not put forward separate claims under Article I:1 of the GATS in respect
of that Agreement's application to the challenged measures. Nevertheless, Panama discusses the application of
the GATS in the context of its arguments under Articles II and XVII of the GATS. Both provisions require, as a
first step, that the complaining party prove that the challenged measure is "covered by this Agreement"
(Article II) or affects the supply of services, as required by Article XVII ("in respect of all measures affecting
the supply of services").
187 Argentina's first written submission, paras. 141-143.
188 In Canada – Autos, the parties disagreed on whether the measures at issue were covered by the
GATS. The Appellate Body indicated that "… here, the fund amental structure and logic of Article I:1, in relation
to the rest of the GATS, require that determination of whether a measure is, in fact, covered by the GATS must
be made before the consistency of that measure with any substantive obligation of the GATS can be assessed".
See Appellate Body Report, Canada – Autos, para. 151. (emphasis original)

(c) by a service supplier of one Member, through commercial presence in the
territory of any other Member;
(d) by a service supplier of one Member, through presence of natural persons of a
Member in the territory of any other Member.
3. For the purposes of this Agreement:
(a) "measures by Members" means measures taken by:
(i) central, regional or local governments and authorities; and
(ii) non-governmental bodies in the exercise of powers delegated by central,
regional or local governments or authorities;
In fulfilling its obligations and commitments under the Agreement, each Member shall
take such reasonable measures as may be available to it to ensure their observance
by regional and local governments and authorities and non-governmental bodies
within its territory;
(b) "services" includes any service in any sector except services supplied in the
exercise of governmental authority;
(c) "a service supplied in the exercise of governmental authority" means any
service which is supplied neither on a commercial basis, nor in competition with one or
more service suppliers.
7.3.1.2.3 The legal standard under Article I of the GATS
7.83. We recall that, in Canada – Autos, the Appellate Body identified two key legal issues which a
complainant must establish in order to prove that a measure is covered by the GATS:
"[T]wo key legal issues must be examined to determine whether a measure is one
"affecting trade in services": first, whether there is "trade in services" in the sense of
Article I:2; and, second, whether the measure in issue "affects" such trade in services
within the meaning of Article I:1.
189
7.84. Guided by this finding by the Appellat e Body, we shall successively examine whether
Panama has proved that (i) there is "trade in serv ices" in the sense of Article I:2 of the GATS, and
(ii) whether the measure at issue "affect[s]" such trade in services within the meaning of
Article I:1 of the GATS.
7.3.1.2.3.1 First question: Whether there is "trade in services" in the sense of
Article 1:2 of the GATS
7.85. We note that the main reason for the di spute between the parties concerns this first key
legal issue of the legal standard established by the Appellate Body in Canada – Autos . Argentina
claims that the complainant must demonstrate that there is effective trade in services, either
between the complainant and the respondent or between other Members and the respondent.190 At
the first substantive meeting, Argentina raised the possibility of showing the existence of potential
trade in services but, in that case, Argentina considers that the complainant has to identify specific
services and service suppliers duly attributable to a Member, in one or more of the four modes of
supply and in respect of which it has been show n that they are potentially affected by the
measures at issue.191

189 Appellate Body Report, Canada – Autos, para. 155.
190 Argentina's first written submission, paras. 143 and 144. See also Argentina's response to Panel
question No. 24(a)(i).
191 Argentina's response to Panel question No. 24(a)(i).

7.86. Panama responds that Argentina's interpretation of this first element is erroneous as the
requirement of the existence of effective trade has no legal basis in the text of the GATS. 192
Panama asserts that the Appellate Body's reference to whether "there is 'trade in services'" should
be understood as a need to identify the relevant services and modes of supply in the light of the
specific measure challenged. In Panama's opinion, the fact of whether or not there are service
suppliers of the complaining Member which, at the time of the dispute, are supplying the services
concerned to consumers in the defending Member does not prevent the relevant "trade in services"
from being identified. Panama argues that Argentina's interpretation could lead to the absurd
result that, even if a measure has the specific obje ctive of regulating trade in service "X" and does
in fact regulate such trade, it would have to be demonstrated in addition that "there is 'trade in
services'" in order for the GATS to be applicable.
193
7.87. We recall that the relevant text of the GATS stipulates that the Agreement "applies to
measures by Members affecting trade in services" (Article I:1 of the GATS) and defines "trade in
services" as "the supply of a service" through fo ur modes of supply (Article I:2 of the GATS).
Pursuant to Article XXVIII(c) of the GATS, the expression "measures by Members affecting trade in
services" covers measures in respect of: (i) the purchase, payment or use of a service; (ii) the
access to and use of, in connection with the supply of a service, services which are required by
those Members to be offered to the public genera lly; and (iii) the presence, including commercial
presence, of persons of a Member for the supply of a service in the territory of another Member.
7.88. In our view, it cannot be inferred from th e wording of Article I:1 that the GATS is only
applicable between two Members when there are ac tual flows of services between them or when
"suppliers of specific services attributable" to a Member seek to supply services in the market of
the defending Member. The ordinary meaning of Arti cle I:1 of the GATS rather indicates that the
GATS applies to measures which affect "trade in services", defined in the following subparagraph
as the supply of services through four modes. The wording of Article I:1, therefore, does not refer
to measures that specifically affect actual services and service suppliers of the complaining
Member or of any other Member.
194
7.89. By way of context, we note that, according to Article XVII, paragraph 1, of the GATS, the
Article applies to "all measures affecting the supply of services", irrespective of whether service
suppliers of the complaining party are engaged in trade or seeking to engage in trade with the
Member applying the measure.
195 Likewise, paragraph 3 of the Article requires consideration of
whether a measure "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". In
our view, the context afforded by Article XVII in dicates that the analysis must hinge on the
conditions of competition and not on the actual effects on specific service suppliers. We agree with
one of the third parties that the WTO obligations protect equality of competitive opportunities
rather than actual trade volumes.
196
7.90. The existing case law with regard to trade in goods appears to support this approach. With
reference to the GATT 1994, the Appellate Body confirmed in an early decided case that:
"[I]t is irrelevant that 'the trade effects' of the tax differential between imported and
domestic products, as reflected in the volumes of imports, are insignificant or even
non-existent; Article III [of the GATT 1994] protects expectations not of any particular
trade volume but rather of the equal competitive relationship between imported and
domestic products."
197
7.91. We note also that Article XXIII:1 of th e GATS, which is the dispute settlement provision
applicable to disputes arising in relation to the GATS, stipulates as follows:

192 Panama's second written submission, para. 2.13.
193 Panama's second written submission, paras. 2.20-2.24 and response to Panel question No. 24.
194 United States' third-party submission, para. 4.
195 We note that the United States makes the same analysis. See United States' third-party submission,
para. 4.
196 European Union's third-party submission, paras. 39 and 40 (referring to Appellate Body Reports, EC
– Seal Products, paras. 5.82 and 5.87; Japan – Alcoholic Beverages II, p. 16 and US – FSC (Article 21.5 – EC),
para. 215; and Panel Reports, US – Clove Cigarettes, paras. 7.348-7.445 (in relation to Article 2.1 of the
TBT Agreement) and EC – Bananas III (US), para. 7.320 (in relation to Article XVII of the GATS)).
197 Appellate Body Report, Japan – Alcoholic Beverages II, p. 16.

"I f a n y M e m b e r s h o u l d c o n s i d e r t h a t a n y o t h e r M e m b e r f a i l s t o c a r r y o u t i t s
obligations or specific commitments under this Agreement, it may with a view to
reaching a mutually satisfactory resolution of the matter have recourse to the DSU."
(emphasis added)
7.92. Accordingly, the context afforded by Ar ticle XXIII:1 of the GATS indicates that Members
have broad discretion when reporting to the DSB to claim alleged violations of the GATS. A
complainant may resort to the DSB if it "considers" that another Member "fails to carry out its
obligations or specific commitments" under the GA TS. Article XXIII of the GATS does not contain
any other condition and does not, therefore, require that non-compliance with the said obligations
or commitments have trade effects for the complainant.
7.93. We note that in EC – Bananas III , in language similar to that used in Article XXIII of the
GATT 1994
198, the Appellate Body emphasized that "a Member has broad discretion in deciding
whether to bring a case against another Member under the DSU" and agreed with the Panel that
"with the increased interdependence of the global economy, ... Members have a greater stake in
enforcing WTO rules than in the past since any deviation from the negotiated balance of rights and
obligations is more likely than ever to affect them, directly or indirectly." 199 In our view, this
reasoning also applies in the context of the GATS.
7.94. Accordingly, we agree with the posi tion expressed by one of the third parties 200 that
acceptance of Argentina's argument that Panama must identify "actual" services and service
suppliers operating in the Argentine market and being affected by the challenged measures would
mean adding a requirement to Article I:1 of the GA TS rather than treating it as an additional
element of evidence. Furthermore, Argentina's argument would lead to an absurd situation in
which the GATS would apply to measures provided that there is actual trade in services but would
not apply to the most trade-restrictive measures, that is, bans on supplying services, which, by
their very nature, prevent actual flows of services. We believe that such an outcome would serve
to weaken the GATS and would clearly be contrary to the object and purpose of the Agreement,
whose preamble states, inter alia , that Members wish "to establish a multilateral framework of
principles and rules for trade in services with a view to the expansion of such trade under
conditions of transparency and progressive liberalization …".
7.95. Nor do we share Argentina's interpretation of the Appellate Body Report in Canada –
Autos.
201 Like Panama, we understand that, in Canada – Autos , the Appellate Body did not
establish a general rule that the existence of specific transactions between the complainant and
the respondent has to be proved but ruled on the factual situation in the market in question.202 We
also note that none of the four subsequent Pa nels which adjudicated disputes under the GATS
required the complaining party to prove the existence of specific transactions between the
complainant and the respondent (or between the latter and other Members). 203 Such precedents
confirm, in our view, that none of these Panels interpreted the Appellate Body Report in Canada –

198 Article XXIII:1 of the GATT 1994 provides as follows: "If any contracting party should consider that
any benefit accruing to it directly or indirectly under this Agreement is being nullified or impaired or that the
attainment of any objective of the Agreement is being impeded …".
199 Appellate Body Report, EC – Bananas III, paras. 135 and 136 (referring to Panel Reports in that
dispute, para. 7.50).
200 United States' third-party submission, paras. 4 and 6.
201 In that dispute, the parties disagreed as to whether the measure at issue – namely, exemption from
import duty on motor vehicles covered by the GATT 1994 – could also affect the supply of distribution services
and thus be covered by the GATS. When considering whether there was "trade in services", the Appellate Body
referred to the definitions of "trade in services" in Article I:2, noted that the mode concerned was defined in
Article I:2(c), namely, mode 3, and also recalled the definition of commercial presence in Article XXVIII(d).
Subsequently, the Appellate Body found that the complainants had identified the relevant sector on the basis of
the Central Product Classification (CPC) and the respondent had not denied that there was a commercial
presence on the part of the complainant's service suppliers on its territory. The Appellate Body concluded,
therefore, that "the 'trade in services' here in issue is wholesale trade services of motor vehicles supplied by
service suppliers of certain Members through commercial presence in Canada". See Appellate Body Report,
Canada – Autos, paras. 156 and 157.
202 Panama's second written submission, para. 2.20.
203 Two Panels (US – Gambling and China – Publications and Audiovisual Products) made a summary
examination of the applicability of the GATS, and two other Panels (Mexico – Telecoms and China – Electronic
Payment Services) did not examine this question at all.

Autos as requiring the complainant to prove the existence of "actual" transactions as a prerequisite
for determining application of the GATS.
7.96. In fact, in justifying the measures at issue in this dispute, Argentina itself appears to admit
that there is – or there may be – trade in se rvices between Argentina and other WTO Members –
including Panama. For example, Argentina explains at the beginning of its first written submission
that "[t]he defensive anti-abuse measures such as those at issue in this dispute" are "essential
tools for … equalizing the conditions of competition on the international market for financial and
other services".
204 Accordingly, if Argentina considers it necessary to apply defensive anti-abuse
measures to "equaliz[e] the conditions of competition on the international market for financial and
other services", it is because, in the first place, such trade in services with Argentina exists – or
may exist.
7.97. The Panel notes that, for each of the eigh t measures at issue, Panama has identified the
relevant services and modes of supply.
205 The information in this regard is shown in the following
table:
No. Description Services and modes affected
1
Withholding tax on
payments of interest
or remuneration
 Claim under Article II:1 of the GATS
MODE SECTOR
Mode 1
206 Lending, credit services (CPC 8113) and those involving
placement of funds in Argentina207

2
Presumption of
unjustified increase
in wealth
 Claim under Article II:1 of the GATS
MODE SECTOR
Mode 1208 All sectors of services where supply or delivery requires
the entry of funds into Argentina209

 Claim under Article XVII of the GATS
MODE SECTOR
Mode 1210 Maritime and air transport insurance services
and reinsurance and retrocession services211

204 Argentina's first written submission, para. 10.
205 See in particular Panama's second written submission, paras. 2.90 and 2.91 (measure 1);
paras. 2.254 and 2.255 (measure 2); paras. 2.401-2.403 (measure 3); paras. 2.507 and 2.508 (measure 4);
paras. 2.594 and 2.595 (measure 5); paras. 2.692-2.694 (measure 6); para. 2.730 (measure 7);
paras. 2.776-2.779 (measure 8). Moreover, Panama has also provided examples of actual supply by suppliers
from Panama and/or non-cooperative countries for various measures. See in particular Panama's second
written submission, paras. 2.93-2.99 (measure 1); paras. 2.256-2.261 (measure 2); paras. 2.405 and 2.406
(measure 3).
206 Panama's second written submission, para. 2.91.
207 Originally Panama stated that these were classified in sector 7.B (see Panama's first written
submission, para. 4.30). Argentina clarified that the broad meaning of this term covers "deposits and other
forms of attracting funds from financial institutions" (which are identified as services in provisional
CPC codes 8115–8119), "or [receiving funds from] other sources (issue and placement of negotiable bonds,
trust securities of financial trust funds, etc.)". See Panama's second written submission, para. 2.91 (referring
to Argentina's first written submission, Explanatory Annex No. 1, para. 15).
208 Panama's second written submission, para. 2.249.
209 Panama considers this sector to be a general category. Panama also mentions that lending,
insurance and reinsurance, and retrocession services, as specific services, confirm the existence of the general
category. See Panama's second written submission, para. 2.254.
210 Panama's first written submission, para. 4.152. See also Panama's second written submission,
para. 2.303.
211 Panama's first written submission, paras. 4.133 and 4.152. See also Panama's second written
submission, para. 2.304.

No. Description Services and modes affected
3
Transaction valuation
based on transfer
prices

 Claim under Article II:1 of the GATS
MODE SECTOR
Modes 1 and 2
212 All services 213

 Claim under Article XVII of the GATS
MODE SECTOR
Modes 1 and 2
214 All services on which Argentina undertook full national
treatment commitments under modes 1 and 2215
4
Payment received
rule for the allocation
of expenditure
 Claim under Article II:1 of the GATS
MODE SECTOR
Mode 1216 All services whose payment generates revenue of
Argentine source for the service supplier217

 Claim under Article XVII of the GATS
MODE SECTOR
Mode 1218 Services whose payment generates revenue of Argentine
source for the service supplier and for which Argentina
adopted a full commitment under mode 1219

5
Requirements
relating to
reinsurance services
 Claim under Article II:1 of the GATS
MODE SECTOR
Modes 1 and 3
220 Reinsurance services 221

 Claim under Articles XVI:1 and XVI:2(a) of the GATS
MODE SECTOR
Mode 1
222 Reinsurance services 223

212 Panama's second written submission, paras. 2.402 and 2.413.
213 Panama's second written submission, paras. 2.398 and 2.401.
214 Panama's second written submission, paras. 2.402 and 2.413.
215 Panama's second written submission, footnote 420:
In mode 1, the only sectors in which Argentina did not undertake national treatment
commitments are the following: life, accident and health insurance services; non-life insurance
services; acceptance of deposits and other repayable funds from the public; lending of all types,
including consumer credit, mortgage credit, factoring and financing of commercial transactions;
financial leasing with a purchase option; all payment and money transmission services;
guarantees and commitments; trading for own account or for account of customers on the
money market (cheques, bills, certificates of deposit, etc.), foreign exchange, derivative
products, including, but not limited to, futures and options, exchange rate and interest rate
instruments, such as swaps, forward interest-rate agreements, etc., transferable securities and
other negotiable instruments and financial assets, including bullion; participation in issues of all
kinds of securities, including underwriting and placement as agent (whether publicly or privately)
and provision of services related to such issues; money broking; asset management; settlement
and clearing services for financial assets; new financial services. In mode 2, the only sectors in
which Argentina did not undertake national treatment commitments are the following: life,
accident and health insurance services; non-life insurance services; and new financial services"
(emphasis original).
See Argentina's Schedule of Specific Commitments, (Exhibit PAN-19).
216 Panama's second written submission, paras. 2.507 and 2.516.
217 Panama presents this category as a general services category which would cover services referred to
in Title V of the LIG, including lending, consumer credit and other services involving the placement of funds.
See Panama's second written submission, paras. 2.507 and 2.516.
218 Panama's second written submission, paras. 2.507 and 2.516.
219 Panama's second written submission, paras. 2.507 and 2.516. By way of example, Panama mentions
insurance services (provisional CPC 81293) and reinsurance services (provisional CPC 81299*); financial
consultancy services (provisional CPC 8131 or 8133); technical consultancy or other consultancy services
provided from abroad (including management consulting services (provisional CPC 865)). See Panama's second
written submission, para. 2.538.
220 Panama's second written submission, para. 2.595. See also second written submission, para. 2.594.
221 Panama's second written submission, para. 2.595. See also second written submission, para. 2.594.
In this connection, we recall that the Panel has concluded that measure 5 does not cover retrocession services.
See section 7.1.4 above.
222 Panama's second written submission, para. 2.615.
223 Panama's second written submission, para. 2.615. In this connection, we recall that the Panel has
concluded that measure 5 does not cover retrocession services. See section 7.1.4 above.

No. Description Services and modes affected
6
Requirements for
access to the
Argentine capital
market
 Claim under Article II:1 of the GATS
MODE SECTOR
Mode 1224 Portfolio management services225

7
Requirements for the
registration of
branches
 Claim under Article II:1 of the GATS
MODE SECTOR
Mode 3
226 All sectors 227

8
Foreign exchange
authorization
requirement
 Claim under Article II:1 of the GATS
MODE SECTOR
Mode 3228 All sectors (except for financial services)229

7.98. In the light of the foregoing, the Panel considers that Panama has demonstrated that the
eight measures at issue apply to services supplie d pursuant to Article I:2 of the GATS and that
Panama has therefore demonstrated that there is trade in services within the meaning of
Article I:2 of the GATS.
7.3.1.2.3.2 Second question: Whether the measures in question "affect" trade in
services within the meaning of Article I:1 of the GATS
7.99. We continue our analysis with the second key legal issue under the legal standard
established by the Appellate Body in Canada – Autos , namely, whether the challenged measures
"affect" trade in services within the meaning of Article I:1 of the GATS.
7.100. We recall that Panama argues that, as stated by the Appellate Body in EC – Bananas III ,
Article I:1 of the GATS ensures the broadest possible coverage of the Agreement precisely because
of its reference to measures that "affect" trade in services. The GATS thus not only covers
measures which directly "govern" or "regulate" trade in services, but also any other type of
measure which, even if it has been designed for other purposes (such as trade in goods)
nevertheless "affects" trade in services.
230
7.101. Argentina responds that, inasmuch as Panama has failed to prove that the relevant
services are supplied from the territory of Panama – or of any other Member – to the territory of
Argentina through modes 1 and 3, Panama has not shown that there is trade in relevant services
and modes which may be "affected" by the measures challenged in this dispute. 231 Argentina puts
forward separate and additional arguments for me asure 8 and claims that the repatriation of
investments is not directly related to trade in services and, therefore, does not affect trade in
services within the meaning of Articles I:2 and XXVIII of the GATS. Argentina concludes that
measure 8 is not covered by the GATS.232
7.102. The Panel recalls that in EC – Bananas III , the Appellate Body considered that no
measures are excluded a priori from the scope of the GATS. According to the Appellate Body,
The scope of the GATS encompasses any measure of a Member to the extent it affects
the supply of a service regardless of whether such measure directly governs the

224 Panama's second written submission, para. 2.692. See also second written submission, paras. 2.694
and 2.695.
225 Panama's second written submission, para. 2.692. See also second written submission, paras. 2.694
and 2.695.
226 Panama's second written submission, para. 2.730.
227 Panama's second written submission, para. 2.730.
228 Panama's second written submission, para. 2.787. See also second written submission, para. 2.790.
229 Panama's second written submission, para. 2.787. See also second written submission, para. 2.790.
230 Panama's first written submission, para. 4.13; response to Panel question No. 24(b).
231 Argentina's first written submission, para. 144.
232 Argentina's first written submission, Explanatory Annex No. 2, paras. 27-41.

supply of a service or whether it regulates other matters but nevertheless affects
trade in services.233
7.103. As regards the term "affect", the Appellate Body explained that:
In our view, the use of the term "affecting" reflects the intent of the drafters to give a
broad reach to the GATS. The ordinary me aning of the word "affecting" implies a
measure that has "an effect on", which indicates a broad scope of application. This
interpretation is further reinforced by the conclusions of previous panels that the term
"affecting" in the context of Article III of the GATT is wider in scope than such terms
as "regulating" or "governing".
234
7.104. According to Argentina, Panama failed to prove this second issue inasmuch as it did not
demonstrate that there is trade in services and did not identify "specific" Panamanian service
suppliers.235 As we concluded above, for the purposes of establishing application of the GATS to
the measures at issue, Article I:1 of the GATS does not require the complainant to prove the
existence of specific services or service suppliers, or the existence of actual transactions. We also
note that, except as concerns measure 8, to which we shall refer later, Argentina does not appear
to deny that the measures at issue "affect" trade in services. Indeed, on various occasions
Argentina explains that the rationale for the measures at issue is to equalize the conditions of
competition between, on the one hand, services an d service suppliers of Argentina and/or other
cooperative countries and, on the other, serv ices and service suppliers of non-cooperative
countries.
7.105. For example, by arguing that the defe nsive anti-abuse measures are necessary to
"equaliz[e] the conditions of competition on the international market for financial and other
services"
236, Argentina acknowledges not only that there is – or there may be – trade in services in
these sectors, but also that, by equalizing the conditions of competition on the international
market for services, these measures govern – or at least affect – trade in these services. At the
Panel's first meeting with the parties, Argentina stated that "at the time the Agreement on
Services was negotiated … during the Uruguay Ro und, the right of Members to adopt [defensive
tax measures against non-cooperative jurisdictions] was totally and clearly understood by
them".
237 At the same meeting, Argentina explained th at "[t]he criteria on the basis of which
Argentina distinguishes between cooperative and non-cooperative jurisdictions are the objective
reflection of intractable and fundamental regulato ry differences between the services and service
suppliers of cooperative jurisdictions and those of non-cooperative jurisdictions". 238 Likewise, in its
second written submission, Argentina explicitly recognizes that measures 5 and 6 – those on
access to the Argentine reinsurance services market and to the Argentine capital market – affect
the supply of financial services, that is, trade in financial services within the meaning of Article I:2
of the GATS. In Argentina's words:
First of all, the measures in question undoubtedly affect "the supply of financial
services" within the meaning of paragraph 1(a) of the Annex on Financial Services. In
fact, both "reinsurance and retrocession" services and the trade in "transferable
securities" are specifically listed in the definitions of financial services in
paragraph 5(a) of the Annex on Financial Services.
239
7.106. In our view, such arguments show that, for Argentina itself, the purpose of the measures
at issue is to govern or – at least – to "affect" service suppliers of other Members that supply

233 Appellate Body Report, EC – Bananas III, para. 217 (citing Panel Reports, EC – Bananas III
(Ecuador), para. 7.285; EC – Bananas III (Mexico), para. 7.285; and EC – Bananas III (United States),
para. 7.285).
234 Appellate Body Report, EC – Bananas III, para. 220.
235 See Argentina's first written submission, para. 140 ("It is with regard to the first element of this
proof [as to whether there is 'trade in services' within the meaning of Article I:2 of the GATS] that Panama's
first written submission is flawed") (referring to Appellate Body Report, Canada – Autos, para. 155).
237 Argentina's opening statement at the first meeting of the Panel, para. 18. See also opening
statement at the first meeting of the Panel, paras. 34-36 (referring to the Chairman's Statement, Informal
Meeting of the Group of Negotiations on Services, 10 December 1993, MTN.GNS/49, p. 2).
238 Argentina's opening statement at the first meeting of the Panel, para. 12.
239 Argentina's second written submission, para. 85.

services in Argentina and, consequently, such measures adopted by Argentina "affect" the supply
of services within the meaning of Article I:1 of the GATS.
7.107. The Panel notes that Argentina presents separate and additional arguments with regard to
measure 8. As explained in the descriptive section 240, measure 8 consists of imposing on service
suppliers from non-cooperative countries the requirement to obtain prior authorization from the
BCRA in order to be able to repatriate their direct investments. Argentina applies this measure
pursuant to BCRA Communication "A" 4940, Section I.
241
7.108. Argentina contends that the prior authorization from the BCRA to repatriate investments,
as imposed by measure 8, is not covered by the GA TS as it is not directly related to trade in
services and, therefore, does not affect trade in services within the meaning of Articles I:1 and
XXVIII of the GATS. In Argentina's view, the meas ure does not affect the establishment of a
company in the country or the delivery of services by such a company, but implies closer scrutiny
of access to the local foreign exchange market fo r the transfer of equity funds invested in the
country if it is decided to repatriate them.242
7.109. Panama responds that the foreign exchange authorization requirement has an ex ante
impact on business planning in Argentina because it affects the decision on establishing a
commercial presence in Argentina. Panama argues that, although the additional requirement for
the repatriation of investments does not directly affect the inflow of investment into Argentine
territory, by affecting the outflow of such invest ment the measure has an effect on the business
planning of any company and on the decision to supply services through a commercial presence in
Argentina. Panama argues that in Argentina – Import Measures, the panel found that Argentina's
requirements on operators to refrain from repatriating profits when their level of exports is not
sufficient to compensate for their imports "have a limiting effect on imports". In Panama's view, if
the restrictions on repatriation affect the import of goods, they all the more affect foreign service
suppliers which establish a commercial presence in Argentina.
243
7.110. The Panel notes that, judging by its terms, Communication "A" 4940 requires that prior
authorization from the BCRA be obtained "when the beneficiary abroad is a natural or legal
person". Pursuant to Article XXVIII(d) of the GATS, "'commercial presence' means any type of
business or professional establishment, including through (i) the constitution, acquisition or
maintenance of a juridical person … within the territory of a Member for the purpose of supplying a
service". The wording of Communication "A" 4940 sh ows that the foreign exchange authorization
requirement applies, inter alia , to service suppliers which, having established a commercial
presence
244 in Argentina, possibly decide to withdraw from the Argentine market and, hence, to
repatriate their investment.
7.111. The Panel also recalls that, pursuant to Article XXVIII(c) of the GATS, "measures by
Members affecting trade in services include measures in respect of …. (iii) the presence, including
commercial presence, of persons of a Member for the supply of a service in the territory of another
Member". In Spanish, the term " referente a" ("in respect of") is defined as "[q]ue refiere o que
expresa relación a algo" [referring or expressing a relationship to something]. 245 We thus consider
that the concept of "measures … affecting trade in services" covers measures related to the
"constitution" or "acquisition" of a legal person within the territory of a Member for the purpose of
supplying a service. In our view, this is the case for the foreign exchange authorization
requirement.

240 See paras. 2.39 and 2.40 above.
241 Communication "A" 4940, (Exhibits PAN-71 / ARG-31).
242 Argentina's first written submission, Explanatory Annex No. 2, paras. 27-35; and response to Panel
question No. 71.
243 Panama's second written submission, paras. 2.780, 2.783 and 2.784 (citing Panel Report, Argentina
– Import Measures, para. 6.259).
244 Article XXVIII(d) of the GATS defines "commercial presence" as "any type of business or professional
establishment, including through: (i) the constitution, acquisition or maintenance of a juridical person, or
(ii) the creation or maintenance of a branch or a representative office, within the territory of a Member for the
purpose of supplying a service".
245 Diccionario de la Lengua Española, 23rd edition, Real Academia Española (Espasa Calpe, 2014),
Vol. II, p. 1875.

7.112. The fact that this requirement does not apply at the time of establishing a commercial
presence in Argentina but rather at the time of withdrawing the investment from the Argentine
market does not prevent this requirement from be ing related to the supply of services through
commercial presence, in accordance with the definition of this mode in Article I:2 of the GATS.
Indeed, such a measure may have an impact on a service supplier's decision to invest in the
market or, in the terms of the GATS, to establish a commercial presence. In our view, a measure
which, for example, totally prohibits repatriation of invested capital at the time of withdrawal from
the market would most likely influence the supplier's decision as to whether or not to establish a
commercial presence in that market. It is our view that a determination which implies leaving
outside the scope of the GATS those measures which apply at the time when a legal person
withdraws from a market could open up a breach in the Agreement, as it would mean that
measures which influence the decision to set up in the territory of a Member would not be covered
by the Agreement. For the foregoing reasons, we co nsider that measure 8 affects trade in services
in the sense of Article I:1 and is thus covered by the GATS.
7.113. In the light of the foregoing, the Panel concludes that the eight measures at issue "affect"
trade in services within the meaning of Article I:1 of the GATS.
7.3.1.2.4 Conclusion
7.114. Having determined that Panama has demonstrated that there is trade in services and that
the eight measures at issue in this dispute "affect trade in services" within the meaning of
Article I:1 of the GATS, the Panel finds that the GATS is applicable to measure 1 (withholding tax
on payments of interest or remuneration), meas ure 2 (presumption of unjustified increase in
wealth), measure 3 (transaction valuation based on price transfers), measure 4 (payment received
rule for the allocation of expenditure), measure 5 (requirements relating to reinsurance services),
measure 6 (requirements for access to the Argentine capital market), measure 7 (requirements for
the registration of branches) and measure 8 (foreign exchange authorization requirement).
7.115. We therefore proceed to examine Panama's claims under the GATS, starting with those
made under Article II of that Agreement.
7.3.2 Panama's claims under Article II:1 of the GATS
7.3.2.1 Main arguments of the parties
7.3.2.1.1 Panama
7.116. Panama claims that the eight measures at issue are inconsistent with Article II:1 of the
GATS because they accord less favourable trea tment to services and service suppliers of
non-cooperative countries than that accorded to like services and service suppliers of cooperative
countries.
246
7.117. As regards the arguments as to whether the measures at issue fall within the scope of
Article II:1 of the GATS, we refer to section 7.3.1 above.
7.118. With regard to whether the services and service suppliers concerned by the measures at
issue are like, Panama claims that the regulatory distinction established by the Argentine
measures at issue is based solely and exclus ively on the origin of the service supplier. 247 Panama
argues that in situations such as the present one, where the regulatory distinction is based
exclusively on the origin, as established in the text of the measure itself 248, the likeness is
presumed and there is no need to make casuistic demonstrations that the services and/or service
suppliers are like or to examine the competitiv e relationship between services and service

246 Panama's first written submission, paras. 5.1.a, 5.1.b(i), 5.1.c(i), 5.1.d(i), 5.1.e(i), 5.1.f, 5.1.g
and 5.1.h.
247 Panama's first written submission, paras. 4.16-4.18, 4.34, 4.110, 4.112, 4.156-4.158, 4.246, 4.256,
4.309, 4.317, 4.339, 4.397, 4.422-4.423 and 4.449. See also second written submission, paras. 2.30, 2.38,
2.42, 2.54, 2.602. 2.697, 2.733 and 2.787.
248 Panama's response to Panel question No. 32.

suppliers.249 Panama bases itself on the statement in this regard made by the panel in China –
Publications and Audiovisual Products . According to that panel, when origin is the only factor on
which a measure bases a difference of treatment be tween suppliers, the service suppliers are like,
provided there will, or can, be domestic and foreign suppliers that under the measure are the
same in all material respects except for origin.250
7.119. Panama adds that the existence of reasons (whether or not legitimate) justifying the
distinction between service suppliers according to their origin is not relevant to the determination
of their likeness. 251 Panama considers that, if they exist, such reasons must be examined under
the exemptions to the GATS.252
7.120. Even though in Panama's view the distinct ion between service suppliers in this dispute is
based exclusively on their origin, Panama considers that, if the Panel wishes to examine the
likeness of service suppliers in more detail, it could resort, not without first making certain
adjustments, to the four traditional likeness criteria used in trade in goods: the nature of the
services, their purpose, consumer preferences, and any possible governmental classification.
253 In
any event, Panama fails to understand how the existence or non-existence of an agreement on the
exchange of tax information could have an impact on any of these four criteria 254 and considers
that to accept this fact would imply making the likeness analysis subject to the unilateral will of
each Member.255
7.121. Contrary to the view expressed by Argentina, Panama asserts that the regulatory
background is a factor external to the service supplier and could only be relevant insofar as it is
perceived by the market and, hence, affects the competitive relationship between suppliers.
256
Argentina's interpretation, on the other hand, would entail a likeness assessment based on the
"aims and effects" of the regulations, an approa ch that has repeatedly been rejected by the
Appellate Body.257 In Panama's opinion, the regulatory objectives of the measure should not be
taken into account in like likeness analysis.258
7.122. As to whether the measures at issue accord less favourable treatment to like services and
service suppliers, Panama contends that the challenged measures accord less favourable
treatment to services and service suppliers of non-cooperative countries compared to that
accorded to like services and service suppliers of cooperative countries because they modify the
conditions of competition to the detriment of services and service suppliers of non-cooperative
countries vis-à-vis like suppliers of cooperative countries.
259
7.123. Panama considers that, in order to examine whether there is less favourable treatment
under Article II of the GATS, it is not necessary to assess whether the detrimental effect of a
measure stems exclusively from a legitimate regulatory distinction.
260
7.124. Panama also considers that, contrary to what is stated by Argentina, the existence of less
favourable treatment should not be examined be fore and after having examined the "likeness"

249 Panama's response to Panel question No. 33. See also responses to Panel questions Nos. 27 and 28
(citing Panel Report, Canada – Wheat Exports and Grain Imports, para. 6.164).
250 Panama cites Panel Report, China – Publications and Audiovisual Products, para. 7.975.
251 Panama's second written submission, paras. 2.46 and 2.47; and response to Panel question No. 28.
252 Panama's second written submission, paras. 2.128, 2.274, 2.421, 2.522 and 2.608; and response to
Panel question No. 29.
253 Panama's second written submission, paras. 2.131, 2.276, 2,524 and 2.604. See also responses to
Panel questions Nos. 23, 30 and 69.
254 Panama's response to Panel question No. 69.
255 Panama's responses to Panel questions Nos. 29 and 69.
256 Panama's second written submission, paras. 2.266, 2.412, 2.515, 2.701, 2.735 and 2.789. See also
response to Panel question No. 31.
257 Panama's second written submission, paras. 2.129, 2.275, 2.422, 2.523 and 2.605.
258 Panama's response to Panel question No. 29.
259 Panama's first written submission, paras. 4.36-4.41, 4.113-4.127, 4.247- 4.248, 4.310- 4.311,
4.340-4.343, 4.398-4.403, 4.424-4.436 and 4.450-4.457.
260 Panama's second written submission, paras. 2.73, 2.612, 2.706, 2.744 and 2.796 (referring to its
response to Panel question No. 41, which in turn refers to Appellate Body Report, EC – Seal Products,
para. 5.125).

element.261 According to Panama, the legal standard enshrined in the case law indicates that the
likeness element should be examined before examining the less favourable treatment element.262
7.125. More specifically, as regards the existence of no less favourable treatment for each of the
measures at issue, Panama asserts in relation to measure 1 that payments for services rendered
by service suppliers from non-cooperative countries are subject to a heavier tax burden than that
imposed on payments for services contracted with suppliers of cooperative countries. 263 Panama
considers that this heavier tax burden on payments for services rendered by suppliers of
non-cooperative countries "nullifies equality of competitive conditions in the Argentine market"
between services and service suppliers of coop erative countries and like services and service
suppliers of non-cooperative countries, thus resulting in less favourable treatment of the latter.264
7.126. With regard to measure 2, Panama claims that the services rendered from non-cooperative
countries entail a heavier burden on the consum er of the service as the AFIP presumes an
unjustified increase in wealth. This presumption would have to be rebutted by the consumer by
presenting the relevant documents proving the existence of a legitimate transaction. 265 Panama
claims that, in the first place, this measure discourages the consumption of services provided by
suppliers of non-cooperative countries because it represents an administrative burden and
generates a tax risk. In Panama's opinion, even if the consumer of the service successfully rebuts
the presumption, its mere existence in itself implies less favourable treatment for non-cooperative
service suppliers inasmuch as it raises the possibility that a negative determination may be made.
Secondly, Panama points out that the consumer has to take additional steps (the presentation of
the documents to rebut the presumption), which are not required if services are contracted from
like service suppliers of cooperative countries. For all these reasons, Panama considers that the
measure accords less favourable treatment to services and service suppliers of non-cooperative
countries.
266
7.127. As far as measure 3 is concerned, Panama asserts that application of this valuation regime
involves additional charges for those Argentine taxpayers who decide to contract with service
suppliers of non-cooperative countries. According to Panama, this more burdensome regime would
not apply if the Argentine taxpayer contracted services from a supplier situated in a cooperative
country.
267 In Panama's opinion, this additional requirement clearly modifies the conditions of
competition to the detriment of services and service suppliers of non-cooperative countries as
contracting them becomes more burdensome in comp arison with services and service suppliers of
cooperative countries. Panama thus considers that Argentina accords to services and service
suppliers of non-cooperative countries treatment less favourable than that accorded to like
services and service suppliers of cooperative countries.
268
7.128. With regard to measure 4, Panama contends that "for Argentine taxpayers, purchasing
services from persons in [non-cooperative countries] involves a clear tax, accounting and
economic disadvantage in terms of the allocation of expenditure", inasmuch as expenditure
incurred with suppliers of non-cooperative countries may only be allocated to the time of payment
of the service and not to the period in which the obligation accrues, as is the case for service
suppliers of cooperative countries. Panama considers that the disincentive generated by the
"distortion of accounting-tax management" as a result of applying this measure modifies the
conditions of competition between foreign like services and service suppliers and accords less
favourable treatment to service suppliers of non-cooperative countries in comparison with that
accorded to like service suppliers of cooperative countries.
269
7.129. Concerning measure 5 following the March 2014 amendment, Panama contends that
Argentina allows suppliers of cooperative countries to provide reinsurance services through

261 Panama's second written submission, para. 2.56.
262 Panama's second written submission, para. 2.63.
263 Panama's first written submission, para. 4.37; and second written submission, para. 2.139.
264 Panama's first written submission, para. 4.38.
265 Panama's first written submission, para. 4.114.
266 Panama's first written submission, paras. 4.118, 4.119, 4.124 and 4.126; and second written
submission, paras. 2.280 and 2.281, and 2.285.
267 Panama's first written submission, para. 4.247; and second written submission, para. 2.426.
268 Panama's first written submission, para. 4.248; and second written submission, para. 2.427.
269 Panama's first written submission, paras. 4.310 and 4.311; and second written submission,
paras. 2.532 and 2.533.

cross-border trade (mode 1) or commercial presence (mode 3), while it establishes conditions for
the supply of such services by service suppliers of non-cooperative countries. These conditions are
that the entity (or its parent company) supplyin g the service must be subject to the control and
supervision of an institution which fulfils functions similar to those of the SSN and with which a
memorandum of understanding has been signed. 270 Panama considers that the less favourable
treatment takes the form of the uncertainty surrounding compliance with the conditions laid down,
which entails an impairment of the conditions of competition.
271
7.130. With regard to measure 6, Panama claims that there is less favourable treatment for
suppliers of portfolio management services as the restrictions applicable to stock market
intermediaries place them at a disadvantage vis-à-vis like service suppliers of cooperative
countries. This is so because registered intermediaries (which provide stockbroking services) may
only conduct transactions on the Argentine capita l market if these are ordered by persons from
cooperative countries.
272 In Panama's opinion, the measure "limits the investment options of
portfolio managers of the [non-cooperative] countries" by restricting their access to essential
auxiliary services such as stockbroking. Panama contends that the measure gives portfolio
management service suppliers of cooperative countries an advantage that is not extended
immediately and unconditionally to like suppliers of non-cooperative countries.
273
7.131. As regards measure 7, Panama alleges that the mere fact that there is an additional
requirement for branches of companies from non-cooperative countries "is a significant sign" of
the existence of less favourable treatment.
274 Panama maintains that less favourable treatment is
given to service suppliers of non-cooperative countries as the required certification that the
company is effectively engaged in economically significant business activities in the place where it
was incorporated (i) limits the development of certain kinds of business which involve the parallel
creation of several commercial establishments, and (ii) entails an additional administrative
burden.
275
7.132. Concerning measure 8, Panama considers that the mere fact that the regulations impose
an additional requirement (prior authorization from the BCRA) indicates that there is less
favourable treatment.276 Panama contends that this regulation, by restricting the repatriation of
direct investments, discourages the establishment of service suppliers of non-cooperative
countries.
277 P a n a m a a d d s t h a t t h e r e s t r i c t i o n i s c o m p o u n d e d b y u n c e r t a i n t y a s t o w h e t h e r t h e
BCRA will ultimately authorize access to the Single Free Foreign Exchange Market (MULC). In
Panama's opinion, this discretionary power to grant authorization for access to the MULC also has
negative repercussions for service suppliers of non-cooperative countries vis-à-vis like service
suppliers of cooperative countries. 278 Panama states that the fact of bearing an additional
administrative burden (the request for auth orization from the BCRA) and the uncertainty
surrounding the authorization process places suppliers of non-cooperative countries at a
competitive disadvantage compared to like service suppliers of cooperative countries.
279
7.133. With regard to the question of whether no less favourable treatment is immediately and
unconditionally accorded to like services and service suppliers, Panama asserts that measure 1
establishes a condition for according to service suppliers of non-cooperative countries the more
favourable treatment accorded to cooperative countries. This condition is that the home
jurisdiction of the supplier must have signed an agreement on information exchange with
Argentina and that, by application of its domestic regulations, it may not invoke banking, stock
market or any other form of secrecy in response to a request for information.
280 As regards

270 Panama's second written submission, para. 2.610.
271 Panama's second written submission, para. 2.612.
272 Panama's first written submission, paras. 4.398 and 4.399.
273 Panama's first written submission, para. 4.402 (footnote original) Title XI, Section III, Article 5 of the
Rules of the CNV (Exhibit PAN-58).
274 Panama's second written submission, para. 2.739 (citing Appellate Body Report, Thailand –
275 Panama's first written submission, para. 4.425.
276 Panama's first written submission, para. 4.445. See also second written submission, para. 2.792.
277 Panama's first written submission, para. 4.451. (footnote original) Point 1.13 of Communication "A"
4662, amended by point 1 of Communication "A" 4692 (Exhibits PAN-67 and PAN-68).
278 Panama's first written submission, paras. 4.453 and 4.454.
279 Panama's first written submission, para. 4.455.
280 Panama's first written submission, para. 4.41.

measures 5 and 6, Panama contends that conditions are imposed on service suppliers of
non-cooperative countries in order to be eligible for access to a benefit. In the case of measure 5,
the benefit consists of access to the Argentine reinsurance market, while for measure 6 it consists
of access to the Argentine securities market. In Panama's opinion, the granting of benefits may not
be made subject to any condition, so the very existence of a condition conduces to the conclusion
that the measure is inconsistent with Article II:1 of the GATS.
281
7.3.2.1.2 Argentina
7.134. Argentina maintains that the eight measures at issue are not inconsistent with Article II:1
of the GATS inasmuch as Panama has not established a prima facie case that the GATS applies to
these measures or that the treatment accord ed to services and service suppliers of
non-cooperative countries is less favourable than that accorded to like services and service
suppliers of cooperative countries.282 Argentina also contends that, even if Panama had established
a prima facie case of less favourable treatment, it has not established a prima facie case that the
services and service suppliers are like.283
7.135. Regarding the arguments as to whether the measures at issue fall within the scope of
Article II:1 of the GATS, we refer back to section 7.3.1 above.
7.136. With regard to whether the services and service suppliers concerned by the measures at
issue are like, Argentina asserts that the regula tory differences between the service suppliers
being compared are relevant to the likeness determination inasmuch as they affect the way in
which suppliers operate on the market.
284 Argentina considers that the Appellate Body's
jurisprudence on trade in goods to the effect that regulatory differences are relevant to likeness to
the extent that "they have an impact on the competitive relationship between and among the
products concerned"285 is applicable to the GATS. 286 Argentina also asserts that these regulatory
differences are relevant to the likeness analysis "even though these differences are not fully
reflected in the market" and "even when these regulatory differences do not affect the essential
features of the service". 287 In any event, Argentina states that, in this case, the regulatory
differences between suppliers of the services in question affect the way in which the supplier
supplies the service and thus affect the competitive relationship.288
7.137. Argentina claims that the cooperative or non-cooperative nature of a jurisdiction is "an
essential feature of the service which consumers of services are seeking when they choose to do
business in a non-cooperative jurisdiction". 289 Argentina thus considers that exchange of tax
information is a feature of the services and service suppliers that is reflected in the conditions of
competition.290 Argentina argues that, if Panama wished to rebut its argument, it would have to
prove that the regulatory distinction applied by the measure at issue does not affect the
commercial or regulatory characteristics of the services or service suppliers.291
7.138. Argentina contends that the origin of a service or service supplier is a relevant factor in
determining likeness as it may affect the characteristics of the service supplier. 292 In this
connection, Argentina clarifies that it does not rule out the possibility of there being situations
where the principle of origin is applicable, even though this is not the case in this dispute as the
measures at issue are objectively related to th e services and service suppliers in question.
293 In
any event, Argentina considers that the de jure/de facto distinction developed by the case law in

281 Panama's first written submission, para. 4.402; and second written submission, paras. 2.611 and
2.705.
282 Argentina's first written submission, Sections III and III.A.
283 Argentina's first written submission, Section III.B.
284 Argentina's response to Panel question No. 31.
285 Argentina refers to Appellate Body Report, US – Clove Cigarettes, para. 119.
286 Argentina's first written submission, para. 185.
287 Argentina's response to Panel question No. 29. See also Argentina's first written submission,
para. 187 and response to Panel question No. 31.
288 Argentina's first written submission, paras. 188 and 210. See also response to Panel question No. 33.
289 Argentina's first written submission, para. 210.
290 Argentina's second written submission, para. 9. See also response to Panel question No. 71.
291 Argentina's second written submission, para. 35.
292 Argentina's second written submission, paras. 10, 24 and 34.
293 Argentina's first written submission, para. 196; and response to Panel question No. 32(a).

relation to trade in goods cannot be directly appl ied to the GATS since Articles I and III of the
GATT 1994 only refer to "like products" whereas the GATS refers to "like services and service
suppliers".
294
7.139. Likewise, Argentina asserts that the use of the conjunction "and" in the expression "like
services and service suppliers" in Articles II and XVII of the GATS indicates that likeness should be
assessed taking into account the relevant characteristics of both the services and the service
suppliers.
295 In Argentina's opinion, this is because the characteristics of a service are often
inseparable from the characteristics of the supplier.296
7.140. As regards whether the measures at issue accord no less favourable treatment to like
services and service suppliers, Argentina contends that the differential treatment existing in this
dispute is the result of its adherence to effective tax information exchange rules in effect at
international level. Argentina maintains that, in principle, these standards may be adopted by any
Member.
297
7.141. Argentina considers that Panama has not established a prima facie case that services and
service suppliers of Panamanian origin receive less favourable treatment compared to like services
and service suppliers of any other country or of Argentine origin. This is because Argentina has
designated Panama as a cooperative jurisdiction.
298 In this connection, Argentina contends that the
services and service suppliers which should be compared in order to determine the existence of no
less favourable treatment within the meaning of Article II of the GATS are, on the one hand, those
of the complaining Member and, on the other, like services and service suppliers of any other
Member which allegedly receive more favourable treatment.
299
7.142. Argentina asserts that the expression "treatment no less favourable" in Article II (and
Article XVII) of the GATS should be interpreted in the same way as in Article 2.1 of the Agreement
on Technical Barriers to Trade (TBT Agreement), that is, in the sense that there is no less
favourable treatment if the negative impact of the measure on the conditions of competition in the
Argentine market for services and service suppliers of non-cooperative countries "stems
exclusively from a legitimate regulatory distinction".
300
7.143. Moreover, Argentina asserts that the re gulatory distinction between cooperative and
non-cooperative jurisdiction is a legitimate one and that the challenged measures are based on
internationally recognized objective criteria which can be met by any Member.
301
7.144. Argentina submits no arguments concerning the granting of no less favourable treatment
immediately and unconditionally under Article II of the GATS.
7.3.2.2 Assessment by the Panel
7.3.2.2.1 Introduction
7.145. The question before the Panel is whether the eight measures at issue are inconsistent with
Article II:1 of the GATS. In response to Panama's claims, Argentina asserts that its measures are
not inconsistent with Article II:1 of the GATS as Panama has not established a prima facie case
that the GATS is applicable to those measures, th at the services and service suppliers are like or
that there is less favourable treatment.
302

294 Argentina's second written submission, paras. 24, 26 and 31.
295 Argentina's first written submission, para. 184. However, it should be pointed out that Argentina
does not consider it necessary for the Panel to decide whether the likeness analysis should be conducted on a
cumulative basis (taking into account both the service and the service supplier) or on a disjunctive basis
(taking into account the service or the service supplier). See Argentina's first written submission, footnote 131.
296 Argentina's first written submission, paras. 182-184; and second written submission, para. 33.
297 Argentina's first written submission, para. 196.
298 Argentina's first written submission, paras. 165 and 166.
299 Argentina's first written submission, paras. 149 and 154.
300 Argentina's first written submission, paras. 228 and 229.
301 Argentina's first written submission, paras. 231 and 232.
302 Argentina's first written submission, Sections III, III.A and III.B.

7.146. We shall start by examining the wording of Article II:1 of the GATS in order to establish
the applicable legal standard, taking into account the paucity of case law in this respect. Bearing
this in mind, we shall then determine whether the eight measures at issue violate this provision.
303
7.3.2.2.2 The relevant legal provision
7.147. Article II:1 of the GATS provides as follows:
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.
7.148. Article II:1 enshrines the general princi ple of most-favoured-nation (MFN) treatment,
imposing a general and unconditional obligation to grant MFN treatment, which applies irrespective
of whether there are specific commitments in the sector(s) in question. This MFN treatment
obligation applies to all service sectors, unless a Member has registered MFN exemptions in the
Annex on Article II Exemptions, as provided in Article II:2 of the GATS. 304 We note that Argentina
has not registered any relevant MFN exemption in the instant case.
7.3.2.2.3 The legal standard under Article II:1 of the GATS
7.149. The wording of Article II:1 of the GATS suggests that, in order to make a prima facie case,
Panama must demonstrate that: (i) first, the measures at issue are covered by Article II:1 of the
GATS; (ii) second, the relevant services and service suppliers are "like"; and (iii) third, the
measures at issue accord "immediately and unconditionally" "treatment no less favourable" to like
services and service suppliers.
7.150. We turn to a separate analysis of whether Panama has complied with these requirements.
7.3.2.2.3.1 First requirement: whether the measures at issue are covered by Article II:1
of the GATS
7.151. Regarding compliance with this first element, we refer to section 7.3.1 above, in which we
conclude that, having determined that Panama has demonstrated that there is "trade in services"
and that the eight measures at issue in this dispute "affect" trade in services within the meaning of
Article I:1 of the GATS, the Panel finds that the GATS is applicable to these measures. Panama
has, therefore, complied with the first requirement of proving that the eight measures at issue are
covered by the GATS.
7.152. We therefore continue by examining the second requirement, namely, whether Panama
has proved that services and service suppliers of cooperative and non-cooperative countries are
like.
7.3.2.2.3.2 Second requirement: whether the services and service suppliers are like
7.153. We recall that Panama claims that the re gulatory distinction established by the Argentine
measures at issue is based solely and exclusively on the origin of the service supplier
305 and that,

303 We find the statement by the Appellate Body in Canada – Autos to be particularly useful as regards
how a panel should address analysis of the consistency of a measure with Article II:1 of the GATS. According
to the Appellate Body, after having responded positively to the threshold questions of whether there is "trade
in services" and whether the measure under review "affects" trade in services, a panel should interpret the text
of this article. Once it has been interpreted, the panel must make "factual findings as to treatment of services
and service suppliers … [in dispute]" and, as a last step, a pply its interpretation of Article II:1 to the facts as it
found them. See Appellate Body Report, Canada – Autos, paras. 170 and 171.
304 Article II:2 provides as follows:
A Member may maintain a measure inconsistent with paragraph 1 provided that such a measure
is listed in, and meets the conditions of, the Annex on Article II Exemptions.
305 Panama's first written submission, paras. 4.16-4.18, 4.34, 4.110, 4.112, 4.156-4.158, 4.246, 4.256,
4.309, 4.317, 4.339, 4.397, 4.422- 4.423, and 4.449. See also second written submission, paras. 2.30, 2.38,
2.42, 2.54, 2.602. 2.697, 2.733 and 2.787.

consequently, there is no need to make casuistic demonstrations that the services and/or service
suppliers are like or to examine the competitiv e relationship between services and service
suppliers.306
7.154. Argentina, for its part, argues that the regulatory differences between the service suppliers
being compared are relevant to the likeness determination inasmuch as they affect the way in
which suppliers operate on the market. 307 Argentina also disagrees with Panama regarding the
transposition to the GATS of the de jure/de facto distinction developed in the case law in relation
to trade in goods. In this connection, Argentina maintains that this distinction cannot be directly
applied to the GATS as the GATS refers to "like services and service suppliers", whereas Articles I
and III of the GATT 1994 refer only to "like products".308
7.155. We shall commence our analysis of the likeness requirement under Article II:1 of the GATS
by referring to the dearth of existing jurisprude nce on trade in services, which would serve as a
guide in our interpretative exercise. The first of the few disputes in which the question of
"likeness" was addressed in connection with the GATS was EC – Bananas III . In that case, the
panel, in a finding that was not subsequently examined on appeal, considered relevant "the nature
and the characteristics" of the services in ques tion when determining likeness. The panel also
concluded that, to the extent that entities pr ovide such like services, they are like service
suppliers.
309
7.156. As regards the likeness of service suppliers, in Canada – Autos the panel followed the
approach taken in EC – Bananas III and considered that "to the extent that the service suppliers
concerned supply the same services, they should be considered 'like' for the purpose of this
case".310 The same approach was subsequently followed by the panel in China – Publications and
Audiovisual Products, in its likeness examination under Article XVII of the GATS. In that dispute, in
which the parties did not contest the likeness of the service suppliers, the panel concluded that
when the "only factor" on which a measure bases a difference of treatment between domestic and
foreign suppliers is "origin", the likeness requirement is met. Specifically, the panel found as
follows:
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.
311
7.157. Panama referred to this element of case law on several occasions, arguing that, in the case
before us, the difference in treatment is based exclusively on the origin of the service suppliers
and, therefore, likeness must be presumed.
312
7.158. In China – Publications and Audiovisual Products, however, the panel also pointed out that:
[I]n cases 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".313
7.159. The panel focused precisely on these "other factors" in China – Electronic Payment
Services. In that dispute, the panel undertook a more detailed analysis of likeness, considering

306 Panama's response to Panel question No. 33. See also responses to Panel questions Nos. 27 and 28
(citing Panel Report, Canada – Wheat Exports and Grain Imports, para. 6.164).
307 Argentina's response to Panel question No. 31
308 Argentina's second written submission, paras. 26 and 31.
309 Panel Report, EC – Bananas III, para. 7.322.
311 Panel Report, China – Publications and Audiovisual Products, para. 7.975 (citing Panel Reports,
Canada – Wheat Exports and Grain Imports, paras. 6.164-6.167 and Argentina – Hides and Leather,
paras. 11.168 and 11.169). (footnote omitted)
312 Panama's first written submission, paras. 4.16, 4.110, 4.149, 4.246, 4.256, 4.265, 4.277- 4.278,
4.309, 4.317, 4.339, 4.397, 4.423 and 4.449; and second written submission, paras. 2.30, 2.32, 2.38, 2.45,
2.297-2.298, 2.600-2.601, 2.697, 2.733 and 2.787.
313 Panel Report, China – Publications and Audiovisual Products, para. 7.975.

that the difference in treatment was not exclusively linked to the origin of the service suppliers but
to "other factors". 314 After examining the ordinary meaning of the term "like" and the context of
the expression "like services" in Article XVII of the GATS, the panel concluded that "like services
are services that are in a competitive relationsh i p w i t h e a c h o t h e r ( o r w o u l d b e i f t h e y w e r e
allowed to be supplied in a particular market)".315
7.160. We agree with the panel in China – Electronic Payment Services that interpretation of the
expression "like services and service suppliers" should be based on the ordinary meaning of its
terms, taking into account the context of Article II itself, as well as other provisions of the GATS.
Consequently, we see no obstacle to using the sa me likeness interpretation as that used by the
panel in China – Electronic Payment Services , even though it was developed in relation to
Article XVII of the GATS.
7.161. In our view, the likeness analysis under Article II of the 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. Although the Appellate Body has exercised caution with regard to the
direct transposition to Article II of all interp retations developed under Article XVII of the GATS 316,
we consider the context afforded by this provision to be useful inasmuch as the Appellate Body has
transposed interpretations developed under Article XVII to Article II of the GATS. 317 Indeed, not
only is the term to be interpreted the same but the context afforded by the term "treatment no
less favourable" also informs the likeness determination in both cases. This has also been the view
of previous panels and the Appellate Body in connection with Article III:4 of the GATT 1994 and
Article 2.1 of the TBT Agreement.
7.162. While we are aware of the risks involved in directly transposing the case law of other
covered agreements to the GATS
318, we are of the view that, in the context of a likeness
determination, there are sufficient elements in common in these three Agreements to make it
possible to adopt an interpretation of likeness ba sed on the competitive relationship between the
relevant services and service suppliers. In our view, this approach does not prevent us taking into
account the specific characteristics of trade in services, including in particular the intangible nature
of services and the existence of four modes of supply.
319
7.163. Taking as a starting point the competitiv e relationship between the services and service
suppliers, we continue our likeness analysis taking into account the particular circumstances of our
case
320 and considering all the arguments and evidence that pertain to the competitive relationship
between the services and service suppliers being compared. 321 Like the parties, we understand
that the likeness analysis under Article II:1 of the GATS concerns, on the one hand, services and
service suppliers of non-cooperative countries and, on the other, services and service suppliers of
cooperative countries. We recall that this distinct ion is reflected in each and every one of the
measures at issue by virtue of the provisions of Decree No. 589/2013.
322
7.164. As we have already seen, Panama considers that origin is the only reason for the
differences in treatment and therefore requests us to apply the presumption of likeness based on

314 Panel Report, China – Electronic Payment Services, para. 7.697.
315 Panel Report, China – Electronic Payment Services, para. 7.700.
316 In this connection, the Appellate Body stated that "provisions elsewhere in the GATS relating to
national treatment obligations, and previous GATT practice relating to the interpretation of the national
treatment obligation of Article III of the GATT 1994 are not necessarily relevant to the interpretation of
Article II of the GATS". See Appellate Body Report, EC – Bananas III, para. 231.
317 For example, the Appellate Body held that Articles II and XVII of the GATS cover both de jure and
de facto discrimination. See Appellate Body Report, EC – Bananas III, paras. 233 and 234.
318 In this connection, the panel in China – Electronic Payment Services warned of the risks of directly
transposing case law on likeness under the GATT 1994 to the area of trade in services. See Panel Report, China
– Electronic Payment Services, para. 7.698.
319 Panel Report, China – Electronic Payment Services, para. 7.698.
320 Panel Report, China – Electronic Payment Services, para. 7.701.
321 It should be pointed out that this statement was made in a context in which the Panel considered
that the difference in treatment was not exclusively linked to origin and, therefore, examined in detail the
relationship of this difference in treatment to "other factors". See Panel Report, China – Electronic Payment
Services, para. 7.702. (footnote omitted)
322 See section 2.2 above. We recall that Article 1 of Decree No. 589/2013 provides for the replacement
of the references to "countries with low or no taxes" by "countries not considered as 'cooperating for tax
transparency purposes'". See exhibits PAN-3 / ARG-35.

origin applicable under the GATT 1994. 323 Argentina considers that this presumption cannot be
transposed directly to the GATS context becaus e Articles II and XVII of the GATS, unlike their
counterparts in the case of goods, refer to "like services and service suppliers". 324 Argentina
considers that the issue is not just one of the orig in of the service or service supplier, but also has
to do with the characteristics which are intrinsically linked to the origin of the said service or
supplier.325 These characteristics are defined, inter alia, by aspects of the regulatory framework in
their countries of origin that affect the supply of the services. More specifically, Argentina refers in
this dispute to the aspects of the regulatory framework relating to tax transparency.326
7.165. We agree with Argentina that the presumption of likeness based on origin applicable in the
context of the GATT 1994 is not directly transp osable to the context of the GATS because the
reference to "like services and service suppliers" in the GATS has no equivalent in the GATT 1994,
which only refers to "like products". As the Panel explained in China – Electronic Payment Services,
therefore, we have to determine whether the diffe rence in treatment may also be due to "other
factors".327 To that end, we shall first examine wh ether the difference in treatment between
cooperative and non-cooperative countries is due to origin. If we conclude that this difference is
not due exclusively to origin, we shall continue our analysis by examining whether there is also
another factor or "other factors" linked to the difference in treatment between services and service
suppliers of non-cooperative countries and services and service suppliers of cooperative countries.
7.166. As regards the origin rule, as we have already mentioned, the eight measures challenged
by Panama distinguish between services and serv ice suppliers of cooperative and non-cooperative
countries. In our view, the mere fact that differe ntial 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 cons idered 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 o n o r i g i n , a s a s s e r t e d b y P a n a m a , o r w h e t h e r t h e r e i s a l s o s o m e " o t h e r f a c t o r "
explaining the difference in treatment, as we shall consider below.
7.167. We recall that Panama contends that, when discrimination according to origin is already
established in the law itself, there is no need to examine any other factor in order to determine the
likeness of services and service suppliers.
328 Argentina responds that the origin of a service or
service supplier is a relevant factor for determining likeness inasmuch as it may affect the
characteristics of the service supplier.
329 Argentina does not rule out the possibility of there being
situations where the principle of origin is applicable, but contends that this is not the case in this
dispute as the measures at issue are objectively related to the services and service suppliers in
question.
330 In any event, Argentina considers that the de jure/de facto distinction developed by
the case law in relation to trade in goods cannot be directly applied to the GATS since Articles I
and III of the GATT 1994 only refer to "like" prod ucts, whereas the GATS refers to "like services
and service suppliers".331
7.168. Given that there are doubts regarding th e existence of "other factors", we shall follow
previous case law on trade in services and turn to consider whether, in addition to origin, there are

323 See Panama's first written submission, paras. 4.16-4.18, 4.34, 4.110, 4.112, 4.156-4.158, 4.246,
4.256, 4.309, 4.317, 4.339, 4.397, 4.422-4.423, and 4.449. See also second written submission, paras. 2.30,
2.38, 2.42, 2.54, 2.602. 2.697, 2.733 and 2.787.
324 Argentina's second written submission, paras. 26 and 31.
325 Argentina's first written submission, paras. 185-210. See also second written submission, paras. 9,
10, 24, 26, 31 and 34; and responses to Panel questions Nos. 29, 31, 32 and 71.
326 Argentina's second written submission, para. 9. See also response to Panel question No. 71.
327 Panel Report, China – Electronic Payment Services, para. 7.697.
328 Panama's response to Panel question No. 29.
329 Argentina's second written submission, paras. 10, 24 and 34.
330 Argentina's first written submission, para. 196; and response to Panel question No. 32.
331 Argentina's second written submission, paras. 26 and 31.

other factors relevant to the examination of the li keness of services and service suppliers in this
dispute.
7.169. The main difficulty we encounter in determining whether the difference in treatment is
solely and exclusively based on origin lies in the fact that, in order to make such a determination,
difference in treatment based on "other factors" has to be set aside and, in the context of the
GATS, it is not specified what "other factors" are to be examined.332
7.170. The only panel which has to date examined this question is the one in China – Electronic
Payment Services .333 In its analysis of "other factors", the panel exercised caution when
transposing the traditional likeness criteria of the GATT 1994 to the GATS because of the
"important dissimilarities" between the two Agreements. In particular, the panel highlighted
differences regarding the intangible nature of serv ices, their supply through four different modes,
and the ways in which trade in services is conducted and regulated.
334 In order to try to identify
the "other factors" to be considered when determining the likeness of the relevant services, the
panel turned to the context of the expression "lik e services" provided by Article XVII of the GATS.
The panel indicated, more generally, that a likeness determination should be made on a
case-by-case basis
335 and be based on "arguments and evidence that pertain to the competitive
relationship of the services being compared".336
7.171. As regards the likeness of service suppliers, the panel in China – Electronic Payment
Services established that there is a presumption that service suppliers are like "if, and to the
extent that, they provide like services", even though, depending on the circumstances, a "separate
inquiry into the 'likeness' of the suppliers may be called for". 337 In essence, the panel focused on
the similar description of activities by the suppl iers and the fact that they were perceived as
competitors in the same market 338 and concluded that the relevant service suppliers in that
dispute were like "at least to the extent that they provide 'like' services".339
7.172. The panel in China – Electronic Payment Services stated, in line with what had been
established by previous panels and the Appellate Body, that any determination of likeness must be
made on a case-by-case basis.
340 We therefore turn to examine whether, in this dispute, there are
" o t h e r fa c t o r s " t o b e c o n s id e r e d a n d , if t h a t is t h e c a s e , wh e t h e r t h e y h a ve a n y im p a c t o n t h e
competitive relationship of the services and service suppliers concerned.
7.173. In this dispute, the parties have devoted part of their meetings with the Panel and their
submissions to discussing a question that we might treat as one of those "other factor(s)" referred
to by the panel in China – Electronic Payment Services. Argentina, in particular, contends that the
distinction established by Decree No. 589/2013 reflects a regulatory difference that has to be
taken into account by the Panel as an "other factor".
341 This "other factor" would be the possibility
of access by Argentina to tax information on foreign suppliers. We note that this is not the case for
Panama, which has cooperative country status despite having denied that it initiated negotiations

332 The panel in China – Publications and Audiovisual Products left the door open to consideration of
"other factors" in the likeness analysis, indicating that "in cases 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". See Panel Report, China – Publications and Audiovisual Products, para. 7.975.
333 Although it considered the possibility of "other factors", the panel in China – Publications and
Audiovisual Products did not consider it necessary to address this aspect.
334 Panel Report, China – Electronic Payment Services, para. 7.698.
335 Panel Report, China – Electronic Payment Services, para. 7.701.
336 Panel Report, China – Electronic Payment Services, 7.702. (footnote original) This is also consistent
with the criterion adopted in relation to goods. See Appellate Body Reports, EC – Asbestos, paras. 99 and 103;
and Philippines – Distilled Spirits, footnote 211.
337 Panel Report, China – Electronic Payment Services, para. 7.705. The Panel based itself on Panel
338 Panel Report, China – Electronic Payment Services, para. 7.706.
339 Panel Report, China – Electronic Payment Services, para. 7.708.
340 See, for example, Appellate Body Reports, EC – Asbestos, para. 101 and Japan – Alcoholic
Beverages II, p. 20 (in relation to the GATT 1994) and Panel Report, China – Electronic Payment Services,
paras. 7.701 and 7.705 (in relation to trade in services).
341 Argentina's response to Panel question No. 29.

with Argentina on the signing of a tax information exchange agreement and, thus, on the effective
exchange of information with Argentina.342
7.174. Argentina maintains that this factor corresponds to an "objective basis" on which to
establish the distinction.343 Argentina also emphasizes that the need to examine (or not examine)
"other factors" in the determination of likeness "has to be established in each case, depending on:
(a) the nature of the services in question, and (b) the particular circumstances of the case".344
7.175. Panama considers that the expression "other factors" should refer to factors that are
"neutral as to origin" and that the "other factor" identified by Argentina does not fall within this
category. As an example of a factor that is neutral as to origin, it refers to the case of China –
Electronic Payment Services , in which the differences in treatment related to whether one
company in particular (China UnionPay (CUP)) was or was not the domestic or foreign supplier.345
7.176. In the case before us, the "other factor " identified by one of the parties (access to tax
information on foreign service suppliers) is of a regulatory nature. We therefore deem it useful to
recall what was stated by the panel in EC – Asbestos and, more recently, in US – Clove Cigarettes.
In our view, this Appellate Body case law is of particular relevance to this case as in both those
disputes the Appellate Body addressed the regulatory concerns of Members in the determination of
likeness to the extent that these a ffect the competitive relationship.
346 In this connection, we note
that regulatory concerns play a key role in the scope of the GATS as this Agreement refers not
only to services but also to service suppliers. To this must be added the fact that the GATS
regulates four modes of supply, two of which (modes 1 and 2) refer to service suppliers outside
the territory of the Member "importing" the service and are thus subject to the regulations of that
other Member.
7.177. In EC – Asbestos , in the context of Article III:4 of the GATT 1994, the Appellate Body
recognized that the examination of certain regula tory concerns (such as the risk posed to human
health by the product in question) could be relevant "in assessing the competitive relationship in
the marketplace between allegedly 'like' products"
347, and, ultimately, in determining likeness. In
that dispute, the risks posed by asbestos to human health were examined in relation to two of the
likeness criteria traditionally used under the GATT 1994: the physical properties of the product and
consumers' tastes and habits.348
7.178. In US – Clove Cigarettes , the Appellate Body did not consider that the concept of "like
products" in Article 2:1 of the TBT Agreement "lends itself to distinctions between products that
are based on the regulatory objectives of a measure". 349 According to the Appellate Body,
consideration of the objectives of a measure would distort the comparison under the "no less
favourable treatment" analysis. The Appellate Body nevertheless indicated that this approach does
not mean that the regulatory concerns underlying the measures at issue play no role in the
determination of likeness. Following the lines set out in EC – Asbestos , the Appellate Body found
that "regulatory concerns and considerations may play a role in applying certain of the 'likeness'
criteria (that is, physical characteristics and consumer preferences) and, thus, in the determination
of likeness".
350 The Appellate Body clarified that regulatory concerns play a role in determining
likeness "[t]o the extent that they are relevant to the examination of certain 'likeness' criteria and
are reflected in the products' competitive relationship".351
7.179. Applying the Appellate Body's reasoning to our case, it appears to us that the possibility
for Argentina to have access to tax information on foreign suppliers may be considered to be an
"other factor" to be taken into account in our likeness analysis, provided that it is reflected in the
competitive relationship between services and service suppliers of cooperative and
non-cooperative countries. This being said, it lies with Argentina to prove that this "other factor"

342 Panama's response to Panel question No. 7.
343 Argentina's response to Panel question No. 32(b).
344 Argentina's response to Panel question No. 29.
345 Panama's response to Panel question No. 28.
346 Appellate Body Reports, EC – Asbestos, para. 115; and US – Clove Cigarettes, para. 119.
347 Appellate Body Report, EC – Asbestos, para. 115 (emphasis original).
348 Appellate Body Report, EC – Asbestos, para. 113.
349 Appellate Body Report, US – Clove Cigarettes, para. 116.
350 Appellate Body Report, US – Clove Cigarettes, paras. 116-117.
351 Appellate Body Report, US – Clove Cigarettes, para. 120.

affects the competitive relationship between se rvices and service suppliers, for example, by
showing its effect on the characteristics of the service and consumers' preferences.
7.180. According to Argentina, in the instant case, the fact that the service suppliers may or may
not be situated in jurisdictions subject to the effe ctive exchange of information is a characteristic
that is directly reflected in the conditions of competition on the market. 352 Argentina contends that
the different regulatory context in which services and service suppliers of cooperative and
non-cooperative countries find themselves as rega rds the exchange of tax information affects the
way in which the supplier supplies the service, and thus affects the competitive relationship.
353
Argentina sees lack of transparency and effective exchange of information as the main competitive
advantage for services and service suppliers originating from non-cooperative countries
354, and
this is also acknowledged by Panama.355
7.181. As we explained in the descriptive part, the distinction made by Argentina is a function of
its access (or lack of access) to tax information on service suppliers. According to Argentina's
claims, the possibility of access to tax information falls into the following two categories:
cooperative countries (there is access to tax information) and non-cooperative countries (there is
no access to tax information).
7.182. Decree No. 589/2013 lays down the conditions for a country to be considered cooperative,
namely: (i) to have signed 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 effective exchange of information; or (ii) to have initiated with
Argentina the negotiations necessary for concluding such an agreement and/or convention.
356 If
one of these requirements is not met, the country is considered to be non-cooperative.357
7.183. In looking at how Decree No. 589/2013 has been implemented in practice, we note that
the current list of cooperative countries includes countries that have not signed a double taxation
convention or an information exchange agreemen t 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. Let us take, for example, the cases of Panama and
Germany. These two countries belong to the ca tegory of cooperative countries. Argentina has
signed a double taxation agreement with Germany, which has been in force since
25 November 1979
358, giving it access to tax information. 359 In the case of Panama, however,
Argentina has no access to tax information as it has not signed any agreement on exchange of tax
information with Panama. We also note that various countries which have initiated negotiations
have a different status. For example, both Panama and Hong Kong (China) have initiated
negotiations but neither of the two exchanges tax information with Argentina as there is no
agreement or convention in force to cover such exchange.
360 While Panama has the status of
cooperative country, however, Hong Kong (China) is still considered a non-cooperative country.361

352 Argentina's second written submission, para. 9.
353 Argentina's first written submission, paras. 188 and 210. See also response to Panel question No. 33.
354 Argentina's second written submission, para. 46.
355 Argentina's first written submission, paras. 49-51 (referring to Exhibit ARG-8).
356 Article 1 of Decree No. 589/2013, (Exhibits PAN-3 / ARG-35).
357 We note, however, that AFIP Resolution No. 3.576/2013, "adopted in exercise of the powers
conferred by Article 2(b) of Decree No. 589" exhibits slight differences in comparison with Decree
No. 589/2013. On the one hand, Article 1 of this Resolution establishes three categories of cooperative
country: "(a) cooperative countries which have signed a double taxation convention or information exchange
agreement, with a positive assessment of effective exchange of information; (b) cooperative countries with
which a double taxation convention or information exchange agreement has been signed but it has not been
possible to assess effective exchange; and (c) cooperative countries with which the process of negotiating or
ratifying a double taxation convention or information exchange agreement has been initiated". We also note
that the third category refers to initiation of the negotiation or ratification process, whereas Decree
No. 589/2013 refers only to negotiation. See AFIP Resolution No. 3.576/2013, (Exhibits PAN-3 / ARG-37).
358 Amending Protocol in force since 30 June 2011. See Argentina's response to Panel question No. 13.
359 Germany signed the OECD Convention on Mutual Administrative Assistance in Tax Matters, to which
Argentina is a party, on 3 November 2011, although it has not yet entered into force. See Argentina's response
to Panel question No. 13.
360 Argentina's first written submission, paras. 131 and 132; and responses to Panel questions
Nos. 10(b)(i) and 10(b)(ii). The other countries with which Argentina has initiated negotiations since Decree
No. 589/2013 entered into force and which do not appear on the current list of cooperative countries are

7.184. This factual situation makes it extremely difficult for us to make the comparison we need
to make for an examination of likeness, especia lly when considering "other factor(s)" that are
relevant. Nor has Argentina indicated to us how such a comparison is to be made taking into
account this factual situation. We consider that the current circumstances make it impossible for
us to compare relevant services and service suppliers in order to evaluate relevant "other
factor(s)" in addition to their origin.
7.185. 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 serv ice suppliers of cooperative and non-cooperative
countries are like by reason of origin.
7.186. In the light of the foregoing, we find that, for the purposes of the claims made by Panama
under Article II:1 of the GATS, the services and se rvice suppliers of cooperative countries are like
the services and service suppliers of non-cooperative countries.
7.3.2.2.3.3 Third requirement: Whether the measures at issue do not immediately and
unconditionally accord treatment no less favourable to like services and service
suppliers
7.187. We continue our analysis with the third requirement of the legal standard under Article II:1
of the GATS, namely, whether Panama has proved that the measures at issue do not "immediately
and unconditionally" accord "treatment no less favourable" to like services and service suppliers.
We shall start by examining whether the measures at issue accord no less favourable treatment to
the like services and service suppliers we have just identified. Next, if there is no less favourable
treatment, we shall consider whether such treatment is accorded immediately and unconditionally.
7.188. Before beginning our analysis, however, we think it necessary to clarify a matter raised by
Argentina with regard to the terms of comparison to be used in determining the existence of no
less favourable treatment: whether the treatment accorded to the complaining Member is that
which should be the subject of comparison in a no less favourable treatment determination or
whether it should be the treatment accorded to any other Member even when it is not the
treatment given to the complaining Member.
(a) Whether the treatment accorded to the complaining Member is that which
should be the subject of comparison in a no less favourable treatment
determination
7.189. One of Argentina's principal arguments regarding the "treatment no less favourable"
element of Article II:1 of the GATS concerns th e status of the complainant as a cooperative
country. Argentina argues that Panama has not established a prima facie case that services and
service suppliers of non-cooperative countries receive less favourable treatment since Panama
enjoys cooperative country status. According to Argentina, this status as a cooperative country
means that Panama receives the most favourable treatment.
362
7.190. In Argentina's opinion, "the reference to services and service suppliers of any other
Member in Articles II and XVII should be underst ood as a reference to the specific services and
service suppliers originating in the complaining Member" 363, which are allegedly those which
receive less favourable treatment. The treatmen t they receive should be compared with the
treatment accorded to "the services and service suppliers that are the subject of the complaint",
whether domestic (in the case of claims under Article XVII of the GATS) or of another origin (in the
case of claims under Article II of the GATS).364

Belarus, Cameroon, Côte d'Ivoire, Cyprus, Gabon and Gibraltar. See Argentina's response to Panel question
No. 10(b)(i), para. 5.
361 Argentina claims that the reason why Hong Kong (China) is not on the list of cooperative countries is
because the list is updated at the beginning of each fiscal year. We note, however, that the list was not
updated at the beginning of the 2015 fiscal year. See Argentina's response to Panel question No. 10(b)(ii).
362 Argentina's first written submission, paras. 165 and 166.
363 Argentina's first written submission, para. 154.
364 Argentina's first written submission, para. 149.

7.191. Panama disagrees with Argentina and contends that "[t]he ordinary meaning of the terms
'any other Member' [in Articles II and XVII of the GATS] and 'that other Member' [in
Article XXVIII(f) of the GATS] is cl early not the 'complaining Member'". 365 Panama adds that "the
benchmark for determining the existence of trade in services and the mode of supply is the
presence/absence of the supplier in the defending Member ."366 Panama also indicates that
Article 3.8 of the DSU provides that the nullification or impairment presumed once a measure's
inconsistency with WTO obligations has been found refers to " other Members party to the covered
agreement" and not to the complaining Member.
367 Furthermore, it points out that Article XXIII of
the GATS provides that a Member may have recourse to the DSU if it "considers that any other
Member fails to carry out its obligations or spec ific commitments" under the GATS, without at all
mentioning that the effects of the alleged non-compliance by any other Member must be borne by
the complaining Member.
368 In any event, Panama clarifies that it has proved the existence of
negative effects on Panamanian suppliers during the period in which Panama was considered a
non-cooperative country.
369
7.192. In our view, determining the existence of less favourable treatment does not necessarily
imply comparing the treatment given to services and service suppliers of the complaining Member.
Although it is true that in most disputes the complaining Member is the Member affected by the
allegedly less favourable treatment accorded by the respondent, we recall that in EC – Bananas III
the Appellate Body determined that no provision of the DSU contains any requirement on the need
for the complainant to have a "legal interest or right", as shown below:
We agree with the Panel that "neither Article 3.3 nor 3.7 of the DSU nor any other
provision of the DSU contain any explicit requirement that a Member must have a
'legal interest' as a prerequisite for requesting a panel". We do not accept that the
need for a "legal interest" is implied in the DSU or in any other provision of the WTO
Agreement. It is true that under Article 4.11 of the DSU, a Member wishing to join in
multiple consultations must have "a substantial trade interest", and that under
Article 10.2 of the DSU, a third party must have "a substantial interest" in the matter
before a panel. But neither of these provisions in the DSU, nor anything else in the
WTO Agreement , provides a basis for asserting that parties to the dispute have to
meet any similar standard.
370
7.193. The Appellate Body also indicated that Members have broad discretion in deciding whether
to bring a case against another Member under the DSU and they have to judge whether such
action would be fruitful.371
7.194. The Appellate Body's statement in Canada – Autos also appears relevant to us in respect of
the comparison required under Article II:1 of the GATS. The Appellate Body held that "[t]he text of
Article II:1 requires, in essence, that treatment by one Member of 'services and services suppliers'
of any other Member be compared with treatment of 'like' services and service suppliers of 'any
other country'".372
7.195. In the dispute before us, we note that Panama currently has cooperative status. Panama
nonetheless indicates that when it requested the establishment of a panel it had the status of a
non-cooperative country
373 and it was only after the establishment of this Panel that Argentina

365 Panama's second written submission, para. 2.59.
366 Panama's second written submission, para. 2.59. (emphasis original)
367 Panama's second written submission, para. 2.61. (emphasis original)
368 Panama's second written submission, paras. 2.61 and 2.62.
369 Panama's second written submission, para. 2.62.
370 Appellate Body Report, EC – Bananas III, para. 132. (footnote omitted; emphasis original)
371 Appellate Body Report, EC – Bananas III, para. 135.
372 Appellate Body Report, Canada – Autos, para. 171.
373 The terminology used by Panama in its panel request is "listed countries". By "listed countries",
Panama means all those WTO Members listed in Decree No. 1344/98, as amended by Decree No. 1037/00. We
recall that the list mentioned by Panama was amended after the entry into force of Decree No. 589/2013,
Article 1 of which replaces the seventh unnumbered article incorporated by Decree No. 1037/00 following
Article 21 of the Regulations to the LIG, consolidated text of 1997 and amendments thereto, approved by
Article 1 of Decree No. 1344/98 and amendments thereto. See Panama's request for the establishment of a
panel, and Decree No. 589/2013, (Exhibits PAN-3 / ARG-35).

changed its status to that of a cooperative jurisdiction. 374 Taking into account the Appellate Body's
case law in EC – Bananas III , we do not consider that that change in Panama's status affects its
right to bring a complaint under the DSU. At the same time, we do not consider that we should
interfere in the broad discretion enjoyed by Panama to decide whether to bring a complaint against
another Member under the DSU and whether such complaint would be fruitful for it.
7.196. Bearing in mind the foregoing, we conclude that the submission of claims under Article II:1
of the GATS does not require that the allegedly less favourable treatment that is the subject of the
complaint must refer to the complaining party in this dispute, i.e. Panama.
(b) Whether the measures at issue do not accord treatment no less favourable to
like services and service suppliers
7.197. After examining this preliminary issue, we turn to consider whether Panama has proved
that the measures at issue do not accord "treatment no less favourable" to like services and
service suppliers. We shall start by interpreting the expression "treatment no less favourable"
within the meaning of Article II:1 of the GATS. In th e light of our interpretation of this expression,
we shall then proceed to determine whether the eight measures in relation to which Panama has
put forward claims under Article II of the GATS gr ant treatment no less favourable to services and
service suppliers of non-cooperative countries compared to the treatment accorded to like services
and service suppliers of cooperative countries.
7.198. We note that Article II:1 of the GATS does not define the concept of "treatment no less
favourable". Nor does the scant jurisprudence on this provision provide us with a definition of this
concept even though, as we pointed out earlier, the Appellate Body in Canada – Autos indicated
that Article II:1 of the GATS "requires, in essenc e, that treatment by one Member of 'services and
services suppliers' of any other Member be compared with treatment of 'like' services and service
suppliers of 'any other country'".
375
7.199. The parties have engaged in an intense debate on the interpretation of the phrase
"treatment no less favourable" under Article II:1 of the GATS and, in particular, on the possibility
of transposing to the GATS context the Appellate Body case law on the relevance of legitimate
regulatory distinctions in relation to "treatment no less favourable" under Article 2.1 of the
TBT Agreement.
7.200. Argentina's proposal asserts that the conclusions reached by the Appellate Body in
US - Clove Cigarettes on Article 2.1 of the TBT Agreement are applicable to the interpretation of
"treatment no less favourable" in Articles II and XVII of the GATS.
376 Argentina considers, in
particular, that a "measure does not accord 'less favourable treatment' if the detrimental impact
on imports 'stems exclusively from legitimate regulatory distinctions'".
377 Argentina emphasizes
that the interpretation of the expression "treat ment no less favourable" in Article 2.1 of the
TBT Agreement, as developed by the Appellate Body in US – Clove Cigarettes, was made in the
light of the object and purpose of the TBT Agreem ent, which is "to strike a balance between, on
the one hand, the objective of trade liberalizati on and, on the other hand, Members' right to
regulate'".378 Argentina considers that this approach is also applicable to interpretation of the
expression "treatment no less favourable" in the context of Articles II and XVII of the GATS,
inasmuch as the preamble to the GATS itself "expressly recognizes that the object and purpose of
the Agreement is to promote the progressive liberalization of trade in services at the same time as
confirming Members' right to regulate services in order to meet national policy objectives".
379
Argentina asserts that this balance between liberalization and regulation is to be found in the
provisions of the GATS and, by way of example, cites Articles VI and VII. 380 In the light of the
foregoing, Argentina states that "the term 'treatment no less favourable' in Articles II and XVII

374 Panama's second written submission, para. 2.62.
375 Appellate Body Report, Canada – Autos, para. 171.
376 Argentina's first written submission, paras. 225 and 226.
377 Argentina's first written submission, paras. 225 and 226 (citing Appellate Body Report, US – Clove
Cigarettes, para. 175).
378 Argentina's first written submission, para. 225 (citing Appellate Body Report, US – Clove Cigarettes,
para. 174).
379 Argentina's first written submission, para. 226.
380 Argentina's first written submission, para. 227.

must be interpreted as having the same meaning as the term 'treatment no less favourable' in
Article 2.1 of the TBT Agreement".381
7.201. Argentina asks us to proceed in the manner indicated by the Appellate Body in US - Clove
Cigarettes, that is, to "carefully scrutinize the particular circumstances of the case, that is, the
design, architecture, revealing structure, operation, and application of the technical regulation at
issue, and, in particular, whether that technical regulation is even-handed", in order to determine
whether the detrimental impact on services and service suppliers of non-cooperative countries in
the Argentine market stems from a legitimate regulatory distinction.382 Argentina considers that its
measures differentiate on the basis of a legitimate regulatory distinction which is "the ability of the
national tax authorities to obtain tax information from other jurisdictions", and are in line with
internationally recognized objective criteria, for which reason the treatment they prescribe for
services and service suppliers of non-cooperative countries does not constitute less favourable
treatment in comparison with that accorded to like services and service suppliers of cooperative
countries.
383
7.202. Panama considers that Argentina's argument is "erroneous" and is not based on the case
law cited by Argentina or on the conclusions of the Appellate Body in EC – Seal Products .384
Panama contends that the case law in relation to Article 2.1 of the TBT Agreement cannot simply
be extrapolated to the context of the GATT 1994 or the GATS inasmuch as it was developed taking
into account the specific context of that provision. Panama also points out that the interpretation
of "treatment no less favourable" developed in US – Clove Cigarettes also had other relevant
aspects, such as the fact that the TBT Agreement has no provision containing general exceptions,
similar to Article XX of the GATT 1994.
385
7.203. Panama considers that its position is borne out by the Appellate Body's statement in EC –
Seal Products that there is no legal reason why "the legal standards for similar obligations – such
as Articles I and III:4 of the GATT 1994, on the one hand, and Article 2.1 of the TBT Agreement,
on the other hand – must be given identical meanings". 386 Panama argues that the contextual
differences which gave rise to diverse interpretations of the expression "treatment no less
favourable" in relation to the TBT Agreement, on the one hand, and the GATT 1994, on the other,
also apply as between the TBT Agreement and the GATS. Panama mentions in this connection the
existence of Article XIV of the GATS, which contains general exceptions similar to those in
Article XX of the GATT 1994 and which, therefore, excludes transposition of the interpretation
developed under Article 2.1 of the TBT Agreement to Articles II and XVII of the GATS. Panama
concludes that "[i]n the context of Articles II:1 and XVII of the GATS, there is 'less favourable
treatment' when the conditions of competition are modified, without it being necessary to examine
the existence of a legitimate regulatory distinction".
387
7.204. From the parties' arguments, we note that, certainly, the expression "treatment no less
favourable" in Article II:1 of the GATS is also to be found in Article 2.1 of the TBT Agreement and
Article III:4 of the GATT 1994, as well as in Ar ticle XVII of the GATS. We consider that these
provisions may constitute a relevant context when interpreting the expression "treatment no less
favourable" under Article II:1 of the GATS. Neverthe less, before turning to the context, we recall
that Article 31.1 of the 1969 Vienna Convention on the Law of Treaties states that the starting
point for an interpretative exercise is the "the ordinary meaning to be given to the terms of the
treaty".
388 Article 31.1 of the Vienna Convention adds that the basis of interpretation shall be not
only the ordinary meaning of the terms but also "t heir context and in the light of [the treaty's]
object and purpose". This was reiterated by the Appellate Body in EC – Asbestos when it observed
that the same term 389 present in several provisions "must be interpreted in light of the context,

381 Argentina's first written submission, para. 228.
382 Argentina's first written submission, para. 230 (citing Appellate Body Report, US – Clove Cigarettes,
para. 182).
383 Argentina's first written submission, paras. 231, 232, 235 and 236.
384 Panama's second written submission, para. 2.68.
385 Panama's second written submission, para. 2.69.
386 Panama's second written submission, para. 2.71 (referring to Appellate Body Report, EC – Seal
Products, para. 5.123).
387 Panama's second written submission, para. 2.72. See also second written submission, para. 2.73.
388 Vienna Convention on the Law of Treaties (Vienna Convention), done at Vienna on 23 May 1969,
United Nations document A/CONF.39/27.
389 The expression to be interpreted in EC – Asbestos cited in this quotation was "like products".

and of the object and purpose, of the provision at issue, and of the object and purpose of the
covered agreement in which the provision appears." 390 We shall thus start with the ordinary
meaning of the terms composing the expression "treatment no less favourable".
7.205. We turn to the dictionary of the Spanish Royal Academy for the definition of the ordinary
meaning of the Spanish terms "trato" (treatment), "menos" (less), and "favorable" (favourable).391
"Trato" (treatment) is defined as " acción y efecto de tratar " (action and effect of treating). 392
"Tratar" (to treat) is to be understood as meaning "[ p]roceder con una persona de determinada
manera, de obra o de palabra " (deal with a person in a certain way, in deed or in word). 393 If we
look at the ordinary meaning of the term " menos" (less), we find that "[a]nte adjetivos o
explícito o sobrentendido" (before adjectives or adverbs, indicates that the degree of property they
express is low in comparison with another explicit or implied degree). 394 Lastly, " favorable"
(favourable) means "que favorece" (which favours).395 "Favorecer" (to favour) has been defined as
"[d]ar o hacer un favor " (give or do a favour), " favor" (favour) being understood to mean " honra,
beneficio, gracia" (honour, benefit or kindness).396 From the ordinary meaning of the terms, it can
be seen that the expression "treatment no less favourable" refers to the action of not granting a
benefit to some in smaller measure than to others. Let us nevertheless place this ordinary
meaning within its context and in the light of the object and purpose of the treaty in which the
expression is to be found, as provided by Article 31.1 of the Vienna Convention.
7.206. The Panel notes that both parties, in developing their arguments on interpretation of the
expression "treatment no less favourable", have stressed the important role played by the context,
making special reference to the interpretation of the same concept in Article 2.1 of the
TBT Agreement by the Appellate Body in US – Clove Cigarettes . In fact, as indicated by Panama,
the Appellate Body itself, in EC – Seal Products, underlined the importance of the context to the
interpretation when it stated that "it is the spec ific context of Article 2.1 of the TBT Agreement …
that supports a reading that Article 2.1 does not operate to prohibit a priori any restriction on
international trade".
397
7.207. We agree with the parties on the need to look at the context of the expression "treatment
no less favourable" when interpreting it in accordance with Article 31.1 of the Vienna Convention,
and we shall now do this. First, we shall address the immediate context of the expression, shaped
by the actual terms of Article II, before examining its broader context, comprising other provisions
of the GATS, as well as other covered agreements.
7.208. We draw attention to the text of Article II:1, which states:
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.

390 Appellate Body Report, EC – Asbestos, para. 88.
391 We nevertheless recall that, as stated by the Appellate Body, "dictionaries alone are not necessarily
capable of resolving complex questions of interpretation" but "are important guides to, but not dispositive of,
the meaning of words appearing in treaties". See Appellate Body Report, China – Publications and Audiovisual
Products, para. 348 (referring to Appellate Body Reports, US – Gambling, para. 164; US – Softwood
Amendment), para. 248.
392 Diccionario de la Lengua Española, 23rd edition, Real Academia Española (Espasa Calpe, 2014),
Vol. II, p. 2165.
393 Diccionario de la Lengua Española, 23rd edition, Real Academia Española (Espasa Calpe, 2014),
Vol. II, p. 2165.
394 Diccionario de la Lengua Española, 23rd edition, Real Academia Española (Espasa Calpe, 2014),
Vol. II, p. 1446.
395 Diccionario de la Lengua Española, 23rd edition, Real Academia Española (Espasa Calpe, 2014),
Vol. I, p. 1015.
396 Diccionario de la Lengua Española, 23rd edition, Real Academia Española (Espasa Calpe, 2014),
Vol. I, p. 1015.
397 Appellate Body Report, EC – Seal Products, para. 5.124 (cited in Panama's second written
submission, para. 2.71). (emphasis original; footnote omitted)

7.209. In reading this text, we note two aspects in particular which we consider relevant to the
interpretation of "treatment no less favourable". The first is the broad scope of the obligation
under Article II of the GATS, which applies "[w]ith respect to any measure covered by this
Agreement". The second aspect is the reference to services and service suppliers in the text of the
provision. We shall explain below to what extent these two aspects can inform the interpretative
exercise we are conducting.
7.210. As regards the first aspect, we observe that the scope of the GATS is very broad inasmuch
as it applies to "measures by Members affecting trade in services".
398 Article XXVIII(a) of the GATS
defines the term "measure" as "any measure by a Member, whether in the form of a law,
regulation, rule, procedure, decision, administrative action, or any other form". The extent of the
scope is amplified by the fact that case law has indicated that the term "affecting" should be
interpreted to mean having "'an effect on', which indicates a broad scope of application".
399 The
broad scope of the Agreement is also reflected in the fact that in the GATS trade in services is
defined as the supply of a service through four modes
400, two of which provide that service
suppliers may be located outside the territory of the Member "importing" the service.401
7.211. The second relevant aspect mentioned above is the reference not only to services but also
to service suppliers. We consider that this mention of services and service suppliers is particularly
significant, especially if we draw a comparison with other agreements such as the GATT 1994 or
the TBT Agreement, which only refer to products and not to producers. Accordingly, below we shall
go into further detail concerning the implications that this reference to service suppliers may have
when interpreting the expression "treatment no less favourable".
7.212. As we have just stated, the "treatment no less favourable" obligation in Article II:1 of the
GATS concerns both like services and service su ppliers. In our view, this reference to service
suppliers is linked to the nature of the services and, thus, to the nature of the actual trade in
them. Their 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 g oods and which, in our opinion, have a decisive
influence on their production, marketing and use. In our view, this immediate context afforded by
the actual text of Article II:1 of the GATS, in th e light of the special features of services and the
importance given to suppliers of services
402, 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 considered when examining "treatment no less favourable" can only be
made on a case-by-case basis.
7.213. This position would appear to be supported by the preamble to the GATS. We note in
particular that the fourth recital of the GATS sp ecifically recognizes "the right of Members to
regulate, and to introduce new regulations, on the supply of services within their territories in
order to meet national policy objectives and, given asymmetries existing with respect to the
degree of development of services regulations in different countries, the particular need of
developing countries to exercise this right". More over, the third recital of the GATS mentions the
need to achieve higher levels of liberalization of trade, "while giving due respect to national policy
objectives".

398 Article I:1 of the GATS. See section 7.3.1 above.
399 Appellate Body Report, EC – Bananas III, para. 220.
400 Article I:2 of the GATS envisages four modes of supply:
(a) from the territory of one Member into the territory of any other Member;
(b) in the territory of one Member to the service consumer of any other Member;
(c) by a service supplier of one Member, through commercial presence in the territory of any other
Member;
(d) by a service supplier of one Member, through presence of natural persons of a Member in the
territory of any other Member.
401 We refer to supply of a service from the territory of one Member into the territory of any other
Member (mode 1) and supply in the territory of one Member to the service consumer of any other Member
(mode 2).
402 We note in this connection that the GATS refers to service suppliers in many provisions, for example,
Articles IV:2, V:6, VII:1 and VII:3, VIII:5 and IX:1.

7.214. This respect for national policy objectives reflected in the preamble to the GATS seems to
have its counterpoint in the preamble itself and, in particular, in the second and fifth recitals of the
GATS. These refer to the creation of the GATS "with a view to the expansion of … trade [in
services] under conditions of transparency and progressive liberalization and as a means of
promoting the economic growth … and the developm ent …" and to the importance of facilitating
"the increasing participation of developing countries … and the expansion of their service exports
including, inter alia, through the strengthening of their domestic services capacity". This balance
between liberalization of trade in services and respect for national policy objectives is also
reflected in Article XIX of the GATS, which provides that "[t]he process of liberalization shall take
place with due respect for national policy object ives and the level of development of individual
Members".
7.215. We do not find in the preamble or in Article XIX of the GATS any definition or enumeration
of "national policy objectives" on the basis of which Members may exercise their right to regulate
the supply of services in their territory. These ob jectives could perhaps relate to the situations
covered by the general exceptions of Article XIV of the GATS, namely: protection of public morals
and public order; protection of human, animal or plant life or health; compliance with laws or
regulations which are not inconsistent with the GATS; equitable or effective imposition or collection
of direct taxes in respect of services or servic e suppliers of other Members or cases of double
taxation. Nevertheless, these situations, relatively few in themselves
403, are not reflected in the
preamble to the GATS. Nor are they reflected in the preamble, the security exceptions in
Article XIV bis of the GATS or other provisions such as paragraph 2(a) of the Annex on Financial
Services, which contains the so-called "prudential exception". In our view, equating the national
policy objectives mentioned in the preamble and in Article XIX of the GATS with the situations
covered by the few general exceptions would mean that any regulation adopted "in order to meet
national policy objectives" would necessarily be a violation of the basic principle of
non-discrimination and would require justification under Articles XIV and XIV bis. In our view, if
this were the case, the drafters of the GATS would have included it in the wording of the
Agreement.
7.216. We therefore consider that, although the ri ght of Members to regulate in accordance with
their national policy objectives in the context of the GATS cannot be seen as an unlimited right, it
should not be confined to the objectives set out in Articles XIV and XIV bis. As stated in the
preamble to the GATS itself, this right recognized in the Agreement finds it counterpoint in the
express desire of the signatories to the Agreement to expand trade in services under conditions of
transparency and progressive liberalization and as a means of promoting economic growth and
development.
7.217. 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.
7.218. We continue our interpretative exercise by examining the context afforded by another
provision of the GATS containing the expression "treatment no less favourable": Article XVII of the
GATS on the principle of nation al treatment. Unlike Article II of the GATS, paragraph 3 of
Article XVII defines what is considered treatment less favourable in the context of this provision as
follows:
Formally identical or formally different trea tment … [which] 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.
7.219. Consequently, "[t]his treatment is to be assessed in terms of the 'conditions of
competition' between like services and services suppliers".
404
7.220. As already mentioned, although the Appe llate Body has exercised caution regarding the
direct transposition of all interpretations deve loped under Article XVII to Article II of the GATS 405,

403 In fact, if we take Article XX of the GATT 1994 as a benchmark, which has often been used in
interpreting the Article XIV exceptions because of its similar wording, we see that the list of exceptions in
Article XX is much longer.
404 Panel Report, China – Publications and Audiovisual Products, para. 7.978.

we consider the context afforded by this provision to be useful inasmuch as the Appellate Body has
transposed interpretations developed under Article XVII to Article II of the GATS. 406 We find no
impediment to using the definition of "treatment no less favourable" in Article XVII in the context
of Article II of the GATS. As in EC – Bananas III , in which the Appellate Body established that
Articles II and XVII of the GATS cover both de jure and de facto discrimination, even though only
Article XVII does so explicitly, we consider that in Article II, the concept of "treatment no less
favourable" also hinges on the "conditions of competition", even though this is not explicitly
stated. The context afforded by the interpretation s of "treatment no less favourable" developed by
the Appellate Body in connection with the GATT 1994 and the TBT Agreement, in our view, support
this affirmation. We therefore turn now to ex amine them as part of the broader context of
Article II of the GATS.
7.221. As regards the context provided by other covered Agreements, the parties urge us to take
into account the interpretation of "treatment no less favourable" developed by the Appellate Body
in relation to Articles I:1 and III:4 of the GATT 1994 and Article 2.1 of the TBT Agreement.
407
These provisions read:
Article I
General Most-Favoured-Nation Treatment
1. With respect to customs duties and charges of any kind imposed on or in
connection with importation or exportation or imposed on the international transfer of
payments for imports or exports, and with respect to the method of levying such
duties and charges, and with respect to all rules and formalities in connection with
importation and exportation, and with respect to all matters referred to in paragraphs
2 and 4 of Article III, any advantage, favour, privilege or immunity granted by any
contracting party to any product originating in or destined for any other country shall
be accorded immediately and unconditionally to the like product originating in or
destined for the territories of all other contracting parties.
Article III
National Treatment on Internal Taxation and Regulation
4. The products of the territory of any contracting party imported into the territory of
any other contracting party shall be accorded treatment no less favourable than that
accorded to like products of national origin in respect of all laws, regulations and
requirements affecting their internal sale, offering for sale, purchase, transportation,
distribution or use. The provisions of this paragraph shall not prevent the application
of differential internal transportation charges which are based exclusively on the
economic operation of the means of transport and not on the nationality of the
product.
Article 2
Preparation, Adoption and Application of Technical Regulations by
Central Government Bodies
1. Members shall 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.

405 See footnote 316 above.
406 See footnote 317 above.
407 Panama refers to Articles I and III:4 of the GATT 1994, while Argentina focuses on Article 2.1 of the
TBT Agreement. See Panama's first written submission, paras. 4.20 and 4.26; and Argentina's first written
submission, paras. 225 and 226.

7.222. As regards Article I:1 of the GATT 1994, Panama considers that it should be taken into
account when interpreting Article II of the GATS. 408 According to Panama, "[i]n the light of the
context afforded by the provisions on MFN treatment in the GATT, especially Article I:1, it is to be
understood that, in respect of services, the expression 'treatment no less favourable' in Article II:1
of the GATS refers to each Member's obligation to accord to the services and service suppliers of
any other Member, any advantage which creates more favourable competitive opportunities for
like services and like service suppliers of any other country". 409 In Panama's opinion, this
interpretation is supported by the case law de veloped under Article III of the GATT 1994, which
also refers to the conditions of competition.410
7.223. We note that Article I:1 of the GATT 1994 does not specifically mention the words
"treatment no less favourable". As we see from the wording of the provision, what is granted
"immediately and unconditionally" in this case is "any advantage, favour, privilege or immunity".
In any event, as Article I of the GATT 1994 , like Article II of the GATS, contains the
most-favoured-nation treatment obligation, it will be useful to us in the interpretative exercise we
are undertaking. In this connection, we point out that previous panels linked the word "advantage"
to the existence of "'more favourable competitiv e opportunities'" or [which] affect the commercial
relationship between products of different origins". 411 In our view, this follows the approach we
took previously when highlighting the reference to modification of the conditions of competition in
Article XVII of the GATS.
7.224. The two other provisions we are examining as context (Article III:4 of the GATT 1994 and
Article 2:1 of the TBT Agreement) do include the expression "treatment no less favourable". In
Article III:4 of the GATT 1994, no less favourable treatment is mentioned in connection with the
national treatment obligation in relation to domestic regulations. Although Article II of the GATS
refers to the most-favoured-nation treatment obligation and not the national treatment obligation,
we consider that Article III:4 could offer a useful context as it contains the expression to be
interpreted.
412 A s i n d i c a t e d b y A r g e n t i n a , w e a l s o f i n d t h i s e x p r e s s i o n i n A r t i c l e 2 . 1 o f t h e T B T
Agreement, which deals with national treatment and most-favoured-nation obligations.
7.225. The principal common feature we identify in Article II of the GATS and in these two
provisions is the text. The three provisions use the expression "treatment no less favourable". 413 It
should be noted, however, that, as we mentioned previously, the fact that the actual wording is
the same does not necessarily indicate that identical meaning is to be attributed to this
expression
414, so we shall move forward with our analysis noting how the concept of "treatment no
less favourable" has been interpreted in Articles III:4 of the GATT 1994 and 2.1 of the TBT
Agreement in the light of the context provided by their respective Agreements and to what extent
these interpretations can inform our approach under Article II of the GATS.
7.226. With regard to Article III:4 of the GATT 1994, the Appellate Body has determined that
there is less favourable treatment if "a measure modifies the conditions of competition in the
relevant market to the detriment of imported products".
415 In Thailand - Cigarettes (Philippines) ,
the Appellate Body clarified that "there must be in every case a genuine relationship between the
measure at issue and its adverse impact on competitive opportunities for imported versus like
domestic products".
416 We also find this idea in EC – Seal Products , in which the Appellate Body
explained that there is less favourable treatment if, after assessing "the implications of the
contested measure for the equality of competitive conditions between imported and like domestic
products" the conclusion is "that the measure has a detrimental impact on the conditions of
competition for like imported products".
417

408 Panama's first written submission, para. 4.20.
409 Panama's first written submission, para. 4.22. (emphasis original)
410 Panama's first written submission, para. 4.23.
411 Panel Reports, Colombia – Ports of Entry, para. 7.341; and US – Poultry (China), para. 7.415 (citing
Panel Report, EC – Bananas III (Guatemala / Honduras), para. 7.239).
412 Panama's first written submission, para. 4.26.
413 In the case of Article III:4 of the GATT 1994, the exact wording is "… shall be accorded treatment no
less favourable…".
414 See para. 7.204 above.
415 Appellate Body Report, Korea – Various Measures on Beef, para. 137. (emphasis original)
416 Appellate Body Report, Thailand – Cigarettes (Philippines), para. 134.
417 Appellate Body Report, EC – Seal Products, para. 5.116.

7.227. In connection with Article 2.1 of the TBT Agreement, the Appellate Body stated that, in
order to determine whether there is less favourable treatment, it must be determined "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" and whether this detrimental impact stems exclusively from a legitimate
regulatory distinction.
418 As stated by the Appellate Body in US – Clove Cigarettes:
[W]here the technical regulation at issue does not de jure discriminate against
imports, the existence of a detrimental impact on competitive opportunities for the
group of imported vis-à-vis the group of domestic like products is not dispositive of
less favourable treatment … Instead, a panel must further analyse whether the
detrimental impact on imports stems exclusively from a legitimate regulatory
distinction rather than reflecting discrimination against the group of imported
products. In making this determination, a panel must carefully scrutinize the
particular circumstances of the case, that is, the design, architecture, revealing
structure, operation, and application of the technical regulation at issue, and, in
particular, whether that technical regulation is even-handed, in order to determine
whether it discriminates against the group of imported products.
419
7.228. As we have already seen in relation to Article II of the GATS, one of the aspects which
differentiates it from the other covered agreem ents is the reference to "service suppliers". 420
Whereas the agreements relating to goods refer on ly to "products" (and not to "producers"), the
no less favourable treatment affects both services and suppliers of services. We consider that this
difference between the GATS, on the one hand, and the GATT 1994 and the TBT Agreement, on
the other, has a decisive influence on the use we can make of the interpretations developed in
these Agreements in the GATS context.
7.229. Another important aspect that we consider it necessary to highlight is the existence of a
general exceptions clause both in Article XX of the GATT 1994 and in Article XIV of the GATS,
although we note that fewer exceptions are lis ted under Article XIV of the GATS than under
Article XX of the GATT 1994. This is not the case for the TBT Agreement, in which there is no
similar provision. We recall that this was precisely one of the aspects taken into account by the
Appellate Body when interpreting the expression "treatment no less favourable" in Article 2.1 of
the TBT Agreement.
421
7.230. We nevertheless note some similarities between the GATS and the TBT Agreement as far
as the importance of the regulatory element in b o t h A g r e e m e n t s i s c o n c e r n e d . W e f i n d i n t h e
preambles to both Agreements recognition of Member s' right to regulate with a view to achieving
certain objectives. On the one hand, the sixth recital of the TBT Agreement contains an "explicit
recognition of Members' right to regulate in order to pursue certain legitimate objectives" 422, a
right which, as stated by the Appellate Body, is curtailed by the provision in the fifth recital, which
states that "unnecessary obstacles to international trade" must not be created. 423 On the other
hand, as already explained, the fourth recital of the GATS explicitly recognizes "the right of
Members to regulate, and to introduce new regulations, on the supply of services within their
territories in order to meet national policy obje ctives and … the particular need of developing
countries to exercise this right". The third recital, in turn, refers to the need to achieve higher
levels of liberalization of trade in services "while giving due respect to national policy objectives".
7.231. Having examined the context of the expression "treatment no less favourable" in
Article II:1 of the GATS, which comprises provisions of the Agreement itself and interpretations of
this expression developed under other covered agreements, we have reached the conclusion that
we cannot ignore the reference to "service suppliers" in Article II:1 of the GATS when defining the
concept of "treatment no less favourable", since they are also covered by the

418 Appellate Body Report, US – Clove Cigarettes, paras. 180 and 181. We point out that in that dispute
the panel's analysis of treatment no less favourable focused on the national treatment obligation under
Article 2.1 of the TBT Agreement. This provision also contains the most-favoured-nation obligation.
419 Appellate Body Report, US – Clove Cigarettes, para. 182.
420 Service suppliers are also referred to in Article XVII of the GATS.
421 Appellate Body Report, US – Clove Cigarettes, para. 101. See also Appellate Body Report, US – Clove
Cigarettes, para. 109.
422 Appellate Body Report, US – Clove Cigarettes, para. 94.
423 Appellate Body Report, US – Clove Cigarettes, para. 95.

most-favoured-nation treatment obligation. Accordin gly, we do not think that the interpretations
developed under Articles III:4 of the GATT 1994 an d 2.1 of the TBT Agreement can be transposed
directly to 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 necess arily constitute "treatment … less favourable"
within the meaning of Article II:1 of the GATS.
7.233. It is our understanding that this view appears to be confirmed by the object and purpose
of the GATS, as set out in its preamble. It is the preamble to the GATS which refers to a balance
between the objective of expanding trade in conditions of transparency and progressive
liberalization, on the one hand, and, on the other, the right of Members to regulate the supply of
services in their territories and to establish new regulations in this regard in order to meet national
policy objectives.
424
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
order to determine, measure by measure, whether Argentina accords treatment no less favourable
to services and service suppliers of non-cooperat ive countries compared to the treatment given to
services and service suppliers of cooperative countries. To this end, we shall first determine
whether Argentina accords different treatment to these two categories of services and service
suppliers and then go on to examine whether this treatment is less favourable for like services and
service suppliers of non-cooperative countries. 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. In this connection, applying to this dispute the
statement of the Appellate Body in Thailand – Cigarettes (Philippines) and US – COOL, we consider
that the assessment of the design, structure and operation of the measures at issue also forms
part of our examination.
425 Otherwise, we would not be fulfilling our duty to scrutinize carefully the
particular circumstances of this case.
(i) Whether the measures at issue accord different treatment to services and
service suppliers of non-cooperative countries compared to the treatment
accorded to like services and service suppliers of cooperative countries
7.236. We shall begin by examining whether the measures at issue treat services and service
suppliers of non-cooperative countries differently from like services and service suppliers of
cooperative countries. The Panel notes that both Panama and Argentina have recognized that the
measures at issue differentiate on the basis of whether the country of origin of the service and
service supplier is a cooperative or non-cooperative country. 426 The Panel notes that the actual
text of the challenged Argentine provisions occasionally shows the different treatment accorded to

424 See paras. 7.213 and 7.214 above.
425 Appellate Body Reports, Thailand – Cigarettes (Philippines), para. 134; and US – COOL, para. 269.
We note that this statement by the Appellate Body was in relation to the assessment of claims under
Article III:4 of the GATT 1994 (in the case of Thailand – Cigarettes (Philippines)) and Article 2.1 of the TBT
Agreement (in the case of US – COOL)).
426 With the exception of certain requirements that form part of measure 5. We refer in particular to the
requirements maintained under point 19 of Annex I to SSN Resolution No. 35.615/2011 and Article 4 of SSN
Resolution No. 35.794/2011. See Panama's first written submission, paras. 4.35, 4.113, 4.256, 4.311, 4.340,
4.398, 4.424 and 4.450; second written submission, paras. 2.134, 2.415, 2.517, 2.583, 2.602, 2.698, 2.734,
2.738 and 2.791; and Argentina's first written submission, paras. 102, 109-110, 112, 123, 125, 196, 202-203,
347, 360-362, 364-365, 369, 373-374, 393, and 396-398.

services and service suppliers of cooperative and non-cooperative countries. 427 Below we shall see
what constitutes the different treatment envisaged in each of the measures challenged by Panama.
1. Whether Argentina accords different treatment under measure 1
7.237. As explained in section 2.3.2 above, measure 1 consists of a legal presumption that
payments made to banks or financial institutions located in non-cooperative countries as
consideration for the granting of credits or loans or the placement of funds from abroad represent
a net gain of 100% for the suppliers for the purpose of determining the tax base for gains tax. This
presumption, which allows no evidence to the contrary, is established in Article 93(c) of the LIG.428
7.238. The Panel notes that Article 93(c) of the LIG also covers the treatment accorded when the
banking or financial institution supplying the service to the Argentine taxpayer is based in a
cooperative country. In such cases, the presumed net gain is no longer 100% but 43%. We point
out that the rate applicable to net gains in both cases is the same, namely, 35%.
7.239. Consequently, the different treatment accorded to service suppliers of cooperative
countries and like service suppliers of non-cooperative countries arises from the specific terms of
Article 93(c) of the LIG.
2. Whether Argentina accords different treatment under measure 2
7.240. As explained in section 2.3.3 above, meas ure 2 consists of the 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. This presumption may be rebutted provided that
"it is conclusively shown that the funds originated from activities actually carried out by the
taxpayer or by a third party in those countries or from placements of duly declared funds".
Argentina applies this measure pursuant to the unnumbered article added after Article 18 of the
LPT.
429
7.241. As we indicated when examining the factual context of this measure, the legal
presumptions in Article 18 of the LPT, which apply to Argentine taxpayers, come into play when
the AFIP estimates the tax base ex officio because the taxpayer has not submitted a sworn
declaration or the declaration is challengeable.
430 The presumption of unjustified increase in wealth
in subparagraph (f) of Article 18 of the LPT does not provide for any distinction according to the
source of the funds. The unnumbered article adde d after Article 18 of the LPT, however, under
which the measure at issue is applied, does refer specifically to entries of funds from
non-cooperative countries, which automatically generate for Argentine taxpayers receiving them a
presumption that they constitute unjustified increases in wealth.
431
7.242. We thus note that, in principle, the concept of unjustified increase in wealth in Article 18 of
the LPT may be applicable to any entry of funds, whether from an Argentine or foreign person and,
in the latter case, it does not matter whether the funds come from a cooperative or a
non-cooperative country. Article 18 of the LPT also provides for the possibility of rebutting the
presumptions it contains. We note, however, that in this dispute, the measure at issue challenged
by Panama does not refer to the presumption of unjustified increase in wealth provided for in
subparagraph (f) of Article 18 of the LPT, but to th e presumption of unjustified increase in wealth
provided for in the unnumbered article added after Article 18 of the LPT, which applies
automatically to income from non-cooperative countries, "irrespective of its nature or purpose or
the type of transaction involved".
432 This provision, therefore, is an exception to the rule of

427 This is the case for measures 1, 5 and 6.
428 Gains Tax Law, (Exhibits PAN-4 / ARG-42).
429 Law on Tax Procedure, (Exhibits PAN-9 / ARG-45).
430 See section 2.4.2.2 above.
431 The result of applying this presumption is a higher tax base when paying the tax. In this connection,
the second paragraph of the unnumbered article added following Article 18 of the LPT provides that "unjustified
increases in wealth … plus ten per cent (10%) as income disposed of or consumed as non-deductible
expenditure represent net gains during the financial year in which they occur, for the purpose of determining
gains tax …".
432 Panama's second written submission, para. 2.284.

self-assessment of taxable subject matter by Argentin e taxpayers, a rule that will not apply if the
funds come from a non-cooperative country.
7.243. We therefore consider that Argentina accords different treatment to like services and
service suppliers from cooperative and non-cooper ative countries inasmuch as the entry of funds
from one or the other country will have different consequences for Argentine taxpayers when
determining the tax base for gains tax. Whereas, when funds enter from cooperative countries, the
AFIP will apply the general rule of self-assessment of the taxable subject matter, only resorting to
ex officio determination if the taxpayer has not submitted a sworn declaration or this is
challenged; in the case of funds entering from non-cooperative countries, the AFIP will
automatically determine the taxable subject matter ex officio, applying the presumption of
unjustified increase in wealth. Likewise, in our view, the fact that this presumption may be
rebutted by the taxpayer does not affect the fact that the treatment Argentina accords to like
services and service suppliers of cooperative and non-cooperative countries is different.
3. Whether Argentina accords different treatment under measure 3
7.244. As we explained in section 2.3.4 above, measure 3 consists of applying methods for
valuing transactions based on transfer pricing in order to determine the tax base for gains tax
payable by Argentine taxpayers. Argentina applies this measure pursuant to Article 15.2 of the
LIG.
433
7.245. Previously we indicated that Article 14 of the LIG establishes the rule that transactions
between an Argentine taxpayer and a foreign person shall be considered as arm's-length
transactions "if their services and conditions are in line with normal arm's-length market
practices".
434 If this is not the case, the valuation will be governed by the provision in Article 15 of
the LIG, which refers to the use by the AFIP of "averages, indices or coefficients … based on the
performance of independent companies engaged in identical or similar activities" in order to
determine the taxable net profit.
7.246. The measure at issue provides that transactions between Argentine taxpayers and persons
of non-cooperative countries "shall not be considered consistent with normal arm's-length market
practices or prices". We observe, therefore, that irrespective of whether the parties to the
transaction are related, the fact that one of the parties is domiciled, incorporated or located in a
non-cooperative country means that the transaction will be valued on the basis of the rules of
Article 15 of the LIG and not on the "normal market price", as is the case for arm's-length
transactions.
7.247. In our view, the measure at issue provides different treatment for like services and service
suppliers of cooperative and non-cooperative countr ies inasmuch as the rules of Article 15 of the
LIG always apply provided that one of the parties is from a non-cooperative country, whereas
these rules will only apply to cooperative countries if their services and conditions are not in line
with normal arm's-length market practices. The rule does not thus envisage that transactions
between Argentine taxpayers and persons from non-cooperative countries might be in line with
normal arm's-length market practices, and presumes in every case that they are related.
7.248. This leads us to conclude that the treatm ent accorded to services and service suppliers of
cooperative countries is different from that accorded to like services and service suppliers of
non-cooperative countries.
4. Whether Argentina accords different treatment under measure 4
7.249. As explained in section 2.3.5 above, meas ure 4 consists of applying the payment received
rule when allocating expenditure for transactio ns between Argentine taxpayers and persons from
non-cooperative countries. Argentina applies this measure pursuant to the last paragraph of
Article 18 of the LIG.
435

433 As regards the claims under the GATT 1994, Panama indicates that measure 3 is applied pursuant to
Article 8.5 of the LIG. See the Gains Tax Law, (Exhibits PAN-4 / ARG-42).
434 See section 2.4.2.3 above.
435 Gains Tax Law, (Exhibits PAN-4 / ARG-42).

7.250. In explaining the factual context for measure 4, it was indicated that the accrual rule is
considered to be the general rule for allocating income and expenditure. 436
The measure at issue, however, provides that when an Argentine taxpayer's expenditure
constitutes income from an Argentine source for persons located, incorporated, based or domiciled
in non-cooperative countries, it must be allocated to the tax year in which the payment was
executed (payment received rule). It should be pointed out that this allocation of expenditure does
not necessarily occur in the same tax year as that in which the payment obligation accrues.
7.251. Although it is true that the payment received rule is not exclusively restricted to the
allocation of expenditure constituting income from an Argentine source for persons located,
incorporated, based or domiciled in non-cooperative countries
437, we note differences in approach
in the Argentine rule. This is because it is not permitted to allocate expenditures which constitute
income for persons in non-cooperative countries on the basis of the accrual rule, irrespective of
whether the Argentine taxpayer and the person receiving the income of Argentine source are
related. However, in cases of allocation of expenditures constituting income for persons in
cooperative countries, the Argentine taxpayer may apply the accrual rule, provided that there is no
relationship with the foreign person to which the income accrues.
7.252. We thus consider that the treatment accorded to services and service suppliers of
cooperative countries is different to that accorded to like services and service suppliers of
non-cooperative countries.
5. Whether Argentina accords different treatment under measure 5
7.253. As explained in section 2.3.6 above, for the purposes of the claims under Article II:1 of the
GATS, measure 5 consists of Argentina's imposition on service suppliers of non-cooperative
countries of requirements that they must meet in order to be able to gain access to Argentina's
reinsurance services market. Argentina maintains this measure pursuant to points 18 and 20(f) of
Annex I to SSN Resolution No. 35.615/2011.
438
7.254. As can be seen from the actual wording of two of the provisions implementing measure 5
(points 18 and 20(f) of Annex I to Resolution SSN No. 35.615/2011, amended by SSN Resolution
No. 38.284/2014), Argentina accords different treatment according to whether or not the suppliers
of reinsurance services are incorporated and registered in cooperative countries. For example, if a
foreign company does not prove that it
439 or its parent company 440 is incorporated and registered
in a cooperative country, it must prove that: (i) the foreign company or its parent company is
subject to the control and supervision of a body fulfilling functions similar to those of the SSN; and
(ii) that this control and supervisory body to which the foreign company or its parent company is
subject has signed a memorandum of understanding on cooperation and exchange of information
with the SSN.
7.255. We consider that it is obvious, in the light of the text of points 18 and 20(f) of Annex I to
SSN Resolution No. 35.615/2011, that the treatment accorded to service suppliers of cooperative
countries is different to that accorded to like service suppliers of non-cooperative countries.
6. Whether Argentina accords different treatment under measure 6
7.256. As explained in section 2.3.7 above, me asure 6 consists of imposing requirements on
stock market intermediaries
441 for them to be able to engage in transactions ordered by persons

436 See section 2.4.2.4 above.
437 For example, Article 18 of the LIG itself, in its last paragraph, provides that the payment received
rule shall also apply to cases of "outlays by local companies which result in profits of Argentine source for
persons or entities abroad with which these companies are related".
438 SSN Resolution No. 35.615/2011, (Exhibits PAN-36 / ARG-27).
439 In the case of cross-border supply (mode 1).
440 In the case of supply through commercial presence (mode 3).
441 "Stock market intermediaries" means the persons indicated in Article 1 of the Rules of the National
Securities Commission (CNV), and including "bargaining agents, liquidation and compensation agents,
distribution and placement agents, and collective investment management agents".

from non-cooperative countries. Argentina maintains this measure pursuant to Title XI, Section III,
Article 5 of the Rules of the National Securities Commission (CNV).442
7.257. Title XI, Section III, Article 5 of the CNV's Rules allows Argentine stock market
intermediaries to engage in transactions conducted or ordered by persons incorporated, domiciled
or residing in non-cooperative countries in connection with the public offering of negotiable
securities, forward contracts, futures or options of any nature, or other financial instruments or
products provided that two requirements are met: (i) the persons incorporated, domiciled or
residing in non-cooperative countries that give the order to 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 Ar gentine CNV; and (ii) the body in question must
have signed a memorandum of understanding on cooperation and exchange of information with
the Argentine CNV.
443 However, Argentine stock market intermediaries are not subject to these
requirements when they engage in transactions conducted or ordered by persons from cooperative
countries
7.258. In the light of the text of Title XI, Sect ion III, Article 5 of the CNV's Rules, we conclude
that the treatment accorded to services and servic e suppliers of cooperative countries is different
from that accorded to like services and service suppliers of non-cooperative countries.
7. Whether Argentina accords different treatment under measure 7
7.259. As explained in section 2.3.8 above, measure 7 consists of the alleged imposition of
additional requirements on branches of companies from non-cooperative countries for the purpose
o f r e g i s t r a t i o n i n t h e P u b l i c T r a d e R e g i s t e r o f t h e A u t o n o m o u s C i t y o f B u e n o s A i r e s . A r g e n t i n a
maintains this measure pursuant to Article 192 of IGJ Resolution No. 7/2005.
444
7.260. We note that one of the main points in dispute between the parties in relation to this
measure concerns whether, as asserted by Panama, Article 192 of IGJ Resolution No. 7/2005
imposes additional requirements on companies of non-cooperative countries or, on the contrary,
as claimed by Argentina, the "additional requirements" of Article 192 are required of all
companies, whether of cooperative or non-cooperative countries, in those cases in which the IGJ
considers that the documents furnished do not provide evidence that the company is effectively
engaged in economically significant business activities.
445 In this connection, Argentina contends
that the assessment of the requirements under Article 188 responds to the need to check whether
a foreign company (from a cooperative or non-cooperative country) is engaged in such
activities.
446
7.261. Below we shall examine whether, as asserted by Argentina, it does not differentiate
between foreign companies wishing to set up in Argentina and it applies both Article 188 and
Article 192 of IGJ Resolution No. 7/2005 to all foreign companies, irrespective of whether they are
from a cooperative or a non-cooperative country.447
7.262. We shall first focus on the title of the two provisions, before going into their wording.
Article 188 is entitled "First registration. Requirements" and Article 192 is entitled "Companies
from jurisdictions with low or no taxes or not cooperating in the fight against 'money laundering'
and transnational crime". At first sight, we note that Article 188 lays down some requirements
concerning the first registration of companies, whereas Article 192 focuses on a specific category
of foreign companies, namely, those "from jurisdictions with low or no taxes or not collaborating in
the fight against 'money laundering' and transnational crime".
7.263. If we now look at the text of Article 188, we see that the requirements indicated in the title
concern the "registration covered by Article 118, third paragraph, of Law No. 19.550". Article 118
of Law No. 19.550, as we have already seen, concerns firms incorporated abroad. We thus note
that the requirements of Article 188 concern the firs t registration of foreign firms, irrespective of

442 CNV Rules, (Exhibits PAN-58 / ARG-50).
443 See paras. 2.35-2.36 above.
444 IGJ Resolution No. 7/2005, (Exhibits PAN-62 / ARG-33).
445 Argentina's first written submission, paras. 608, 624, 630-631, 651 and 656.
446 Argentina's first written submission, paras. 618 and 628.
447 Argentina's first written submission, paras. 626 and 631.

whether they are from cooperative or non-cooperative countries. This means that the exemption
from the requirements set out of Article 188 according to which the IGJ may "where warranted,
grant exemption from certain formalities when it is well-known and public knowledge that the
company is effectively engaged in economically significant business activities abroad and that its
management is also located there" applies to companies from both cooperative and
non-cooperative countries.
7.264. We now examine Article 192 of IGJ Resoluti on No. 7/2005, a provision which, according to
Argentina, applies to all foreign firms. First of a ll, as we have already noted, Argentina's position
appears questionable to us in the light of the title of this provision, which only refers to
"companies from jurisdictions with low or no taxes or not collaborating in the fight against 'money
laundering' and transnational crime". We fail to see on what basis a provision bearing this title
could apply to any type of company other than those mentioned in its title.
7.265. We note that Article 192 of IGJ Resolution No. 7/2005 requires the IGJ to consider
compliance with a series of requirements "restrictively" when the type of company indicated in its
title is being registered. These requirements are set out in section 3, subsections (b) and (c) of
Article 188 of IGJ Resolution No. 7/2005, namely: do cuments proving (i) 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 the
stock markets or securities markets indicated in its corporate purpose (subsection (b)); and (ii)
particulars of the persons who are partners at the time of the decision to request registration
(subsection (c)).
448 As provided in Article 192 of IGJ Resolution No. 7/2005, this restrictive
assessment entails the submission of additional documents.
7.266. In the light of the foregoing, we do not consider that, as asserted by Argentina, Article 192
of IGJ Resolution No. 7/2005 applies to foreign firms of cooperative countries. As can be seen from
the title and wording of Articles 188 and 192 of IGJ Resolution No. 7/2005, Article 188 applies to
any foreign company, whereas Article 192 applies only to foreign companies "from jurisdictions
with low or no taxes and not collaborating in the fight against 'money laundering' and
transnational crime".
7.267. Consequently, we conclude that companies from non-cooperative countries receive
different treatment as regards registration in the Public Trade Register of the Autonomous City of
Buenos Aires compared to the treatment accorded to companies from cooperative countries,
inasmuch as the Argentine law only provides for restrictive assessment of the requirements
contained in Article 188.3(c) and 188.3(f) of IGJ Resolution No. 7/2005 in the case of companies
from non-cooperative countries.
449
8. Whether Argentina accords different treatment under measure 8
7.268. As explained in section 2.3.9 above, measure 8 consists of imposing on service suppliers of
non-cooperative countries the requirement to obtain prior authorization from the BCRA in order to
be able to repatriate their direct investments. Argentina maintains this measure pursuant to
Communication "A" 4940, Section I, of the BCRA.
450
7.269. The first difference we note between the parties concerns the scope of the requirement on
prior authorization from the BCRA. While Panama contends that this requirement applies only to
service suppliers of non-cooperative countries, Argentina asserts that it also applies to service
suppliers of cooperative countries if they do not meet certain conditions.
7.270. In the descriptive part of this Report we indicated that Section I of Communication
"A" 4940 establishes the prior authorization requir ement for repatriating investment "when the
beneficiary abroad is a natural or legal person residing, incorporated or domiciled in" a
non-cooperative country. This requirement is an exception to the rule of not requiring prior

448 Article 188.3 of IGJ Resolution No. 7/2005, (Exhibits PAN-62 / ARG-33).
449 We note that the restrictive assessment of the requirements mentioned above could apply to foreign
companies established, registered or incorporated in cooperative countries if these countries are not considered
to be collaborating in the fight against money laundering and transnational crime.
450 Communication "A" No. 4940, (Exhibits PAN-71 / ARG-31).

authorization for such repatriation set out in point 1.13 of Communication "A" 4662, as amended
by Communication "A" 4692. We also noted, however, that there are other instances of
repatriation of investment which require prior authorization from the BCRA. These are the
situations covered by point 4 of Communication "A" 5237, which provides that "transactions for
the repatriation of direct investment which are subject to the established requirements but cannot
be shown to be compliant therewith at the date of access to the local foreign exchange market
must have prior authorization from the Central Bank". One of the established requirements is
contained in point 1 of the same Communication.
451 Point 4 of Communication "A" 4662 lays down
other requirements to be met by entities authoriz ed to deal in foreign exchange before they can
engage in transactions exempt from prior authorization.452
7.271. Consequently, from a reading of points 1 and 4 of Communication "A" 5237 in conjunction
with point 4 of Communication "A" 4662, it is clear that the requirement of prior authorization
from the BCRA is not limited to repatriation of foreign direct investment in the non-financial private
sector on the part of service suppliers of non-cooperative countries but may also apply to cases
involving service suppliers of cooperative countries.
7.272. We note that 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 Communication "A" 4662, it will have to obtain prior authorization from the BCRA, 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, do not have to obtain prior authorization, unless they do
not comply with any of the requirements laid down in the law.
7.273. The Panel, therefore, finds that the treatm ent accorded to service suppliers of cooperative
countries is different to that accorded to like service suppliers of non-cooperative countries.
(ii) Whether the measures at issue do not accord treatment no less
favourable to services and service supp liers of non-cooperative countries in
comparison with the treatment acco rded to like services and service
suppliers of cooperative countries
7.274. As mentioned above, once we have determined whether the treatment Argentina accords
to services and service suppliers of non-cooperative countries is different from that accorded to
like services and service suppliers of cooperative countries, we shall go on to examine whether this
different treatment constitutes treatment no less favourable within the meaning of Article II:1 of
the GATS.
7.275. We recall that the mere formal difference of treatment between relevant services and
service suppliers is "neither necessary, nor sufficient" to prove the existence of less favourable
treatment.
453

451 The requirement laid down in point 1 of Communication "A" 5237 consists of "proof of the entry of
funds through the local foreign exchange market for all new investment derived from new contributions or
purchases of shares in local companies and real estate, effected in foreign currency as of this date
[28 October 2011] by the foreign investor". See Exhibit ARG-75.
452 The following are the requirements established in point 4 of Communication "A" No. 4662:
(a) Verification of the purpose declared for access to the foreign exchange market; (b) Possession of
documents proving that the resident debtor has had access to the foreign exchange market for the purpose
and amount paid to the non-resident of the country (in cases of payment in the country, for imports, services,
income and other current transfers from abroad and commercial and financial debts abroad); (c) Sworn
declaration by the customer or his/her representative in the country stating that there has been no previous
transfer for the same transaction; (d) Assurance that the funds received have not been used for other
investment in the country from the date they were paid in the country for the purpose declared until the date
of access to the local foreign exchange market; (e) Certificate of prior settlement of such payments on the
foreign exchange market in cases where, as a result of sale of the investment or payment of the credit, part or
all of the payments have been made in foreign currency; (f) Possession (on the part of the authority authorized
to conduct foreign exchange dealings) of all elements needed to certify the reasonableness and authenticity of
the transaction and the documents required under foreign exchange regulations; and (g) Verification of
compliance with the other applicable foreign exchange regulations. See Exhibits PAN-67 / ARG-69.
453 Appellate Body Report, EC – Seal Products, para. 5.101 (citing Appellate Body Report US – Clove
Cigarettes, para. 177 (referring in turn to Appellate Body Reports, Korea – Various Measures on Beef,

7.276. We shall therefore examine whether the meas ures modify the conditions of competition to
the detriment of services and service suppliers of non-cooperative countries. We recall that, for the
purposes of this analysis, we have considered that , in this dispute, there is an additional element
that must be taken into account in our analysis: the possibility for Argentina to access tax
information on foreign suppliers.
7.277. Our analysis will therefore also examin e the effects on the conditions of competition
caused by the design and operation of the measures at issue.
1. Whether Argentina accords trea tment no less favourable under
measure 1
7.278. As we saw when examining whether or not there is different treatment
454, measure 1
consists of a legal presumption that payments made to banks or financial institutions located in
non-cooperative countries as consideration for the granting of foreign credits or loans or the
placement of funds from abroad represent a net ga in of 100% for the suppliers for the purpose of
determining the tax base for gains tax.455 This presumption allows no evidence to the contrary.
7.279. Panama considers that this measure creates a tax disadvantage for service suppliers of
non-cooperative countries inasmuch as the tax burden on them is heavier than that on like service
suppliers of cooperative countries.
456 According to Panama, this distinction for purposes of
establishing the tax base, all other conditions being equal, results in less favourable treatment of
service suppliers from non-cooperative countries, whose tax base is higher as a result of the
application of the measure. For Panama, the measure modifies the conditions of competition to the
detriment of service suppliers from non-cooperative countries because it has a negative impact on
their profitability.
457
7.280. Argentina considers that the treatment accorded to Panamanian services and service
suppliers is not less favourable as Panama appears on the list of cooperative countries.458
7.281. We note that, in regard to the payment of an identical sum as consideration for the
granting of credits or loans or the placement of funds from abroad, application of the measure at
issue results in an increase in the tax base for gains tax if the payment goes to service suppliers of
non-cooperative countries.
7.282. We therefore consider that, as a result of measure 1, service suppliers of non-cooperative
countries bear a heavier tax burden that has a negative impact on their profitability in the
Argentine market and, consequently, modifies the conditions of competition between suppliers of
cooperative countries and suppliers of non-cooper ative countries on the Argentine market, to the
detriment of the latter.
7.283. We note, however, one other factor that cannot be ignored when analysing no less
favourable treatment under Article II:1 of the GATS in the case before us and which directly
affects the supply of services on the Argentine market, and may modify the conditions of
competition on that market. This factor concerns the possibility for Argentina to have access to tax
information on foreign suppliers providing services in Argentina.
7.284. In this dispute, Argentina contends th at the establishment of differential treatment
between service suppliers of cooperative jurisdic tions and service suppliers of non-cooperative
jurisdictions is the direct consequence of access or lack of access to tax information.
459 We note
that the obligation to exchange tax information applies only to parties which have concluded an
agreement on exchange of tax information or a convention on the avoidance of international

para. 137) and Thailand – Cigarettes (Philippines), para. 128 (referring in turn to Appellate Body Report, EC –
Asbestos, para. 100))).
454 See para. 7.237 above.
455 Argentina maintains this measure pursuant to Article 93(c) of the LIG, (Exhibits PAN-4 / ARG-42).
456 Panama's first written submission, para. 4.37; and second written submission, para. 2.139.
457 Panama's first written submission, para. 4.38; and second written submission, para. 2.134.
458 Argentina's first written submission, paras. 165 and 166.
459 Argentina's second written submission, para. 76. See also responses to Panel questions Nos. 49
and 71.

double taxation with a broad exchange of info rmation clause and it has entered into force.
According to Argentina, access to tax information is key in this dispute because measure 1, like
the other measures challenged by Panama, is a defensive measure to combat risks to Argentina's
fiscal and tax system arising from harmful tax competition generated by service suppliers from
jurisdictions with which there is no exchange of information for tax transparency purposes.
460
7.285. We have already seen that Decree No. 589/2013, which we consider to be inherent in each
and every one of the measures at issue because it is the key piece of legislation defining their
design and operation, establishes the conditions for a country to be considered cooperative,
namely: (i) to have signed an agreement with Argentina on exchange of tax information or a
convention on avoidance of international double taxation with a broad information exchange
clause, provided that there is effective exchange of information; or (ii) to have initiated with
Argentina the negotiations necessary for concluding such an agreement and/or convention. In the
latter case, the AFIP will be the body responsible for determining whether the necessary conditions
for initiating negotiations have been met.
461
7.286. We note that, as regards the criterion for initiating the process of negotiating a double
taxation convention or an information exchan ge agreement, there is no formal mechanism
allowing effective exchange of information between Argentina and the country with which it is
negotiating. Argentina, nonetheless, grants cooperative status to countries in the negotiating
process with respect to which it has no access to tax information because no agreement or
convention exists. Leaving aside the dispute between the parties as to whether Panama complied
with this requirement and did, in fact, initiate negotiations
462, this would be the case of Panama,
for example, which is considered by Argentina to be a cooperative country but has not signed any
of the agreements provided for in Decree No. 589 /2013. This means that the jurisdictions with
which Argentina is in the process of negotiating agreements on exchange of tax information should
be considered cooperative, despite the fact that Argentina continues to have no access to tax
information, the exchange of which is the raison d'être of its defensive measures.
7.287. Argentina states that the reason why it grants cooperative country status to countries with
which it is negotiating a double taxation convention or information exchange agreement is "to
promote this type of cooperation" in view of "the tax authorities' expectation that they will be able
to have access to tax information on the transactions conducted with natural or legal persons
domiciled, established or located in cooperative countries".
463
7.288. We also note that countries which are in a similar situation as regards access to tax
information by Argentina are treated differently. For example, according to Argentina, negotiations
have begun on a double taxation convention or information exchange agreement with Panama and
Hong Kong (China).
464 As no agreement has been signed with those two jurisdictions, there is, in
principle, no exchange of tax information betw een them and Argentina. Panama, however, has
cooperative country status, whereas Hong Kong (China) does not.465
7.289. Looking at the list of cooperative countries, we also see that countries in different
situations as regards the exchange of tax information are treated in the same way by Argentina.
Let us take the cases of Panama and Germany by wa y of example. Both belong to the category of
cooperative countries. Argentina signed a double taxation agreement with Germany that has been

460 Argentina's first written submission, paras. 1, 16 and 31.
461 Article 1 of Decree No. 589/2013, (Exhibits PAN-3 / ARG-35).
462 We recall that Panama contends that it never initiated negotiations with Argentina, whereas
Argentina asserts that such negotiations were initiated in November 2013. See Argentina's first written
submission, paras. 131 and 132; Panama's response to Panel question No. 7(a); and Argentina's response to
Panel question No. 10(c).
463 Argentina's response to Panel question No. 9(a).
464 Argentina's first written submission, paras. 131 and 132; and responses to Panel questions
Nos. 10(b)(i) and 10(b)(ii). Other countries with which Argentina has initiated negotiations since Decree
No. 589/2013 entered into force and which do not appear on the current list of cooperative countries are
Belarus, Cameroon, Côte d'Ivoire, Cyprus, Gabon and Gibraltar. See Argentina's response to Panel question
No. 10(b)(i), para. 5.
465 Argentina claims that the reason why Hong Kong (China) is not on the list of cooperative countries is
because the list is updated at the beginning of each fiscal year. We note, however, that the list was not
updated at the beginning of the 2015 fiscal year. See Argentina's response to Panel question No. 10(b)(ii).

in force since 25 November 1979466, giving it access to tax information. 467 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.
7.290. In the light of the examples we have just given, it is obvious that 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. We believe that this lack of consistency
is directly attributable to the design of Decree No. 589/2013, which establishes the mechanism for
classifying the two categories of countries. The examples mentioned above show that: (i)
Argentina treats countries with which it has signed tax information exchange agreements in the
same way as countries with which it has not signed such agreements; and (ii) Argentina accords
different treatment to countries with which it has initiated negotiations on signing such
agreements.
7.291. To the above must be added the question of the updating of the list of cooperative
countries. The current list, as indicated in the descriptive part of this report, is the one published
on the AFIP's website on 1 January 2014 pursuant to AFIP Resolution No. 3.576/2013.
468 This list
has not been updated at the time of distribution of this Report to the parties, despite Argentina's
assertion that the list is updated at the beginning of each fiscal year. 469 This system of annual
updating may also cause distortion in the treatment accorded to certain countries compared to
others in the same situation. This is the case, for example, for countries such as Belarus,
Cameroon, Côte d'Ivoire, Cyprus, Gabon, Gibraltar and Hong Kong (China) which, despite allegedly
being in the same situation as Panama, as they are negotiating a tax information exchange
agreement with Argentina, are not considered to be cooperative jurisdictions because the
negotiations were initiated after Decree No. 589/2013 had entered into force.
470 Panama, however,
is still on the list of cooperative countries despite having denied that it initiated negotiations with
Argentina on the signing of a tax information exchange agreement or an international double
taxation convention with a broad information exchange clause. 471 P a n a m a ' s d e n i a l t h a t
negotiations have been initiated suggests that there has still not been any such exchange of
information.472
7.292. In view of the foregoing, we consider th at the design of measure 1, 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. This can
be seen from the fact that countries that are in the process of negotiating an agreement on
exchange of tax information have cooperative st atus even though the agreement has not been
concluded and there is thus no formal mechanism f o r e x c h a n g i n g i n f o r m a t i o n . T o t h i s m u s t b e
added the operation of the list of cooperative countries drawn up by Argentina, which results in
unequal treatment of jurisdictions in the process of negotiating an agreement, since some are on
the list whilst others continue to await the updating of the list.
7.293. We therefore find that the design and operation of measure 1, pursuant to Decree
No. 589/2013, create distortions which modify the conditions of competition to the detriment of

466 Amending Protocol in force since 30 June 2011. See Argentina's response to Panel question No. 13.
467 On 3 November 2011, Germany signed the OECD Convention on Mutual Administrative Assistance in
Tax Matters, to which Argentina is a party, although it has not yet entered into force. See Argentina's response
to Panel question No. 13.
468 AFIP Resolution No. 3.576/2013, (Exhibits PAN-3 / ARG-37).
469 Article 2 of Decree No. 589/2013 provides that the AFIP shall update the list of cooperative
countries, without specifying the periodicity for such updating. Argentina has explained that it is updated at the
beginning of each fiscal year. This is in line with the provision in Article 3 of AFIP Resolution No. 3.576/2013,
which refers to the "list published by [AFIP] in effect at the beginning of each fiscal year", (Exhibits PAN-3 /
ARG-37). See Argentina's responses to Panel questions No. 9(b), para. 14, and No. 10(b)(ii), and opening
statement at the second meeting of the Panel, para. 41. At the second meeting of the Panel, Argentina stated
that "in view of Panama's current position of not negotiating an agreement with Argentina, the AFIP is
reviewing whether to maintain this country's [Panama's] status as a cooperative country for tax transparency
purposes. This review is part of the ongoing adjustment to include and remove countries from the list of
cooperative countries in this year's update, in accordance with the criteria laid down in the legislation". See
Argentina's opening statement at the second meeting of the Panel, paras. 42 and 43.
470 Argentina's response to Panel question No. 10(b)(i), para. 5.
471 Panama's response to Panel question No. 7(a).
472 Panama's response to Panel question No. 7(a).

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.
2. Whether Argentina accords trea tment no less favourable under
measure 2
7.294. As we have already stated, measure 2 consists of the presumption of unjustified increase
in wealth applicable to any entry of funds from non-cooperative countries received by an Argentine
taxpayer.473
7.295. Panama contends that the very existence of this presumption of unjustified increase in
wealth applicable to entries of funds from non-cooperative countries constitutes less favourable
treatment for services and service suppliers of non-cooperative countries because it implies an
additional requirement for Argentine taxpayers (t hat of having to rebut the presumption) that
would not apply if the taxpayer had contracted services (which give rise to the entry of funds)
from a service supplier of a cooperative country.
474
7.296. As in the case of the previous measure, Argentina argues that the treatment accorded to
Panamanian services and service suppliers is not less favourable as Panama appears on the list of
cooperative countries.475
7.297. The Panel notes that the unnumbered articl e added after Article 18 of the LPT determines
(i) the type of funds covered by that provision; (ii) the nature of the legal presumption provided
therein; and (iii) the treatment given to unjustified increases in wealth. In the first place, as
regards the funds falling within the scope of th e unnumbered article added after Article 18 of the
LPT, the Panel highlights the broad scope of the provision, inasmuch as it refers to entries of funds
from non-cooperative countries "irrespective of their nature or purpose or the type of transaction
involved". In other words, the rule applies to any transaction which generates an entry of funds
from those countries. This means that the transmittal of funds earned from the supply of a service
to an Argentine taxpayer by a supplier from a non-cooperative country would fall within the scope
of this provision.
476 Secondly, as regards the nature of the presumption established by this
provision, the Panel points out that the presum ption may be rebutted if "the interested party
conclusively proves that [the entries of funds] originated from activities actually carried out by the
taxpayer or by a third party in those countries or from placements of funds duly declared funds".
In that case, the increase in wealth will be co nsidered justified. Lastly, with regard to the
treatment accorded to increases in wealth deemed to be unjustified, the unnumbered article added
after Article 18 of the LPT provides that such in creases plus 10% "under the heading of income
disposed of or consumed as non-deductible expenditure" shall be considered net gains for the
purposes of determining gains tax and "where app licable [represent] the basis for estimating the
taxable transactions omitted from the respective marketing year in terms of value added and
internal taxes". Classifying an entry of funds as an unjustified increase in wealth automatically
involves an increase in the tax base for gains tax.
7.298. We agree with Panama that this legal presumption involves an additional requirement for
taxpayers who contract for services with suppliers of non-cooperative countries and who seek to
justify the entry of funds obtained through such services. We note that the additional requirement
of having to rebut the legal presumption stipulated in the unnumbered article added after
Article 18 of the LPT may deter Argentine taxpayers from entering into contracts with suppliers of
non-cooperative countries, since they know that such contracts automatically trigger the legal
presumption of unjustified increase in wealth. We consider that this disincentive entails a
competitive advantage for service suppliers of cooperative countries, whose services are not
affected by this legal presumption. We also consider that, quite apart from the difficulty implicit in

473 See section 2.3.3 above.
474 Panama's first written submission, para. 4.126; and second written submission, para. 2.281.
475 Argentina's first written submission, paras. 165 and 166.
476 According to Panama, such entries of funds could, for example, originate from: (i) loans granted by
suppliers of financial services established in a non-cooperative country for tax transparency purposes;
(ii) compensation for damage under an insurance, reinsurance or retrocession contract taken out by an
Argentine resident with an insurance company situated in a non-cooperative country for tax transparency
purposes; or (iii) compensation for damage under a maritime or air transport insurance contract taken out by
an Argentine resident with an insurance company situated in a non-cooperative country for tax transparency
purposes. See Panama's first written submission, paras. 4.57 and 4.58.

rebutting the presumption and the greater or lesse r success of such a rebuttal by the Argentine
taxpayer, the mere existence of this presumptio n places service suppliers from non-cooperative
countries in a less favourable position than like service suppliers of cooperative countries, as the
Argentine taxpayer is asked to take an additional step (to prove conclusively "that [the entries of
funds] originated from activities actually carried out by the taxpayer or by a third party in those
countries or from placements of duly declared funds").
7.299. We believe that our position is supported in the GATT 1994 case law which, even though it
cannot be considered directly applicable within the GATS framework, can provide valuable
guidance for our analysis. For example, in Thailand – Cigarettes (Philippines) , in which the
Appellate Body stated that "the mere fact that the additional administrative requirements are
imposed on imported cigarettes, and not on lik e domestic cigarettes, provides, in itself, a
significant indication that the conditions of competition are adversely modified to the detriment of
imported cigarettes".
477 We find that, in the case of measure 2, there is an "additional
requirement" that affects only certain services provided by service suppliers of non-cooperative
countries.
7.300. On a preliminary basis, therefore, we conclude that there is less favourable treatment for
service suppliers of non-cooperative countries, and this imposes on Argentine taxpayers the
additional burden of rebutting the presumption. Nevertheless, as in the case of measure 1, our
analysis must take account of the regulatory framework resulting from the signature or
non-signature of tax information exchange agreements, that is, the possibility for Argentina to
access tax information on foreign service suppliers providing services in Argentina through one of
the four modes of supply provided for in the GATS.
7.301. As in the case of measure 1, however, the design and operation of measure 2, pursuant to
Decree No. 589/2013, create distortions with regard to (i) granting cooperative status to
jurisdictions 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. Indeed, the design of measure 2 establishes differential treatment according to whether
the services and service suppliers are from cooperative or non-cooperative countries. This
differential treatment, pursuant to Decree No. 589/2013, is not based, as Argentina argues, on
whether or not Argentina has access to tax information. This can be seen from the fact that
countries which are in the process of negotiating a tax information exchange agreement have
cooperative status even though the agreement has not been signed and there is thus no formal
mechanism for exchanging information. To this must be added the operation of the list of
cooperative countries drawn up by Argentina, which results in unequal treatment of jurisdictions in
the process of negotiating an agreement, since some are on the list while others continue to await
the updating of the list.
478
7.302. We therefore find that the design and operation of measure 2, 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.
3. Whether Argentina accords trea tment no less favourable under
measure 3
7.303. Measure 3 contested by Panama concerns the application of the transfer pricing regime in
valuing transactions between Argentine taxpayers and persons in non-cooperative countries.
479
7.304. Panama argues that the use of the transfer pricing regime "implies administrative
requirements, economic charges and tax contingencies" 480 which alter the conditions of
competition to the detriment of services and service suppliers of non-cooperative countries.481

477 Appellate Body Report, Thailand – Cigarettes (Philippines), para. 138.
478 See paras. 7.284-7.291 above.
479 See section 2.3.4 above.
480 Panama's first written submission, para. 4.247. See second written submission, paras. 2.425 and
2.426.
481 Panama's first written submission, para. 4.248; and second written submission, para. 2.428.

7.305. Argentina, as was the case for the previous measures, argues that the treatment accorded
to Panamanian services and service suppliers is not less favourable, since Panama is included in
the list of cooperative countries.
482
7.306. When an Argentine taxpayer conducts a transaction with a person in a cooperative
country, the valuation of the transaction is based on the value agreed between the parties, unless
the parties are related, in which case the transfer pricing regime applies. 483 On the other hand,
transactions between Argentine taxpayers and persons domiciled, established or located in
non-cooperative countries are not considered to be "in line with normal arm's-length market
practices or prices".484 In such cases, Argentine law requires that the transfer pricing regime apply
as if it were a transaction between related parties, irrespective of whether the relationship actually
exists. Consequently, transactions between Argentine taxpayers and service suppliers of
non-cooperative countries are automatically valued using the transfer pricing regime.
485
7.307. We thus note that the Argentine taxpayer has no option but to follow this regime when
valuing transactions with service suppliers of non-cooperative countries. This is specified in
Article 15 of the LIG, which stipulates that, where stable institutions domiciled or located in
Argentina or certain companies and trust funds conduct transactions "with natural or legal persons
domiciled, established or located in countries with low or no taxes …, [such transactions] shall not
be considered to be in line with normal arm's-length market practices or prices". It should also be
noted that both Panama and Argentina consider that the transfer price valuation regime is a more
burdensome method of valuation for the taxpayer as it "requires more work" than other
methods.
486
7.308. Consequently, the fact that this valuation regime involves higher costs for Argentine
taxpayers enables us to conclude on a preliminary basis that this measure alters the conditions of
competition to the detriment of service suppliers of non-cooperative countries as it deters
Argentine taxpayers from entering into contracts with them.
7.309. As was the case for measures 1 and 2, however, the design and operation of measure 3,
pursuant to Decree No. 589/2013, create distortions with regard to (i) granting cooperative status
to jurisdictions which have not signed an agreem ent and which, therefore, are not subject to the
exchange of tax information with Argentina; and (ii) the updating of the list of cooperative
countries. Indeed, the design of measure 3 establishes differential treatment according to whether
the services and service suppliers are from cooperative or non-cooperative countries. This
differential treatment, pursuant to Decree No. 589/2013, is not based, as Argentina argues, on
whether or not Argentina has access to tax information. This can be seen from the fact that
countries which are in the process of negotiating a tax information exchange agreement have
cooperative status even though the agreement has not been signed and there is thus no formal
mechanism for exchanging information. To this must be added the operation of the list of
cooperative countries drawn up by Argentina, which results in unequal treatment of jurisdictions in
the process of negotiating an agreement, as some are on the list, while others continue to await
the updating of the list.
487
7.310. We therefore find that the design and operation of measure 3, 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.

482 Argentina's first written submission, paras. 165 and 166
483 See section 2.4.2.3 above.
484 Article 15.2 of the LIG, (Exhibits PAN-4 / ARG-42).
485 A similar rule is determined in Article 8 of the LIG in connection with "earnings from the export of
goods produced, manufactured, treated or purchased in the country". See exhibits PAN-4 / ARG-42.
486 Argentina's first written submission, para. 104. See also Panama's first written submission,
paras. 4.218 and 4.238.
487 See paras. 7.284-7.291 above.

4. Whether Argentina accords trea tment no less favourable under
measure 4
7.311. Pursuant to measure 4, Argentine companies which enter into a contract with a service
supplier of a non-cooperative country may only deduct expenditure incurred by the transaction
from their tax base for gains tax when the expenditure is carried out, i.e., when the payment
arising from the transaction is executed.488
7.312. Panama argues that the application of this rule means that Argentine taxpayers that
contract with service suppliers of non-cooperative countries bear a heavier tax burden because
their tax base will be higher as a result of not being able to deduct expenditure at the time at
which the contractual obligation is generated.
7.313. Argentina argues that the treatment accorded to Panamanian services and service
suppliers is not less favourable as Panama is included in the list of cooperative countries.
489
7.314. First of all, the Panel observes that th e measure at issue does not prevent deduction of
expenditure by the Argentine taxpayer. In the ca se of both the accrual rule and the payment
received rule, the expenses incurred by the Argentine taxpayer may be deducted from the latter's
tax base. In our view, what changes from one rule to the other is the time at which the expenses
are allocated, that is, whether the expenses are allocated to the fiscal year in which the obligation
accrues or the fiscal year in which the outlay or payment occurs, and the accrual and payment of
the obligation may or may not take place in the same fiscal year. Consequently, we agree with
Argentina that the rule applied to transactions with service suppliers of non-cooperative countries
does not prevent deduction of expenditure by Argentine companies.
490
7.315. In view of the foregoing, the Panel's an alysis will focus on determining whether this
possible time difference in allocating expenses constitutes less favourable treatment for service
suppliers of non-cooperative countries compared to the treatment arising from the rule applicable
to transactions with service suppliers of cooperative countries.
7.316. In this connection, we note that the amount to be allocated in the fiscal year of accrual or
the fiscal year of payment will be the same, give n that the expenditure effected by the company
when contracting services from suppliers in non-cooperative countries in order to obtain revenue
does not vary. We consider, however, that the real value of this amount diminishes with the
passage of time, since money depreciates over time through the effect of inflation.
7.317. We also agree with Panama that the application of this measure may create an additional
burden for companies as it may oblige them to make adjustments in their accounts to reflect the
two rules for allocating expenses. We have alre ady referred in this connection to the GATT 1994
case law and, in particular, to the Thailand – Cigarettes (Philippines) dispute, in which the
Appellate Body considered that the existence of additional requirements for certain products and
not others may constitute a "significant indication" that the conditions of competition have been
modified to the detriment of the group of products affected by the additional requirement.
491
7.318. We consider that the effects of the measur e at issue in terms of the reduced value of the
expenses deducted and the possible additional cost s linked to modifying accounting procedures as
a result of applying two cost allocation rules (one for transactions with service suppliers of
cooperative countries – the accrual rule – and the other for transactions with service suppliers of
non-cooperative countries – the payment received rule) may serve to deter Argentine companies
from contracting services with suppliers in non-cooperative countries. This would lead us to
conclude, on a preliminary basis, that the treatmen t accorded to services and service suppliers of
non-cooperative countries is less favourable than that accorded to like services and service
suppliers of cooperative countries.
7.319. As in the case of measures 1, 2 and 3, however, the design and operation of measure 4,
pursuant to Decree No. 589/2013, create distortions with regard to (i) granting cooperative status

488 See section 2.3.5 above.
489 Argentina's first written submission, paras. 165 and 166.
490 Argentina's first written submission, Explanatory Annex No. 1, para. 127.
491 See para. 7.299 above.

to jurisdictions which have not signed an agreem ent and which, therefore, are not subject to the
exchange of tax information with Argentina; and (ii) the updating of the list of cooperative
countries. Indeed, the design of measure 4 establishes differential treatment according to whether
the services and service suppliers are from cooperative or non-cooperative countries. This
differential treatment, pursuant to Decree No. 589/2013 is not based, as Argentina argues, on
whether or not Argentina has access to tax information. This can be seen from the fact that
countries which are in the process of negotiating a tax information exchange agreement have
cooperative status even though the agreement has not been signed and there is thus no formal
mechanism for exchanging information. To this must be added the operation of the list of
cooperative countries drawn up by Argentina, which results in unequal treatment of jurisdictions in
the process of negotiating an agreement, since some are included in the list while others continue
to await the updating of the list.
492
7.320. We therefore find that the design and operation of measure 4, 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.
5. Whether Argentina accords trea tment no less favourable under
measure 5
7.321. As regards the claims under Article II:1 of the GATS, measure 5 consists in the
enforcement of compliance with certain requ irements by branches of companies from
non-cooperative countries which supply their services through commercial presence (mode 3) and
by companies in non-cooperative countries which supply reinsurance services through cross-border
supply (mode 1) in order to be able to gain access to the Argentine reinsurance services market.
7.322. Points 18 and 20(f) of Annex I to SSN Resolution No. 35.615/2011, following the
March 2014 amendment, provide that foreign supplie rs of reinsurance services may be authorized
to accept reinsurance from their country of origin (point 20(f)) or from a branch in Argentina
(point 18) provided that they comply with tw o requirements which, according to Argentina
493, are
cumulative:
(1) Prove that they have been incorporated and registered in countries "cooperating
for tax transparency purposes" in accordance with the provisions of Decree
No. 589/2013 and supplementary regulations (in the case of branches, such proof
relates to the parent company)
494;
(2) Prove that they have been incorporated and registered in countries that
collaborate in the global fight against the money laundering and terrorist financing
offences in accordance with the criteria defined in the public documents issued by the
FATF (in the case of branches, such proof relates to the parent company).495
7.323. Measure 5 itself provides that, if suppliers of services via mode 1 or mode 3 do not prove
that they have been incorporated and registered in a country cooperating for tax transparency
purposes, they must show that they are subject to the control and supervision of a body (i) which
fulfils functions similar to those of the SSN, and (ii) with which a memorandum of understanding
on cooperation and exchange of information has been signed.
496 Measure 5 also provides that, if
suppliers of services via mode 1 or mode 3 do not prove that they have been incorporated and
registered in a country collaborating in the global fight against money laundering and terrorist
financing offences in accordance with the crit eria defined by the FATF, 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 FATF and the Interpretive Note
thereto may be applied.
497

492 See paras. 7.284-7.291 above.
493 Argentina's response to Panel question No. 63.
494 Points 18(a) and 20(f)(I) of Annex I to SSN Resolution No. 35.615/2011, (Exhibit ARG-27).
495 Points 18(b) and 20(f)(II) of Annex I to SSN Resolution No. 35.615/2011, (Exhibit ARG-27).
496 Points 18(a) and 20(f)(I) of Annex I to SSN Resolution No. 35.615/2011, (Exhibit ARG-27).
497 Points 18(b) and 20(f)(II) of Annex I to SSN Resolution No. 35.615/2011, (Exhibit ARG-27).

7.324. Panama, which only challenges the requirements on cooperation for tax transparency
purposes498, argues that compliance with these conditions laid down in paragraphs (a) and (I) of
points 18 and 20(f) of SSN Resolution No. 35.615/ 2011 is the only way available to suppliers of
reinsurance services from non-cooperative countries to gain access to the Argentine market for
such services through cross-border supply (mode 1) or commercial presence (mode 3). 499 In its
opinion, the imposition of these conditions causes uncertainty for suppliers of reinsurance services
from non-cooperative countries, which face a change in the conditions of competition in the
Argentine market.
500
7.325. Argentina, as was the case for the other measures at issue, argues that the treatment
accorded to Panamanian services and service suppliers is not less favourable, since Panama is
included in the list of cooperating countries.
501
7.326. According to the provisions of points 18 and 20(f) of Annex I to SSN Resolution
No. 35.615/2011 with regard to cooperation for tax transparency purposes, we note that the
following are the situations which may be faced by foreign suppliers of reinsurance services
seeking to enter the Argentine reinsurance market:
a. Suppliers of reinsurance services from cooperative countries
In this case, no requirements would apply to access to the Argentine reinsurance
services market through cross-border supply (mode 1) or commercial presence
(mode 3).
b. Suppliers of reinsurance services from non-cooperative countries
In this case, access to the Argentine reinsurance market through mode 1 and mode 3
for these suppliers is conditional upon compliance with the two requirements
mentioned above: (i) that the supplier (or its parent company) is subject to the
control and supervision of a body which fulfils functions similar to those of the SSN,
and (ii) that the body in question has signed a memorandum of understanding on
cooperation and exchange of information with the SSN.
7.327. On the basis of this classification, we note that the measure does not require that suppliers
from cooperative countries should be subject to th e control and supervision of a body which fulfils
functions similar to those of the SSN or that th e body in question has signed a memorandum of
understanding on cooperation and exchange of information in order to have access to the
Argentine reinsurance market. This does not mean , however, that they are not subject to other
conditions derived from their cooperative (or non-cooperative) status for the purposes of the fight
against money laundering and financing of terrori sm in the FATF framework, a question which
Panama does not address in its submissions.
502
7.328. As a preliminary matter, we consider that the imposition of market access conditions on
suppliers of non-cooperative countries modifies th e conditions of competition to the detriment of
those suppliers in comparison with like service suppliers of cooperative countries, which may have
access to the Argentine reinsurance services market via mode 1 and mode 3 without having to
comply with these two requirements.
7.329. As in the case of measures 1, 2, 3 and 4, however, the design and operation of measure 5,
pursuant to Decree No. 589/2013, create distortions with regard to (i) granting cooperative status
to jurisdictions which have not signed an agreem ent and which, therefore, are not subject to the

498 Panama's first written submission, paras. 4.341 and 4.342; and second written submission,
paras. 2.610 and 2.611.
499 Panama's second written submission, para. 2.610.
500 Panama's second written submission, para. 2.612.
501 Argentina's first written submission, paras. 165 and 166.
502 As we have indicated, the assessment of requests for authorization of suppliers from countries
cooperating for tax transparency purposes but not in the fight against money laundering and financing of
terrorism shall be subject to "enhanced due diligence, proportionate to the risks", and the counter-measures
indicated in Recommendation 19 of the FATF and the Interpretive Note thereto may be applied. See
para. 7.323 above.

exchange of tax information with Argentina; and (ii) the updating of the list of cooperative
countries. Indeed, the design of measure 5 establishes differential treatment according to whether
the services and service suppliers are from cooperative or non-cooperative countries. This
differential treatment, pursuant to Decree No. 589/2013 is not based, as Argentina argues, on
whether or not Argentina has access to tax information. This can be seen from the fact that
countries which are in the process of negotiating a tax information exchange agreement have
cooperative status even though the agreement has not been signed and, there is thus no formal
mechanism for exchanging information. To this must be added the operation of the list of
cooperative countries drawn up by Argentina, which results in unequal treatment of jurisdictions in
the process of negotiating an agreement, since some are included in the list while others continue
to await the updating of the list.
503
7.330. We therefore find that the design and operation of measure 5, 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.
6. Whether Argentina accords trea tment no less favourable under
measure 6
7.331. As we have already mentioned, measure 6 consists of imposing requirements on Argentine
stock market intermediaries for them to be able to engage in transactions conducted or ordered by
persons from non-cooperative countries.
504
7.332. Panama argues that the imposition of these market access conditions deters Argentine
consumers from contracting services (such as investment portfolio management services) provided
by suppliers subject to these conditions, i.e., service suppliers of non-cooperative countries, as
they do not have access to all financial centres, including the Argentine market. According to
Panama, this means that the Argentine customer incurs additional costs because it has to contract
with another investment portfolio manager who does have access to the Argentine market through
Argentine stock market intermediaries.
505
7.333. Argentina, as was the case for the other measures at issue, argues that the treatment
accorded to Panamanian services and service suppliers is not less favourable, since Panama is
included in the list of cooperative countries.
506 In any event, Argentina adds that the measure does
not constitute an absolute prohibition, as asserted by Panama, but allows transactions conducted
or ordered by persons incorporated, domiciled or residing in non-cooperative countries to proceed
provided that they meet the two conditions specif ied in Article 5 of the Consolidated Text of the
CNV.507
7.334. We wish first of all to address the question of the services affected by this measure.
Panama claims that, although the measure at issue, as contained in Title XI, Section III, Article 5
of the Rules of the CNV, does not explicitly refer to portfolio management services, the measure
affects the cross-border supply of such services as it imposes obligations on authorized
intermediaries "whose service is essential for portfolio managers". In Panama's view, "the stock
market intermediation service is an essential aux iliary service for the effective delivery of portfolio
management services".
508 The measure at issue therefore affects the supply "of portfolio
management services to Argentine customers through mode 1". 509 Argentina did not object to this
statement by Panama. In fact, Argentina identified portfolio management services in its first
written submission when summarizing the services and modes of supply which Argentina considers
to be affected by the measures challenged by Panama.
510

503 See paras. 7.284-7.291 above.
504 See section 2.3.7 above.
505 Panama's second written submission, para. 2.706.
506 Argentina's first written submission, paras. 165 and 166.
507 Argentina's first written submission, para. 491.
508 Panama's first written submission, para. 4.387.
509 Panama's first written submission, para. 4.394.
510 Argentina's first written submission, para. 142.

7.335. We note that both parties agree that suppliers of portfolio management services from
non-cooperative countries only have access to the Argentine capital market if they comply with the
two conditions specified in Title XI, Section III, Article 5 of the CNV's Rules. We also note that such
access to the Argentine capital market is necessarily effected through stock market
intermediaries
511, which are the ones that proceed with transactions in relation to the public
offering of negotiable securities, forward contracts, futures or options of any kind and other
financial instruments or products. We see no need to determine whether stock market
intermediation services really are auxiliary services for portfolio management services, as asserted
by Panama, in order to conclude that the measure at issue has an impact on the cross-border
supply of portfolio management services to Argentine consumers by service suppliers of
non-cooperative countries. We therefore consider that the services at issue under measure 6 are
portfolio management services.
7.336. Having addressed the question of the serv ice affected by the measure at issue, we shall
focus on whether the treatment accorded by measur e 6 is less favourable to service suppliers of
non-cooperative countries. In this connection, we have noted that imposition of conditions on
access to the Argentine capital market through stock market intermediaries only affects service
suppliers of non-cooperative countries. We consider that the mere imposition of these
requirements modifies the conditions of competition to the detriment of service suppliers from
non-cooperative countries as, in the eyes of the consumer, they do not have the same ease of
access to the Argentine capital market.
7.337. Like Panama, we also believe that the im position of these conditions on Argentine stock
market intermediaries may discourage the contra cting of services provided by suppliers of
non-cooperative countries, since the latter do not have access to the Argentine market (whereas
service suppliers of cooperative countries do have such access) and thus may make it necessary to
contract the services of some other supplier which does have access to the Argentine market,
generating additional costs for Argentine consumers.
7.338. This leads us to the preliminary conclusi on that the treatment accorded to services and
service suppliers of non-cooperative countries is less favourable than that accorded to like services
and service suppliers of cooperative countries.
7.339. As in the case of measures 1, 2, 3, 4 and 5, however, the design and operation of
measure 6, pursuant to Decree No. 589/2013, create distortions with regard to (i) granting
cooperative status to jurisdictions which have not signed an agreement and which, therefore, are
not subject to the exchange of tax information with Argentina; and (ii) the updating of the list of
cooperative countries. Indeed, the design of measure 6 establishes differential treatment
according to whether the services and service su ppliers are from cooperative or non-cooperative
countries. This differential treatment, pursuant to Decree No. 589/2013 is not based, as Argentina
argues, on whether or not Argentina has access to tax information. This can be seen from the fact
that countries which are in the process of negotiating a tax information exchange agreement have
cooperative status even though the agreement has not been signed and there is thus no formal
mechanism for exchanging information. To this must be added the operation of the list of
cooperative countries drawn up by Argentina, which results in unequal treatment of jurisdictions in
the process of negotiating an agreement, since some are included in the list while continue to
await the updating of the list.
512
7.340. We therefore find that the design and operation of measure 6, 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.

511 We recall that "stock market intermediaries" means the persons indicated in Article 1 of the CNV's
Rules, including "bargaining agents, liquidation and compensation agents, distribution and placement agents,
and collective investment management agents". See footnote 53 above.
512 See paras. 7.284-7.291 above.

7. Whether Argentina accords trea tment no less favourable under
measure 7
7.341. Measure 7, as we explained above, relates to the registration requirements applicable to
companies from non-cooperative countries wishing to register in the Autonomous City of Buenos
Aires.513
7.342. Panama contends that the imposition of additional requirements makes the business model
consisting of simultaneous establishment in several countries more problematic because at the
outset it deters service suppliers of non-cooperative countries from setting up in Argentina.514
7.343. Argentina, once again, argues that the treatment accorded to Panamanian services and
service suppliers is not less favourable as Panama is included in the list of cooperative countries.515
In response to Panama's argument that the IGJ exercises discretionary authority in assessing
compliance with the requirements, Argentina states that this discretionary authority is inherent in
the exercise of its administrative functions.516
7.344. We have already seen that Argentina imposes different treatment on companies from
non-cooperative countries, since it applies to them Article 192 of IGJ Resolution No. 7/2005,
which, as indicated in its title, is not applicable to companies from cooperative countries.
7.345. We understand that the IGJ may evaluate more or less restrictively compliance with the
requirements stipulated in Article 188 on the part of a company from a cooperative country in the
light of the particular circumstances of each case, being able to request additional documents
similar to those provided for in Article 192 if considered necessary. We do not consider, however,
that our analysis of the measure at issue requires us to examine the more or less strict
assessment by the IGJ of compliance with the requirements laid down in Article 188.
7.346. Nor do we consider that the fact that the exemption from furnishing the documents
provided for in Article 188 may apply to non-cooperative countries alters the fact that the legal
mandate given to the IGJ in Article 192 to "appraise restrictively compliance with the requirements
of Article 188, section 3, subsections (b) and (c)" refers exclusively to companies from countries
not cooperating for the purposes of tax transparency and the fight against money laundering and
transnational crime.
7.347. We do not consider, as claimed by Panama, that the requirement to prove that the
company is effectively engaged in economically significant business activities applies only to
companies from non-cooperative countries.
517 In this connection, we note that the exemption
provided for in Article 188, which applies to any foreign company, may apply "in cases where it is
well-known and public knowledge that the company is effectively engaged in economically
significant business activities abroad and that its management is also located there" This concords
with Argentina's statement that the assessment of whether the documents submitted by the
foreign company in accordance with Article 188 are sufficient is conducted in relation to two
aspects: whether the company is effectively engaged in economically significant business activities
and its place of central management.
518 We therefore consider that, in assessing compliance with
the requirements of Article 188, the IGJ also seeks to determine whether the company is
effectively engaged in economically significant business activities, as asserted by Argentina.
519
7.348. Even though the details that the document ation requested is intended to ascertain are the
same in both Article 192 and subsections (b) and (c) of Article 188.3, we cannot ignore the IGJ's
mandate under Article 192 to assess compliance with the said requirements restrictively in the
case of companies from countries not cooperatin g for the purposes of tax transparency and the
fight against money laundering and transnational crime.

513 See section 2.3.8 above.
514 Panama's second written submission, paras. 2.742 and 2.743.
515 Argentina's first written submission, paras. 165 and 166.
516 Argentina's first written submission, para. 620.
517 Panama's first written submission, paras. 4.425 and 4.431; and second written submission,
para. 2.738.
518 Argentina's first written submission, para. 627.
519 Argentina's first written submission, para. 630.

7.349. In our view, the fact that the IGJ assesses compliance with these requirements
restrictively modifies the conditions of competition to the detriment of companies from
non-cooperative countries compared to those from cooperative countries as it may create
disincentives to the registration of companies from non-cooperative countries, which face exposure
to closer scrutiny on the part of the IGJ, and it may mean that a larger number of documents are
required. The fact that most companies register successfully
520 does not eliminate the disincentives
caused by the treatment stipulated in Article 192 of IGJ Resolution No. 7/2005.
7.350. Having regard to the foregoing, we reac h the preliminary conclusion that the restrictive
assessment by the IGJ of certain requirements n eeded for the registration of companies from
non-cooperative countries modifies the conditions of competition to the detriment of the latter,
placing them in a less favourable position than like service suppliers from cooperative countries.
7.351. As was the case for measures 1, 2, 3, 4, 5 and 6, however, the design and operation of
measure 7, pursuant to Decree No. 589/2013, create distortions with regard to (i) granting
cooperative status to jurisdictions which have not signed an agreement and which, therefore, are
not subject to the exchange of tax information with Argentina; and (ii) the updating of the list of
cooperative countries. Indeed, the design of measure 7 establishes differential treatment
according to whether the services and service su ppliers are from cooperative or non-cooperative
countries. This differential treatment, pursuant to Decree No. 589/2013 is not based, as Argentina
argues, on whether or not Argentina has access to tax information. This can be seen from the fact
that countries which are in the process of negotiating a tax information exchange agreement have
cooperative status even though the agreement ha s not been signed and there is therefore no
formal mechanism for exchanging information. To this must be added the operation of the list of
cooperative countries drawn up by Argentina, which results in unequal treatment of jurisdictions in
the process of negotiating an agreement, since some are included in the list while others continue
to await the updating of the list.
521
7.352. We therefore find that the design and operation of measure 7, 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.
8. Whether Argentina accords trea tment no less favourable under
measure 8
7.353. As we have already seen, measure 8 consists of the requirement imposed on natural or
legal persons from non-cooperative countries to obtain prior authorization from the BCRA in order
to repatriate direct investments from Argentina.
522
7.354. Panama argues that the requirement to ob tain prior authorization from the BCRA to allow
service suppliers to repatriate their direct investments, which "only applies" to service suppliers of
non-cooperative countries
523 creates uncertainty, deterring service suppliers of non-cooperative
countries from setting up in Argentina. 524 Panama considers that this requirement imposes an
additional administrative burden and, in turn, leads to a risk that the authorization will be refused
or given too late.
525 In this connection, Panama highlights the discretionary authority surrounding
approval of the application by the BCRA and the waiting times which a supplier has to face before
repatriation takes place.526
7.355. Argentina, for its part, argues that the treatment accorded to Panamanian services and
service suppliers is not less favourable, since Panama is included in the list of cooperative
countries.527 Argentina adds that it does not consider that the repatriation of investment is covered

520 Argentina's first written submission, para. 648.
521 See paras. 7.284-7.291 above.
522 See section 2.3.9 above.
523 Panama's first written submission, para. 4.438. See also first written submission, paras. 4.449,
4.450 and 4.453; and second written submission, para. 2.793.
524 Panama's second written submission, paras. 2.794 and 2.795.
525 Panama's second written submission, para. 2.795.
526 Panama's second written submission, para. 2.793.
527 Argentina's first written submission, paras. 165 and 166.

by the GATS and that it does not affect the su pply of any service inasmuch as it is a "prior
verification requirement" for access to the Argentine foreign exchange market. 528 Nevertheless,
Argentina contends that the requirement of prior authorization from the BCRA in order to
repatriate foreign direct investment in the non-financial private sector applies to suppliers of both
cooperative and non-cooperative countries whenever certain conditions are not met.
529 Argentina
adds that the applications for prior authorization submitted so far have not been rejected 530 and
the time-frame for granting authorization is a reas onable one in accordance with the transparency
requirements of the GATS, the complexity of the transactions and the requirements of the
competent authorities.531 Lastly, Argentina denies that repatriation of investment is subject to the
discretionary authority of the BCRA as it will be authorized when the prescribed conditions are
met.532
7.356. First of all, we note that, pursuant to Section I of Communication "A" 4940, the prior
authorization requirement automatically applies to the repatriation of direct investment in the
non-financial sector when the beneficiary of the repatriation is a natural or legal person from a
non-cooperative country, irrespective of whether the other requirements laid down in Argentina's
legislation for this type of transaction have been met. This automaticity appears to us at the outset
to place persons from non-cooperative countries in a less favourable position than those from
cooperative countries, as the rule in point 1. 13 of Communication "A" 4940, on exemption from
this requirement can in no event be applied to them.
7.357. To the above must be added the fact that , as stated by Panama, the prior authorization
application in itself implies an additional administrative burden to be borne in any event by
persons from non-cooperative countries wishing to repatriate their direct investment in the
non-financial sector. We recognize that any application not only entails a certain cost in terms of
the time required
533 but also a risk that it may ultimately be rejected, which may generate
disincentive to establishment for suppliers from non-cooperative countries.
7.358. We understand that any business decision involving investment abroad is based on a
survey of the market receiving the investment, which covers not only the terms of entry for the
investment but also its treatment post-establishment, including its withdrawal from the country.
This includes consideration of not only the formalities for applying for authorization, but also the
risks which rejection of the application entails and the time that elapses between the application
and the final decision by the BCRA. The fact that no application has so far been rejected, as
asserted by Argentina, may give foreign investors an indication of the BCRA's customary practice,
but does not prevent us from considering, in the light of the foregoing, that the measure
challenged by Panama may have the potential effect of discouraging certain investments by
service suppliers of non-cooperative countries, which find themselves automatically made subject
to a requirement that does not apply automatically to like service suppliers of cooperative
countries.
7.359. We therefore consider, on a preliminary ba sis, that the requirement of prior authorization
from the BCRA imposed in respect of repatriation of direct investment in the non-financial sector
when the beneficiary is a person from a non-cooperative country modifies the conditions of
competition to the detriment of the latter, placin g them in a less favourable position than like
service suppliers from cooperative countries.
7.360. As was the case for measures 1, 2, 3, 4, 5, 6 and 7, however, the design and operation of
measure 8, pursuant to Decree No. 589/2013, create distortions with regard to (i) granting
cooperative status to jurisdictions which have not signed an agreement and which, therefore, are
not subject to the exchange of tax information with Argentina; and (ii) the updating of the list of
cooperative countries. Indeed, the design of measure 8 establishes differential treatment
according to whether the services and service su ppliers are from cooperative or non-cooperative
countries. This differential treatment, pursuant to Decree No. 589/2013, is not based, as Argentina

528 Argentina's first written submission, para. 124 and Explanatory Annex No. 2, paras. 27-29 and 41.
529 Argentina's first written submission, Explanatory Annex No. 2, paras. 38 and 42.
530 Argentina's first written submission, para. 124 and Explanatory Annex No. 2, paras. 39 and 41.
531 Argentina's first written submission, Explanatory Annex No. 2, para. 41.
532 Argentina's first written submission, Explanatory Annex No. 2, para. 43.
533 This cost in temporal terms covers the time needed to prepare the application for prior authorization
and, in particular, the time that elapses between submission of the application and its acceptance or rejection.

argues, on whether or not Argentina has access to tax information. This can be seen from the fact
that countries which are in the process of negotiating a tax information exchange agreement have
cooperative status even through the agreement has not been signed and there is thus no formal
mechanism for exchanging information. To this must be added the operation of the list of
cooperative countries drawn up by Argentina, which results in unequal treatment of jurisdictions in
the process of negotiating an agreement, since some are included in the list while others continue
to await the updating of the list.
534
7.361. We therefore find that the design and operation of measure 8, 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.
(iii) Conclusion
7.362. In the light of the foregoing, we find that Panama has demonstrated that the
eight measures at issue do not accord "treatment no less favourable" to services and service
suppliers of non-cooperative countries compared to the treatment accorded to like services and
service suppliers of cooperative countries.
(c) Whether the treatment no less favo urable is accorded immediately and
unconditionally to like services and service suppliers
7.363. Having concluded that the eight measures at issue do not accord treatment no less
favourable to like services and service suppliers of cooperative and non-cooperative countries, we
do not believe it necessary to pursue our analysis by addressing the question of whether
non-existent "treatment no less favourable" is accorded immediately and unconditionally to like
services and service suppliers.
7.3.2.2.4 Conclusion
7.364. Firstly, we have concluded that Panama has demonstrated that the eight measures at
issue in this dispute are covered by the GATS.
7.365. Next, we have concluded that Panama has demonstrated that, in the context of the eight
measures at issue, services and service suppliers of cooperative and non-cooperative countries are
like by reason of origin. In this respect, we also conclude that Argentina has not persuaded us that
the exchange of tax information is an "other factor" that is reflected in the competitive relationship
between services and service suppliers of cooperative and non-cooperative countries.
7.366. We have also concluded that Panama has demonstrated that the eight measures at issue
do not accord "treatment no less favourable" to services and service suppliers of non-cooperative
countries in comparison with the treatment accorded to like services and service suppliers of
cooperative countries, which is why we have not considered it necessary to pursue our analysis by
addressing the question of whether non-existent "treatment no less favourable" is accorded
immediately and unconditionally to like services and service suppliers.
7.367. In the light of the foregoing, the Panel finds that measure 1 (withholding tax on payments
of interest or remuneration), measure 2 (presu mption of unjustified increase in wealth),
measure 3 (transaction valuation based on transfer prices), measure 4 (payment received rule for
the allocation of expenditure), measure 5 (requirements relating to reinsurance services),
measure 6 (requirements for access to the Argentine capital market), measure 7 (requirements for
the registration of branches) and measure 8 (for eign exchange authorization requirement) are
inconsistent with Article II:1 of the GATS because they do not immediately and unconditionally
accord to services and service suppliers from non-cooperative countries treatment no less
favourable than that accorded to like services and service suppliers from cooperative countries.

534 See paras. 7.284-7.291 above.

7.3.3 Panama's claims under Articles XVI:1 and XVI:2 of the GATS
7.3.3.1 Main arguments of the parties
7.3.3.1.1 Panama
7.368. Panama claims that measure 5 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.
535 Because of the changes
made to this measure, which are explained in sections 2.3.6 and 7.1.3 above, Panama has
indicated that it withdraws its claims under Articl es XVI:1 and XVI:2(a) of the GATS in respect of
the supply of reinsurance services by suppliers from non-cooperative countries via mode 3
(point 18 of Annex I to SSN Resolution No. 35.615/2011) and mode 1 (point 20(f) of Annex I to
SSN Resolution No. 35.615/2011). Panama has also emphasized that it maintains its claims "under
Article XVI of the GATS in relation to point 19 of Annex I to SSN Resolution 35.615/2011".
536 In
this section we include a summary of all Panama's arguments in relation to its claims under
Articles XVI:1 and XVI:2 of the GATS.
7.369. In Panama's opinion, Argentina undertook commitments on market access under modes 1
(cross-border supply) and 3 (commercial presence) in relation to the reinsurance and retrocession
sector.
537 As regards the cross-border supply mode (mode 1), Panama claims that, by inscribing
"None" in the market access column under mode 1, Argentina made a full commitment for this
mode.538 Concerning supply through commercial presence (mode 3), Panama states that the
limitation entered ("Authorization of the establishment of new entities is suspended") concerns
Argentina's capacity to authorize the establishment of new entities. Panama claims that the
ordinary meaning of this entry only covers temporary suspension of authorizations for the
establishment of new entities in Argentina for the purpose of providing reinsurance services, a
suspension that was in force on 15 April 1994, the date on which the Schedule was adopted. Given
that SSN Resolution No. 13.828/1977, which was in force on 15 April 1994, was repealed in 1998
by SSN Resolution No. 25.804/1998, Panama consider s that the limitation in Argentina's Schedule
ceased to have effect from the moment the granting of authorizations for the establishment of new
entities was reinstated, i.e. from 1 October 1998 onwards.
539 Accordingly, Panama concludes that
the total ban imposed by Argentina on the supply of reinsurance services through commercial
presence on the part of service suppliers from no n-cooperative countries – pursuant to point 18 of
Annex I to SSN Resolution No. 35.615/2011 – is inconsistent with Argentina's commitments in this
sector and mode of supply because it corresponds to a zero quota, falling within the scope of
Article XVI:2(a) of the GATS.
540
7.370. With regard to mode 1, Panama points out that, pursuant to point 20(f) of Annex I to SSN
Resolution No. 35.615/2011, service suppliers of non-cooperative countries are prohibited from
supplying reinsurance services in the cross-border mode. According to Panama, this prohibition,
for reasons of nationality, on supplying a service for which a specific commitment has been made
is equivalent to a zero quota falling within the scope of Article XVI:2(a) of the GATS.
541
7.371. Panama also indicates that, although suppliers from cooperative countries are not subject
to this ban on the cross-border supply of re insurance services, they are subject to certain
limitations. More specifically, Panama explains that foreign suppliers of reinsurance services from
cooperative countries operating solely from their head office may only provide their services to
consumers located in the Argentine market in two situations: (i) pursuant to point 19 of Annex I to
SSN Resolution No. 35.615/2011, "when the magnitude or particular characteristics of the ceded
risks make it impossible for [the] reinsurance operations to be covered on the Argentine

535 Panama's second written submission, para. 3.1.e(ii).
536 See Panama's response to Panel question No. 60.
537 The Panel recalls that, in section 7.1.4 above, it reached the conclusion that retrocession services are
not included in measure 5 contested by Panama. We will therefore refer only to "reinsurance services" in the
remainder of this section.
538 Panama's first written submission, paras. 4.367 and 4.368 (citing Panel Report, US – Gambling,
para. 6.279).
539 Panama's first written submission, paras. 4.369-4.374.
540 Panama's first written submission, paras. 4.380 and 4.381 (citing Appellate Body Report, US –
Gambling, para. 237).
541 Panama's first written submission, para. 4.376.

reinsurance market", and (ii) pursuant to Article 4 of SSN Resolution No. 35.794/2011, in cases
where the individual risks exceed US$50,000,0 00 and "for that portion which exceeds the
aforementioned amount". According to Panama, this measure amounts to a "limitation on the
number of service suppliers … in the form of … th e requirements of an economic needs test ",
within the meaning of Article XVI:2(a) of the GATS.
542
7.372. Panama contends that these measures are inconsistent with Article XVI:1 of the GATS as
well because they accord suppliers from non-cooperative countries treatment less favourable than
that provided in Argentina's Schedule of Commitments.543
7.373. In its second written submission, Panama notes that Argentina amended SSN Resolution
No. 35.615/2011 by means of SSN Resolution No. 38.284/2014, on the same day that Panama
presented its first written submission, namely, 25 March 2014. This SSN Resolution
No. 38.284/2014 amends two points in SSN Resolution No. 35.615/2011 on which Panama had
submitted claims, namely, points 18 and 20(f) of Annex I to the Resolution, and maintains
differential treatment for reinsurance service suppliers according to their origin, both for mode 1
and for mode 3. Panama argues that, given that it had identified SSN Resolution No. 35.615/2011
in its panel request as the instrument whereby Argentina maintained its measures on reinsurance
services inconsistent with the GATS and had indicated that "the scope of [this] request … covers …
any possible amendments, extensions or additions where applicable"
544, Argentina's amendment
forms part of this Panel's terms of reference.545
7.374. Panama claims that point 19 of Annex I to SSN Resolution No. 35.615/2011 and Article 4
of SSN Resolution No. 35.794/2011 are still in force and observes that Argentina itself admits that
it does not allow full access to its reinsurance market, but only "partial" access. Panama asserts
that Argentina's legislation does not allow the cross-border supply of reinsurance services unless
there is an economic need therefor, which cons titutes a limitation "on the number of service
suppliers … in the form of … the requirements of an economic needs test", within the meaning of
Article XVI:2(a) of the GATS. Panama claims that the WTO Secretariat Note on economic needs
tests, to which the Appellate Body has referred on occasion, gives as an example of limitation by
means of an economic needs test measures that allow insurance takers "to seek insurance cover
from foreign-based suppliers to the extent that coverage is not available domestically". In
Panama's opinion, this example almost identically reflects what is provided in point 19 of Annex I
to SSN Resolution No. 35.615/2011. Panama argues that the Secretariat Note indicates that the
quantitative nature of measures in the form of economic needs tests means that these are
measures "based on criteria the fulfilment of which is beyond the control of the affected service
supplier". According to Panama, by allowing the cross-border supply of reinsurance services solely
for that portion of the individual risks exce eding US$50 million, Article 4 of SSN Resolution
No. 35.794/2011 establishes a criterion the fulfilment of which is clearly "beyond the control" of
the foreign reinsurer.
546
7.375. Panama claims that Argentina took advantage of Panel question No. 76 in order to set out
for the first time its response to Panama's claim relating to point 19 of Annex I to SSN Resolution
No. 35.615/2011. Panama considers that Argentina's response clearly exceeds the scope of the
Panel's question. Panama stresses that Argentina had not previously mentioned, for example, the
economic needs tests on which Panama developed detailed arguments in its two written
submissions. According to Panama, Argentina's response cannot be accepted because it would run
counter to what has been stated by the Appellate Body regarding the division of panel proceedings

542 Panama's first written submission, paras. 4.376-4.379 (referring to point 19 of Annex I to SSN
Resolution No. 35.615/2011), (Exhibits PAN-36 / ARG-27); Article 4 of SSN Resolution No. 35.794/2011,
(Exhibits PAN-40 / ARG-48); and the 1993 Scheduling Guidelines, which include as an example of a limitation
on the number of service suppliers a "[l]icense for a new restaurant based on an economic needs test". See
"Scheduling of Initial Commitments in Trade in Services: Explanatory Note" (1993 Guidelines),
MTN.GNS/W/164 of 3 September 1993, (Exhibits PAN-46 / ARG-79), para. 6(a), point 1).
543 Panama's first written submission, paras. 4.376 and 4.379; and second written submission,
para. 2.631.
544 Panama's second written submission, para. 2.576 (referring to its request for the establishment of a
panel, p. 7).
545 Panama's second written submission, paras. 2.575-2.583.
546 Panama's second written submission, paras. 2.628-2.630 (referring to the Note by the Secretariat,
Economic Needs Tests, S/CSS/W/118 of 30 November 2001, (Exhibit PAN-47); and Appellate Body Report, US
– Gambling, footnote 269).

into phases and the purpose of rule 8 of this Pa nel's Working Procedures. Panama contends that it
would affect its right of defence inasmuch as within the seven-day period it did not have a proper
opportunity for weighing up, rebuttal and defence of its position. Panama insists that it was not
able to discuss these arguments with Argentina and the Panel at any meeting, in accordance with
the principles of due process, procedural immedi acy and oral presentation. Panama claims that
accepting these belated arguments of Argentina would also affect the rights of third parties, which
have not been able to examine or comment on Argentina's position in relation to Panama's claim
under Article XVI of the GATS. Panama contends that, in the light of Article 11 of the DSU, the
Panel should take due precautions to prevent eith er of the parties from taking advantage of the
opportunity afforded by the Panel to clarify arguments in order to present its case for the first
time. In Panama's view, Argentina has not proved that there are any intervening facts or grounds
justifying the presentation of arguments and new evidence at this stage of the proceedings.
547
7.3.3.1.2 Argentina
7.376. In its first written submission, Argentina cl aims that Panama's description of the Argentine
measure does not correspond to the true situation because Argentina's regulatory framework for
reinsurance has been modified.
548
7.377. As regards the supply of reinsurance services through commercial presence (mode 3),
Argentina claims that point 18 of Annex I to SSN Resolution No. 35.615/2011, as amended by SSN
Resolution No. 38.284/2014, does not prohibit service suppliers of non-cooperative countries from
providing reinsurance services in Argentina through commercial presence, but allows them to do
so provided that they are subject to the regulatory supervision of a body similar to the SSN, with
which there is exchange of information.
549
7.378. According to Argentina, to this must be added the fact that the limitation recorded under
mode 3 in the reinsurance services sector is still in force as Argentina has not amended its
Schedule of Commitments in accordance with Article XXI of the GATS. Argentina argues that,
because of this limitation, authorization to establish new entities has been suspended, which
means that the establishment of new entities will only be possible insofar as the SSN evaluates the
merits of exemption from suspension in each particular case. Argentina does not consider that, as
claimed by Panama, the term "is suspended" can be read in such a way as to suggest that the
suspension of authorization to establish new reinsurers in Argentina is limited temporarily.
Argentina considers that, irrespective of any amendment to its domestic legislation, the limitation
recorded under mode 3 remains in force, thus gi ving Argentina the right to suspend authorization
for the establishment of new reinsurers.
550
7.379. With reference to the cross-border supply of reinsurance services (mode 1), Argentina
claims that, pursuant to point 20(f) of Annex I to SSN Resolution No. 35.615/2011, as amended
by SSN Resolution No. 38.284/2014, service supp liers of non-cooperative countries are not
prohibited from supplying cross-border reinsurance services. Argentina explains that the new
wording of point 20(f), pursuant to SSN Resolution No. 38.284/2014, provides that entities located
in non-cooperative jurisdictions may be authorized to supply cross-border reinsurance or
retrocession services in Argentina provided that it is certified that they are subject to the
regulatory supervision of an entity similar to the SSN, with which there is exchange of
information.
551 Furthermore, Argentina argues that it is also not the case that point 19 of Annex I
to SSN Resolution No. 35.615/2011 prohibits the cross-border supply of reinsurance services from
central offices (mode 1), but makes it subject to certain conditions. Argentina explains in particular
that point 19 of Annex I to SSN Resolution No. 35.615/2011 (elaborated by Article 4 of SSN
Resolution No. 35.794/2011) provides for the participation of foreign firms in the supply of
reinsurance services through mode 1 partially and for the amount in excess of what is considered
to be a threshold for certain types of insured ri sk, normally defined as "major risks". Argentina
justifies this partial limitation on the grounds of strengthening the domestic reinsurance market

547 Panama's comments on Argentina's response to Panel question No. 76 (citing Appellate Body Report,
548 Argentina's first written submission, para. 407.
549 Argentina's first written submission, para. 431.
550 Argentina's first written submission, paras. 476-479; and second written submission, paras. 56-58.
551 Argentina's first written submission, paras. 435 and 436; and second written submission, paras. 54
and 55.

and increasing control so as to avoid fraudulent practices. 552 Argentina claims that the large
number of foreign reinsurance firms currently providing reinsurance and retrocession services in
Argentina corroborates the absence of any "limitations on the number of service suppliers" within
the meaning of Article XVI:2(a) of the GATS.
553
7.380. Moreover, Argentina points out that the retrocession regime is governed by SSN Resolution
No. 35.794/2011, which was not challenged by Panama in this dispute. According to Argentina, not
only are retrocession services not limited by any regulatory provision but, in practice, are mostly
supplied by foreign firms.
554
7.381. At the second substantive meeting of the parties with the Panel, Argentina claimed that
the measure contested is not inconsistent with Articles XVI:1 and XVI:2(a) of the GATS because it
is not covered by those obligations. According to Argentina, Article XVI:2(a) refers exclusively to
limitations on the number of service "suppliers". The measure challenged by Panama, however, is
not aimed at limiting the number of reinsurance service "suppliers" but at regulating reinsurance
"operations". Argentina contends that, if a measur e does not limit the number of service suppliers
per se , it falls outside the scope of Article XVI:2(a) of the GATS. Argentina claims that, in the
unlikely event that the Panel were to consider that measure 5 relates to service "suppliers",
Argentina has already explained that it is a qualitative measure and thus also falls outside the
scope of Article XVI:2(a) of the GATS, which covers measures of a quantitative nature.
555
7.3.3.2 Assessment by the Panel
7.3.3.2.1 Introduction
7.382. The issue before the Panel is whether measure 5 is inconsistent with Articles XVI:1 and
XVI:2(a) of the GATS because, as claimed by Panama, it limits the number of foreign service
suppliers by requiring an economic needs test and, consequently, accords them treatment less
favourable than that specified in Argentina's Schedule of Commitments.
556 Argentina, for its part,
responds that measure 5 does not apply to service "suppliers" and is therefore not covered by
Article XVI:2(a) of the GATS. It contends that, in the event that the Panel were to consider that
the measure is covered by Article XVI:2(a), Argentina considers that it is a qualitative measure.557
7.383. As explained in section 2.3.6 above, me asure 5 has been the subject of elaboration and
amendments occurring before and after the establis hment of this Panel. We recall our decision to
rule on measure 5 as elaborated by SSN Reso lution No. 35.794/2011 and in accordance with the
amendment introduced by SSN Resolution No. 38.284/2014.558
7.384. The changes to measure 5 led Panama to reduce the scope of its claims under
Articles XVI:1 and XVI:2(a) of the GATS. 559 In particular, in view of the amendment of points 18
and 20(f) of Annex I to SSN Resolution No. 35.615/2011 by SSN Resolution No. 38.284/2014 and
the resulting disappearance of the absolute prohibition initially provided for by those points,
Panama confirmed to the Panel that it was withdrawing its claims under Articles XVI:1 and
XVI:2(a) of the GATS with regard to the supply of reinsurance services through modes 1 and 3 by
suppliers from non-cooperative countries.
560 Panama pointed out, however, that the economic

552 Argentina's first written submission, paras. 456-458.
553 Argentina's second written submission, para. 55.
554 Argentina's first written submission, paras. 443 and 449.
555 Argentina's opening statement at the second meeting of the Panel, para. 21.
556 Panama's second written submission, para. 3.1.e(ii)
557 See footnote 555 above.
558 See section 7.1.3 above.
559 In its first written submission, Panama put forward claims under Articles XVI:1 and XVI:2(a) of the
GATS in relation to points 18, 19 (developed by Article 4 of SSN Resolution No. 35.794/2011) and 20(f) of SSN
Resolution No. 35.615/2011. Points 18 and 20(f) established prohibitions on the supply of reinsurance services
through mode 3 and mode 1, respectively. Point 19, developed by Article 4 of SSN Resolution
No. 35.794/2011, limits the supply of reinsurance services through mode 1 to situations in which the individual
risks exceed US$50 million, but only for the portion that exceeds this amount. See Panama's first written
submission, section 4.5.3.
560 Panama confirmed that it maintains the claims under Article II:1 of the GATS in relation to points 18
and 20(f) of Annex I to SSN Resolution No. 35.615/2011. The Panel examined these claims in section 7.3.2.2
above. See Panama's second written submission, para. 2.587.

needs test requirement, which applied to all foreign suppliers pursuant to point 19 of Annex I to
SSN Resolution No. 35.615/2011 (as elaborated by Article 4 of SSN Resolution No. 35.794/2011)
had not been amended and Panama therefore main tained its claims under Articles XVI:1 and
XVI:2(a) of the GATS. In this connection, Panama asserts that Argentina limits cross-border access
(mode 1) to the Argentine reinsurance market to situations in which the individual risks exceed
US$50 million, and only for the portion that exceeds this amount.561
7.385. In the light of the foregoing, the Panel wi ll confine its analysis solely to Panama's claims
under Articles XVI:1 and XVI:2(a) of the GATS with respect to point 19 of Annex I to SSN
Resolution No. 35.615/2011, as developed by Article 4 of SSN Resolution No. 35.794/2011.
Consequently, when we allude to measure 5 in this section on Panama's claims under
Articles XVI:1 and XVI:2(a), we shall be referring only to point 19 of Annex I to SSN Resolution
No. 35.615/2011, as developed by Article 4 of SSN Resolution No. 35.794/2011.
7.386. We shall begin by examining the wording of Articles XVI:1 and XVI:2(a) of the GATS.
7.3.3.2.2 The relevant legal provisions
7.387. Article XVI of the GATS, entitled "Market Access", provides in relevant part:
1. With respect to market access through the modes of supply identified in
Article I, each Member shall accord services and service suppliers of any other
Member treatment no less favourable than that provided for under the terms,
limitations and conditions agreed and specified in its Schedule.
8
2. In sectors where market-access commitments are undertaken, the measures
which a Member shall not maintain or adopt either on the basis of a regional
subdivision or on the basis of its entire territory, unless otherwise specified in its
Schedule, are defined as:
(a) limitations on the number of service su ppliers whether in the form of numerical
quotas, monopolies, exclusive service suppliers or the requirements of an economic
needs test;
Article I, it is thereby committed to allow related transfers of capital into its territory.

7.388. In US – Gambling , the Appellate Body explained that Article XVI of the GATS "sets out
specific obligations for Members that apply insofar as a Member has undertaken 'specific market
access commitments' in its Schedule". 562 The Appellate Body also clarified the function of the
paragraphs of this provision cited by Panama:
The first paragraph of Article XVI obliges Members to accord services and service
suppliers of other Members "no less favourable treatment than that provided for under
the terms, limitations and conditions agreed and specified in its Schedule." The second
paragraph of Article XVI defines, in six sub-paragraphs, measures that a Member,
having undertaken a specific commitment, is not to adopt or maintain, "unless
otherwise specified in its Schedule".
563
7.389. Panama's claims under Articles XVI:1 and XVI:2(a) raise the question of the relationship
between the two paragraphs of Article XVI with a view to deciding the order the Panel should
follow in its analysis. For example, in China – Publications and Audiovisual Products , the panel

561 Panama's response to Panel question No. 60.
562 Appellate Body Report, US – Gambling, para. 214.
563 Appellate Body Report, US – Gambling, para. 214.

decided to begin by examining whether the respondent's Schedule contained a relevant specific
commitment in accordance with the specific subparagraph of Article XVI:2 concerned, before
examining the measure's consistency with Article XVI:1 of the GATS.
564 The panel's reasoning was
as follows:
Paragraph 1 of Article XVI sets out the general principle that a Member must accord to
services and service suppliers of other Members treatment no less favourable than
that specified under the "terms, limitations and conditions" contained in its schedule.
Paragraph 2 is more specific. It defines, in six sub-paragraphs, the measures that a
Member, having inscribed a specific sectoral commitment, must not adopt or maintain
"unless otherwise specified in its Schedule". … Under Article XVI, a Member
undertakes a minimum standard of treatment, and is thus free to maintain a market
access regime less restrictive than set out in its schedule, as confirmed in paragraph 1
which refers to a standard of "no less favourable" treatment. …
The wording of Article XVI indicates that we must next examine the precise terms of
China's Schedule to determine whether, with respect to the services at issue, there is
a market access commitment and, if so, what are the "terms, limitations and
conditions" entered with respect to those commitments.
565
7.390. In China – Electronic Payment Services , the panel followed the same approach. 566 We see
no reason to depart from the approach adopted by previous panels and will, therefore, commence
our analysis with Panama's claim under Article XVI:2(a) of the GATS.
7.3.3.2.3 The question of whether measure 5 is inconsistent with Article XVI:2(a) of
the GATS
7.3.3.2.3.1 The legal standard under Article XVI:2(a) of the GATS
7.391. In US – Gambling , the Appellate Body defined the legal standard to be followed under
Article XVI:2 of the GATS. In examining Article XVI: 2, in particular its subparagraphs (a) and (c),
the Appellate Body explained:
This text suggests that Antigua was required to make its prima facie case by first
alleging that the United States had undertaken a market access commitment in its
GATS Schedule; and, secondly, by identify ing, with supporting evidence, how the
challenged laws constitute impermissible "limitations" falling within Article XVI:2(a)
or XVI:2(c).
567
7.392. Applying this reasoning to the present dispute, in order to establish a prima facie case of
violation of Article XVI:2(a) of the GATS, Panama w ill be required (i) first, to prove that Argentina
undertook relevant market access commitments in its Schedule annexed to the GATS; and (ii)
second, to specify, with supporting evidence, how measure 5 constitutes an "impermissible
limitation" within the meaning of Article XVI:2(a) of the GATS.
7.393. We turn to examine separately whether Panama has complied with these two
requirements.
(a) First requirement: Whether Argentin a undertook specific commitments under
mode 1 in relation to the "reinsurance services" subsector
7.394. We start by recalling that it is for Panama to prove that Argentina undertook market
access commitments in relation to reinsurance services. In this connection, we note that Panama

564 Panel Report, China – Publications and Audiovisual Products, para. 7.1353.
565 Panel Report, China – Publications and Audiovisual Products, paras. 7.1353 and 7.1354.
566 See Panel Report, China – Electronic Payment Services, para. 7.511.
567 Appellate Body Report, US – Gambling, para. 143. Subsequently, the panels in China – Publications
and Audiovisual Products and China – Electronic Payment Services followed the same approach. See Panel
Reports, China – Publications and Audiovisual Products, para. 7.1354 and China – Electronic Payment Services,
para. 7.511.

has identified the commitments undertaken by Argentina in the sectors and modes of supply set
out below568:
Sector or subsector Limitations on market access Limitations on national treatment
(c) Reinsurance and
retrocession services
(CPC 81299*)
(1) None
(2) None
(3) Authorization of the establishment
of new entities is suspended
(4) Unbound, except as indicated in the
horizontal section
(1) None
(2) None
(3) None
(4) Unbound, except as indicated in the
horizontal section

(emphasis added)
7.395. According to Article XX:3 of the GATS, Members' Schedules of Specific Commitments are
an integral part of the GATS and their meaning th erefore has to be determined in accordance with
the rules of interpretation of the Vienna Convention.569
7.396. As we see in the extract from its Schedu le of Commitments reproduced above, Argentina
inscribed "None" in the "Limitations on market access" column with regard to mode 1
(cross-border supply).
7.397. Panama claims that, having inscribed "None" in this column, Argent ina must maintain "full
market access" within the meaning of the GATS, i.e., it must not apply any of the six limitations
and measures set out in Article XVI:2, including subparagraph (a), which is relevant for the
purposes of this dispute. According to Panama, this inscription means that Argentina has made a
full market access commitment for the supply of reinsurance services in cross-border mode.
570
7.398. Argentina appears to agree as it acknowledges that its Schedule of Specific Commitments
includes a full commitment under mode 1 for the supply of reinsurance services.571
7.399. The Panel notes that the GATS does not contain any specific definition of the word "None".
In US – Gambling, the Appellate Body explained that the word "None" in the market access column
means that the Member concerned "has undertake n to provide full market access, within the
meaning of Article XVI, in respect of the services included within the scope of" its commitment in
the subsector concerned.572 The Appellate Body concluded that "[i]n so doing, [the United States]
has committed not to maintain any of the types of measures listed in the six sub-paragraphs of
Article XVI:2".
573
7.400. In the light of the foregoing, the Panel concludes that, having inscribed "None" in the
"Limitations on market access" column, Argentina has made a full specific commitment under
mode 1 for "reinsurance services". This means that Argentina has undertaken not to maintain any

568 Argentina's Schedule of Specific Commitments, document GATS/SC/4, (Exhibit PAN-19), p. 12.
569 In US – Gambling, the Appellate Body stated:
In the context of the GATS, Article XX:3 explicitly provides that Members' Schedules are an "integral
part" of that agreement. Here, too, the task of identifying the meaning of a concession in a GATS
Schedule, like the task of interpreting any other treaty text, involves identifying the common
intention of Members. Like the Panel—and, indeed, both the participants—we consider that the meaning
of the United States' GATS Schedule must be determined according to the rules codified in Article 31
and, to the extent appropriate, Article 32 of the Vienna Convention.
Appellate Body Report, US – Gambling, para. 160 (footnotes omitted, emphasis original).
570 Panama's first written submission, paras. 4.367 and 4.368.
571 Argentina's second written submission, para. 54 ("With regard to mode 1, in which Argentina has
undertaken full market access commitments for reinsurance and retrocession services …").
572 Appellate Body Report, US – Gambling, para. 215. In a footnote, the Appellate Body emphasized that
"the opposite of the notation [is] 'Unbound', which means that a Member undertakes no specific commitment".
See Appellate Body Report, US – Gambling, footnote 257. (emphasis original)
573 Appellate Body Report, US – Gambling, para. 215.

of the six measures covered by any of the subpar agraphs of Article XVI:2, including, therefore,
subparagraph (a), for this mode and this sector.
(b) Second requirement: Whether meas ure 5 constitutes an impermissible
limitation on the cross-border supply of reinsurance services within the meaning of
Article XVI:2(a) of the GATS
7.401. We continue by examining the second requirement, namely, whether, as claimed by
Panama, point 19 of Annex I to SSN Resolution No. 35.615/2011, as elaborated by Article 4 of
SSN Resolution No. 35.794/2011, constitutes an im permissible limitation on the cross-border
supply (mode 1) of reinsurance services within the meaning of Article XVI:2(a) of the GATS.
7.402. Argentina maintains in this connection that Article XVI:2(a) of the GATS is not applicable
to measure 5 because that provision refers solely to limitations on the number of service
"suppliers", whereas the rule challenged by Panama governs reinsurance "operations". 574 In any
event, if the Panel were to consider that measure 5 applies to service "suppliers", Argentina
maintains that the measure imposes qualitative requirements and thus falls outside the scope of
Article XVI:2(a) of the GATS.
575
7.403. The Panels notes that the parties' arguments raise two distinct questions with regard to
the scope of Article XVI:2(a) of the GATS: (i) whether measure 5 governs service "suppliers"
within the meaning of Article XVI:2(a); and (ii) assuming that this is the case, whether the
measure constitutes a limitation on the "number of suppliers" of services within the meaning of
Article XVI:2(a) of the GATS.
7.404. Before examining these two questions, we should like to deal with a procedural issue
raised by Panama in relation to part of Argentina's argument rebutting Panama's claim under
Article XVI:2(a) of the GATS.
(i) Procedural issue raised by Panama
7.405. Panama claims that Argentina's counter-arguments concerning point 19 of Annex I to SSN
Resolution No. 35.615/2011 cannot be accepted by this Panel because they arrived too late.
Panama contends that, by accepting them, we would be affecting its right of defence inasmuch as
within the seven-day period it did not have a proper opportunity to weigh and rebut the arguments
put forward by Argentina or to fully defend its position. Panama also considers that it did not have
the opportunity to discuss these arguments with Argentina and the Panel at any meeting, in
accordance with the principles of due process, procedural immediacy and oral presentation.
576
7.406. We note that Argentina succinctly addressed Panama's claims concerning the inconsistency
of measure 5 with Article XVI:2(a) of the GATS in its first written submission. It then put forward
an additional argument at the Panel's second substantive meeting, and subsequently developed its
argument in response to question No. 76 from the Panel at the second substantive meeting.577
7.407. We also note that Panama had the opportunity to comment on Argentina's response to
Panel question No. 76 at the second substantive meeting and also within the seven-day period
provided in the Panel's timetable. However, Panama opted only to request the Panel to ignore
Argentina's response for reasons of due process. Nor did Panama ask the Panel for additional time
to respond to the argument put forward by Argentina in its response to our question.

574 Argentina's opening statement at the second meeting of the Panel, para. 21 and response to Panel
question No. 76..
575 Argentina's opening statement at the second meeting of the Panel, para. 21 and response to Panel
question No. 76.
576 Panama's comments on Argentina's response to Panel question No. 76 (citing Appellate Body Report,
577 Argentina's response to Panel question No. 76.

7.408. We agree that due process is an essential feature of the WTO's dispute settlement
mechanism.578 This does not mean, however, that Panama's right to due process would be
infringed if we accept Argentina's arguments in response to one of our questions. Although it
would have been preferable for Argentina to submit its arguments relating to the application of
Article XVI:2(a) of the GATS to measure 5 at an earlier stage of the proceedings, Panama had an
opportunity to respond to Argentina's legal arguments concerning the measure in question.
Panama could have commented on those arguments at the second substantive meeting and/or in
its comments on Argentina's responses to the Pane l's questions after the Panel's second meeting.
Panama could also have requested more time in which to comment on these arguments if it had
considered that more time was needed.
7.409. As to the case law and the provisions invoked by Panama – rule 8 of the Working
Procedures for these proceedings and Article 11 of the DSU -, we note that these refer to the
submission of evidence, not legal arguments. Nor do we share Panama's view that "the parties'
arguments should be presented in their written submissions", since such a procedure would reduce
to irrelevance the holding of substantive meetings with the parties, which are an essential part of
panels' working procedures and precisely embody the principles of procedural immediacy and oral
presentation mentioned by Panama.
7.410. In the light of the foregoing, the Panel refuses Panama's request that it should reject
Argentina's arguments in response to Panel question No. 76.
(ii) Whether measure 5 applies to serv ice "suppliers" within the meaning of
Article XVI:2(a) of the GATS
7.411. We continue our analysis by examining whether measure 5 applies to service "suppliers"
within the meaning of Article XVI:2(a) of th e GATS. For this purpose, we shall focus on
determining what is the scope of the concept of service "suppliers" covered by Article XVI:2(a) in
order to be able to decide whether measure 5 is covered by this legal provision.
7.412. We start by looking at the wording of Article XVI:2(a) of the GATS, which provides:
(a) limitations on the number of service su ppliers whether in the form of numerical
quotas, monopolies, exclusive service suppliers or the requirements of an economic
needs test.
7.413. This provision thus refers to limitations on the number of service suppliers. In order to
understand the scope of this provision, we deem it useful to refer to its context and, in particular,
the other subparagraphs of Article XVI:2 of the GATS.
7.414. In addition to subparagraph (a), Article XVI:2 has five other subparagraphs which provide
as follows:
(b) limitations on the total value of service transactions or assets in the form of
numerical quotas or the requirement of an economic needs test;
(c) limitations on the total number of service operations or on the total quantity of
service output expressed in terms of designat ed numerical units in the form of quotas
or the requirement of an economic needs test;
(d) limitations on the total number of natural persons that may be employed in a
particular service sector or that a service supplier may employ and who are necessary
for, and directly related to, the supply of a specific service in the form of numerical
quotas or the requirement of an economic needs test;
(e) measures which restrict or require specific types of legal entity or joint venture
through which a service supplier may supply a service; and

578 In fact, "[d]ue process protection guarantees that the proceedings are conducted with fairness and
impartiality, and that one party is not unfairly disadvantaged with respect to other parties in a dispute." See
Appellate Body Report, US – Continued Suspension, para. 433.

(f) limitations on the participation of foreign capital in terms of maximum
percentage limit on foreign shareholding or the total value of individual or aggregate
foreign investment.
7.415. The chapeau of Article XVI:2 states that the purpose of subparagraphs (a) to (f) is to
define "sectors where market-access commitments are undertaken, the measures which a Member
shall not maintain or adopt …". As indicated by the Appellate Body in US – Gambling:
The chapeau thus contemplates circumstances in which a Member's Schedule
includes a commitment to allow market access, and points out that the function of the
sub-paragraphs in Article XVI:2 is to define certain limitations that are prohibited
unless specifically entered in the Member's Schedule.
579
7.416. If we look at the wording of the first fo ur subparagraphs ((a)-(d)), we see that they share
similar language in that all refer to types of quantitative limitations on market access. Certainly,
only the subject of the limitation changes. In this regard, subparagraph (a), which is the one with
which we are concerned, refers to ""the number of service suppliers", subparagraph (b) to "the
total value of service transactions or assets", subparagraph (c) to "the total number of service
operations or … the total quantity of service output" and subparagraph (d) to "the total number of
natural persons that may be employed in a particul ar service sector or that a service supplier may
employ and who are necessary for, and directly related to, the supply of a specific service".
7.417. The fifth subparagraph, (e), "covers measures which restrict or require specific types of
legal entity or joint venture through which a service supplier may supply a service"; and the sixth
subparagraph, (f), refers to limitations on the participation of foreign capital.
580
7.418. We agree with previous panels that the six types of measure form a closed or exhaustive
list, as indicated in the chapeau of Article XVI:2, by providing that the six measures listed below
"are defined as".
581 The word "definir" (to define) means "[f]ijar con claridad, exactitud y precisión
exactly and precisely the meaning of a word or the nature of a person or thing). In our view, the
list of measures in the six subparagraphs of Article XVI:2 is not only exhaustive but also fulfils the
function of establishing clearly, exactly and precis ely the types of limitation on market access that
are prohibited and hence may not be maintained or adopted in those sectors where a Member had
adopted specific commitments, unless it has specifically mentioned this possibility in its
Schedule.
583 This function is key because it enables Members wishing to undertake specific
commitments on market access, as well as all the other Members, to understand precisely the
scope of such commitments. Bearing in mind that, in sectors where they make specific
commitments, Members have the right to maintain one (or more) of these six limitations provided
that they are inscribed in their Schedules, the function of the list of measures, "to establish clearly,
exactly and precisely", compels Members to define and identify clearly and exactly the scope of
such limitations – and hence the scope of the specific commitment they have made.
7.419. Turning our focus to subparagraphs (a) to (d), which refer to the quantitative limitations
on market access, we note that they explicitly identify the elements to be regulated, namely, "the
number of service suppliers", "the total value of se rvice transactions or assets", "the total number
of service operations or … the total quantity of service output" and "the total number of natural
persons" that may be employed in a service sector or by a service supplier. On its face, the text of

579 Appellate Body Report, US – Gambling, para. 233. (emphasis original)
580 Appellate Body Report, US – Gambling, para. 214. In that Report, the Appellate Body drew a
distinction between the first four subparagraphs and the last two subparagraphs ("The first four
sub-paragraphs concern quantitative limitations on market access; the fifth sub-paragraph covers measures
that restrict or require specific types of legal entity or joint venture through which a service supplier may
supply a service; and the sixth sub-paragraph identifies limitations on the participation of foreign capital.").
581 Panel Reports, China – Publications and Audiovisual Products, para. 7.1353, China – Electronic
582 Diccionario de la Lengua Española, 23rd edition, Real Academia Española (Espasa Calpe, 2014),
Vol. I, p. 716.
583 Regarding the scope of Article XVI:2, see also Panel Report, China – Electronic Payment Services,
para. 7.652 ("Unlike Article XVII, however, the scope of the market access obligation does not extend generally
to 'all measures affecting the supply of services'. Instead, it applies to six carefully defined categories of
measures of a mainly quantitative nature.").

the subparagraphs in question leads us to conclu de that subparagraphs (a) to (d) of Article XVI
only cover those elements which are explicitly mentioned in them. Indeed, even if it were
conceivable that there might be some other el ement distinct from the four identified in
subparagraphs (a) to (d), whose market access could hypothetically be limited quantitatively, such
an element would not form part of the limitations regulated by Article XVI:2 because it was not
identified by the drafters. In this regard, we cons ider that an interpretation of Article XVI:2 which
made it applicable to measures that do not, on their face, regulate any of the four elements
covered by subparagraphs (a) to (d) would unduly broaden the scope of Article XVI of the GATS
and thus the scope of Members' specific commitments.
7.420. One other important element to be borne in mind is that any interpretation of Article XVI:2
of the GATS must give effect to each of the six subparagraphs of the provision. We do not exclude
the possibility that, in practice, a measure whic h regulates, for example, the number of service
operations, within the meaning of subparagraph (c), may have the indirect effect of limiting the
number of service suppliers. Similarly, measures aimed at limiting the total value of transactions
or assets (subparagraph (b)) or the total number of natural persons that may be employed in a
particular service sector (subparagraph (d)) could also have the effect of indirectly limiting the
number of service suppliers. In this regard, it co uld be argued that the limitations covered by
subparagraphs (b), (c) and (d) of Article XVI:2 could in practice result in an indirect limitation on
the number of suppliers even if these measures, on their face, specifically regulate the total value
of assets, the number of operations or the total number of natural persons that may be employed
in a particular sector, respectively. Consequent ly, broadening the scope of subparagraph (a) of
Article XVI:2 to cover measures which, by quantita tively limiting any of the elements regulated by
subparagraphs (b), (c) or (d), indirectly give rise to a quantitative limitation on service suppliers,
would deprive subparagraphs (b, (c) and (d) of an "effet utile". Ultimately, each measure could be
reduced to a limitation on the number of suppliers. We consider that such an interpretation would
run counter to an effective interpretation of the GATS.
7.421. In the light of foregoing, we consider that subparagraphs (a) to (d) of Article XVI:2 cover
measures intended specifically to limit the number or value of "service suppliers" (subparagraph
(a)), "service transactions or assets (subparagraph (b)), "service operations or … the total quantity
of service output (subparagraph (c)) or "natural persons that may be employed in a particular
service sector or that a service supplier may em ploy and who are necessary for, and directly
related to, the supply of a specific service" (subparagraph (d)). Any measure which only has the
indirect effect of limiting any of the elements covered by subparagraphs (a) to (d) would not
therefore be covered by that subparagraph.
584
7.422. Our interpretation of Article XVI:2 is cons istent with the object and purpose of the GATS,
as reflected in its preamble, which confirms Members' intention to liberalize trade in services
"under conditions of transparency and progressive liberalization".
585 At the same time, it
underlines "the right of Members to regulate, and to introduce new regulations, on the supply of
services … in order to meet national policy objectives …". 586
7.423. The preamble confirms that Members wished to liberalize trade in services transparently
and progressively. In those sectors where they have made specific commitments, Members are
authorized to maintain the limitations listed in su bparagraphs (a) to (d) of Article XVI:2, provided
that they have recorded them in their Schedules specifically and transparently. In addition, the
right to regulate is an essential pillar of the progressive liberalization of trade in services which,
according to Article XIX of the GATS "shall take place with due respect for national policy
objectives". Members retain the right to regulate in order to meet their national policy objectives,
subject to the relevant GATS disciplines, Article VI in particular, including in those sectors where
they have made specific commitments under Article XVI of the GATS.

584 We note that in US – Gambling, the Panel considered that measures which referred expressly to
service suppliers also regulated services operations because, according to the Panel, they "effectively"
prohibited the supply of services (see Panel Report, US – Gambling, para. 6.361). For the reasons expressed
earlier, this Panel does not agree with the reasoning of the panel in US – Gambling.
585 Second recital of the GATS.
586 Fourth recital of the GATS.

7.424. On that basis and with a focus on subparagraph (a), the Panel considers that a measure
will be covered by Article XVI:2(a) of the GATS if it regulates "service suppliers" as such, that is,
when the measure is aimed at persons in their capacity as service suppliers.
7.425. Article XXVIII(g) of the GATS defines the term "service supplier" as "any person that
supplies a service". 587 In turn, Article XXVIII(j) of the GATS states that "'person' means either a
natural person or a juridical person". Basing ourselves on these definitions, we consider that
Article XVI:2(a) covers measures whose purpose is to limit the number of persons, natural or
legal, supplying a service.
7.426. We shall now consider whether measure 5 is a measure whose purpose is to limit the
number of natural or legal persons supplying a service. We recall in this connection that point 19
of Annex I to SSN Resolution No. 35.615/2011 specifically provides that:
19. The NATIONAL INSURANCE SUPERVISORY AUTHORITY, by means of a special
reasoned resolution on certain reinsurance transactions duly specified by the
requesting insurer, may allow authorized entities to carry out insurance operations in
the country, enter into reinsurance contracts with foreign reinsurance entities which
conduct their operations from their head office when the magnitude and
characteristics of the ceded risks make it impossible to cover such reinsurance
operations on the national reinsurance market. The request shall be submitted prior to
entering into the contract and shall be accompanied by all the evidence needed to
justify the exception.
7.427. This provision was subsequently developed by Article 4 of SSN Resolution
No. 35.794/2011, which provides as follows:
For the purposes of point 19 of Annex I to SSN Resolution No. 35.615, it is stipulated
that individual risks exceeding US$50,000,000 (FIFTY MILLION UNITED STATES
DOLLARS) may be reinsured with the reinsurance entities mentioned in point 20 of the
aforementioned regulations ("approved reinsurers"), for that portion which exceeds
the aforementioned amount.
7.428. The Panel notes that the text of point 19 of Annex I to SSN Resolution No. 35.615/2011
refers to "… certain reinsurance operations duly specified by the requesting insurer" and to
situations in which it is "… impossible to cover such reinsurance operations on the national
reinsurance market". Article 4 of SSN Resolution No. 35.794/2011, which develops point 19 of
Annex I to SSN Resolution No. 35.615/2011, regulates "individual risks exceeding US$50,000,000
…". On their face, therefore, both provisions regulate "reinsurance operations" or "individual risks",
but do not specifically regulate any natural or legal person supplying reinsurance services (in this
case, from their country of origin). In other words, the provisions cited by Panama do not regulate
reinsurance service suppliers as such, but rather, in any event, the operations which reinsurers
established outside Argentina may conduct with Argentine insurance companies.
7.429. In the light of the foregoing, the Pa nel finds that measure 5 is not covered by
Article XVI:2(a) of the GATS because it does not regulate service suppliers within the meaning of
this provision.
(iii) Whether measure 5 constitutes a limitation on the "number of service
suppliers" within the meaning of Article XVI:2(a) of the GATS
7.430. Having concluded that Article XVI:2(a) of the GATS is not applicable to measure 5 because
it does not regulate service suppliers within the meaning of this provision, the Panel refrains from
examining whether measure 5 constitutes a limitation on the number of suppliers within the
meaning of Article XVI:2(a) of the GATS.

587 A footnote to subparagraph (g) of Article XXVIII of the GATS provides that: "Where the service is not
supplied directly by a juridical person but through other forms of commercial presence such as a branch or a
representative office, the service supplier (i.e. the juridical person) shall, nonetheless, through such presence
be accorded the treatment provided for service suppliers under the Agreement. Such treatment shall be
extended to the presence through which the service is supplied and need not be extended to any other parts of
the supplier located outside the territory where the service is supplied."

7.3.3.2.3.2 Conclusion
7.431. In the light of the foregoing, the Panel dismisses Panama's claim under Article XVI:2(a) of
the GATS because measure 5 (requirements relating to reinsurance services) is not covered by
that provision inasmuch as it does not regulate service suppliers within the meaning of
Article XVI:2(a) of the GATS.
7.3.3.2.4 The question of whether measur e 5 is inconsistent with Article XVI:1
of the GATS
7.432. We shall now examine Panama's claim under Article XVI:1 of the GATS. We recall in this
regard that Panama claims that Argentina accords to foreign suppliers of reinsurance services
treatment less favourable than that specified in its Schedule, inconsistently with Article XVI:1 of
the GATS inasmuch as the limitation on access to Argentina's reinsurance services market via
mode 1, by requiring an economic needs test, is inconsistent with Article XVI:2(a) of the said
Agreement.
588 Argentina responds that measure 5 is not inconsistent with Article XVI:1 of the
GATS because it is not covered by that provision.589
7.433. The Panel notes that Panama only puts forward arguments relating to its claims of
violation of Article XVI:2(a), without developing separate and additional arguments in regard to its
claim under Article XVI:1 of the GATS. In fact, Panama appears to argue that there is a violation of
Article XVI:1 as a consequence of the violation of Article XVI:2 of the GATS.590
7.434. In the absence of a separate argument by Panama concerning the inconsistency of
measure 5 with Article XVI:1, we consider that Panama has not established a prima facie case of
inconsistency in respect of its claim under Article XVI:1 of the GATS.
7.3.3.2.4.2 Conclusion
7.435. In the light of the foregoing, the Panel dismisses Panama's claim under Article XVI:1 of the
GATS in respect of measure 5 (requirements relating to reinsurance services) because Panama has
not established a prima facie case of inconsistency in this regard.
7.3.4 Panama's claims under Article XVII of the GATS
7.3.4.1 Main arguments of the parties
7.3.4.1.1 Panama
7.436. Panama claims that measure 2 (presumption of unjustified increase in wealth), measure 3
(transaction valuation based on transfer prices) and measure 4 (payment received rule for the
allocation of expenditure) are inconsistent with Article XVII of the GATS because they accord
services and service suppliers of non-cooperative countries treatment less favourable than that
accorded by Argentina to its own like services and like service suppliers.
591
7.437. As regards Argentina's commitments under measure 2, Panama claims that Argentina
undertook full national treatment commitments in the sectors of maritime and air transport
insurance, reinsurance and retrocession for the cr oss-border mode of supply (mode 1). As regards
Argentina's commitments in relation to measures 3 and 4, in its first written submission Panama
claims that Argentina undertook full national treatment commitments under the cross-border
supply mode (mode 1) for all sectors in its Schedule of Commitments, except for a series of
financial services.
592 In its second written submission, in connection with measure 3, Panama adds
that Argentina has undertaken full national treatment commitments in these sectors, not only for

588 Panama's second written submission, para. 2.631.
589 Argentina's opening statement at the second meeting of the Panel, para. 21.
590 Panama's first written submission, paras. 4.376, 4.379, 4.381 and 4.382; and second written
submission, para. 2.631.
591 Panama's first written submission, paras. 5.1(b)(ii), 5.1(c)(ii) and 5.1(d)(ii); and second written
submission, paras. 3.1(b)(ii), 3.1(c)(ii) y 3.1(d)(ii).
592 Panama's first written submission, paras. 4.152-4.153, 4.254 and 4.315.

cross-border supply (mode 1), but also for Argentine consumers travelling abroad to receive a
service (mode 2).593
7.438. As to whether the measures affect the relevant modes of supply and service sectors,
Panama argues that measure 2 affects the supply and use of these services, since the presumption
of unjustified increase in wealth affects the amounts of money that the service supplier (the
insurer or reinsurer) pays to the consumer of the service (the insured) in the event of damage or
other circumstances covered by the insurance contract.
594 For measure 3, Panama claims that the
measure affects the "sale" (within the meaning of Article XXVIII(b) of the GATS) of services by
suppliers of non-cooperative countries and, in the light of Article XXVIII(c), the measure affects
the "purchase" or "use" of such services by Arge ntine consumers, both in Argentina (mode 1) and
in the territory of the country in question (mode 2).
595 As regards measure 4, Panama contends
that the measure affects the supply of services which generate revenue of Argentine source
because it has an impact on the perception of the consumer/taxpayer when conducting
transactions with suppliers of a particular origin. It therefore affects the "delivery" of such services
in the terms of Article XXVIII(b) of the GATS, as we ll as the "use" of the services in the terms of
Article XXVIII(c)(i) of the GATS.
596
7.439. As regards the existence of less favourable treatment, Panama argues that measures 2, 3
and 4 accord less favourable treatment to services and service suppliers of non-cooperative
countries in comparison with the treatment accorded to Argentine like services and service
suppliers. In these three cases, the presumption of likeness between national services and/or
service suppliers and foreign services and/or serv ice suppliers is confirmed because the sole basis
for the differential treatment is the origin of the service and/or service supplier. As regards
measure 2, the presumption of likeness is confirmed by the fact that the country of provenance of
the funds is the only triggering element for the pr esumption that the funds in question constitute
an unjustified increase in wealth. In the case of measure 3, Panama explains that it derives from a
regulatory distinction that depends solely on the place of origin or source of the services. Likewise,
measure 4 derives from a regulatory distinction based solely on the place in which the person
receiving the payments, i.e. the service supplier, is located, domiciled and/or incorporated.
597
Panama contends that there is no other criterion differentiating between services and service
suppliers under measures 2, 3 and 4. Accordingly, and in line with previous case law, the likeness
of service suppliers from non-cooperative countries and domestic service suppliers is confirmed.
Panama claims that there are, or may be, service suppliers of non-cooperative countries which are
the same as Argentine service suppliers in every respect except origin.
598
7.440. As regards measure 2, Panama claims that there is treatment less favourable because the
measure imposes a heavier tax burden on consumers of the service, which entails a disincentive to
contract with service suppliers from non-cooperative countries, thereby modifying the conditions of
competition to the detriment of the latter. Accord ing to Panama, the fact that the purchase of
maritime or air transport insurance services and reinsurance or retrocession services offered by
suppliers from non-cooperative countries legally imposes a tax contingency associated with the
presumption of an unjustified increase in weal th, places these services at a disadvantage vis-à-vis
potential Argentine consumers. Given the disparit y of treatment between one and the other type
of service, the consumer's decision will be pr ejudiced against contracting services offered by
service suppliers from non-cooperative countries. According to Panama, one option for the
consumer would be to contract the services offered by suppliers located in Argentina, which would
avoid the presumption of unjustified increase in wealth and, hence, the potential evidentiary and
tax burdens. Panama asserts that the decision taken by the consumer has a direct impact on the
service supplier's opportunities to compete. In such circumstances, Panama considers that the
challenged measure clearly modifies the conditions of competition to the detriment of services and
service suppliers of non-cooperative countries.
599 In Panama's view, the mere risk that the

593 Panama's second written submission, para. 2.433. Panama points out that the following were the
only sectors on which Argentina did not undertake national treatment commitments under mode 2: life,
accident and health insurance services; non-life insurance services and new financial services. See Argentina's
Schedule of Specific Commitments, (Exhibit PAN-19).
594 Panama's first written submission, para. 4.154; and second written submission, para. 2.304.
595 Panama's second written submission, para. 2.434.
596 Panama's second written submission, para. 2.539.
597 Panama's first written submission, paras. 4.157, 4.256 and 4.317.
598 Panama's second written submission, paras. 2.305, 2.435 and 2.540.
599 Panama's first written submission, paras. 4.160-4.167; and second written submission, para. 2.306.

presumption will be applied, irrespective of whether it can be rebutted or not, alters the conditions
of competition to the detriment of like services and service suppliers from non-cooperative
countries. Panama adds that the very design and structure of the measure in question modifies the
conditions of competition in such a way as to accord less favourable treatment to services and
service suppliers of non-cooperative countries.
600
7.441. With regard to measure 3, Panama contends that this measure accords less favourable
treatment to like services and service suppliers of non-cooperative countries in comparison with
like services and service suppliers of Argentine origin because it implies administrative
requirements, economic burdens and significant ta x contingencies, whereas purchasing the same
services from a supplier located in Argentina does not involve the same requirements, economic
burdens and tax contingencies. This implies modification of the conditions of competition between
like services and service suppliers of non-cooperative countries and those of national origin.
601
7.442. Concerning measure 4, Panama claims that the measure accords services and service
suppliers of non-cooperative countries treatment less favourable than that accorded to like
services and service suppliers of national origin. Panama asserts that, for Argentine taxpayers, in
the context of admissible deductions from gains ta x, the purchase of services from persons in
non-cooperative countries involves a problem in managing their accounts and tax matters. The
measure in question imposes the rule for allocation of expenses based on the time at which the
payment of obligations under the service contract is made, instead of the basic principle of accrual
which governs the general accounting of commercial companies in Argentina. This special rule
undermines opportunities for these services to compete in comparison with like services supplied
by domestic service suppliers, whose payments may continue to be allocated on the basis of the
accrual rule. Panama explains that measure 4 may alter the net taxable profit of Argentine
taxpayers, thereby creating a disincentive for Ar gentine companies in their relations with service
suppliers situated in non-cooperative countries. In Panama's opinion, this impairs the ability of
service suppliers from non-cooperative countries to compete on equal terms with like services and
service suppliers of national origin.
602
7.443. Panama alleges that Argentina has submitted its arguments under Articles II:1 and XVII of
the GATS collectively and for all the measures at issue at the same time. According to Panama,
this creates confusion because Panama submitted claims under Article II:1 of the GATS with
regard to the eight measures at issue, but only submitted claims under Article XVII of the GATS in
relation to three specific measures, namely, the presumption of unjustified increase in wealth
(measure 2), the requirement of transaction valuat ion based on transfer prices (measure 3) and
the payment received rule for the allocation of expenditure to the time of payment (measure 4).
603
7.3.4.1.2 Argentina
7.444. Argentina has not presented specific arguments in relation to Article XVII of the GATS. As
regards the questions of "likeness" and "treatment no less favourable", Argentina put forward the
same arguments for Articles II and XVII of the GATS. 604 Accordingly, we refer back to Argentina's
arguments presented in section 7.3.2.1.2 above.
7.3.4.2 Assessment by the Panel
7.3.4.2.1 Introduction
7.445. The question before the Panel is whether measure 2 (presumption of unjustified increase in
wealth), measure 3 (transaction valuation based on transfer prices) and measure 4 (payment

600 Panama's first written submission, paras. 4.168 and 4.169 (referring to Appellate Body Reports,
Thailand – Cigarettes (Philippines), para. 130; and US – Section 211 Appropriations Act, para. 268); and
second written submission, para. 2.307.
601 Panama's first written submission, paras. 4.257 and 4.258; and second written submission,
para. 2.436.
602 Panama's first written submission, para. 4.318; and second written submission, para. 2.541
(referring to its response to Panel question No. 42).
603 Panama's second written submission, para. 2.290.
604 Argentina's first written submission, paras. 147-236; second written submission, paras. 16-51; and
opening statement at the second meeting of the Panel, paras. 2-20.

received rule for the allocation of expenditure) are inconsistent with Article XVII of the GATS. In
response to Panama's claims, Argentina states that its measures are not inconsistent with
Article XVII of the GATS because Panama has not established a prima facie case that the GATS is
applicable to these measures, that the services and service suppliers are like, or that there is
treatment less favourable.
605
7.446. We shall start by examining the wording of Article XVII of the GATS in order to establish
the applicable legal standard. From this perspective, we shall then determine whether measures 2,
3 and 4 violate this provision.
7.3.4.2.2 The relevant legal provision
7.447. Article XVII, entitled "National Treatment", provides as follows:
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.
10
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.
Member to compensate for any inherent competitive disadvantages which result from the foreign
character of the relevant services or service suppliers.
7.3.4.2.3 The legal standard under Article XVII of the GATS
7.448. The Panel recalls that previous panels applied a legal standard consisting of three
requirements in order to determine whether a Member's measure is inconsistent with Article XVII
of the GATS. Those panels considered that, in or der to substantiate a claim that a measure is
inconsistent with Article XVII of the GATS, a complainant must establish a prima facie case with
respect to the following three requirements: (i ) that the respondent has assumed a national
treatment commitment in the relevant sector(s) or mode(s) of supply, taking into account any
conditions and qualifications, or limitations set out in its Schedule of Commitments; (ii) that the
measure in question "affect[s] the supply of services" in the relevant sector(s) and mode(s); and
(iii) that the measure does not accord to the services and service suppliers of any other Member
treatment no less favourable than that accorded by Argentina to its own like services and service
suppliers.
606
7.449. Following the approach taken by those panels, we shall commence by examining whether
Panama has demonstrated that Argentina undertook specific commitments on the services and
modes cited by Panama in respect of measures 2, 3 and 4. Next, we shall determine whether
Panama has demonstrated that measures 2, 3 and 4 "affect […] trade in services" in the sectors
and modes concerned. Lastly, we shall examine whether Panama has demonstrated that
measures 2, 3 and 4 accord services and service suppliers of non-cooperative countries treatment
less favourable than that accorded by Argentina to its own like services and service suppliers.

605 Argentina's first written submission, Sections III, III.A and III.B.
606 Panel Reports, China – Electronic Payment Services, para. 7.641; China – Publications and

7.3.4.2.3.1 First requirement: whether Arge ntina has assumed specific commitments in
the sectors and modes cited by Panama in respect of measures 2, 3 and 4
7.450. We start by examining whether Panama has proved that Argentina made commitments on
national treatment in the relevant sectors and modes in respect of measures 2, 3 and 4, taking
into account any limitations included in its Schedule. We first examine whether Panama has
complied with this first requirement in respect of measure 2.
(a) Whether Argentina has assumed spec ific commitments in the sectors and
modes indicated by Panama in respect of measure 2
7.451. Panama claims that Argentina has assumed specific commitments in respect of measure 2
in relation to (i) maritime and air transport insurance services; and (ii) reinsurance and
retrocession services.
607 The relevant mode of supply in both cases is mode 1. Panama considers
that Argentina made a full national treatment commitment for both sectors because it inscribed
the word "None" in the national treatment column under mode 1. 608 Like Panama, we understand
that Argentina has not denied that it made full specific national treatment commitments in these
two sectors under mode 1.609
7.452. We note that the relevant part of Argentina's Schedule of Commitments 610 lists the
following commitments:
Sector or subsector Limitations on national treatment
- Maritime and air transport
insurance services (CPC 81293)
(1) None
(2) None
(3) None
(4) Unbound, except as indicated in the horizontal section
(c) Reinsurance and retrocession
services (CPC 81299*)
(1) None
(2) None
(3) None
(4) Unbound, except as indicated in the horizontal section
(emphasis added)
7.453. We note that, as indicated by Panama, Argentina has inscribed "None" in its Schedule of
Specific Commitments in the "Limitations on national treatment" column in respect of mode 1
(cross-border supply). We also note that Argentina has inscribed no limitation under mode 1 in the
horizontal section (the so-called "horizontal commitments") of its Schedule of Commitments.
7.454. In section 7.3.3.2.3 above, we indicated that the GATS does not contain a specific
definition of the term "None". Basing ourselves on previous case law, we conclude that, by
inscribing the word "None" in the "Limitations on market access" column, Argentina undertook a
full specific commitment under mode 1 on "Reinsurance services". We thus conclude that
Argentina has undertaken not to maintain any of the six measures included in any of the
subparagraphs of Article XVI:2 and, hence, subparagraph (a) for this mode and this sector. In our
view, when it is inscribed in the national tr eatment column, the word "None" has the same
implications with regard to the national treatment obligation established in Article XVII of the
GATS. That is to say, the word "None" indicates that Argentina has set out no limitations on
national treatment in this mode.
611 As far as the supply of services through mode 1 in the
"Maritime and air transport insurance services" and "Reinsurance and retrocession services"
sectors is concerned, therefore, the notation "N one" in the national treatment column indicates
that Argentina has undertaken to accord full national treatment. Such national treatment extends

607 Panama's first written submission, para. 4.152; and second written submission, paras. 2.302 and
2.303.
608 Panama's first written submission, para. 4.153.
609 Panama's second written submission, para. 2.303.
610 Argentina's Schedule of Specific Commitments, GATS/SC/4, 15 April 1994, (Exhibit PAN-19), p. 12,
and Appendix 1 to this Report.
611 The panel in China – Publications and Audiovisual Products came to the same conclusion regarding
the meaning of the word "None" in the national treatment column. See Panel Report, China – Publications and
Audiovisual Products, paras. 7.951 and 7.1056.

to "all measures affecting the supply of services", which is the scope of Article XVII as defined in
that provision.612
(b) Whether Argentina has assumed specific commitments in the sectors and
modes indicated by Panama in respect of measure 3
7.455. We next examine whether, as Panama claims, Argentina made specific commitments in
respect of measure 3. We note in this connection that, initially, Panama asserted that the relevant
mode of supply affected is "predominantly cross-border trade" (mode 1)
613 in relation to all sectors
in its Schedule of Commitments, except for a series of financial services. 614 Later, in response to a
question from the Panel, Panama clarified that measure 3 "covers and affects" the supply of
cross-border services (mode 1) and the supply of services through consumption in the territory of
other Members (mode 2).615
7.456. Like Panama, we understand that Argentina has not denied that it made specific
commitments in the sectors and modes cited by Panama. 616 In fact, in its first written submission,
Argentina confines itself to indicating that "from [the first] written submission [of Panama] it can
be inferred that Panama considers relevant, at least, the following services and modes of supply",
and refers to modes 1 and 2 in respect of measure 3.617
7.457. We turn to determining whether Argentina has assumed specific commitments in respect
of measure 3 in the modes and sectors claimed by Panama.
7.458. We note in this connection that, in its panel request, in relation to measure 3, Panama
referred to "services or … suppliers domiciled, inco rporated or located in the listed countries …"),
i.e. to services supplied from, and suppliers located in, the territory of another Member. Panama's
panel request therefore potentially covers both mode 1 and mode 2, inasmuch as the common
feature of both these modes is that the service supplier "is not present in the territory of the
Member" which "imports" the service. 618 Consequently, we conclude that modes 1 and 2 are the
relevant modes of supply in respect of measure 3 for the purposes of our examination.
7.459. We next consider whether Panama has identified the sectors in which, in its opinion,
Argentina undertook specific commitments in its Schedule. We note that, in its first written
submission, Panama claims that "except as regards certain specific services in the financial
services sector", Argentina undertook full national treatment commitments" in all the sectors in its
Schedule".
619 Then, referring to Argentina's Schedule of Commitments, in a footnote, Panama lists
those sectors for which Argentina did not assume national treatment commitments in mode 1
instead of listing those for which Argentina did make commitments. The fo llowing are the sectors
listed by Panama:
[L]ife, accident and health insurance services; non-life insurance services; acceptance
of deposits and other repayable funds from the public; lending of all types including
consumer credit, mortgage credit, factoring and financing of commercial transactions;
financial leasing services with a purchase option; payment and money transmission
services; guarantees and commitments; trading on own account or for clients in
money market instruments (cheques, bills, certificates of deposit, etc.), foreign
exchange, derivative products, including, but not limited to, futures and options,
exchange rate and interest rate instrument s, such as swaps, forward interest-rate
agreements, etc., transferable securities and other negotiable instruments and
financial assets, including bullion; participation in issues of all kinds of securities,
including under-writing and placement as agent (whether publicly or privately) and

612 See in this connection Panel Report, China – Electronic Payment Services, para. 7.651.
613 Panama's first written submission, para. 4.254; see also first written submission, para. 4.315.
614 Panama's first written submission, para. 4.254 and footnote 252; and second written submission,
para. 2.433 and footnote 420.
615 See Panama's response to Panel question No. 21; and second written submission, para. 2.433.
616 Panama's second written submission, para. 2.433.
617 Argentina's first written submission, para. 142.
618 See the 1993 Guidelines, (Exhibits PAN-46 / ARG-79), para. 18; and Guidelines for the Scheduling of
Specific Commitments under the General Agreement on Trade in Services (GATS), adopted by the Council for
Trade in Services on 23 March 2001 (2001 Guidelines), S/L/92, (Exhibits PAN-45 / ARG-39), para. 26.
619 Panama's first written submission, para. 4.254.

provision of services related to such issues; money broking; asset management;
settlement and clearing services for financial assets; new financial services.620
7.460. In its second written submission, with regard to measure 3, Panama claims that Argentina
has made full commitments on national treatment for "all sectors in its Schedule in modes 1 and
2". In a footnote, in addition to once again listing the services for which Argentina did not
undertake specific commitments under mode 1, it adds with regard to mode 2 that "the only
sectors in which Argentina did not make national treatment commitments are the following: life,
accident and health insurance services; non-life insurance services; and new financial services".
621
7.461. One question that arises is whether the way in which Panama refers to the sectors in which
it claims that Argentina has undertaken commitments suffices to comply with the requirement to
prove that Argentina has assumed specific commitments within the meaning of Article XVII of the
GATS. Panama did not specify the sectors for which Argentina made national treatment
commitments under modes 1 and 2. Panama opted for a negative enumeration, i.e. a list of the
sectors in which Argentina did not make such commitments. Although in our opinion it would have
been advisable for Panama to identify precisely those sectors for which Argentina did make specific
commitments, we consider that the information provided by Panama is sufficient for Argentina to
understand which sectors are concerned and, ther efore, the scope of Panama's claims under
Article XVII of the GATS. To this must be added the fact that Argentina has not made
any comment in this regard. We therefore accept Panama's negative list for the purposes of
identifying the sectors covered by Argentina's sp ecific commitments on national treatment under
modes 1 and 2.
7.462. Another point to be clarified is whether Panama's claims under Article XVII of the GATS
also cover the commitments on telecommunications which Argentina undertook when ratifying the
fourth Protocol contained in Supplement 1 to Argentina's Schedule. This document "supplements
the section on Telecommunications Services on pages 9 to 11 of document GATS/SC/4".
622 We
note that Panama did not refer to these commitments or to Supplement 1 to Argentina's Schedule,
either in its panel request or in its various submissions. We also note that Argentina makes no
comment in this regard. In addition, this Supplement is not on the record on this case. This leads
us to conclude that Panama's claims under Ar ticle XVII of the GATS do not extend to the
telecommunications commitments contained in this Supplement.
7.463. In the light of the foregoing, with regard to mode 1, we conclude that the relevant services
for which Argentina made a full national treatment commitment include all the services for which
Argentina inscribed the word "None" in that mode. These services include all the sectors listed in
Argentina's Schedule of Commitments
623, except for the telecommunications services included in
Supplement 1 to that Schedule624 and the following sectors:
[L]ife, accident and health insurance services; non-life insurance services; acceptance
of deposits and other repayable funds from the public; lending of all types including
consumer credit, mortgage credit, factoring and financing of commercial transactions;
financial leasing services with a purchase option; payment and money transmission
services; guarantees and commitments; trading on own account or for clients in
money market instruments (cheques, bills, certificates of deposit, etc.), foreign
exchange, derivative products, including, but not limited to, futures and options,
exchange rate and interest rate instrument s, such as swaps, forward interest-rate
agreements, etc., transferable securities and other negotiable instruments and
financial assets, including bullion; participation in issues of all kinds of securities,
including under-writing and placement as agent (whether publicly or privately) and
provision of services related to such issues; money broking; asset management;
settlement and clearing services for financial assets; new financial services.
625

620 Panama's first written submission, para. 4.254, footnote 252.
621 Panama's second written submission, para. 2.433, footnote 420.
622 Argentina's Schedule of Specific Commitments, Supplement 1, GATS/SC/4/Suppl.1, 11 April 1997.
623 See Appendix 1 to this Report.
624 See footnote 622 above.
625 Panama's first written submission, footnote 252; and second written submission, footnote 420.

7.464. As regards mode 2, the relevant services for which Argentina made a full national
treatment commitment include all the services for which Argentina has inscribed the word "None"
in that mode. These include all the services inscribed in Argentina's Schedule of Commitments
626,
except for the telecommunications services included in Supplement 1 to that Schedule 627 and the
following sectors: "Life, accident and health in surance services; non-life insurance services; and
new financial services".628
(c) Whether Argentina has assumed specific commitments in the sectors and
modes indicated by Panama in respect of measure 4
7.465. Panama also claims that Argentina assumed specific commitments in respect of
measure 4. In this connection, Panama asserts that Argentina made full national treatment
commitments under the cross-border mode of suppl y (mode 1) for the vast majority of service
sectors included in its Schedule.
629 This also appears to be Argentina's assessment.630
7.466. We proceed to determine whether Argentina assumed specific commitments in respect of
measure 4 in the mode and sectors claimed by Panama.
7.467. As regards the mode of supply, we note that Panama refers to full commitments ("None")
on national treatment under mode 1 which Argentina has inscribed "in the vast majority of service
sectors included in its Schedule of Commitments".
631 Like Panama, we note that Argentina has not
denied the existence of such commitments.632
7.468. We shall now consider whether Panama has identified the sectors for which, in its opinion,
Argentina made a full commitment ("None") under mode 1 in the "Limitations on national
treatment" column of its Schedule. We note that, as is the case for measure 3, Panama initially
refers to all sectors except for certain financial services. In its second written submission, referring
to Argentina's Schedule of Commitments, in a footnote
633 Panama lists those sectors for which
Argentina did not assume full national treatment commitments in mode 1 instead of listing those
for which Argentina did make commitments. This list of sectors is identical to the sectors not
covered by measure 3. As was the case for measure 3, we accept Panama's negative list for the
purposes of identifying the sectors covered by Argentina's specific commitments on national
treatment under mode 1. For the same reasons that we explained in relation to measure 3, we
a l s o c o n s i d e r t h a t P a n a m a ' s c l a i m s u n d e r A r t i c l e X V I I o f t h e G A T S d o n o t e x t e n d t o t h e
telecommunications commitments contained in Supplement 1 to Argentina's Schedule.
7.469. In the light of the foregoing, with regard to mode 1, we conclude that the relevant services
for which Argentina made a full national treatment commitment include all the services for which
Argentina inscribed the word "None" for that mode. These include all the service sectors inscribed
in Argentina's Schedule of Commitments in document GATS/SC/4
634, except for the
telecommunications services included in Supplement 1 to that Schedule 635 and the following
sectors:
[L]ife, accident and health insurance services; non-life insurance services; acceptance
of deposits and other repayable funds from the public; lending of all types including
consumer credit, mortgage credit, factoring and financing of commercial transactions;
financial leasing services with a purchase option; payment and money transmission
services; guarantees and commitments; trading on own account or for clients in
money market instruments (cheques, bills, certificates of deposit, etc.), foreign
exchange, derivative products, including, but not limited to, futures and options,
exchange rate and interest rate instrument s, such as swaps, forward interest-rate
agreements, etc., transferable securities and other negotiable instruments and

626 See Appendix 1 to this Report.
627 See footnote 622 above.
628 Panama's second written submission, footnote 420.
629 Panama's first written submission, para. 4.315.
630 Argentina's first written submission, para. 142.
631 Panama's second written submission, para. 2.538.
632 Panama's second written submission, para. 2.538.
633 Panama's first written submission, para. 4.315 and footnote 305.
634 See Appendix 1 to this Report.
635 See footnote 622 above.

financial assets, including bullion; participation in issues of all kinds of securities,
including under-writing and placement as agent (whether publicly or privately) and
provision of services related to such issues; money broking; asset management;
settlement and clearing services for financial assets; new financial services.
636
(d) Conclusion
7.470. In the light of the foregoing, the Panel concludes that Panama has proved that Argentina
made specific commitments in the services and modes cited by Panama in respect of measures 2,
3 and 4.
7.471. We continue our analysis with an exam ination of whether Panama has complied with the
second requirement under the legal standard for Article XVII of the GATS, i.e., whether Panama
has proved that measures 2, 3 and 4 "affect trade in services" in the sectors and modes
concerned.
7.3.4.2.3.2 Second requirement: Whether measures 2, 3 and 4 "affect […] the supply of
services" in the sectors and modes concerned
7.472. Panama claims that measures 2, 3 and 4 affect the supply of services under mode 1.
Panama also argues that measure 3 affects the supply of services under mode 2 as well.
637 As we
explained earlier, Argentina did not submit separate additional arguments under Article XVII of the
GATS with respect to whether measures 2, 3 and 4 "affect" the supply of services within the
meaning of that provision. We recall, however, that Argentina has contended that Panama has
failed to make a prima facie case to show that the GATS applies to the eight measures at issue
within the meaning of Article I:1 of the GATS.
638
7.473. We must therefore determine whether, as claimed by Panama, measures 2, 3 and 4 "affect
the supply of services" in the sectors and modes conc erned. To resolve this issue, we consider it
relevant to refer to our findings on the applicatio n of the GATS to the eight measures at issue. In
this connection, we recall that in section 7.3.1.2 of our Report, we found that Panama had proved
that there is "trade in services" and that the eight measures at issue in this dispute "affect" trade
in services within the meaning of Article I:1 of the GATS.
7.474. Although under Article I:1 of the GATS we examined whether the eight measures at issue
(and thus measures 2, 3 and 4) affect "trade" in services, whereas our analysis under Article XVII
of the GATS focuses on whether measures 2, 3 and 4 affect the "supply" of services, we consider
these findings to be relevant because the concepts of "trade in services" and "supply of services"
are closely linked. Indeed, Article I of the GATS en titled "Scope and Definition" in its paragraph 2
defines the concept of "trade in services" as the "supply of a service" through one of the four
modes of supply identified in that provision. If we have found that measures 2, 3 and 4 "affect
trade in services", therefore, the logical conclusion is that they also affect the "supply of services"
in the sectors and modes concerned.
7.475. This is also the position expressed by the parties, which agree that the concept of
measures "affect[ing] the supply of services" within the meaning of Article XVII of the GATS refers
to the trade in services defined in Article I:1 of the GATS.
639
7.476. Consequently, having found in section 7.3.1.2 above that Panama has proved that the
eight measures at issue "affect[…] trade in services" within the meaning of Article I:1 of the GATS,
we conclude that Panama has proved that measures 2, 3 and 4 "affect[…] the supply of services"
within the meaning of Article XVII of the GATS.
7.477. We continue our analysis by examining whether Panama has complied with the third
requirement under the legal standard of Article XVII of the GATS, i.e., whether Panama has proved
that measures 2, 3 and 4 do not accord to se rvices or service suppliers of non-cooperative

636 Panama's first written submission, footnote 252; and second written submission, footnote 420.
637 Panama's first written submission, paras. 4.154, 4.255 and 4.316; and second written submission,
paras. 2.304, 2,434 and 2.539.
638 Argentina's first written submission, paras. 139-146; and second written submission, para. 14.
639 Responses of the parties to Panel question No. 40.

countries treatment no less favourable than that which Argentina accords to its own like services
and like service suppliers.
7.3.4.2.3.3 Third requirement: Whether measur es 2, 3 and 4 do not accord to services
and service suppliers of non-cooperative co untries treatment no less favourable than
that which Argentina accords to its own like services and service suppliers
7.478. Panama claims that measures 2, 3 and 4 accord less favourable treatment to services and
service suppliers of non-cooperative countries in comparison with the treatment accorded to
Argentine like services and service suppliers. According to Panama, in the three cases the
presumption of likeness between Argentine services and/or service suppliers and foreign services
and/or service suppliers has been confirmed because the only basis for differential treatment is the
origin of the service and/or service supplier. Panama contends that measure 2 places a heavier tax
burden on consumers of the service, which enta ils a disincentive to contracting with service
suppliers from non-cooperative countries, thus modifying the conditions of competition to the
detriment of services and service suppliers of non-cooperative countries. Panama also considers
that measure 3 implies administrative requirements, economic burdens and significant tax
contingencies which alter the conditions of competition to the detriment of services and service
suppliers of non-cooperative countries.
640 Lastly, Panama argues that measure 4 creates additional
accounting problems for Argentine taxpayers, depriving services and service suppliers of non-
cooperative countries of opportunities to compete and, impairing equality of opportunities to
compete between them and domestic services and service suppliers.
641
7.479. We recall that Argentina put forward its arguments on the "likeness" of services and
service suppliers and "treatment no less favourable" collectively in relation to Articles II and XVII
of the GATS. We shall therefore refer to section 7.3.2.1.2 above, in which Argentina's arguments
concerning Article II:1 of the GATS are set out.
7.480. In order to examine this third requirement, we must determine whether, as is claimed by
Panama, measures 2, 3 and 4 do not accord services or service suppliers of non-cooperative
countries "treatment no less favourable" than that accorded to Argentine "like services and service
suppliers. We shall start with the question of "likeness" given that, if they are not like, there will be
no need to examine whether Argentina accords se rvices and service suppliers of non-cooperative
countries "treatment no less favourable" than that accorded to Argentine like services and service
suppliers.
(a) Whether the services and service supp liers of non-cooperative countries are
like Argentine services and service suppliers
7.481. We note that both Panama and Argentina consider that their arguments on likeness
developed under Article II are also applicable under Article XVII of the GATS. For example,
Panama maintains that domestic services and service suppliers are like those of non-cooperative
countries because the only basis for differential treatment is the origin of the service and/or
service supplier.
642 Argentina, for its part, argues that the regulatory differences between the
service suppliers being compared are relevant for determining their likeness to the extent that
they affect the way suppliers operate in the market.
643
7.482. We recall that we considered the question of the likeness of services and service suppliers
when we examined Panama's claims under Article II:1 of the GATS. 644 On that occasion, we
concluded that the services and service suppliers of cooperative countries were like the services
and service suppliers of non-cooperative countries.645

640 Panama's first written submission, paras. 4-160-4.169, 4.257 and 4.258; and second written
submission, paras. 2.306 and 2.436.
641 Panama's first written submission, paras. 4.317 and 4.318; and second written submission,
para. 2.541 (referring to its response to Panel question No. 42).
642 Panama's first written submission, paras. 4.157, 4.256 and 4.317; and second written submission,
paras. 2.305, 2.435 and 2.540.
643 Argentina's response to Panel question No. 31.
644 See section 7.3.2.2.3.3 above.
645 See paras. 7.185-7.186 above.

7.483. Unlike our examination under Article II:1 of the GATS, in which the services and service
suppliers being compared were those of cooperative and non-cooperative countries, in the case of
Article XVII of the GATS, the appropriate comparison 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. Panama asks us to confine our comparison to
services and service suppliers of non-cooperative countries and Argentine like services and like
service suppliers.
646 As we indicate below, Argentina, for its part, does not appear to object to this
comparison.
7.484. We note that Article XVII of the GATS obliges Members, in this case, Argentina, to accord
treatment no less favourable to the services and service suppliers "of any other Member". This
comparison does not therefore require a comparison of Argentine services and service suppliers
with the universe of services and service suppliers of all other WTO Members.
7.485. We also note that, for the purposes of this dispute, there are two relevant groups of
Members as a result of applying Decree No. 589/2013, namely, cooperative and non-cooperative
countries. Panama's claims focus on the allegedly less favourable treatment which Argentina
accords solely to services and service suppliers of non-cooperative countries.
7.486. We likewise note that the treatment provided for in the relevant Argentine legislation is the
same for transactions by Argentine taxpayers with Argentine service suppliers and with service
suppliers of cooperative countries. This is because, in both cases, Argentina is able to access tax
information on the service suppliers concerned. Consequently, the rules described in sections
2.4.2.2 and 2.4.2.4 as applying to cooperative co untries in respect of presumption of unjustified
increase in wealth and the allocation of expenditure are those applicable to Argentine taxpayers
with regard to Argentine services and service suppliers. As to the valuation of transactions, there
is no difference in treatment for transactions between Argentine taxpayers and Argentine service
suppliers or those from cooperative countries, provided that they are consistent with normal
arm's-length market practices. In that case, they would not be subject to the special price
determination requirements provided for in Article 15 of the LIG. In this connection, we note that
the treatment provided for in Argentina's legislation with regard to the valuation of transactions is
the same for transactions by Argentine taxpayers with Argentine service suppliers and with service
suppliers of cooperative countries.
7.487. We thus consider that, for the purposes of comparison under Article XVII of the GATS,
Argentine services and service suppliers are subjec t to the same treatment accorded by Argentine
legislation to services and service suppliers from cooperative countries. We understand that
Argentina also agrees that its services and service suppliers would be comparable to services and
service suppliers of cooperative countries as it relates its arguments under Article XVII of the GATS
to its arguments under Article II:1, where we sa w that the comparison was between services and
service suppliers of cooperative countries and those of non-cooperative countries.
647 In connection
with Panama's claims under Article XVII, Argentin a also refers to an argument developed under
Article XIV(c) of the GATS. Argentina refers in particular to the difference between Argentine
domestic services and service suppliers and services and service suppliers of non-cooperative
countries as regards access to information and the exercise of control and supervision by the tax
authorities in enforcing Argentina's tax laws and regulations. The resulting difference in regulatory
treatment finds expression in a similar manner to the difference in treatment governing services
and service suppliers of cooperative and non-cooperative countries for the same purposes.
648
7.488. In the light of the foregoing, having found that services and service suppliers of
cooperative countries are like those of non-cooperative countries, we consider that our likeness
finding under Article II:1 of the GATS can be transposed to the scope of Article XVII of the GATS.

646 Panama's first written submission, paras. 5.1(b)(ii), 5.1(c)(ii) y 5.1(d)(ii); and second written
submission, paras. 3.1(b)(ii), 3.1(c)(ii) y 3.1(d)(ii).
647 For Argentina, "[t]he categories of services and service suppliers are those that originate in
jurisdictions which adhere to the international standards of transparency and effective exchange of tax
information, and those that do not". See Argentina's first written submission, p. 69.
648 Argentina's first written submission, paras. 345-351.

7.489. We thus conclude that Argentine services and service suppliers are like the services and
service suppliers of non-cooperative countries for the purposes of our analysis of Article XVII of the
GATS.
(b) Whether the treatment accorded to services and service suppliers of
non-cooperative countries is "treatment no less favourable" than that accorded to
Argentine like services and service suppliers
7.490. Having made a finding of likeness between the relevant services and service suppliers, we
must now examine whether measures 2, 3 and 4 accord to services and service suppliers of
non-cooperative countries "treatment no less favourable" than that accorded to Argentine like
services and service suppliers.
7.491. We recall that Article XVII:3 of the GATS provides that:
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.
7.492. Accordingly, "[t]his treatment is to be asse ssed in terms of the 'conditions of competition'
between like services and services suppliers".
649
7.493. We note that, like Article II of the GATS, Article XVII of the GATS refers not only to "like
services" but also to "like service suppliers". For the reasons explained above in connection with
our analysis of "treatment no less favourable" under Article II of the GATS
650, we understand that
the reference to service suppliers may also lead the interpreter, depending on the specific
circumstances of each dispute, to take other aspects into account when interpreting "treatment no
less favourable" in the context of Article XVII, 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 XVII of the GATS.
7.494. On the basis of the provisions of Arti cle XVII:3 of the GATS and in the light of our
interpretation of the concept "treatment no le ss favourable" developed under Article II of the
GATS
651, we shall now determine whether measures 2, 3 and 4 stipulate different treatment for
services and service suppliers of non-cooperative countries compared to that accorded to
Argentine like services and service suppliers. Subsequently, we shall examine whether this
treatment is less favourable for like services and service suppliers of non-cooperative countries. In
this connection, it is our understanding that, in order to determine whether treatment is less
favourable, it must be assessed whether the measure modifies the conditions of competition in
favour of Argentine services or service suppliers in comparison with like services or like service
suppliers of non-cooperative countries. Moreover, we consider that, in the present case, such an
assessment has to take into account regulatory aspects concerning the services and service
suppliers that might affect the conditions of competition. We refer, in particular, to the possibility
for Argentina to access tax information on the relevant service suppliers.
(i) Whether the treatment accorded to services and service suppliers of
non-cooperative countries is different to that accorded to Argentine like
services and service suppliers
7.495. As regards whether measures 2, 3 and 4 accord different treatment to services and service
suppliers from non-cooperative countries in comparison with that accorded to Argentine like

649 Panel Report, China – Publications and Audiovisual Products, para. 7.978. See also Panel Report,
650 See section 7.3.2.2.3.4 above.
651 We recall that the Appellate Body exercised caution concerning the direct transposition to Article II of
the GATS of all interpretations developed under Article XVII. Nevertheless, we consider the context provided by
Article II:1 to be useful as the Appellate Body has transposed interpretations developed under Article XVII to
Article II of the GATS. See Appellate Body Report, EC – Bananas III, para. 231.

services and service suppliers, we consider that our findings of different treatment under
Article II:1 of the GATS also apply under Article XVII of the GATS. As we have already indicated,
the reason for this is that the treatment accorded by Argentina to Argentine services and service
suppliers is the same as that accorded to services and service suppliers of cooperative countries.
We recall our conclusions in this regard below.
7.496. As regards measure 2, in section 7.3.2.2.3.4 above
652, we concluded that Argentina
accords different treatment to like services and service suppliers of cooperative and
non-cooperative countries inasmuch as the entry of funds from one or the other country will have
different consequences for Argentine taxpayers when determining the tax base for gains tax.
Whereas when funds enter from cooperative countries, the AFIP will apply the general rule of
self-assessment of the taxable subject matter, only resorting to ex officio determination when the
taxpayer has not submitted a sworn declaration or wh en this is challengeable; in the case of funds
entering from non-cooperative countries, the AFIP will automatically determine the taxable subject
matter ex officio, applying the presumption of unjustified increase in wealth. Likewise, we
concluded that the fact that this presumption may be rebutted by the taxpayer does not affect the
fact that the treatment Argentina accords to like services and service suppliers of cooperative and
non-cooperative countries is different. In the case before us, when an Argentine taxpayer receives
funds from an Argentine service supplier, the AFIP will apply the general rule of self-assessment of
the taxable subject matter (as in the case of the entry of funds from cooperative countries),
resorting to ex officio assessment only if the taxpayer has not presented a sworn declaration or
this is challengeable.
7.497. With regard to measure 3, in section 7.3.2.2.3.4 above
653, we concluded that Argentina
accords different treatment to like services and service suppliers of cooperative and
non-cooperative countries inasmuch as the rules in Article 15 of the LIG are always applied,
provided that one of the parties is from a non- cooperative country, whereas these rules will only
be applied to transactions with service suppliers from cooperative countries if the terms and
conditions of such transactions are not in line with normal arm's-length market practices. The rule
does not thus envisage that transactions between Argentine taxpayers and persons from
non-cooperative countries might be in line with normal arm's-length market practices, and
presumes in every case that they are related. On the other hand, in transactions between
Argentine taxpayers and Argentine service suppliers, it will be considered that these are consistent
with normal arm's-length market practices.
7.498. As far as measure 4 is concerned, in section 7.3.2.2.3.4 above
654, we concluded that
Argentina accords different treatment to like services and service suppliers from cooperative and
non-cooperative countries because, although it is true that the payment received rule is not
exclusively restricted to the allocation of expe nses by the Argentine taxpayer, which constitute
income from an Argentine source for persons located, incorporated, based or domiciled in
non-cooperative countries655, we note differences of criterion in the Argentine rule. This is because
Argentine taxpayers are not permitted to allocate expenses which constitute income for persons in
non-cooperative countries on the basis of the accrual rule, irrespective of whether the Argentine
taxpayer and the person receiving the income of Argentine source are related. However, in cases
of allocation of expenses constituting income for persons in cooperative countries, the Argentine
taxpayer may apply the accrual rule, provided that there is no relationship between the taxpayer
and the foreign person to which the income accrues. Likewise, when an Argentine taxpayer
allocates expenses which constitute income for Argentine persons (service suppliers), the taxpayer
may apply the accrual rule, provided that there is no rela tionship between the taxpayer and the
person receiving the income.
7.499. We therefore conclude 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.

652 See paras. 7.240-7.243 above.
653 See paras. 7.244-7.248 above.
654 See paras. 7.249-7.252 above.
655 For example, Article 18 of the LIG itself, in its last paragraph, provides that the payment made rule
shall also apply to cases of "outlays by local companies which result in profits of Argentine source for foreign
persons or entities with which these companies are related". See the Gains Tax Law, (Exhibits PAN-4 /
ARG-42).

(ii) Whether the treatment accorded to services and service suppliers of
non-cooperative countries is "treatment no less favourable" than that accorded to
Argentine like services and service suppliers
7.500. Concerning whether the treatment accorded to services and service suppliers of
non-cooperative countries is "treatment no less favourable" than that accorded to Argentine like
services and service suppliers, we also consider that there are aspects of the analysis we
developed under Article II:1 which are applicable under Article XVII of the GATS. As we indicated
when addressing the question of different treatm ent, the reason is that Argentina accords the
same treatment to Argentine services and service suppliers as that accorded to those from
cooperative countries. We recall in this connection that the treatment in question "is to be
assessed in terms of the 'conditions of competition' between like services and service suppliers".
656
7.501. In this connection, it is useful to recall that, in the case of measure 2, our preliminary
conclusion of treatment less favourable under Article II:1 results from the fact that Argentine
taxpayers who contract services with suppliers of non-cooperative countries and who wish to
justify the entry of funds earned from obtaining su ch services have to bear an additional burden,
namely to rebut the presumption of unjustified increase in wealth.
657 This burden is not imposed
automatically when the transaction is conducte d between Argentine taxpayers, i.e., when an
Argentine taxpayer receives funds from an Argentine service supplier.658
7.502. In the case of measure 3, we consider that application of the transfer pricing regime for
the valuation of transactions, irrespective of whether or not there is a relationship between the
parties to the transaction, implies higher costs for those Argentine taxpayers that engage in
transactions with service suppliers of non-cooperative countries. Such costs do not have to be
incurred if the transaction is between an Argentine taxpayer and an Argentine service supplier.
659
7.503. In the case of measure 4, we consider that the time difference in the deduction of
expenditure, which has an effect in terms of reduced value of the expenditure deducted, as well as
the possible additional costs caused by more complex accounting as a result of simultaneously
applying two rules for the allocation of expenditure, would lead us to the preliminary conclusion
that the treatment accorded to services and serv ice suppliers of non-cooperative countries is less
favourable than that accorded to Argentine like services and service suppliers, inasmuch as, in the
latter case, Argentine taxpayers do not have to incur those additional costs when obtaining
services from Argentine service suppliers.
660
7.504. Referring back to our findings in connection with Article II:1 of the GATS, therefore, we
consider 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.
7.505. As in our analysis under Article II:1 of the GATS, we also consider that there is one
important factor that cannot be ignored in any analysis of no less favourable treatment under
Article XVII of the GATS and which has a direct im pact on the supply of services in the Argentine
market and may modify the conditions of competition in that market. This factor is the regulatory
framework which allows the Argentine authorities access to tax information on foreign service

656 Panel Report, China – Publications and Audiovisual Products, para. 7.978. See also Panel Report,
657 See para. 7.300 above.
658 We recall that there is a presumption concerning unjustified increases in wealth which the AFIP may
apply in order to estimate the taxable subject matter ex officio in cases of transactions between Argentine
taxpayers or between an Argentine taxpayer and a service supplier from a cooperative country. This
presumption is provided for in Article 18(f) of the LPT. See section 2.4.2.2 above.
659 We point out that Article 33 of the LPT on verification and supervision empowers the AFIP to require
taxpayers to keep supporting documents needed for verification of the taxpayer's tax situation, such as
accounts ledgers or special registers, vouchers and any other documents concerning the taxpayers' operations,
etc. This Article also provides that all accounting entries must be backed up by the corresponding proof. See
the Law on Tax Procedure, (Exhibits PAN-9 / ARG-45).
660 See para. 7.318 above. We point out that, although the accrual rule is the general rule for allocating
income and expenditure and applies to expenditure under transactions between Argentine taxpayers or
between an Argentine taxpayer and a person from a cooperative country, Article 18 of the LIG provides that, in
certain cases, expenditure is not allocated to the fiscal year in which it was accrued.

suppliers. Unlike our analysis under Article II:1, which, by its nature, called for a comparison of
MFN treatment, there is an important aspect to be examined in relation to measures 2, 3 and 4
(and the other measures challenged by Panama) under Article II:1 but which we do not consider
applies to examination of "treatment no less favourable" under Article XVII. We refer to the
distortions caused by the design and operation of measures 2, 3 and 4 pursuant to Decree
No. 589/2013 with regard to the granting of cooperative status to jurisdictions which have not
signed a tax information exchange agreement and the discretionary authority governing the
updating of the list of cooperative countries.
7.506. We recall in this connection that Argentina considers that according service suppliers
different treatment is a direct result of access or no access to tax information.
661 What we
observed in our analysis under Article II:1 of the GATS is that countries in a similar situation as
regards Argentina's access to tax information on their service suppliers do not fall into the same
category. For example, Panama and Hong Kong (China) have not signed a tax information
exchange agreement with Argentina, and yet Panama is considered cooperative and Hong Kong
(China) is considered non-cooperative. We also observed that countries classified in the same
category find themselves in different situations as far as Argentina's access to tax information is
concerned. By way of example, we mentioned th e case of Panama and Germany. Both countries
appear on the list of cooperative countries, although Germany has signed a tax information
exchange agreement with Argentina and Panama has not.
7.507. We do not see that Decree No. 589/2013 cr eates such distortions when comparing service
suppliers from cooperative countries and Argentine service suppliers. In this case, Argentina has
access to tax information on its taxpayers, which include its service suppliers, whereas it has no
access to tax information on suppliers from non-cooperative countries.
7.508. In any event, after concluding that th e distortions in the design and operation of
measures 2, 3 and 4 noted under Article II:1 of the GATS are not relevant in the context of
Article XVII of the GATS, we consider it appropriat e to pursue our analysis in order to ascertain
whether our preliminary conclusions on less favourable treatment are confirmed after examining
the impact on competitive conditions of the possibility for Argentina to access tax information on
service suppliers.
7.509. The first point to be highlighted in this respect is that both Panama and Argentina
acknowledge that lack of tax transparency (caused by failure to exchange tax information) has an
impact on the conditions of competition in which Argentine service suppliers and service suppliers
of non-cooperative countries operate in the Argentine market. Indeed, in its commitment to
accepting the principles of "Transparency" and "Effective exchange of tax information", Panama
states that "it considers essential that implemen tation of the initiative proposed by the OECD
guarantee fairness and non-discrimination among all countries and jurisdictions … with which the
Republic of Panama competes substantially on international markets in supplying international
services, especially financial and business services".
662 Argentina, for its part, refers in particular
to the fact that measures 2, 3 and 4, like the other measures at issue, are "essential tools for
equalizing the conditions of competition on the international market for financial and other
services".
663 This idea of equalizing the conditions of competition is also mentioned by Panama in a
letter to the Secretary-General of the OECD, which st ates that "the principles of transparency and
the exchange of effective information … should be developed within parameters of fairness and
non-discrimination; in other words, a 'level playing field'".
664 We find support for Argentina's
statement concerning the importance of access to tax information in order to equalize the
conditions of competition in many documents of the G-20 and the OECD. For example, in 2000, we

661 See para. 7.140 above. Although Argentina puts this argument forward in relation to the comparison
between service suppliers from cooperative and non-cooperative countries, we consider that the reason given
to justify the different treatment (access to tax information) is equally valid for the comparison between
Argentine service suppliers and those from non-cooperative countries. See Argentina's second written
submission, para. 76. See also first written submission, para. 125 and responses to Panel questions Nos. 49
and 71.
662 Note from Panama's Minister of the Economy and Finance to the Secretary-General of the OECD,
15 April 2002, (Exhibit ARG-8), para. 4.
663 Argentina's first written submission, para. 10.
664 Note from Panama's Minister of the Economy and Finance to the Secretary-General of the OECD,
15 April 2002, (Exhibit ARG-8), last paragraph.

see that the OECD emphasized the role of defensive measures in neutralizing the competitive
advantages derived from the lack of transparency in certain non-cooperative jurisdictions.665
7.510. In this connection, in a 2004 report, the Global Forum explained that the objective of the
global level playing field was to achieve high standards of transparency and exchange of
information so as to allow fair and equitable competition among all countries:
In developing proposals, the members of the Sub-Group [delegated to make
recommendations to the Global Forum on the occasion of the Berlin Global Forum in
June 2004] were guided by the objective of the global level playing field: to achieve
high standards of transparency and information exchange in a way that is fair,
equitable and permits fair competition between all countries, large and small,
OECD and non-OECD.
666
7.511. According to the OECD, in its 2009 document entitled " Towards a level playing field" , all
countries should comply with these standards so that competition among them takes place on the
basis of legitimate commercial considerations rather than on the basis of lack of transparency or
effective exchange of information:
All countries, regardless of their tax systems, should meet such standards so that
competition takes place on the basis of legitimate commercial considerations rather
than on the basis of lack of transparency or the lack of effective exchange of
information. A decade on since the Global Forum's establishment, the goal of a level
playing field is both closer and more relevant than ever.
667
7.512. Another more recent example can be found in a 2013 report on erosion of the tax base
and the transfer of company profits, in which the OECD explains that:
Every jurisdiction is free to set up its corporate tax system as it chooses. States have
the sovereignty to implement tax measures that raise revenues to pay for the
expenditures they deem necessary. An impo rtant challenge relates to the need to
ensure that tax does not produce unintended and distortive effects on cross-border
trade and investment nor that it distorts competition and investment within each
country by disadvantaging domestic player s. In a globalised world where economies
are increasingly integrated, domestic tax systems designed in isolation are often not
aligned with each other, thus creating r oom for mismatches. As already mentioned,
these mismatches may result in double taxation and may also result in double
non-taxation. In other words, these mismatches may in effect make income disappear
for tax purposes. This leads to a reduction of the overall tax paid by all parties
involved as a whole. Although it is often difficult to determine which of the countries
involved has lost tax revenue, it is clear that collectively the countries concerned lose
tax revenue. Further, this undermines competition, as some businesses, such as those
which operate cross-border and have access to sophisticated tax expertise, may profit
from these opportunities and have unintended competitive advantages compared with
other business, such as small and medium-sized enterprises, that operate mostly at
the domestic level.
668 (emphasis added)

665 Argentina's first written submission, paras. 40 and 41 (referring to the OECD Report, Towards Global
Tax Co-operation - Report to the 2000 Ministerial Council Meeting and Recommendations by the Committee on
Fiscal Affairs, OECD 2000, (Exhibit ARG-6), pp. 5 and 6, available at
http://www.oecd.org/tax/transparency/44430257.pdf (exhibit provided in English; Spanish text available at
http://www.ief.es/recursos/publicaciones/libros/informes_OCDE.aspx).
666 International Trade and Investment Organization (ITIO), Leveling the playing field, OECD Global Tax
Forum, Melbourne, 15-16 November 2005 (referring to para. 3 of the Report, which was adopted at the Berlin
Global Forum in June 2004), (Exhibit ARG-94), p. 4.
667 OECD, Tax Cooperation 2009 – Towards a level playing field, 2009, (Exhibit ARG-41), p. 9 (exhibit
provided in English; Spanish translation by the WTO Secretariat).
668 OECD, Addressing base erosion and profit shifting, (Exhibit ARG-22), p. 39, available at
http://www.oecd.org/tax/addressing-base-erosion-and-profit-shifting-9789264192744-en.htm (exhibit
provided in English; Spanish text available at: http://www.oecd-ilibrary.org/taxation/abordando-la-erosion-de-

7.513. Another key concept linking the regulatory element we are examining under "treatment no
less favourable" to the conditions of competition is the expression "harmful tax competition". In
our view, the use of this expression in the competent international fora (in the OECD it has been in
use since the mid-1990s 669) highlights the obvious link between access to tax information (tax
transparency) and the conditions of competition.
7.514. Thus, 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 favourable treatment into "treatment no less favourable". In other words, whether
the exchange of tax information means that measur es 2, 3 and 4 do not modify the conditions of
competition in favour of Argentine services and service suppliers in comparison with like services
and like service suppliers of non-cooperative countries.
7.515. 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"
670 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.
7.516. In connection with the idea of "competitive advantage" expressed in the preceding
paragraph, we note that the text of Article XVII:3 of the GATS states that, in order for "treatment
no less favourable" to exist, the measure must not modify the conditions of competition in favour
of the services or service suppliers of the Member (in this case, Argentina). Previously, when
interpreting the expression "treatment no less favourable" under Article II:1 of the GATS, we
examined the ordinary meaning of the word " favorable" (favourable) and found that "favorable"
671, and that "favorecer" has been defined as "[ d]ar o hacer
un favor " (give or do a favour), "favour" (favour) being understood to mean " honra, beneficio,
gracia" [honour, benefit or kindness]. 672 We therefore understand that Article XVII:3 of the GATS
refers to any modification of the conditions of competition which "favours" Argentine services or
service suppliers or which consists of any type of "favour" for such services and service suppliers.
In our view, taking into account the implications for the conditions of competition resulting from
the absence of tax transparency referred to in numerous statements and reports by the OECD and
the G-20, we do not consider that measures 2, 3 and 4 "favour" or grant any type of "favour" to
Argentine services and service suppliers in comparison with like services and like service suppliers
of non-cooperative countries, as explained below.
7.517. As we explained above, measure 2 consists of the 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.
673 This presumption may be rebutted provided
that "it is conclusively proved that [the entries of funds] originated from activities actually carried
out by the taxpayer or by a third party in those countries or from placements of duly declared
funds". We do not see how a presumption that can be rebutted by proving that the transaction
effectively took place can modify the conditions of competition in favour of Argentine services and
service suppliers because Argentine taxpayers are ab le to free themselves of this burden. We also
recall that, in Article 18(f) of the LPT, there is a presumption of unjustified increase in wealth

669 OECD, Harmful Tax Competition – An Emerging Global Issue, 1998, (Exhibit ARG-5).
670 Term used by the OECD in its Report entitled Addressing base erosion and profit shifting,
(Exhibit ARG-22), p. 39, available at http://www.oecd.org/tax/addressing-base-erosion-and-profit-shifting-
9789264192744-en.htm (exhibit provided in English; Spanish text available at: http://www.oecd-
beneficios_9789264201224-es)
671 Diccionario de la Lengua Española, 23rd edition, Real Academia Española (Espasa Calpe, 2014),
Vol. I, p. 1015.
672 Diccionario de la Lengua Española, 23rd edition, Real Academia Española (Espasa Calpe, 2014),
Vol. I, p. 1015.
673 Argentina applies this measure pursuant to the unnumbered article added after Article 18 of the LPT,
(Exhibits PAN-9 / ARG-45).

which applies to Argentine taxpayers working with Argentine suppliers. Accordingly, the concept of
unjustified increase in wealth is not a tool used exclusively by the Argentine authorities in respect
of non-cooperative jurisdictions, but is in the form of an instrument used to respond to the
existence of certain situations which the Argentine authorities perceive to be a risk for the tax
collection system, with the lack of tax transparency being the trigger in the case of transactions
between Argentine taxpayers and service suppliers of non-cooperative countries. It does not
appear to us to be a measure that gives domestic service suppliers a competitive advantage.
7.518. In the case of measure 3 we do not think either that the application of a different method
for valuing transactions (based on transfer prices) modifies the conditions of competition in favour
of Argentine services and service suppliers.
674 First of all, because the objective of applying the
transfer pricing regime to the valuation of transactions is to determine the market value of the
transaction and not to distort it artificially to the benefit or detriment of one of the parties to the
transaction. To this must be added the fact that there are other situations in which the Argentine
authorities perceive a risk to the tax collection system and prescribe application of this method to
transactions involving Argentine suppliers and those from cooperative countries. In this
connection, as a general rule, the first paragraph of Article 15 of the LIG provides that "[w]hen the
type of operations or the organizational procedures of the companies make it impossible to
determine exactly the income of Argent ine source, the FEDERAL PUBLIC REVENUE
ADMINISTRATION, an autonomous body within the MINISTRY OF THE ECONOMY AND PUBLIC
WORKS AND SERVICES may determine the net taxa ble income by using averages, indices or
coefficients established for this purpose on the basis of the performance of independent companies
engaged in the same or similar activities".
675 We thus see a response to a risk and not the granting
of an advantage to domestic suppliers.
7.519. As regards measure 4, consisting of application of the payment received rule when
allocating expenditure for transactions between Argentine taxpayers and persons of
non-cooperative countries676, we have already indicated that in every case the Argentine taxpayer
may deduct expenses, the main difference being the time at which the deduction is made. We do
not therefore think that the measure results in modification of the conditions of competition in
favour of Argentine services and service suppliers in comparison with those of non-cooperative
countries since in both cases the deduction is made. The difference in treatment reflects the risk
perceived by Argentina to its tax collection system as a result of the lack of tax transparency.
7.520. We find the context afforded by Article III of the GATT 1994 to be particularly relevant; it
contains the same obligation provided for in Article XVII (national treatment). In Japan – Alcoholic
Beverages II, the Appellate Body explained that "Article III protects expectations … of the equal
competitive relationship between imported and domestic products".
677 In Canada – Publications ,
the Appellate Body reiterated that "[t]he fundamental purpose of Article III of the GATT 1994 is to
ensure equality of competitive conditions between imported and like domestic products". 678 We
consider that, as is the case for Article III of th e GATT 1994, 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.
7.521. In our view, measures 2, 3 and 4 are desi gned 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. We agree with the opinion expressed
in other international fora such as the OECD and the G-20 on the effect of harmful tax practices on
the conditions of competition. It is precisely these effects on the conditions of competition caused
by the lack of tax transparency which prompted these fora to envisage the adoption of defensive
measures whose objective is not to place domestic services and service suppliers in a more
advantageous position but rather to address risks caused by the lack of tax transparency in their
respective markets. Consequently, we do not consider that measures 2, 3 and 4 modify the
conditions of competition in favour of Argentine like services and service suppliers.

674 Argentina applies this measure pursuant to Article 15.2 of the LIG, (Exhibits PAN-4 / ARG-42).
675 Gains Tax Law, (Exhibits PAN-4 / ARG-42).
676 Argentina applies this measure pursuant to the last paragraph of Article 18 of the LIG,
(Exhibits PAN-4 / ARG-42).
677 Appellate Body Report, Japan – Alcoholic Beverages II, p. 15.
678 Appellate Body Report, Canada – Periodicals, p. 17.

(c) Conclusion
7.522. In the light of the foregoing, the Panel concludes that Panama has not proved 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.
7.3.4.2.4 Conclusion
7.523. Having concluded, in the first place, that Panama has proved that Argentina made specific
commitments on the services and modes cited by Pa nama in respect of measures 2, 3 and 4, we
went on to conclude that Panama has proved that measures 2, 3 and 4 "affect[..] the supply of
services" within the meaning of Article XVII of the GATS.
7.524. We have also concluded that Panama has proved that Argentine services and service
suppliers are like services and service suppliers of non-cooperative countries for the purposes of
our analysis of Article XVII of the GATS. Lastly, we have concluded that Panama has not proved
that measures 2, 3 and 4 do not accord services and service suppliers of non-cooperative countries
"treatment no less favourable" than that accorded to Argentine "like services and service
suppliers".
7.525. In the light of the foregoing, we find th at measure 2 (presumption of unjustified increase
in wealth), measure 3 (transaction valuation based on transfer prices) and measure 4 (payment
received rule for the allocation of expenditure) are not inconsistent with Article XVII of the GATS
because they accord to services and service supp liers of non-cooperative countries treatment no
less favourable than the treatment accorded to Argentine like services or like service suppliers, in
respect of the relevant services and modes on which Argentina undertook specific commitments.
7.3.5 Argentina's defence under Article XIV(c) of the GATS
7.3.5.1 Main arguments of the parties
7.3.5.1.1 Argentina
7.526. In the event that the Panel finds that six of the eight measures (measures 1 to 4, 7 and 8)
are inconsistent with the GATS provisions cited by Panama, Argentina invokes the exception in
Article XIV(c) of the GATS.
7.527. Specifically, Argentina contends that its defensive tax measures are "necessary to secure
compliance" with Argentina's tax laws and regulations within the meaning of Article XIV(c) of the
GATS, including the "prevention of deceptive and fraudulent practices" (subparagraph (i))
commonly associated with transactions with non-cooperative tax jurisdictions. Argentina maintains
that it has followed the recommendations of the OECD's Global Forum in establishing a
comprehensive regulatory framework to address the risks posed by harmful tax competition to the
integrity and stability of its tax system. Argentina argues that measures such as the withholding
tax on payments of interest or remuneration (measure 1), the presumption of unjustified increase
in wealth (measure 2), transaction valuation based on transfer prices (measure 3), the payment
received rule for the allocation of expendit ure (measure 4) and the requirements for the
registration of branches (measure 7) are widely accepted in the Global Forum's initiative as
appropriate regulatory responses to address the ha rmful effects of tax jurisdictions which do not
cooperate in the collection of taxes and compliance with the tax laws of third parties.
679
7.528. In response to Panama's second written submission, Argentina argues that it is not obliged
to prove that the measures in question refer to "the prevention of deceptive and fraudulent
practices" under Article XIV(c)(i) of the GATS beca use the list of measures in subparagraphs (i) to
(iii) of Article XIV(c) is illustrative. Accordingly, in its opinion, any measure intended to secure

679 Argentina's first written submission, paras. 244-248 (referring to OECD, Harmful Tax Competition –
An Emerging Global Issue, OECD, 1998, (Exhibit ARG-5), and OECD, OECD's Project on Harmful Tax Practices,
The 2004 Progress Report, (Exhibit ARG-9), available at http://www.oecd.org/tax/harmful/30901115.pdf
(exhibit provided in English; Spanish text available at
http://www.ief.es/recursos/publicaciones/libros/informes_OCDE.aspx).

compliance with laws and regulations consistent with the GATS may be justified pursuant to
Article XIV(c), irrespective of whether or not it is covered by subparagraphs (i)-(iii).680
7.529. Argentina claims that in transactions with non-cooperative jurisdictions it is not possible for
Argentina's authorities to determine who are the real beneficiaries of the profits of entities located
in those jurisdictions. Nor is it possible for the Argentine authorities to determine the real value of
the transaction and independently to obtain access to any other information relevant to
establishing whether a particular transaction involving the participation of such jurisdictions has
been conducted for a legitimate purpose or whether it is fraudulent or deceptive in the sense that
its only purpose is to evade taxes in Argentina. According to Argentina, similar risks do not arise in
respect of transactions involving jurisdictions that have concluded information exchange
agreements with Argentina's tax authorities because, in such cases, the AFIP has independent
access to information on the beneficial owner of the legal persons located in the cooperative
jurisdiction, as well as information enabling it to determine the transaction value of operations with
such jurisdictions.
681
7.530. Argentina claims that all models for tax agreements, whether those of the United Nations
or the OECD, include a provision enabling the tax authorities to exchange information. In
Argentina's opinion, this is recognition that a country's ability to enforce its own tax laws is greater
when there is effective exchange of information.
682 Argentina contends that a financial centre
which decides not to adopt high standards of transparency and effective exchange of information
should not be permitted to benefit from that decision.
683
7.531. Argentina claims that its defensive tax measures (measures 1, 2, 3, 4 and 7) were adopted
in order to secure compliance with laws and regulations which are in themselves consistent with
the GATS and are similar to the tax measures widely adopted by WTO Members. Argentina's
legislation on the determination and imposition of income tax secures compliance with the Gains
Tax Law (LIG). The additional information requirements for setting up branches of foreign
companies in Buenos Aires secure compliance with Article 118.3 of the Law on Commercial
Companies (LSC) and Article 188 of IGJ Resolution No. 7/2005.
684 The requirement of
authorization for the repatriation of investment (measure 8) is designed to secure compliance with
Articles 20, 20 bis and 21 of Law No. 25.246 on Concealment and Laundering of Money of Criminal
Origin in Argentina.685
7.532. At the second meeting of the Panel, Argent ina reiterated that measures 1, 2, 3 and 4 are
designed to secure compliance with the LIG in the case of income which Argentina has determined
to be taxable. Argentina argues that Articles 1, 2, 5, 17, 80, 91, 92, 127, 129 and 130 of the LIG
establish rules which determine the earnings subject to taxation in Argentina, and Argentina's
defensive tax measures are intended to secure compliance with these. Measures 1, 2, 3 and 4 are
therefore designed to secure compliance with th e aforementioned articles of the LIG, which
operate in a regulatory framework that includes this Law and the regulations thereto, the
administration and implementation of which are necessarily linked to the body of rules which also
includes the LPT (Articles 33, 38, 39, 45 and 46 in particular) and the Criminal Tax Law (Articles 1,
2 and 6 in particular) and is based on the constituti onal principles enshrined in Articles 4, 16, 17
and 75.2 of the National Constitution of the Argentine Republic. Argentina reiterates that
measure 7 is designed to secure compliance with Article 118.3 of the LSC and Article 188 of IGJ

680 Argentina's opening statement at the second meeting of the Panel, para. 29.
681 Argentina's first written submission, paras. 249-253.
682 Argentina's first written submission, para. 254 (citing OECD, OECD's Project on Harmful Tax
Practices, The 2001 Progress Report, (Exhibit ARG-7), available at
http://www/oecd.org/ctp/harmful/2664450.pdf (exhibit provided in English; Spanish text available at
http://www.ief.es/recursos/publicaciones/libros/informes_OCDE.aspx)).
683 Argentina's first written submission, para. 255 (citing OECD, OECD's Project on Harmful Tax
Practices, The 2001 Progress Report, (Exhibit ARG-7), available at
http://www/oecd.org/ctp/harmful/2664450.pdf (exhibit provided in English; Spanish text available at
http://www.ief.es/recursos/publicaciones/libros/informes_OCDE.aspx)).
684 Argentina's first written submission, paras. 264-267.
685 Argentina's first written submission, paras. 334-338.

Resolution No. 7/2005, and measure 8 to secure compliance with Articles 20, 20 bis and 21 of Law
No. 25.246 on Concealment and Laundering of Money of Criminal Origin in Argentina.686
7.533. Argentina claims that it has explained the "circumstances and problems" which led to the
adoption of the measures at issue, and has su bmitted substantial evidence on the types of
transaction between Argentine taxpayers and non-cooperative jurisdictions which result in the
artificial erosion of the tax base in Argentina.687
7.534. Argentina argues that its defensive tax measures are "necessary" to secure compliance
with its tax laws and regulations. According to Argentina, the defensive tax measures 1, 2, 3, 4
and 7 considerably lessen the risks of tax evasion, tax avoidance and fraud as they eliminate the
possible tax benefits which Argentine taxpayers would gain from the simulation of transactions
with related companies based in non-cooperative countries, conducted exclusively for the purpose
of avoiding the payment of tax in Argentina. Such tax measures constitute a "global strategy" to
address the risks posed by the harmful tax practices of non-cooperative countries. Argentina
argues that the defensive tax measures at issue adequately serve to make an important
contribution to securing compliance with Argentina's tax laws and rules, and are designed
individually or in an overall policy context to address the risks posed by harmful tax practices.
688
Measure 8 is needed to secure compliance with the laws and regulations preventing concealment
and laundering of money of criminal origin and makes an important contribution to the objective of
securing compliance with these laws and regulations as it is in line with international standards on
the prevention of money laundering adopted within the FATF framework.
689
7.535. Argentina argues that the objective of prot ecting its tax collection system against the risks
posed by the harmful tax practices of non-cooperative countries is an interest of the utmost
importance. Argentina claims that, in the past , both panels and the Appellate Body have
recognized the importance of the fight agains t tax evasion and of guaranteeing the proper
implementation of tax laws and regulations. 690 Argentina argues that the degree of importance of
protecting the collection of tax revenue and application of Argentina's tax system against the risks
caused by the harmful tax practices of non-cooperative countries has been confirmed by the Global
Forum's work. According to Argentina, Panama recognized the importance of the fight against the
effects of harmful tax practices when it acceded to the OECD's Global Forum on tax matters and
made a commitment to the principles of transparency and effective exchange of tax information.
691
Argentina also claims that the objective of preven tion against the risks posed by the laundering of
money of criminal origin is an interest of the utmost importance.692
7.536. Argentina claims that its defensive tax measures are not excessively restrictive on trade in
financial services by service suppliers from non-cooperative countries inasmuch as they do not
prohibit these suppliers from providing services in Argentina. Rather, the defensive tax measures
at issue generally reflect the application of pres umptions in order to determine the tax base for
transactions with entities located in non-cooperative countries. In most cases, the Argentine
taxpayer can rebut these presumptions by furnishing the necessary information. 693 Argentina
claims that measure 8 is the least trade-restrictive measure for the purposes of securing
compliance with the obligations imposed by Argentine law to combat the risks posed by the

686 Argentina's second written submission, paras. 71 and 72; and opening statement at the second
meeting of the Panel, paras. 26 and 27.
687 Argentina's opening statement at the second meeting of the Panel, para. 28 (referring to Federal
Administration of Public Revenue, Offshore Companies – Fraudulent Manoeuvres and Harmful Tax Planning,
2013, Exhibit ARG-44).
688 Argentina's first written submission, paras. 276, 287 and 288; second written submission, para. 73;
and opening statement at the second meeting of the Panel, paras. 31 and 32.
689 Argentina's first written submission, paras. 328, 334-338.
690 Argentina's first written submission, paras. 289-292 (citing Appellate Body Report, Dominican
Republic – Import and Sale of Cigarettes, para. 7.215; and Panel Report, Argentina – Hides and Leather,
para. 11.307).
691 Argentina's first written submission, paras. 293 and 294 (citing the OECD Report, Towards Global
Tax Co-operation, Report to the 2000 Ministerial Council Meeting and Recommendations by the Committee on
Fiscal Affairs, OECD 2000, (Exhibit ARG-6), available at http://www.oecd.org/tax/transparency/44430257.pdf
(exhibit provided in English; Spanish text available at
http://www.ief.es/recursos/publicaciones/libros/informes_OCDE.aspx); and Note from Panama’s Minister of the
Economy and Finance to the Secretary-General of the OECD, 15 April 2002, (Exhibit ARG-8).
692 Argentina's first written submission, para. 339.
693 Argentina's first written submission, paras. 297 and 298.

laundering of money of criminal origin. Argentina argues that measure 8 neither prevents nor
discourages the establishment of branches of companies incorporated in non-cooperative countries
but makes repatriation of their direct investments subject to verification of the "transparency of
the operation". According to Argentina, the measure does not impede the supply of services which
a company may provide.
694
7.537. Argentina argues that it is Panama's responsibility to present WTO-consistent measures
that are "reasonably available" alternatives to the defensive tax measures challenged in this
dispute. According to Argentina, any alternative to the defensive tax measures in question must
not be prohibitively expensive as the Argentine authorities have limited resources with which to
secure compliance with tax legislation.
695 Likewise, any alternative measure proposed by Panama
must ensure at least the same level of protec tion against the risks posed by fraudulent tax
practices as that afforded by the defensive tax measures being challenged. According to Argentina,
the conclusion of agreements on mutual exchange of information is the internationally established
means of addressing this type of situation an d is reasonably available to the counterpart.
Argentina considers that measures of a corrective nature do not, a priori , ensure that level of
protection.
696 Argentina claims that Panama has not even suggested an alternative measure and,
when it attempts to do so, the alternative suggested consists of withdrawing the measure
challenged.697
7.538. Argentina argues that its defensive tax measures are applied in accordance with the
chapeau of Article XIV(c) of the GATS. Argentina asserts that the distinction made by Argentina's
defensive tax measures between service suppliers of cooperative and non-cooperative countries
cannot be seen as "arbitrary" or unjustifiable" sinc e these two categories of supplier pose different
levels of risk for compliance with Argentina's tax legislation. In addition, Argentina contends that
the differences between cooperative and non-cooperative countries reflected in Argentina's
defensive tax measures are based on internationally recognized rules of the Global Forum and the
OECD, to which Panama has made a commitment, and they can therefore hardly be considered
"arbitrary or unjustifiable". Argentina claims that, when Panama joined the Global Forum, Panama
asked its fellow members in the Forum to apply a coordinated scheme of defensive tax measures
to all jurisdictions which do not adhere to the standards on transparency and effective exchange of
tax information. Argentina contends that that is precisely what it is doing through the measures at
issue in this dispute.
698
7.539. Argentina also claims that the reason for the distinction between cooperative and
non-cooperative countries in Decree No. 589/2013 concerns Argentina's ability to access the
information needed to secure compliance with its laws and regulations. Accordingly, if a country
has concluded an agreement on effective exchange of tax information with Argentina or has
started negotiations for this purpose, Argentina considers that there is little risk that it will not be
able to have access to the information needed to determine whether the transaction in question
reflects legitimate commercial purposes. According to Argentina, in most cases, the possibility of
initiating negotiations acts as a sufficient incentive to encourage the conclusion of this type of
agreement. Consequently, from the point of view of the risk that the Argentine authorities will not
have access to the information needed to secure compliance with Argentina's laws and regulations,
these two categories of country are undoubtedly not in a similar situation.
699 Argentina thus
considers that its capacity to designate as cooperative those countries that have participated in
good faith in negotiations aimed at signing an agreement on exchange of tax information reflecting
the standards of the Global Forum is not equivalent to an arbitrary or unjustifiable distinction,
since it neither impairs nor is contrary to Argentina's objective of securing compliance with its
legislation.
700
7.540. Argentina argues that, if this Panel finds that Panama has established a violation of
Article XVII of the GATS, Argentina's defensive tax measures challenged by Panama as regards
national treatment under Article XVII of the GATS (measures 2, 3 and 4) are "necessary to secure

694 Argentina's first written submission, paras. 342 and 343.
695 Argentina's first written submission, paras. 308-312 (referring to Appellate Body Report, Brazil –
Retreaded Tyres, para. 171; and Panel Report, Argentina – Hides and Leather, para. [11.305]).
696 Argentina's first written submission, paras. 313 and 314; and second written submission, para. 74.
697 Argentina's opening statement at the second meeting of the Panel, para. 35.
698 Argentina's first written submission, paras. 315-326.
699 Argentina's second written submission, paras. 75-77; and response to Panel question No. 49.
700 Argentina's opening statement at the second meeting of the Panel, para. 36.

compliance" with Argentina's tax laws and regulations within the meaning of Article XIV(c) of the
GATS, including the "prevention of deceptive and fraudulent practices" commonly associated with
transactions with non-cooperative tax jurisdictions. Argentina considers that it has shown that its
defensive measures (measures 1, 2, 3, 4, 7 and 8) are justified under Article XIV(c) of the GATS
and are applied consistently with its chapeau. Argentina argues that this proof and the reasons set
forth also pertain to Panama's claims on national treatment. This is because the difference that
exists between Argentine services and service suppliers and the services and service suppliers of
non-cooperative countries as regards access to information and exercise of control and supervision
by the tax authorities in order to secure compliance with Argentina's tax laws and regulations (and
the resulting difference in regulatory treatment) manifests itself in a way similar to the difference
between services and service suppliers of cooper ative and non-cooperative countries for the same
purposes.
701
7.541. According to Argentina, nothing in the text of Article XIV(c) of the GATS require s a
defending Member to invoke this defence separa t e l y f o r e a c h c l a i m o f v i o l a t i o n m a d e b y t h e
complaining Member, and in China – Auto Parts the panel suggested nothing to the contrary.
Argentina contends that Panama's reference to the China – Auto Parts dispute is out of place
because in that dispute the panel, in substance, considered whether China had proved that its
measures were needed to secure compliance with laws and regulations within the meaning of that
provision, despite having criticized China's collective presentation of arguments.702
7.3.5.1.2 Panama
7.542. Panama argues that Argentina put forward a common defence in relation to a series of
measures, without justifying each of them individually. Panama contends, in particular, that
Argentina submitted a single defence based on Article XIV(c)(i) of the GATS in respect of
measures 1 to 4 and considers that, in its collective defence, Argentina has combined arguments
concerning the violation of Article II:1 and Article XVII of the GATS on some of the four measures
taken together. Panama claims that in China – Auto Parts, the presentation of a combined defence
relating to different violations of WTO law led the panel to question the defence's validity. In the
present case, Panama considers that this lack of clarity not only affects its ability to understand
Argentina's defence clearly, but also the Panel's assessment, and even the effective participation
of third parties.
703
7.543. According to Panama, Argentina is not seeking compliance with its domestic law but rather
an international policy objective, namely, the conclusion of a maximum number of information
exchange agreements so as to expand the AFIP's prerogatives. In Panama's opinion, Argentina is
using its domestic law as a means of exerting pressure on non-cooperative countries. Panama
contends that by attacking the so-called "harmful tax practices" of non-cooperative countries,
Argentina is trying to make these countries align themselves with standards applied by Argentina
in its international relations with other countries. According to Panama, the requirement of this
type of "compliance" is not covered by Article XIV(c)(i) of the GATS.
704
7.544. Panama claims that, even if the purpose of the measures were to secure compliance with
the rules of domestic law, Argentina does not identify the specific obligation(s) with which these
measures allegedly seek to secure compliance and also fails to explain how the various measures
in question have been designed as compliance mechanisms. According to Panama, Argentina does
not specify which situations of non-compliance led to the introduction of the measures and does
not describe what type of unlawful practices or conduct violating domestic law it is sought to
combat with each of the measures in question. Panama claims that Argentina does not explain
how less favourable treatment in tax and administrative matters can lead to effective compliance
with its legislation.
705

701 Argentina's first written submission, paras. 345-351.
702 Argentina's second written submission, paras. 66-70 (citing Panel Report, China – Auto Parts,
para. 7.285).
703 Panama's opening statement at the first meeting of the Panel, para. 48 (citing Panel Report, China –
Auto Parts, para. 7.287); and second written submission, paras. 2.169-2.171 and 2.310-2.311.
704 Panama's opening statement at the first meeting of the Panel, para. 49.
705 Panama's opening statement at the first meeting of the Panel, paras. 50 and 51.

7.545. Panama considers that there are alternative mechanisms that can be used to secure
compliance with Argentine law in a less trade-restrictive manner without entailing the
discrimination and inconsistency of the measures in question. According to Panama, there is no
reason why the instances of fraud involving Argentine taxpayers differ depending on the
counterpart's location. Panama claims that the so-called information exchange agreements could
be effective in adopting corrective measures ex post but in no way prevent fraud ex ante . In
Panama's opinion, trying to justify measures which seek the disclosure of registers and individual
accounts of a confidential nature is contrary to the spirit of Article XIV(c)(ii) of the GATS, which
precisely seeks to protect such confidential information.
706
7.546. Panama argues that Argentina's explanation of how the measures in question secure
compliance with laws and regulations which in themselves are not inconsistent with the GATS is
insufficient and flawed.707
7.547. As regards the identification of laws or regulations that are not inconsistent with the GATS,
Panama argues that, in its first written submission, Argentina made only a general reference to the
LIG without citing any specific provision. Accord ing to Panama, this means that any regulatory
instrument other than the LIG lies outside the Panel's remit and Argentina cannot present new
evidence regarding this matter.
708 Panama claims that Argentina has not proved that the LIG is a
law "relating to the prevention of deceptive an d fraudulent practices" within the meaning of
Article XIV(c)(i) of the GATS. Panama asserts that the LIG establishes the gains tax and all the
components needed to apply it, so it is not a law "relating to the prevention of deceptive and
fraudulent practices". According to Panama, Argentina is pursuing diverse tax or economic policy
o b j e c t i v e s o r i s a t t e m p t i n g t o f o l l o w r e c o m m e n d a t i o n s o r c o n s i d e r a t i o n s s u g g e s t e d i n a n
international standard; according to Panama, this is not in keeping with the purpose protected by
Article XIV(c)(i) of the GATS.
709
7.548. Panama contends that a mere reference to a law or regulation is not sufficient. According
to Panama, Argentina should have identified specific provisions or obligations of the LIG on the
prevention of deceptive or fraudulent practices. Panama argues that there is no LIG provision
linked to the prevention of practices which might in any way resemble practices that are the
subject of Argentina's concern (the so-called self-loans, the transmittal and entry of funds from
non-cooperative countries, transaction valuation based on transfer prices, or the allocation of
expenditure to the time of payment).
710 Panama also argues that the relevant provision of the law
or regulation with which it is sought to achieve compliance through the measure cannot be the
same rule which gives purpose to the measure in question, as this would result in a circular
justification.
711
7.549. With regard to measures 1 to 4, Panama has stated its opposition to Argentina's attempt
during the second meeting of the Panel to rectify its inappropriate invocation of Article XIV(c)(i) of
the GATS. According to Panama, the inclusion of numerous provisions, not only from the LIG but
also from other Argentine regulations and even its National Constitution, broadens the scope of its
defence and affects Panama's procedural rights. Panama considers that Argentina has not even
explained how the measures in question are intended to secure compliance with each and every
one of the new provisions invoked.
712
7.550. As regards measure 7, Panama argues that Argentina's mere assertions regarding the laws
or regulations with which Article 192 of IGJ Resolution No. 7/2005 seeks to secure compliance do
not equate to proof.
713 Concerning measure 8, Panama argues that the domestic rules and
regulations which form part of the defending Member's national legal order cannot be international
rules. Consequently, Argentina's argument that its measure is necessary in order to secure

706 Panama's opening statement at the first meeting of the Panel, para. 52.
707 Panama's second written submission, para. 2.178.
708 Panama's second written submission, paras. 2.179 and 2.180.
709 Panama's second written submission, paras. 2.181-2.184, 2.319-2.322, 2.326, 2.445-2.446, 2.449,
2.549, 2.552, 2.753, 2.800 and 2.802.
710 Panama's second written submission, paras. 2.186-2.192, 2.323-2.324, 2.447, 2.550, 2.552
and 2.801.
711 Panama's second written submission, para. 2.551.
712 Panama's closing statement at the second meeting of the Panel, para. 5.
713 Panama's second written submission, paras. 2.751 and 2.752.

compliance with international standards of transparency is without foundation under
Article XIV(c)(i) of the GATS.714
7.551. Panama argues that Argentina has not proved that the LIG is consistent with the GATS. It
considers that the LIG is in itself inconsistent with the GATS, particularly with Articles II and XVII,
as can be seen from Panama's numerous claims.715 According to Panama, Argentina has also failed
to explain how Articles 118 of Law No. 19.550 on Commercial Companies and 188 of IGJ
Resolution No. 7/2005 are consistent with the GATS.
716 In the case of measure 8, Argentina has
not explained why Law No. 25.246 on Concealment and Laundering of Money of Criminal Origin
should be considered consistent with the GATS.717
7.552. Panama argues that Argentina has not shown how measures 1 to 4 secure compliance with
the LIG. Panama alleges that, without having determined the specific LIG provision with which the
measure in question seeks to secure compliance, it is not possible to assess to what degree the
measure is intended to achieve this purpose. 718 According to Panama, Argentina does not
satisfactorily explain the circumstances which led to introduction of the measure. 719 Panama
alleges that Argentina's concern focuses on a very special situation in the case of measures 1 to 4
and that the scope of each of these four me asures goes beyond the concern in question. 720 As
regards measures 7 and 8, Panama claims that Argentina did not present any argument to show
that these measures are intended to secure compliance with the laws and regulations cited by
Argentina.721
7.553. Regarding measures 1 to 4, Panama argues that the level of contribution of each measure
should be determined according to the objective it is sought to achieve, namely, compliance with
the LIG. As it has not been shown that the practices mentioned violate any specific provision of the
LIG, and thus no specific objective has been established for achieving compliance with measures 1
to 4, it is not possible to assess whether these measures make a contribution with regard to a
compliance objective not identified by Argentina. Panama concludes, therefore, that Argentina has
not been able validly to establish that measures 1 to 4 make a material contribution to an
objective of compliance with the LIG.
722
7.554. Concerning measure 7, Panama recalls that Argentina argues that discrimination in the
registration of branches makes an important contribution to compliance with Argentina's tax
legislation, but does not explain how requesting additional information only from companies of
non-cooperative countries helps to secure compliance with Articles 118 of the LSC and 188 of IGJ
Resolution No. 7/2005, which apply to all companies, irrespective of their origin. Nor does
Argentina indicate how the measure contributes to ensuring that branches of companies from
cooperative countries "have a legitimate commercial purpose" and are not "mere vehicles for
simulated transactions".
723 A s t o m e a s u r e 8 , P a n a m a c l a i m s t h a t A r g e n t i n a o n l y c i t e s t h r e e
provisions of Law No. 25.246 on Concealment and Laundering of Money of Criminal Origin and
does not explain how imposing the requiremen t of prior authorization from the BCRA for
repatriation to non-cooperative countries helps to secure compliance.724
7.555. With regard to measures 1 to 4 and 7, Panama clarifies that it does not contest the value
placed by Argentina on protecting its tax collecti on system against the risks posed by harmful tax
practices on the part of non-cooperative jurisdictions. However, Panama considers that there are
other interests of prime importance such as that of observing the rule of law in tax matters.
Panama argues that, whereas Argentina's interest in collecting taxes is of the utmost importance,
it has to be interpreted in conjunction with the interest of the Argentine citizen, resident or
economic operator who trusts that tax measures will fall within the parameters of strict compliance

714 Panama's second written submission, para. 2.800.
715 Panama's second written submission, paras. 2.197-2.198, 2.329, 2.451 and 2.554.
716 Panama's second written submission, para. 2.754.
717 Panama's second written submission, para. 2.802.
718 Panama's second written submission, paras. 2.200-2.201, 2.330, 2.224, 2.452 and 2.555.
719 Panama's second written submission, para. 2.330.
720 Panama's second written submission para. 2.204. Panama put forward the same argument with
721 Panama's second written submission, paras. 2.755 and 2.802.
722 Panama's second written submission, paras. 2.211, 2.337, 2.456 and 2.559.
723 Panama's second written submission, para. 2.759.
724 Panama's second written submission, para. 2.803.

with the law and tax equality. According to Panama, protecting Argentine citizens and taxpayers is
of the utmost importance, especially in view of the issues of a criminal nature related to the AFIP's
utilization of private information. 725 In the case of measure 8, Panama claims that Argentina has
not identified the interest protected.726
7.556. Panama argues that measures 1 to 4 have an impact on transactions that are not the
subject of Argentina's concern and these measures , therefore, go beyond what is necessary to
meet Argentina's concerns.727 Panama adds that, as far as measure 1 is concerned, the irrefutable
nature of the presumption has no raison d'être when it can be shown that the transaction is not an
"insider loan" or was conducted at arm's length.728 As to measure 7, Panama claims that Argentina
confines itself to observing that Article 192 of IGJ Resolution No. 7/2005 "does not prohibit the
establishment of branches of companies incorporated in {} non-cooperative jurisdictions in Buenos
Aires", as if that alone proved that the measure is not restrictive. In Panama's opinion, the fact
that a prohibition is a measure still more restrictive than that contained in Article 192 of IGJ
Resolution No. 7/2005 does not lessen the fact that the imposition of additional registration
requirements on companies from non-cooperative countries restricts and impedes such companies'
capacity to establish a commercial presence in the city of Buenos Aires.
729 As regards measure 8,
Panama contends that no type of evidence accompanies Argentina's statements that the foreign
exchange measure is the least trade-restrictive measure.730
7.557. In connection with measure 1, Panama argues that the discriminatory withholding tax
should not apply to transactions where it is cert ain that the borrower and the lender are not "the
same person" according to the "insider loan" criteria clearly established by law. Even in
transactions between related persons, there is no reason to apply discriminatory withholding if it
can be shown that the transactions genuinely reflect actual conditions in the market. In this
respect, in Panama's opinion, there is no reason for the presumption to be irrefutable. Panama
considers that, in the case of related persons which have not been able to prove that the
transactions reflect actual conditions in the market, Argentina has at its disposal the transfer
pricing regime under Article 15 of the LIG (except for its second paragraph) and other relevant
provisions of the RIG, which would enable prices similar to market prices to be established.
731
7.558. As far as measures 2, 3 and 4 are concerned, Panama argues that Argentina could and
should have adopted a measure solely intended to assuage Argentina's specific concern and not
one which has restrictive effects on perfectly legal transactions that do not fit the scenario that
preoccupies Argentina.
732
7.559. Panama claims that there is an alternative measure less restrictive than measure 7.
According to Panama, Argentina itself argues in its first written submission that "companies
incorporated in jurisdictions 'not cooperating for tax transparency purposes' are required to
provide the same documents as those incorporated in jurisdictions cooperating for tax
transparency purposes" and asserts that the requirement in Article 192 of IGJ Resolution
No. 7/2005 for companies of non-cooperative countries "is equivalent to the requirements
provided for in Article 188" of IGJ Resolution No. 7/2005. Panama contends that, if this is the case,
Article 192 of IGJ Resolution No. 7/2005 is totally superfluous. According to Panama, eliminating
this discriminatory provision, which targets only companies from non-cooperative countries, would
be a less restrictive alternative and would not be prohibitively costly.
733
7.560. Panama argues that, even allowing that measures 1 to 4, 7 and 8 could be justified
provisionally under Article XIV(c) of the GATS , they constitute a means of arbitrary and
unjustifiable discrimination between countries that are in similar situations for the purposes of tax
transparency and exchange of information. Panama claims that the more favourable treatment

725 Panama's second written submission, paras. 2.222-2.225, 2.341-2.343, 2.461-2.462, 2.561, 2.760
and 2.761.
726 Panama's second written submission, para. 2.803.
727 Panama's second written submission, paras, 2.218, 2.339-2.340, 2.458-2.460 and 2.560.
728 Panama's second written submission, paras. 2.219 and 2.220.
729 Panama's second written submission, para. 2.758.
730 Panama's second written submission, para. 2.803.
731 Panama's second written submission, paras. 2.226-2.228.
732 Panama's second written submission, paras. 2.344, 2.463 and 2.562.
733 Argentina's second written submission, para. 2.762 (referring to Argentina's first written submission,
paras. 614 and 616).

accorded by Argentina is based on the list of countries cooperating with Argentina. By exclusion,
the less favourable treatment accorded by Argentina concerns all those jurisdictions that are not
on this list and that are described as "non-cooperative" for the same purposes. Panama notes that
the distinction between countries based on cooperation with Argentina is unilateral, discretionary
and political; it disregards criteria developed in international fora, prejudges certain countries, and
ignores their individual efforts aimed at greater tax transparency and cooperation in exchanging
information.
7.561. In response to Argentina's argument that, in distinguishing between cooperative and
non-cooperative countries, Argentina is promoting universal adoption of the Global Forum's
standards, Panama states that, in fact, Argentina disregards in part the findings of the Global
Forum with respect to the situation of various countries as regards compliance with tax
transparency and exchange of information standards. Panama asserts, for example, that Argentina
excludes from the "cooperative countries" category jurisdictions such as Bahrain and Hong Kong
(China) which, in the opinion of the Global Forum itself, are in the same situation as Argentina
with regard to tax transparency and exchange of information. Moreover, Argentina includes in the
list of "cooperative countries" jurisdictions which, in the opinion of the Global Forum, do not meet
the institution's basic standards in that regard.
7.562. According to Panama, the criterion for being considered a cooperative country, which
relates to the initiation of negotiations with Argentina with a view to concluding an agreement on
exchange of information, is unrelated to the exis tence of actual conditions in the other country
which facilitate transparency and exchange of in formation with Argentina. In Panama's view, the
desire to negotiate does not imply that the country in question has a legal, administrative, tax,
banking confidential information protection framework, which makes cooperation possible.
7.563. Panama stresses what it regards as the arbitrariness of the rule on initiation of
negotiations, stating that the opening of such negotiations is subject to Argentina's discretion and
there is no established procedure in its regulations enabling non-cooperative countries to initiate
negotiations with a view to their inclusion in the list of cooperative countries. Further, Panama
points out that the regulations also do not dete rmine the intervals at which the list is to be
updated.
734
7.564. Panama also argues that, even if the restriction were provisionally justified under
Article XIV(c)(i) of the GATS, measures 1 to 4 constitute a disguised restriction on trade in
services because their scope is broader than that relating to the concern that gave rise to the
measure.735
7.565. Panama argues additionally that, even if the Panel were to conclude that measure 8 is
provisionally justified under Article XIV(c)(i) of the GATS, Argentina has failed to demonstrate that
the measure is applied in conformity with the chapeau of that article. Panama wishes to emphasize
that, in its first written submission, Argentina did not put forward any argument on the chapeau of
Article XIV in relation to the measure concerning repatriation of investment. Panama claims that,
in any case, in its view, the Argentine measure on repatriation of investment is applied in a way
which "constitute[s] a means of arbitrary or unjustifiable discrimination between countries where
like conditions prevail", inconsistently with the chapeau of Article XIV(c)(i) of the GATS.
7.566. Panama shares the concern expressed by the European Union regarding the discretionary
authority with which Argentina designates countries as "cooperative for tax transparency
purposes" and considers that this raises the question of whether the Argentine measures are really
applied in conformity with the chapeau of Articl e XIV(c)(i) of the GATS. Panama claims that the
"effective exchange of information" referred to by Argentina may not occur even when the service
suppliers are from cooperative countries, since the mere initiation of negotiations with Argentina
does not guarantee the existence of the instruments needed to ensure the effective receipt of
information. Panama contends that Argentina itself has recognized that it considers as cooperative
18 countries with which it has initiated negotiations and with which no agreement on exchange of
information is in force.

734 Panama's second written submission, paras. 2.230-2.236, 2.345, 2.464, 2.563 and 2.764.
735 Panama's second written submission, paras. 2.237, 2.346, 2.465 and 2.564.

7.567. According to Panama, measure 8 imposes th e requirement of prior authorization from the
BCRA on companies from non-cooperative countries (for example, Egypt and Oman), with which
the effective exchange of information is just as absent as with countries deemed cooperative with
which Argentina has not yet signed any agreement guaranteeing such exchange (for example, El
Salvador, Honduras and the Philippines). Panama points out that Argentina is not consistent in
drawing up its list, since countries which have not initiated negotiations with Argentina are
included in the list of cooperative countries (this being the case for Panama), while countries which
have allegedly initiated negotiations with Argentina will continue to be regarded as
non-cooperative while waiting for Argentina to update its list (for example, Cyprus or Hong Kong
(China)).
736
7.3.5.2 Assessment by the Panel
7.3.5.2.1 Introduction
7.568. The issue placed before the Panel is whether, as Argentina claims, measure 1 (withholding
tax on payments of interest or remuneration), me asure 2 (presumption of unjustified increase in
wealth), measure 3 (transaction valuation based on transfer prices), measure 4 (payment received
rule for the allocation of expenditure), measure 7 (requirements for the registration of branches)
and measure 8 (foreign exchange authorization requirement) are covered by the exception in
Article XIV(c) of the GATS, "including its subparagraph (i)". 737 In response, Panama not only calls
into question this coverage, but also the validi ty of the alleged "colle ctive" or "combined"
presentation of Argentina's defence under Articl e X I V ( c ) o f t h e G A T S w i t h r e g a r d t o t h e s i x
measures.
7.569. We start by examining the two preliminar y questions relating to the defence put forward
by Argentina under Article XIV(c) of the GATS.
7.3.5.2.2 Preliminary questions relating to the defence put forward by Argentina
7.3.5.2.2.1 The question of whether the wa y in which Argentina presents its defence
under Article XIV(c) of the GATS is admissible
7.570. Panama asks us to reject Argentina's defence under Article XIV(c) of the GATS in relation
to the six measures concerned because it was pres ented as a "combined" or "collective" defence
"without trying to justify each of them individually". 738 Panama claims that, faced with a similar
situation in which the respondent had presented a general defence with respect to various
violations of WTO law, the panel in China – Auto Parts indicated that "[i]t is not for the Panel to
advance or presume specific arguments or analysis for a claim made by a party to the dispute".
Panama urges us to follow the same reasoning as the panel in China – Auto Parts and asserts that,
because of its general nature and lack of precision, we should dismiss Argentina's defence under
Article XIV(c) of the GATS. According to Panama, an objective assessment of the matter under
Article 11 of the DSU implies in this case refraining from "presum[ing] specific arguments or
analysis" which Argentina did not present. Panama argues that, given the uncertainty of its
collective arguments and bearing in mind that Arge ntina has the burden of proving the merits of
the justification it claims, we have no option but to find that the measures in question cannot be
justified under Article XIV(c) of the GATS.
739
7.571. Argentina responds that Panama's reference to China – Auto Parts is out of place because,
despite criticism of the way in which China presented its arguments, the panel in that dispute
assessed, in substance, whether China had shown that its measures met the requirements of
Article XX(d) of the GATT 1994. Moreover, Argentin a explains, the criticism of China by the panel
in that dispute was exclusively concerned with the fact that the underlying measures with which
China allegedly secured compliance were different, depending on whether the Panel found a

736 Panama's second written submission, paras. 2.805-2.808.
737 Argentina's first written submission, paras. 244 and 328; and opening statement at the second
738 Panama's opening statement at the first meeting of the Panel, para. 48.
739 Panama's opening statement at the first meeting of the Panel, para. 48; and second written
submission, paras. 2.170-2.171, 2.311-2.312, 2.439, 2.544, and 2.749 (citing Panel Report, China – Auto
Parts, para. 7.287).

violation of Article II or Article III of the GATT 1994. Argentina argues that in the present dispute,
on the contrary, the measures with which compliance with its laws and regulations is secured are
the same, irrespective of whether the Panel finds a violation of Article II:1 or Article XVII of the
GATS. Argentina contends that nothing in the text of Article XIV(c) requires a defending Member
to invoke its defence separately for each claim of violation put forward by a complaining Member
and in China – Auto Parts the panel did not suggest the contrary. For Argentina, this means that
Panama's argument lacks merit and it urges us to reject Panama's objection.
740
7.572. Argentina also maintains that Panama's criticism refers exclusively to the way in which
Argentina decided to frame its arguments and that, therefore, Panama is mistaken in affirming
that Argentina invoked a collective defence for the measures justified under Article XIV(c) of the
GATS. Argentina explains that, in order to avoid unn ecessary repetition and in the interests of the
Panel's efficiency and of Secretariat resources, Argentina refrained from repeating the arguments
for each of the elements of the "weighing and balancing" test when they were common to all the
measures. According to Argentina, this is also true for the element relating to the importance of
the interests or for the analysis in the context of the chapeau of Article XIV, for example.
Argentina contends that, whenever the arguments were different, Argentina established the
relevant elements of the test separately and individually for each measure.
741
7.573. Consequently, as a preliminary matter, we must focus on whether, as proposed by
Panama, we should dismiss Argentina's defence under Article XIV(c) of the GATS because of the
way in which it was presented. We begin precisely by examining the way in which Argentina
presented its defence.
7.574. We note that, in its first written submission, Argentina structures its arguments by dividing
them into two groups: on the one hand, it develops arguments for five of the six measures
defended under Article XIV(c) of the GATS (measures 1, 2, 3, 4 and 7) and, on the other, it
develops its arguments for measure 8 separately. As regards measures 1, 2, 3, 4 and 7, although
Argentina discusses certain elements together, it also develops separate arguments for each
measure. For example, in its first written submission, Argentina discusses separately each
measure's contribution to its legitimate objectives
742, as well as the trade-restrictive aspects. 743
Argentina also makes a distinction in the light of the provision invoked by Panama, that is, the
arguments developed under Article XIV(c) of the GATS appear initially only to concern the claims
under Article II:1 of the GATS. Then, in a later part of its written submission, Argentina extends all
the arguments developed previously in relation to Ar ticle XIV(c) of the GATS to the claims relating
to Article XVII of the GATS, which only concern measures 2, 3 and 4. In its second written
submission, Argentina deals with measures 1, 2, 3, 4, 7 and 8 together, except as regards
Argentina's arguments with respect to the laws or regulations which it is sought to enforce, where
Argentina provides a separate explanation for each measure. Argentina also explains that the
measures it uses to secure compliance with its laws and regulations are the same, irrespective of
whether the Panel finds a violation of Article II:1 or Article XVII of the GATS.
7.575. We do not therefore agree with Panama that Argentina has presented a "collective" or
"combined" defence for measures 1, 2, 3, 4, 7 and 8 "without trying to justify each of them
individually". Perhaps Argentina could have presented its arguments under Article XIV(c) of the
GATS differently, but this does not mean that it is obliged to follow the approach chosen by
Panama. We recall that Panama organized its arguments in its written submissions measure by
measure, i.e. an analysis of all the relevant claims and defences under the GATS (and the
GATT 1994) presented in relation to a single measure at issue. As we have already indicated
744,
this way of organizing its arguments causes Panama to repeat the same arguments over and over
again in different parts of its second written submission. This is so precisely because, as Argentina
contends, there are numerous elements common to several of the measures.

740 Argentina's second written submission, paras. 66-70 (citing Panel Report, China – Auto Parts,
para. 7.285).
741 Argentina's response to Panel question No. 79, paras. 1 and 2. Argentina refers in particular to
paras. 278-286 and 297-304 of its first written submission where it explains for each measure its contribution
to the objective pursued and its degree of trade restrictiveness.
742 Argentina's first written submission, paras. 278-286.
743 Argentina's first written submission, paras. 297-304.
744 See para. 7.66 above.

7.576. In any event, even though Argentina's defence may be qualified as "combined" or
"collective", we note that both in China – Auto Parts 745 and in Colombia – Ports of Entry 746, two
disputes in which the respondents put forward thei r defence of various measures collectively, the
panels assessed that defence despite their criticism and reservations in this respect. Accordingly,
assuming that Argentina has presented a "collective" defence, quod non, the Panel considers that,
contrary to Panama's contention, this would not be sufficient reason to dismiss Argentina's defence
out of hand.
7.577. In the light of the foregoing, we shall examine Argentina's defence under Article XIV(c) of
the GATS with regard to measures 1, 2, 3, 4, 7 and 8. Where there are elements common to the
measures at issue concerned, we shall examine these elements collectively.
7.3.5.2.2.2 The question of whether Argent ina's defence is limited to the laws and
regulations indicated in subparagraph (i) of Article XIV(c) of the GATS
7.578. The second preliminary question we must address is whether the defence presented by
Argentina is limited to the types of laws and regulations covered by subparagraph (i) of
Article XIV(c) of the GATS.
7.579. Panama raises a general objection relating to Argentina's invocation of subparagraph (i) of
Article XIV(c) of the GATS. Panama contends in th is regard that Argentina should be consistent
with this option and refer only to securing compliance with laws and regulations on the prevention
of deceptive and fraudulent practices or ways of dealing with the effects of a default on services
contracts.
747
7.580. Argentina disagrees with Panama and argues that it is not obliged to prove separately that
the measures concerned refer to "the prevention of deceptive and fraudulent practices" under
subparagraph (i) of Article XIV(c) of the GATS. According to Argentina, this is because the list of
measures in subparagraphs (i) to (iii) of Article XIV(c) is illustrative and not exhaustive.
Consequently, any measure intended to secure co mpliance with laws and regulations consistent
with the GATS may be justified pursuant to Article XIV(c), irrespective of whether or not it is
covered by subparagraphs (i) to (iii). Argentina argues that Article XIV does not contain any
limitation a priori with regard to the types of GATS-consistent "laws and regulations" with which it
is sought to secure compliance.
748
7.581. The Panel notes that Argentina does not appear to argue that the relevant laws and
regulations are exclusively concerned with "the prevention of deceptive and fraudulent
practices…". In its first written submission, for example, Argentina explains that its defensive tax
measures "have been implemented to 'secure compliance' with its own laws and regulations by
imposing taxes, including the prevention of 'deceptive and fraudulent practices'".
749 Likewise, in its

745 In China – Auto Parts, the panel noted that, initially, in its justification of the measures under
Article XX(d), China did not distinguish whether the justification referred to a possible finding of inconsistency
with Article III or Article II of the GATT 1994. After the second substantive meeting, in response to a question
from the panel, China changed its position and clarified that the Article XX(d) analysis should be different
depending on whether a violation was found under Article III or Article II of the GATT 1994. The panel, noting
that China had not distinguished its Article XX(d) arguments on the possible violation of Article III from those
concerning Article II until specifically asked to do so by the panel, questioned "from the outset the validity of
China's defence under Article XX(d)". The panel nevertheless considered that it was not for the panel "to
advance or presume specific arguments or analysis for a claim made by a party to the dispute" and therefore
went on to examine China's defence. See Panel Report, China – Auto Parts, paras. 7.283-7.287.
746 In Colombia – Ports of Entry, the panel noted that the respondent had presented a "general defence"
under Article XX(d) of the GATT 1994, in the sense that Colombia referred collectively to various requirements
of the measure concerning ports of entry which constituted the basis of Panama's claims under several
provisions of the GATT 1994. The panel noted that Colombia had not presented evidence to demonstrate how
each of the requirements at issue "as the object of a separate claim, [was] individually necessary to secure
compliance". Bearing in mind the approach decided by Colombia for presenting its defence, the panel decided
to "address Colombia's global defence that the ports of entry measure is justified as necessary to secure
compliance with the relevant laws or regulations by considering the requirements under the ports of entry
measure collectively, without attempting to evaluate the individual contribution of each requirement in the
ports of entry measure". See Panel Report, Colombia – Ports of Entry, paras. 7.502-7.508.
747 Panama's second written submission, paras. 2.153, 2.180, 2.320-2.322, 2.445, 2.549 and 2.753.
748 Argentina's opening statement at the second meeting of the Panel, para. 29.
749 Argentina's first written submission, para. 262. (emphasis added)

subsequent submissions to the Panel, Argentina did not refer again to subparagraph (i) but rather
focused its arguments on subparagraph (c) of Article XIV in general.750
7.582. In any event, we agree with the panel in US – Gambling that Article XIV(c) contains an
illustrative list of laws or regulations "which are not inconsistent with the provisions" of the GATS.
On this premise, the panel considered that laws and regulations other than those in subparagraphs
(i) to (iii) may be relied upon in justifying a GATS-inconsistent measure under subparagraph (c)
provided that those other laws and regulations are consistent with the provisions of the GATS.
751 It
should be noted that the Appellate Body reached a similar conclusion regarding the list in
Article XX(d) of the GATT 1994.752
7.583. The Panel therefore agrees with Argentina that Article XIV(c) "does not contain any
limitation a priori with regard to the types of 'laws and re gulations' consistent with the GATS with
which a Member may seek to secure compliance".753 Accordingly, the Panel will not assess whether
Argentina has proved that the relevant "laws or regulations" are related to "the prevention of
deceptive and fraudulent practices", provided that it considers that Argentina has proved that the
relevant measures secure compliance with laws and regulations that are not inconsistent with the
provisions of the GATS.
7.3.5.2.3 The relevant legal provision
7.584. Article XIV(c) of the GATS provides in relevant part:
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) …
[…]
7.585. In US – Gambling , the Appellate Body elaborated on the analogy between Article XIV of
the GATS and Article XX of the GATT 1994, expl aining that the former stipulated general
exceptions under the GATS in a similar way to the latter under the GATT 1994. The Appellate Body
concluded that its previous decisions under Article XX of the GATT 1994 were relevant to the
analysis of Article XIV of the GATS:
Article XIV of the GATS sets out the general exceptions from obligations under that
Agreement in the same manner as does Article XX of the GATT 1994. Both of these
provisions affirm the right of Members to pursue objectives identified in the
paragraphs of these provisions even if, in doing so, Members act inconsistently with

750 Argentina's opening statement at the first meeting of the Panel, para. 41; second written submission,
paras. 66-78; and opening statement at the second meeting of the Panel, paras. 24-36.
752 Appellate Body Report, Mexico – Taxes on Soft Drinks, para. 70.
753 Argentina's opening statement at the second meeting of the Panel, para. 29.

obligations set out in other provisions of the respective agreements, provided that all
of the conditions set out therein are satisfied. Similar language is used in both
provisions, notably the term "necessary" and the requirements set out in their
respective chapeaux. Accordingly, like the Panel, we find previous decisions under
Article XX of the GATT 1994 relevant for our analysis under Article XIV of the GATS.
754
7.586. The analogy between the two provisions led the Appellate Body in US – Gambling to use in
its examination of Article XIV of the GATS the same "two-tier analysis" already used in relation to
Article XX of the GATT 1994. Thus, Article XIV of th e GATS provides for an analysis in two stages:
(i) first, the Panel must determine whether the measure falls within the scope of one of the
subparagraphs of Article XIV of the GATS; and (ii) after having found that the measure at issue is
justified under one of the subparagraphs of Ar ticle XIV of the GATS, the Panel must examine
whether this measure satisfies the requirements laid down in the introductory clause or chapeau of
Article XIV of the GATS.
755
7.587. We shall therefore first examine whether me asures 1, 2, 3, 4, 7 and 8 are provisionally
justified under subparagraph (c) of Article XIV, that is, whether they are "necessary to secure
compliance with laws or regulations" of Argentina "which are not inconsistent with the provisions
of [the GATS]". Only if we find that measures 1, 2, 3, 4, 7 and 8 are provisionally justified under
Article XIV(c), shall we proceed to examine whether those measures satisfy the requirements of
the chapeau of Article XIV, that is, whether they "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".
7.588. In conducting this examination, we take into account the Appellate Body's observations in
EC – Seal Products according to which the general exceptions (in that case, Article XX of the
GATT 1994) apply to "measures" that are to be analysed under the subparagraphs and the
chapeau, not to any inconsistency with the GATT 1994 that might arise from such measures. With
reference to its report in Thailand – Cigarettes (Philippines) , the Appellate Body pointed out that
the analysis of the Article XX(d) defence in that case should focus on the "differences in the
regulation of imports and of like domestic produc ts" giving rise to the finding of less favourable
treatment under Article III:4 of the GATT 1994. The Appellate Body concluded that the aspects of
a measure to be justified under the subparagraphs of Article XX are those that give rise to the
finding of inconsistency under the GATT 1994.
756 The same conclusion could be applied to our
analysis under Article XIV(c) of the GATS. Our analysis of measures 1, 2 3, 4, 7 and 8 under
Article XIV(c) of the GATS will therefore focus on the aspects of the measures that have given rise
to the findings of inconsistency with Article II:1 of the GATS, particularly those aspects concerning
the design and operation of measures 1, 2, 3, 4, 7 and 8 pursuant to Decree No. 589/2013.

754 Appellate Body Report, US – Gambling, para. 291. (footnotes omitted)
755 Appellate Body Report, US – Gambling, para. 292 (referring to its Reports in US – Shrimp, para. 147
and US – Gasoline, pp. 20-21 and 25).
756 The Appellate Body reasoned as follows:
We begin by noting that the general exceptions of Article XX apply to "measures" that are to be
analysed under the subparagraphs and chapeau, not to any inconsistency with the GATT 1994 that
might arise from such measures. In US – Gasoline, the Appellate Body clarified that it is not a panel's
legal conclusions of GATT-inconsistency that must be justified under Article XX, but rather the
provisions of a measure that are infringing the GATT 1994.
See Appellate Body Report, EC – Seal Products, para. 5.185 (referring to Appellate Body Report, US –
Gasoline, pp. 12 and 13).
In Thailand – Cigarettes (Philippines), the Appellate Body indicated that the analysis of the Article XX(d)
defence in that case should focus on the "differences in the regulation of imports and of like domestic products"
giving rise to the finding of less favourable treatment under Article III:4. The aspects of the measure that have
to be justified under the subparagraphs of Article XX are thus those giving rise to the finding of inconsistency
under GATT 1994. See Appellate Body Report, Thailand – Cigarettes (Philippines), para. 177.

7.3.5.2.4 The question of whether measures 1, 2, 3, 4, 7 and 8 fall under Article XIV(c)
of the GATS
7.3.5.2.4.1 The legal standard under Article XIV(c) of the GATS
7.589. We note that one part of the wording of Article XIV(c) of the GATS ("necessary to secure
compliance with laws or regulations which are not inconsistent with the provisions of this
Agreement") is very similar to that of Article XX(d) of the GATT 1994, which provides as follows:
Article XX
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 the same conditions prevail, or a disguised restriction on international trade,
nothing in this Agreement shall be construe d to prevent the adoption or enforcement
by any contracting party of measures:
[…]
(d) necessary to secure compliance with laws or regulations which are not
inconsistent with the provisions of this Agreement, including those relating to customs
enforcement, the enforcement of monopolies operated under paragraph 4 of Article II
and Article XVII, the protection of pate nts, trademarks and copyrights, and the
prevention of deceptive practices.
7.590. In view of the similar wording of Articl e XIV(c) of the GATS and Article XX(d) of the
GATT 1994, and bearing in mind the co nclusions of the Appellate Body in US – Gambling to the
effect that previous decisions under Article XX of the GATT 1994 are relevant to the analysis of
Article XIV of the GATS
757, we shall be guided by these decisions where relevant for our analysis.
7.591. In this connection, we note that in Korea – Various Measures on Beef , the Appellate Body
set forth the legal standard to be followed under Article XX(d) of the GATT 1994:
For a measure … to be justified provisionally under paragraph (d) of Article XX, two
elements must be shown. First, the measure must be one designed 758 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. A Member who invokes Article XX(d) as a justification has the burden of
demonstrating that these two requirements are met.
759
7.592. We agree with the panel in US - Gambling 760 that the legal standard set forth by the
Appellate Body in Korea – Various Measures on Beef is relevant to our analysis of Argentina's
defence under Article XIV(c) of the GATS.
7.593. In order to justify its measures successfully under subparagraph (c) of Article XIV,
therefore, Argentina should first demonstrate that measures 1, 2, 3, 4, 7 and 8 are designed to
secure compliance with the relevant Argentine la ws and regulations that are not in themselves
inconsistent with the GATS; and secondly, that these measures are "necessary" to secure such
compliance.
7.594. We start by examining the first element of the legal standard.

757 Appellate Body Report, US – Gambling, para. 291. (footnotes omitted)
758 The Panel points out that the original text of the Appellate Body Report in English uses the term
"designed to secure compliance". In our view, the words "diseñada para" are closer to the original English than
the terms "destinada a" used in the official translation We note that the parties use both terms indifferently
"diseñada para" and "destinada a" in Spanish).
759 Appellate Body Report, Korea – Various Measures on Beef, para. 157. See also Appellate Body
760 Appellate Body Report, US – Gambling, paras. 6.536 and 6.537 and footnote 990.

(a) First element: Whether the measures are designed to secure compliance with
laws and regulations that are not in themselves inconsistent with the GATS
7.595. In examining whether a measure is designed to secure compliance with laws and
regulations within the meaning of Article XX(d) of the GATT 1994, previous panels considered that
the Member invoking such a defence must (i) id entify the laws and regulations with which the
challenged measure is intended to secure compliance, and prove that (ii) those laws and
regulations are not in themselves inconsistent with WTO law; and (iii) that the measure challenged
is designed to secure compliance with those laws or regulations.
761
7.596. We will follow the previous panels' approach, adapting it where necessary to the text of
Article XIV(c) of the GATS. We begin by examin ing whether Argentina has duly identified the
relevant laws and regulations for the purposes of its defence under Article XIV(c) of the GATS.
(i) Whether Argentina has identified th e laws or regulations with which the
challenged measures are intended to se cure compliance within the meaning of
subparagraph (c) of Article XIV
7.597. In its first written submission, Argentina explained that measures 1, 2 3 and 4 are
designed to secure compliance with the LIG "pursuant to which taxable income in Argentina is
determined".
762 At the second substantive meeting with the Panel, Argentina specified that
measures 1 to 4 are designed to secure compliance with Articles 1, 2, 5, 17, 80, 91, 92, 127, 129
and 130 of the LIG, which "operate in a regulato ry framework that includes this Law and the
regulations thereto, the administration and implementation of which are necessarily linked to the
body of rules which also includes the LPT (Art icles 33, 38, 39, 45 and 46 in particular) and the
Criminal Tax Law (Articles 1, 2 and 6 in particular) and is based on the constitutional principles
enshrined in Articles 4, 16, 17 and 75 (second pa ragraph) of the National Constitution of the
Argentine Republic.
763 Argentina also maintains that measure 7 secures compliance with
Article 118.3 of Law No. 19.550 on Commercial Companies (LSC) and Article 188 of IGJ Resolution
No. 7/2005.764 As regards measure 8, Argentina states that it secures compliance with Law
No. 25.246 on Concealment and Laundering of Mone y of Criminal Origin in Argentina, and
Articles 20, 20 bis and 21 thereof in particular.765
7.598. Panama objects to the way in which Argentina has sought to identify the relevant laws and
regulations for the purposes of its defence under Article XIV(c) of the GATS. Initially, Panama
argued that a mere reference to a law or regulation, or even a chapter of such a law or regulation,
is not sufficient, and this should lead a panel to conclude that the respondent erred in putting
forward its defence. According to Panama, Argentina should have identified specific provisions or
obligations in the LIG on the prevention of deceptive or fraudulent practices.
766 As regards
measure 7, Panama argues that Argentina's mere affirmations regarding the laws or regulations
with which Article 192 of IGJ Resolution No. 7/2005 seeks to secure compliance do not equate to
proof.
767 Concerning measure 8, Panama argues that the domestic rules and regulations which
form part of the defending Member's national legal order cannot be international rules. Therefore,
the argument that the measure is necessary to secure compliance with international standards on
transparency is without foundation under Article XIV(c) of the GATS.
768

761 Panel Reports, Colombia – Ports of Entry, para. 7.514; and US – Shrimp (Thailand), para. 7.174. See
also Appellate Body Report, Korea – Various Measures on Beef, para. 157.
762 Argentina's first written submission, para. 264. See also first written submission, para. 265; and
second written submission, para. 71.
763 Argentina's opening statement at the second meeting of the Panel, para. 26.
764 Argentina's first written submission, para. 266; second written submission, para. 72; and opening
statement at the second meeting of the Panel, para. 27.
765 Argentina's first written submission, paras. 334-337; second written submission, para. 72; and
opening statement at the second meeting of the Panel, para. 27.
766 Panama's opening statement at the first meeting of the Panel, para. 50; second written submission,
paras. 2.186 and 2.187. Panama refers to the Appellate Body Report, Thailand – Cigarettes (Philippines),
para. 179 and footnote 271. Panama puts forward the same argument with regard to measure 2 (para. 2.323),
767 Panama's second written submission, para. 2.752.
768 Panama's second written submission, para. 2.800.

7.599. Panama also objects to the inclusion of several provisions, not only from the LIG but also
from other Argentine regulations, and even its National Constitution, at the Panel's second meeting
because, in its opinion, it broadens the scope of Argentina's defence and affects Panama's
procedural rights. Panama also argues that Argentina has not explained how the measures in
question are intended to secure compliance with each and every one of the new provisions invoked
in Argentina's opening statement at the second meeting of the Panel.
769
7.600. Before turning to consider whether Argentina identified the relevant laws and regulations
for the purpose of its defence under Article XIV(c) of the GATS, we shall respond to Panama's
objection to Argentina's late identification of the specific provisions in the instruments referred to
previously and the inclusion of new instruments, and to what extent this affects its procedural
rights.
7.601. As we have already emphasized, due process is an essential feature of the WTO dispute
settlement system.
770 In our view, the fact that Argentina referred to new instruments and specific
provisions of the instruments identified as relevant "laws or regulations" at the second meeting is
not extemporaneous, although it would have been desirable for Argentina to have done so earlier
in the proceedings. We consider that a complaining party cannot expect the defending party
invoking an exception to present its entire defence in its first written submission. Although the
defending party should endeavour to present its defence in the most comprehensive manner
possible, it should also have the opportunity to react to the rebuttal presented by the complaining
party in its second written submission and at the second meeting. Bearing in mind that in WTO
panel procedures, the parties present their second written submissions simultaneously, the panel's
second meeting with the parties represents the first opportunity the defending party has to
challenge the rebuttal submission of the complaining party.
7.602. To this must be added the opportunity to respond to Argentina's arguments and to its
responses to Panel questions. Indeed, in its op ening statement at the first substantive meeting
with the Panel, Panama argued that Argentina "does not identify the specific obligation or
obligations with which the measures in question allegedly seek to secure compliance". Panama
develops this argument in its second written submission, criticizing Argentina, inter alia, for having
made a mere reference to the LIG without specifying the relevant provisions.
771 Panama also
argues that Argentina only refers to the LIG and does not mention any other law or regulation
under Argentine legislation.
772
7.603. The Panel therefore considers that by specif ying the provisions of the LIG and citing other
instruments at the second meeting, Argentina was responding to Panama's arguments. One of the
purposes of the second meeting is precisely to respond to the arguments contained in the other
party's second written submission. The Panel also considers that Panama had the opportunity to
defend its position and to respond to Argentina' s arguments relating to the LIG, the LPT, the
Criminal Tax Law and the National Constitution. Panama could have made known its arguments at
the second meeting. Panama did not, however, make any statement in this regard at the second
meeting, except to present a complaint in its closing statement with regard to the broadening of
the scope of Argentina's defence.
773 Nor did Panama request more time in which to comment on
the arguments presented by Argentina at the second meeting. We also note that in its comments
on Argentina's response to a question from the Panel at the second substantive meeting, Panama

769 Panama's closing statement at the second meeting of the Panel, para. 5. See also Panama's
comments on Argentina's response to Panel question No. 82. In those comments, Panama claims that
Argentina's arguments in its response to Panel question No. 82 are "extemporaneous". According to Panama,
"the references to other regulations under Argentine law [i.e. other than the LIG] at this stage of the
proceedings deprive Panama and third parties of the opportunity to defend their position properly". Panama
also argues that the inadmissibility of Argentina's request is made even more obvious by the fact that
Argentina has produced no evidence on the text of the various rules which it is invoking at this stage.
770 In fact "[d]ue process protection guarantees that the proceedings are conducted with fairness and
impartiality, and that one party is not unfairly disadvantaged with respect to other parties in a dispute". See
Appellate Body Report, US – Continued Suspension, para. 433.
771 Panama's opening statement at the first meeting of the Panel, para. 50; second written submission,
paras. 2.180, 2.323, 2.447 and 2.550.
772 Panama's second written submission, para. 2.179.
773 Panama's closing statement at the second meeting of the Panel, para. 5. The Panel recalls that in US
– Gambling, the respondent only presented its defence for the first time in its second written submission and
the Appellate Body considered that the complaining party had had the opportunity to rebut the respondent's
arguments. See Appellate Body Report, US – Gambling, paras. 274-276.

essentially put forward procedural arguments, but it could have taken the opportunity to respond
to the substantive arguments presented by Argentina in its response as well.774
7.604. Although we consider that the reference to specific provisions of instruments previously
indicated and the reference to new instruments at the second substantive meeting did not affect
Panama's procedural rights, this does not mean that we shall not consider carefully whether
Argentina has "identified" laws and regulations within the meaning of subparagraph (c) of
Article XIV of the GATS.
7.605. The Panel notes that the instruments with which Argentina seeks to secure compliance are
the same for measures 1, 2, 3 and 4, namely, the LIG, the LPT, the Criminal Tax Law and the
National Constitution. With regard to measures 7 and 8, Argentina refers to different instruments.
We start by examining whether Argentina has duly identified the relevant laws and regulations for
the purposes of its defence under Article XIV(c) of the GATS in relation to measures 1 to 4 and will
then examine whether it has done the same in relation to measures 7 and 8.
1. Whether Argentina has "identified" laws and regulations within the
meaning of subparagraph (c) of Article XIV in respect of measures 1 to 4
7.606. The Panel observes that in its first and second written submissions Argentina only refers to
the LIG as a "law or regulation" with which measures 1 to 4 seek to secure compliance. At the
second meeting, Argentina mentioned three additional instruments, namely: the LPT, the Criminal
Tax Law and the National Constitution. At that meeting, Argentina also identified various
provisions in those four instruments.
775
7.607. The concept of "laws and regulations" was examined by the Appellate Body in Mexico –
Taxes on Soft Drinks , which concluded that those terms "cover rules that form part of the
domestic legal system of a WTO Member". 776 All the instruments mentioned by Argentina form
part of Argentina's domestic legal system.
7.608. We point out that Argentina has provided th e text of the LIG, as well as that of the LPT. 777
As regards the Criminal Tax Law (Law No. 24.769), Ar gentina only cites the wording of Article 1 in
its response to a Panel question.778 As far as the National Constitution is concerned, Argentina has
not provided the text. We note, however, that in its second written submission Panama refers to
various constitutional principles and provides an exhibit citing various provisions of Argentina's
National Constitution.779
7.609. In our view, when "identifying" laws or re gulations with which the measures at issue seek
to secure compliance within the meaning of Article XIV(c) of the GATS, it is not enough to refer to
them or to their provisions; the respondent must provide their texts, either by way of an exhibit or
by citing their wording in its submissions. It does not appear reasonable to us, however, to require
a party to present an exhibit that is already in our record. Accordingly, even though Argentina has
not provided them, we shall take into account the provisions of the National Constitution cited by
Argentina, provided that they are contained in the Panel's record
780, in order to examine
Argentina's defence. This is not the case for the Criminal Tax Law whose text has not been
provided by Argentina and is not in our record, with the exception of Article 1, the wording of
which is provided by Argentina in its response to Panel question No. 82.

774 Panama's comments on Argentina's response to Panel question No. 82.
775 Argentina's opening statement at the second meeting of the Panel, para. 26. See also Argentina's
response to Panel question No. 82.
776 The Appellate Body added that "laws and regulations" also include "rules deriving from international
agreements that have been incorporated into the domestic legal system of a WTO Member or have direct effect
according to that WTO Member's legal system". See Appellate Body Report, Mexico – Taxes on Soft Drinks,
para. 79.
777 Gains Tax Law, (Exhibits PAN-4 / ARG-42); Law on Tax Procedure (Exhibits PAN-9 / ARG-45).
778 Argentina's response to Panel question No. 82.
779 Panama's second written submission, paras. 2.223 and 2.342 (referring to Exhibit PAN-83,
"Constitutional principles on tax matters").
780 The following are the provisions of Argentina's National Constitution contained in full or in part in
Exhibit PAN-83: Articles 4, 16, 17, 19, 52 and 75.

7.610. In the light of the foregoing, and as far as measures 1 to 4 are concerned, we consider
that Argentina has identified the following laws and regulations within the meaning of
Article XIV(c): the LIG, the LPT, Article 1 of th e Criminal Tax Law and those provisions of the
National Constitution contained in our record.
7.611. We turn to examine whether Argentina has duly "identified" the relevant "laws and
regulations" in the case of measures 7 and 8.
2. Whether Argentina has "identified" the laws and regulations
within the meaning of subparagraph (c) of Article XIV in respect of
measures 7 and 8
7.612. We note that since its first written submission Argentina has referred to Article 118.3 of
Law No. 19.550 on Commercial Companies (LSC) and Article 188 of IGJ Resolution No. 7/2005 as
the "laws and regulations" with which measure 7
781 seeks to secure compliance.
7.613. According to Argentina, measure 8 seeks to secure compliance with Law No. 25.246 on
Concealment and Laundering of Money of Criminal Origin, particularly Articles 20, 20 bis and 21
thereof.782 Argentina did not identify additional instruments at a subsequent stage of the
proceedings as "laws or regulations" relevant to measures 7 and 8. We also note that, contrary to
what Panama appears to assert
783, Argentina does not contend that measure 8 is justified in order
to secure compliance with international standards.
7.614. As is the case of the instruments identified in relation to measures 1 to 4, the instruments
to which Argentina refers in relation to measures 7 and 8, namely, the LSC, IGJ Resolution
No. 7/2005 and Law No. 25.246 on Concealment and Laundering of Money of Criminal Origin, form
part of Argentina's legal system and are therefor e "laws and regulations" within the meaning of
Article XIV(c) of the GATS.
7.615. As we explained earlier, in order to determine whether these laws and regulations have
been "identified" within the meaning of Article XIV(c) of the GATS it is not enough to refer to them
or to their provisions; the respondent must provide their texts, either by means of an exhibit or by
setting out their wording in its submissions. We note that Argentina has provided us with the text
of Article 118.3 of the LSC and Article 188 of IGJ Resolution No. 7/2005 in relation to
measure 7
784, as well as Articles 20, 20 bis and 21 of Law No. 25.246 on Concealment and
Laundering of Money of Criminal Origin in relation to measure 8.785
3. Conclusion
7.616. In the light of the foregoing, the Panel considers that Argentina has identified the laws and
regulations with which it seeks to secure compliance by means of measures 1, 2, 3, 4, 7 and 8
within the meaning of Article XIV(c) of the GATS.
(ii) Whether the laws or regulation s identified are not in themselves
inconsistent with the provisions of the GATS786
7.617. We continue our analysis by examining whether the laws and regulations identified by
Argentina, namely, Articles 1, 2, 5, 17, 80, 91, 92, 127, 129 and 130 of the LIG, Articles 33, 38,
39, 45 and 46 of the LPT, Article 1 of the Crim inal Tax Law, the provisions of the National
Constitution contained in our record, Article 118.3 of the LSC, Article 188 of IGJ Resolution

781 Argentina's first written submission, para. 266; second written submission, para. 72; and opening
statement at the second meeting of the Panel, para. 27.
782Argentina's first written submission, paras. 334 and 337; second written submission, para. 72; and
opening statement at the second meeting of the Panel, para. 27.
783 Panama's second written submission, para. 2.800.
784 Law on Commercial Companies, (Exhibits PAN-34 / ARG-43); and IGJ Resolution No. 7/2005,
(Exhibits PAN-62 / ARG-33).
785 Law No. 25.246 on Concealment and Laundering of Money of Criminal Origin, (Exhibit ARG-32).
786 We note that the text of Article XIV(c) of the GATS refers to the provisions "of this Agreement", so it
is our understanding that inconsistency must be examined in relation to the GATS.

No. 7/2005 and Articles 20, 20 bis and 21 of Law No. 25.246 on Concealment and Laundering of
Money of Criminal Origin are not in themselves inconsistent with the provisions of the GATS.
7.618. Argentina argues that its defensive tax measures, similar to those adopted by other WTO
Members, have been devised to secure compliance with laws and regulations which are in
themselves consistent with the GATS. According to Argentina, measures 1 to 4 and measure 7 are
fully consistent with the GATS. 787 Argentina also claims that measure 8 is designed "to secure
compliance" with laws and regulations established in accordance with the international
recommendations on preventing the concealment and laundering of money of criminal origin.788
7.619. Panama responds that Argentina has not shown that the LIG is consistent with the GATS
and asserts that it is in itself inconsistent with the GATS, especially Articles II:1 and XVII, as can
be seen from Panama's numerous claims.
789 Panama also claims that Argentina has also failed to
explain why Articles 118 of the LSC and 188 of IGJ Resolution No. 7/2005 and Law No. 25.246 on
Concealment and Laundering of Money of Criminal Origin should be considered consistent with the
GATS.
790
7.620. The Panel agrees with Panama that it is Argentina's responsibility to prove that its
measures meet the conditions necessary for the defence invoked. In this connection, we recall that
on several occasions the Appellate Body has emphasized that the legislation of a defending
Member shall be considered WTO-consistent until proven otherwise.
791
7.621. Beginning our examination with the LIG and the LPT, we note that Panama has made
claims of inconsistency with regard to certain measures that are applied pursuant to specific
provisions found in these two instruments. Panama challenges in particular measure 1
(withholding tax on payments of interest or remuneration, maintained pursuant to Article 93(c) of
the LIG); measure 2 (presumption of unjustified in crease in wealth, maintained by virtue of the
unnumbered article added after Article 18 of the LPT); measure 3 (transaction valuation based on
transfer prices, maintained pursuant to Article 15.2 of the LIG); and measure 4 (payment received
rule for the allocation of expenditure, maintained pursuant to Article 18 of the LIG). Panama has
not therefore challenged these two instruments as a whole. We also note that Panama has not
challenged any provision of the Criminal Tax Law or Argentina's National Constitution.
7.622. We recall that in sections 7.3.2.2.4 and 7.3.4.2.4 above we concluded that measures 1, 2,
3 and 4 are inconsistent with Article II:1 of the GATS. This does not mean that the GATS
inconsistency of certain provisions of the LIG and the LPT results in the GATS inconsistency of the
other provisions of these two instruments.
7.623. As regards the laws and regulations cited in relation to measure 7, the Panel notes that
Panama has not challenged any provision of the LSC. Panama challenges the requirements for the
registration of branches, maintained pursuant to Article 192 of IGJ Resolution No. 7/2005, and
Argentina refers to Article 188 of the same Resolution as a relevant "law or regulation". The Panel
has found that the measure challenged by Panama and maintained by virtue of Article 192 of IGJ
Resolution No. 7/2005 is inconsistent with Article II:1 of the GATS. Panama has not, however, put
forward any claims of inconsistency in relation to other provisions of IGJ Resolution No. 7/2005
and the inconsistency of one provision of IGJ Re solution No. 7/2005 does not mean that the other
provisions of this instrument are also GATS-inconsistent.
7.624. Lastly, we recall that we have concluded that the foreign exchange authorization
requirement (measure 8), maintained by virtue of Section I of Communication "A" 4940 is
inconsistent with Article II:1 of the GATS. Pana ma has not, however, challenged Law No. 25.246
on Concealment and Laundering of Money of Criminal Origin, which Argentina cites as a "law or
regulation" with which measure 8 seeks to secure compliance.

787 Argentina's first written submission, para. 267.
788 Argentina's first written submission, para. 328.
789 Panama's second written submission, paras. 2.197 and 2.198. See also second written submission,
paras. 2.329, 2.451 and 2.554.
790 Panama's second written submission, paras. 2.754 and 2.802.
791 Appellate Body Report, US – Carbon Steel, para. 157. See also Appellate Body Reports,
Dominican Republic – Import and Sale of Cigarettes, para. 111, and US – Gambling, para. 138.

7.625. The Panel recalls that a Member's legislation shall be presumed WTO-consistent until
proven otherwise. In our view, the findings of in consistency of certain provisions of the LIG, the
LPT and IGJ Resolution No. 7/2005 do not mean that the other provisions of these instruments are
also inconsistent with the GATS. 792 The Panel therefore considers that it is not necessary to
undertake a detailed examination of the instruments and/or provisions invoked by Argentina in
order to establish whether they are consistent with the GATS.
7.626. In the light of the foregoing, the Panel co ncludes that, for the purposes of its analysis of
Argentina's defence under subparagraph (c) of Article XIV of the GATS, Argentina has identified
laws and regulations which "are not inconsistent with the provisions of [the GATS]".
(iii) Whether the measures in question are designed to secure compliance
with the laws or regulations identified by Argentina that are not in
themselves inconsistent with the GATS
7.627. We continue our examination of whether measures 1, 2, 3, 4, 7 and 8 are designed to
secure compliance with the laws and regulations identified by Argentina.
7.628. In Mexico – Taxes on Soft Drinks , the Appellate Body explained that the words "to secure
compliance" refer to two types of measure which a Member may justify under subparagraph (d) of
Article XX of the GATT 1994. According to the Ap pellate Body, these words "relate to the design 793
of the measures sought to be justified". 794 The Appellate Body considered that "a measure can be
said to be designed 'to secure compliance' even if the measure cannot be guaranteed to achieve
its result with absolute certainty". 795 Applying this conclusion of the Appellate Body to the similar
language used in Article XIV(c) of the GATS, we proceed to determine whether measures 1, 2, 3,
4, 7 and 8 are "designed to" secure compliance with the laws and regulations identified by
Argentina, even if it is not possible to guarantee that they will achieve that result with absolute
certainty.
796 We start with measures 1 to 4.
1. Whether measures 1 to 4 are "des igned to secure compliance" with
the laws and regulations identified
7.629. We note that Argentina argues that measures 1 to 4 are designed to secure compliance
with the LIG, under which the tax base for Argentine taxpayers' gains tax is determined. Argentina
asserts that these defensive tax measures were devi sed to lessen the risk of artificial erosion of
the tax base through deceptive and fraudulent transactions between Argentine taxpayers and
entities located in non-cooperative jurisdictions. Argentina also maintains that measure 3 in
particular, which increases the information requirements for transactions with non-cooperative
jurisdictions, ensures compliance with the LIG, which establishes the general transfer pricing
regime. This regime's overall objective is to determine the accuracy of the value of transactions
between related parties, thereby preventing fraudulent and simulated transactions which have as
their sole purpose to evade taxes and/or transfer profits to non-cooperative jurisdictions where
there is a lack of tax transparency.
797
7.630. Panama responds that Argentina does not explain how such measures secure compliance
with the LIG. In its opinion, the failure to specify the particular LIG provision with which it is
sought to secure compliance means that it is not possible to assess properly to what extent the
measure is designed to achieve that compliance objective.
798 Panama contends that, for each of

792 The Panel points out that in Colombia – Ports of Entry the panel reached the same conclusion in a
similar situation. See Panel Report, Colombia – Ports of Entry, para. 7.530.
793 As we indicated earlier, in the English text of the Appellate Body Report, the word "design" is used,
which should be translated into Spanish as "diseño". Likewise, the Appellate Body refers to "measures designed
to secure compliance". In the Spanish version of our analysis, therefore, we shall use the words "diseño" and
"diseñado para" because we consider that they are closer to the original English text of the Appellate Body
Report. See footnote 758 above.
794 Appellate Body Report, Mexico – Taxes on Soft Drinks, para. 72.
795 Appellate Body Report, Mexico – Taxes on Soft Drinks, para. 74.
796 The Panel also recalls that it now has to assess whether the measures in question are designed to
secure compliance with the relevant laws and regulations. The Panel is not now assessing to what extent the
measures in question contribute to compliance with the relevant laws and regulations.
797 Argentina's first written submission, paras. 264 and 265; second written submission, para. 71.
798 Panama's second written submission, paras. 2.199, 2.330, 2.452 and 2.555.

the measures 1 to 4, Argentina's concern focuses on a very specific situation (for example, insider
loans) and that the measure's scope goes beyond that concern. 799 Panama claims that Argentina
has not shown how the practices referred to by Arge ntina allegedly violate the LIG and, therefore,
Panama concludes that the measure is not "designed" to secure the compliance in question. 800
Panama contends that it is important to draw a distinction between tax evasion and avoidance,
because although evasion is illegal, avoidance is legal. 801 Panama also argues that Argentina's real
concern focuses on the possibility of tax evasion and not so much on avoidance. Panama argues
that Argentina only invoked the LIG, which does not regulate the offence of tax evasion as such.
According to Panama, Argentina's failure to refer to the rules governing tax evasion issues is an
irremediable error.
802
7.631. Panama also argues that Argentina does not adequately explain the circumstances or
problems which led to the introduction of measure 1 (withholding tax on payments of interest or
remuneration) and measure 2 (presumption of unjustified increase in wealth).803
7.632. We turn now to examine the content of th e laws and regulations identified by Argentina.
We begin with the provisions of the LIG identifi ed by Argentina. The LIG establishes the general
framework governing the collection of gains tax. Its first two articles define the subjects
(Article 1)804 and the object of the tax, i.e. the taxable "gains" (Article 2). 805 Article 5 of the LIG
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.
806 Article 17 of the LIG defines the net gains subject to the tax and Article 80 the
deductions permitted. 807 Article 91 of the LIG provides that the net profits earned by foreign
suppliers are subject to a tax of 35%, which mu st be withheld and paid to the AFIP by the

799 Panama's second written submission, paras. 2.204, 2.331-2.333, 2.453, 2.556 and 2.557.
800 Panama's second written submission, paras. 2.207 and 2.334.
801 Panama's second written submission, para. 2.193.
802 Panama's comments on Argentina's response to Panel question No. 82.
803 Panama's second written submission, paras 2.202 and 2.330.
804 Article 1 of the LIG provides as follows:
All gains (ganancias) earned by natural or legal persons are subject to the emergency levy
established by this Law.
The persons referred to in the preceding paragraph who are resident in the country shall pay tax
on all their gains earned in the country or abroad, and may credit against the tax governed by
this Law the sums actually paid under analogous levies on their activities abroad, up to an
amount not exceeding the increased tax obligation resulting from inclusion of the gains earned
abroad.
Non-residents shall pay tax only on their gains from Argentine sources, in accordance with the
provisions of Title V.
Undivided estates are taxpayers in accordance with the provisions of Article 33.
See the Gains Tax Law, (Exhibit PAN-4). See also Exhibit ARG-42.
805 Article 2 of the LIG provides as follows:
For the purposes of this Law, without prejudice to the special provisions in each category, and, even
when not specified therein, gains are:
(1) yields, income or enrichments subject to a periodicity that implies the permanence of the source
producing them and their authorization;
(2) yields, income, profits or enrichments, whether or not complying with the conditions of the previous
paragraph, which are earned by the responsible persons referred to in Article 69 and all those derived
from other companies, enterprises or single-person businesses, unless, though not in the case of the
taxpayers covered by in Article 69, they carry out activities indicated in subparagraphs (f) and (g) of
Article 79 and they are not supplemented by a commercial operation, in which case the provisions of the
previous paragraph shall be applicable;
(3) the profits earned from the disposal of depreciable movables, regardless of the person who earns
them.
See the Gains Tax Law, (Exhibit PAN-4). See also Exhibit ARG-42.
806 Article 5 of the LIG provides as follows:
In general and without prejudice to the special provisions of the following articles, gains of
Argentine source are those derived from assets situated, placed or used economically in the
Republic, from the performance in the territory of the Nation of any act or activity susceptible of
producing profits, or of actions occurring within the limits of the same regardless of the
nationality, domicile or residence of the holder or of the parties intervening in the operations, or
the place where the contracts are concluded.
See the Gains Tax Law, (Exhibits PAN-4 / ARG-42).
807 Gains Tax Law, (Exhibits PAN-4 / ARG-42).

Argentine taxpayer.808 The 35% rate is applied to the presumed net gain (Article 92). Articles 127,
129 and 130 of the LIG define the "gains of foreign source" taxable in Argentina. These three
articles are a necessary complement to Articles 1 and 2 of the LIG, which establish the obligation
for Argentine residents to pay tax on all the gains earned in Argentina or abroad.
809
7.633. The LPT810 lays down the methods for collecting taxes in Argentina, including procedures to
ensure verification (Article 33), violations and applicable sanctions (Articles 38 and 39). Article 38
defines the procedures and sanctions applicable in cases of non-compliance with the obligation to
submit sworn declarations (including those on gains subject to the LIG), which constitute the initial
basis for determining the taxes payable by the Argentine taxpayer. Article 39 establishes sanctions
for non-compliance with formal obligations by the taxpayer, for example, keeping documentary
evidence of transactions or furnishing data required by the AFIP in order to control international
operations. The LPT also provides for sanctions for omission and tax fraud (Articles 45 and 46).
Article 45 establishes sanctions for cases where the sworn declaration is either not submitted or is
inaccurate, while Article 46 establishes sanctions for any person engaging in tax fraud through
misleading declarations or wilful concealment.
811
7.634. Article 1 of the Criminal Tax Law, the only provision identified by Argentina, provides that
"any obligor who, by means of misleading declarations, wilful concealment or any other scheme or
deception, by action or omission evades all or so me of the taxes payable to the national treasury,
the provincial treasury or the Autonomous City of Buenos Aires, shall be punished by a term of
imprisonment of two (2) to six (6) years provid ed that the amount evaded exceeds the sum of
four hundred thousand pesos ($400,000) for each tax and for each financial year, even in the case
of spot taxes or a fiscal period of less than one (1) year".
7.635. The provisions of its National Constitution identified by Argentina
812 refer to various tax
principles.813 According to Article 16 of the Argentine National Constitution "[a]ll its inhabitants are
equal before the law … Equality is the basis of taxation". 814 In the commentary in the second
column entitled "Synthesis", it is explained that the principle of equality of taxation means that the
law "shall ensure the same treatment for persons in analogous situations" 815 Accordingly, equality
refers to each taxpayer's capacity to pay: taxpayers with equal capacity to pay must pay the same
tax. Moreover, Articles 4 and 75.2 determine that taxes are fixed by congressional law and are an
essential source of financing for the State.
816 Likewise, Article 17, declaring the inviolability of
private property, confirms that only Congress may levy the taxes mentioned in Article 4 of the
Constitution.
7.636. From our examination of the laws and regulations identified by Argentina, we may
conclude that the LIG, the LPT, the relevant se ction of the Criminal Tax Law and the National
Constitution form the backbone of the regulatory framework for collecting taxes in Argentina. The

808 Article 91 of the LIG, in part, provides as follows:
When net profits of any category are paid to companies, enterprises or any other beneficiary
abroad, with the exception of dividends and profits of the persons to which items 1, 2, 3, 6 and 7
of subparagraph (a) of Article 69 refer, as well as the profits of the establishments included in
subparagraph (b) of the same Article, whoever pays them must withhold and transfer to the
Federal Public Revenue Administration, an autonomous body within the Ministry of the Economy
and Public Works and Services, as sole and final payment, thirty five % (35%) of such profits.
See the Gains Tax Law, (Exhibit PAN-4). See also Exhibit ARG-42.
809 See the Gains Tax Law, (Exhibits PAN-4 / ARG-42).
810 Law on Tax Procedure, (Exhibits PAN-9 / ARG-45).
811 Article 46 of the LPT provides the following: "Anyone who, by means of misleading declarations or
wilful concealment, by action or omission defrauds the Treasury, shall be punishable by a fine of TWO (2) up to
TEN (10) times the amount of the tax evaded". See the Law on Tax Procedure, (Exhibits PAN-9 / ARG-45).
812 We recall that we are only considering the provisions of the National Constitution found in Exhibit
PAN-83 ("Constitutional Principles on Tax Matters").
813 Panama's second written submission paras. 2.223 and 2.342 (referring to Exhibit PAN-83,
"Constitutional Principles on Tax Matters"). This document cites relevant constitutional provisions on tax
matters and comments on each of them.
814 Constitutional Principles on Tax Matters, (Exhibit PAN-83), p. 3.
815 Constitutional Principles on Tax Matters, (Exhibit PAN-83), p. 3.
816 Pursuant to Article 75.2 of the Argentine National Constitution, Congress is empowered "[t]o levy
indirect taxes as a power concurrent with the provinces. To levy direct taxes for a specified term and
proportionally equal throughout the national territory, provided that the defence, common security and general
welfare of the State so require it." See Constitutional Principles on Tax Matters, (Exhibit PAN-83), p. 3.
(emphasis original)

National Constitution in particular obliges the Argentine National Congress and the Government to
levy taxes equitably, according to each taxpayer's capacity to pay. The relevant parts of the LIG
and the LPT develop the tax principles established in the Argentine National Constitution. They
thus oblige the competent authorities to levy tax on the earnings of natural and legal persons
resident in Argentina according to their capacity to pay, ensuring that taxpayers with equal
capacity pay the same amount of tax.
7.637. In our view, measures 1 to 4 are designed to secure compliance with the overall objective
of the LIG, which is to collect the gains tax owed by Argentine taxpayers. They are also designed
to secure compliance with certain key provisions of the LIG. As Argentina explains, measures 1 to
4 were established to prevent fraudulent and simulated transactions whose ultimate objective is to
evade taxes and/or transfer profits to jurisdiction s where there is a lack of tax transparency. In
other words, these measures enable the Argentine authorities to determine whether transactions
with non-cooperative jurisdictions have a legitimate commercial purpose or are simply aimed at
evading the payment of taxes in Argentina. Thus, by making transactions with a high risk of
evasion subject to additional information requir ements (measures 2, 3 and 4) or higher tax
(measure 1), these measures 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 LIG. By reducing the opportunities for conducting fraudulent
transactions, measures 1 to 4 are also designed to secure compliance with Article 5 of the LIG,
which considers earnings from activities performe d in Argentine territory, by either Argentine or
foreign service suppliers, to be gains of Argentine source (and thus subject to taxation in
Argentina).
7.638. Measures 1 to 4 are also designed to se cure compliance with the LPT. For example, the
measures enable Argentina's tax authorities to prevent the use of transactions with service
suppliers from non-cooperative countries to defraud the treasury by means of misleading
declarations or wilful concealment, which is prec isely the goal pursued by Article 46 of the LPT.
This would also be the case for the offence defined in Article 1 of the Criminal Tax Law.
7.639. Their design also makes it easier to secure compliance with the relevant provisions of
Argentina's National Constitution, especially Article 16 promoting tax equality, which provides that
taxpayers with the same contributive capacity must pay the same tax. Consequently, by mitigating
the risks of tax evasion, measures 1 to 4 contribute to ensuring that, given equal contributive
capacity, honest taxpayers do not pay higher taxes than dishonest taxpayers.
817
7.640. With regard to Panama's argument that a distinction has to be made between tax evasion
and tax avoidance, we consider that such a distinction is not relevant for the purposes of
Argentina's defence under Article XIV(c) of the GATS. Indeed, it is sufficient for Argentina to
demonstrate that measures 1 to 4 are designed to secure compliance with its regulations and
laws, including those established to prevent tax avoidance.
818

817 The prejudicial effect of harmful tax practices on taxpayers has been recognized in the relevant
international fora. See, for example OECD, OECD's Project on Harmful Tax Practices, The 2001 Progress
Report, (Exhibit ARG-7), para. 2 ("[u]ltimately, taxpayer confidence in the integrity and fairness of the tax
system, and in government in general, declines as honest taxpayers feel that they shoulder a greater share of
the tax burden and that government cannot effectively enforce its own tax laws", available at
http://www/oecd.org/ctp/harmful/2664450.pdf (exhibit provided in English; Spanish text available at
http://www.ief.es/recursos/publicaciones/libros/informes_OCDE.aspx); G-20 Statement on Transparency and
Exchange of Information for Tax Purposes, 21 November 2004, (Exhibit ARG-85), p. 1, ("[l]ack of access to
information in the tax field has significant adverse effects. It allows some to escape tax that is legally due and
is unfair to citizens that comply with the tax laws (exhibit provided in English; Spanish translation by the WTO
Secretariat); and OECD Addressing base erosion and profit shifting, (Exhibit ARG-22), p. 50, available at
http://www.oecd.org/tax/addressing-base-erosion-and-profit-shifting-9789264192744-en.htm (exhibit
provided in English; Spanish text available at: http://www.oecd-ilibrary.org/taxation/abordando-la-erosion-de-
la-base-imponible-y-la-deslocalizacion-de-beneficios_9789264201224-es) ("if other taxpayers (including
ordinary individuals) think that multinational corporations can legally avoid paying income tax it will undermine
voluntary compliance by all taxpayers – upon which modern tax administration depends.").
818 We note in this regard that the evidence provided by Argentina indicates that in the relevant
international fora both tax evasion and tax avoidance are considered to be problematic practices that should be
combated and eliminated. For example, in 2013, the G-20 stated: "Cross-border tax evasion and avoidance
undermine our public finances and our people's trust in the fairness of the tax system. Today, we endorsed
plans to address these problems and committed to take steps to change our rules to tackle tax avoidance,

7.641. We therefore disagree with Panama's claim that measures 1 to 4 are not designed to
secure compliance with the LIG because the LIG "does not regulate the offence of tax evasion". 819
We consider that, despite not "defining" tax offences, the LIG is relevant as a law or regulation
with which the measures at issue seek to secure compliance. If we were to follow Panama's
argument that only "laws or regulations" that "define offences" can be relevant for the purposes of
applying Article XIV(c) of the GATS, we would considerably diminish the scope of the "laws or
regulations" that may be relevant under this provision. Panama's approach could have as a
consequence that only criminal laws or regulations could be considered relevant "laws or
regulations" for the purposes of applying Article XIV(c) of the GATS. The Panel considers, on the
contrary, that the concept of "laws or regulations" within the meaning of Article XIV(c) also covers
laws and regulations that establish obligations to be met in the jurisdiction of the Member invoking
the provision. More specifically, laws or regulations that define offences are only relevant to the
extent that there is a prior obligation that must be met.
7.642. In the light of the foregoing, the Panel considers that Argentina has demonstrated that
measures 1, 2, 3 and 4 are designed to secure co mpliance with the relevant provisions of the LIG,
the LPT, the Criminal Tax Law and the National Constitution of Argentina.
7.643. We now examine whether measures 7 and 8 are designed to secure compliance with the
laws and regulations identified by Argentina.
2. Whether measures 7 and 8 are "designed to secure compliance" with
the laws and regulations identified
7.644. With regard to measure 7, Argentina claims that it ensures compliance with Articles 118.3
of Law No. 19.550 on Commercial Companies (LSC) and 188 of IGJ Resolution No. 7/2005, which
require proof of the legitimacy of commercial activities from the parent company in the home
jurisdiction for the purpose of establishing branches in the City of Buenos Aires.
820 In the case of
measure 8, Argentina maintains that it is a measure necessary for securing compliance with Law
No. 25.246 on Concealment and Laundering of Money of Criminal Origin in the area of prevention
of money laundering. According to Argentina, the request for prior authorization in order to sell
foreign currency to non-residents for the repatriation of direct investment enables the banking
entity to place on record that it has verified the documentation submitted by the customer in order
to approve the type of investment declared, an d that the funds used for the purchase of the
foreign currency transfer come from the sale within the country of the assets realized, as well as
the reasonableness and authenticity of the transaction.821
7.645. In connection with measure 7, Panama responds that Argentina did not put forward any
argument to show that this measure is designed to secure compliance with Articles 118 of the LSC
and 188 of IGJ Resolution No. 7/2005, and that it effectively does so. According to Panama,
Argentina neither identified nor submitted evidence regarding the fraudulent or deceptive practices
that are explicitly contrary to Articles 118 of the LSC and 188 of IGJ Resolution No. 7/2005 and
which it is sought to prevent or mitigate through Article 192 of IGJ Resolution No. 7/2005. 822
Panama argues that Argentina has also provided no explanation of how measure 8 is intended to
secure compliance with Law No. 25.246 on Concealment and Laundering of Money of Criminal
Origin.
823

harmful practices, and aggressive tax planning." See the G-20 Declaration, Saint Petersburg Summit,
5-6 September 2013, (Exhibit ARG-87), p. 4 (exhibit provided in English; Spanish translation by the WTO
Secretariat). We also note that the multilateral Council of Europe/OECD Convention on Mutual Assistance in
Tax Matters condemns both tax evasion and tax avoidance: "The Council of Europe/OECD Convention on
Mutual Administrative Assistance in Tax Matters was developed jointly by the Council of Europe and the OECD
to provide for all possible forms of administrative co-operation between states in the collection and assessment
of taxes, in particular with a view to combating tax avoidance and evasion." See the OECD Report, Tax
Co-operation 2009: Towards a Level Playing Field, (Exhibit ARG-41), p. 346 (exhibit provided in English;
Spanish translation by the WTO Secretariat).
819 Panama's comments on Argentina's response to Panel question No. 82.
820 Argentina's first written submission, para. 266; and second written submission, para. 72.
821 Argentina's first written submission, paras. 328 and 329 and Explanatory Annex No. 2, para. 52; and
second written submission, para. 72.
822 Panama's second written submission, paras. 2.755 and 2.756.
823 Panama's second written submission, para, 2.802.

7.646. As regards measure 7, we note that Section XV of the LSC 824, which includes Article 118,
concerns companies incorporated abroad. Article 118.3 of the LSC establishes various
requirements which a company incorporated abroad must meet when setting up in Argentina, such
as proving that the company complies with the laws of its country, establishing domicile in
Argentina or showing good cause for the decisi on to create the representative office, and
designating the person to be responsible for running it. In turn, IGJ Resolution No. 7/2005
establishes various requirements for the registration of companies incorporated abroad. Article 188
of this Resolution specifies the requirements to be met for registering a foreign company under
Article 118.3 of the LSC. This provision describ es the documentation and type of information
required for the purpose of registering a foreign company in Argentina (notably, the particulars of
the partners, the amount of the assets etc.).
825 Consequently, the additional information required
of companies located in non-cooperative jurisdictions intending to set up branches in the City of
Buenos Aires, pursuant to Article 192 of IGJ Resolution No. 7/2005 under which measure 7 is
maintained, enables the Argentine authorities to obtain the relevant information for the purpose of
applying Article 118.3 of the LSC and Article 188 of IGJ Resolution No. 7/2005.
7.647. As regards measure 8, Argentina has argued that it is designed to secure compliance with
Law No. 25.246 on Concealment and Laundering of Money of Criminal Origin 826, which establishes
rules to combat money laundering. Articles 20, 20 bis and 21, cited by Argentina, refer to the duty
to inform the Financial Intelligence Unit (UIF). In particular, the various persons required to report
to the UIF are identified (Article 20), the content of the reporting duty is defined (Article 20 bis)
and other related obligations are established (f or example, the obligation for the persons
concerned to collect relevant information from their clients). The BCRA is expressly identified as a
person subject to the duty to report to the UIF. In our view, by requiring the BCRA to conduct
closer scrutiny of transfers to non-cooperative jurisdictions in order to ensure that the operations
concerned, are of genuine origin, Communication "A" 4.940, Section I, under which measure 8 is
maintained, is designed to secure compliance with Law No. 25.246 on Concealment and
Laundering of Money of Criminal Origin. These additional information requirements enable the
Argentine authority, for example, to verify the identity of the person obliged to report to the UIF in
situations where the requested authority fails to provide this information, as in the case of the
authorities of a country which does not exchange information with Argentina. Measure 8,
therefore, makes it possible to verify that the repatriation of capital does not cover up a money
laundering operation.
7.648. Taking the above into account, the Panel considers that Argentina has demonstrated that
measure 7 is designed to secure compliance with the relevant provisions of Law No. 19.550 on
Commercial Companies (LSC) and IGJ Resolution No. 7/2005, and that measure 8 is designed to
secure compliance with the relevant provisions of Law No. 25.246 on Concealment and Laundering
of Money of Criminal Origin.
3. Relevance of the prevailing circumstances at the time of
implementing measures 1, 2, 3, 4, 7 and 8
7.649. We recall that previous panels have taken into account the prevailing circumstances at the
time of implementing measures when assessing whether these were designed to secure
compliance with laws and regulations under Article XX(d) of the GATT 1994.
827 We consider that
such analysis is also relevant to our analysis under Article XIV(c) of the GATS.
7.650. We note that Argentina has presented evidence of the existence of fraudulent tax practices
between Argentine taxpayers and non-cooperative ju risdictions. These practices involve "offshore"
companies based in non-cooperative jurisdictions, including Panama. The fraudulent manoeuvres
documented by the AFIP include the use of such co mpanies as owners of intangible assets of an
economic group, to which royalties or usage fees are payable; the supply of intra-group services;
intermediation in buying and selling transactions and the simulation of financial loans. The AFIP
found that Argentine residents participate in "offshore" companies located in Panama without
informing the Argentine tax authorities and use those companies to evade tax. The AFIP also

824 Law on Commercial Companies, (Exhibits PAN-34 / ARG-43).
825 IGJ Resolution No. 7/2005 (Exhibits PAN-62 / ARG-33).
826 Law on Concealment and Laundering of Money of Criminal Origin, (Exhibit ARG-32).
827 Panel Reports, Korea – Various Measures on Beef, paras. 655-658; China – Auto Parts,
paras. 7.309-7.312; and Colombia – Ports of Entry, paras. 7.542 and 7.543.

described the effects that harmful tax planning can have, including the possibility of laundering
money through non-externalized operations and lowering the tax base. The AFIP indicates,
inter alia, that investigative work led to the detection of 2,699 Argentine taxpayers with companies
abroad, of which 27.26% were companies resident in Panama. The Argentine authorities identified
1,542 Argentine taxpayers who did not externalize th eir participation in "offshore" companies. The
document also indicates that "the AFIP filed requests with the Republic of Panama for exchange of
information through diplomatic channels, none of which received a response" from Panama.
828 The
Panel therefore considers that the evidence submitted by Argentina demonstrates that transactions
with entities located in non-cooperative jurisdictions make tax evasion possible because the lack of
transparency characterizing such jurisdictions facilitates manoeuvres intended to evade taxes in
Argentina.
7.651. We also note that the efficacy of defensive tax measures, such as the measures at issue in
the present case, in preserving the integrity of national tax systems has been recognized in the
relevant international fora, in particular the OECD and the G-20. Argentina has provided ample
evidence of the recognition by these fora of th e important role of defensive tax measures as a
means of protecting public revenue.
7.652. For example, mention should be made of a 1998 OECD report which identifies the ways in
which harmful tax practices affect the economy and the tax systems of other countries, proposes
criteria for determining whether a particular jurisdiction may be considered a "tax haven", and
identifies defensive measures that countries may take to deal with harmful tax competition.
829
Likewise, another OECD report of 2000 makes the following recommendation:
The Committee [on Fiscal Affairs] recommends a general framework within which
Member countries can implement a common approach to restraining harmful tax
competition. This framework will facilitate the ability of countries to take defensive
measures swiftly and effectively against jurisdictions that persist in their harmful tax
practices. Defensive measures are important so that the adverse impacts from
uncooperative jurisdictions can be addressed and so that these jurisdictions do not
gain a competitive advantage over co-operative jurisdictions. In the application of the
co-ordinated defensive measures, no distinction shall be made between jurisdictions
that are dependencies of OECD countries and those that are not. These defensive
measures would be at the discretion of countries and taken under their domestic
legislation or under tax treaties. Moreover, each country may choose to enforce the
defensive measures in a manner that is proportionate and prioritised according to the
degree of harm that a particular jurisdiction has the potential to inflict, and taking into
account the effectiveness of its existing defensive measures.
830
7.653. An OECD report of 2001 acknowledges the benefits of exchanging information between tax
authorities in order to halt harmful tax practices and notes that "a framework of coordinated
defensive measures is a means by which countries with similar concerns can support each other's
efforts to counter the effects of harmful tax practices". 831 Another OECD report of 2004 discusses
the importance of guaranteeing a coordinated appr oach to the application of defensive measures
against non-cooperative jurisdictions, indicating that it is not "possible to produce an exhaustive or
exclusive list of measures that might be used" and identifies some possible defensive measures.832

828 AFIP, Offshore companies – Fraudulent manœuvres and harmful tax planning, (Exhibit ARG-44).
829 Argentina's first written submission, paras. 17-29; and OECD, 1998 Report, Harmful Tax Competition
– An Emerging Global Issue, (Exhibit ARG-5), Chapter 2.
830 OECD, Towards Global Tax Co-operation – Report to the 2000 Ministerial Council meeting and
Recommendations by the Committee on Fiscal Affairs, OECD, 2000, (Exhibit ARG-6), para. 33, available at
http://www.oecd.org/tax/harmful/2090192.pdf (exhibit provided in English; Spanish text available at:
http://www.ief.es/recursos/publicaciones/libros/informes_OCDE.aspx). See also Argentina's first written
submission, paras. 40 and 41.
831 OECD, The OECD's Project on Harmful Tax Practices: The 2001 Progress Report, (Exhibit ARG-7),
para. 47, available at http://www/oecd.org/ctp/harmful/2664450.pdf (exhibit provided in English; Spanish text
available at http://www.ief.es/recursos/publicaciones/libros/informes_OCDE.aspx). See also Argentina's first
written submission, paras. 44-48.
832 OECD, The OECD's Project on Harmful Tax Practices: The 2004 Progress Report, (Exhibit ARG-9),
para. 30, available at http://www.oecd.org/tax/harmful/30901115.pdf (exhibit provided in English; Spanish

7.654. We note that, at their meeting held in Pittsburgh in November 2009, the members of the
G-20 reiterated their commitment "to maintain the momentum in dealing with tax havens, and
agreed that they were "ready to use countermeasures against tax havens from March 2010".
833
Likewise, the lack of transparency in non-cooperat ive jurisdictions has been identified as a factor
that can encourage money laundering and therefore justifies the application of defensive
measures. In the same Declaration, the G-20 reaffirmed their commitment "to maintain the
momentum in dealing with … money laundering".
834
(iv) Conclusion
7.655. In the light of the foregoing, the Panel considers that Argentina has proved to its (the
Panel's) satisfaction that measures 1, 2, 3 and 4 are designed to secure compliance with the
relevant provisions of the LIG, the LPT, the Criminal Tax Law and Argentina's National
Constitution. The Panel also considers that Argentina has proved to its (the Panel's) satisfaction
that measure 7 is designed to secure compliance with the relevant provisions of Law No. 19.550
on Commercial Companies (LSC) and IGJ Resolution No. 7/2005, and that measure 8 is designed
to secure compliance with the relevant provisions of Law No. 25.246 on Concealment and
Laundering of Money of Criminal Origin.
7.656. Consequently, the Panel will now examine whether measures 1, 2, 3, 4, 7 and 8 are
"necessary" to secure compliance with the aforementioned laws and regulations.
(b) Second element: Whether the measures are "necessary" to secure compliance
with the laws and regulations identified by Argentina
(i) The standard of "necessity"
7.657. Having found that measures 1, 2, 3, 4, 7 and 8 are designed to secure compliance with the
laws and regulations identified by Argentina, we begin our analysis of the second element of the
legal standard set out in Article XIV(c) of the GATS, namely, whether measures 1, 2, 3, 4, 7 and 8
are "necessary" to secure compliance with the said instruments in Argentina's legislation.
7.658. When examining the concept of "nece ssary" in the context of subparagraph (a) of
Article XIV of the GATS, the Appellate Body in US – Gambling defined the standard of "necessity"
as an "objective" standard and urged panels to assess the "necessity" of the measure before them
independently and objectively, taking into account the structure and application of the measures
and all the evidence in the record. The Appellate Body noted that:
[T]he standard of "necessity" provided for in the general exceptions provision is an
objective standard. To be sure, a Member's characterization of a measure's objectives
and of the effectiveness of its regulatory approach – as evidenced, for example, by
texts of statutes, legislative history, and pronouncements of government agencies or
officials – will be relevant in determining whether the measure is, objectively,
"necessary". A panel is not bound by these characterizations, however, and may also
find guidance in the structure and operatio n of the measure and in contrary evidence
proffered by the complaining party. In any event, a panel must, on the basis of the
evidence in the record, independently and objectively assess the "necessity" of the
measure before it.
835 (emphasis original)
7.659. In EC – Seal Products , the Appellate Body summarized its previous decisions on the
necessity standard as follows:

text available at http://www.ief.es/recursos/publicaciones/libros/informes_OCDE.aspx). See also Argentina's
first written submission, para. 55.
833 Argentina's first written submission, para. 72 (referring to the G-20, Leaders' Statement, The
Pittsburgh Summit, 24-27 September 2009, (Exhibit ARG-15), para. 15). ("We are committed to maintain the
momentum in dealing with tax havens, money laundering, proceeds of corruption, terrorist financing, and
prudential standards.") (exhibit provided in English; Spanish translation by the WTO Secretariat).
834 Argentina's first written submission, para. 72 (referring to the G-20, Leaders' Statement, The
Pittsburgh Summit, 24-27 September 2009, (Exhibit ARG-15), para. 15).
835 Appellate Body Report, US – Gambling, para. 304. (footnote omitted)

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.836 The Appellate Body has further explained that, in most cases, a
comparison between the challenged measure and possible alternatives should then be
undertaken.837 838
7.660. In EC – Seal Products, the Appellate Body also recalled that:
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' [to the Member
concerned]".
839 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".
840 841
7.661. The Panel will therefore assess whether me asures 1, 2, 3, 4, 7 and 8 are "necessary"
within the meaning of Article XIV(c) of the GATS, being guided by these comments of the
Appellate Body. The Panel will take into account (a) the importance of the objective pursued; (b)
the measure's contribution to that objective; and (c) the trade-restrictiveness of measures 1, 2, 3,
4, 7 and 8. We shall then turn to examine whethe r it is feasible to make a comparison between
measures 1, 2, 3, 4, 7 and 8 and possible alternatives.
1. The importance of the objective pursued
7.662. We proceed to assess the importance of th e objective pursued by the laws and regulations
with which measures 1, 2, 3, 4, 7 and 8 are designed to secure compliance.
7.663. In the Panel's opinion, it can be seen from Argentina's arguments 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 the harmful tax practices of non- cooperative jurisdictions for tax transparency
purposes".
842 With respect to measure 8, Argentina claims that the objective of preventing the
risks posed by laundering money of criminal origin is an interest of the utmost importance.843
The objective pursued in the case of measures 1, 2, 3, 4 and 7

7.664. As we have already explained, the objective of measures 1, 2, 3, 4 and 7 is "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".
844 We note in this connection that previous panels
have acknowledged the importance of protecting the tax revenue system, including the prevention

836 (Footnote original) Appellate Body Reports, Korea – Various Measures on Beef, para. 164; US –
837 (Footnote original) Appellate Body Report, US – Gambling, para. 307 (referring to Appellate Body
Report, Korea – Various Measures on Beef, para. 166). See also Appellate Body Report, US – Tuna II (Mexico),
para. 321 (referring to Appellate Body Report, US – Gambling, para. 307). In the context of Article 2.2 of the
TBT Agreement, the Appellate Body stated that "[i]n most cases, a comparison of the challenged measure and
possible alternative measures should be undertaken". (Appellate Body Report, US – Tuna II (Mexico),
para. 322.) The Appellate Body then proceeded to identify circumstances in which comparison with possible
alternative measures may not be required, for instance, when the challenged measure is not trade restrictive,
or when it makes no contribution to the objective. (Ibid., footnote 647 to para. 322).
838 Appellate Body Report, EC – Seal Products, para. 5.169.
839 (Footnote original) Appellate Body Report, US – Gambling, para. 307 (referring to Appellate Body
Report, Korea – Various Measures on Beef, para. 166).
840 (Footnote original) Appellate Body Report, Brazil – Retreaded Tyres, para. 182.
841 Appellate Body Report, EC – Seal Products, para. 5.214.
842 Argentina's first written submission, para. 289.
843 Argentina's first written submission, paras. 333 and 339.
844 Argentina's first written submission, para. 289.

of tax evasion.845 We agree with those previous panels that protecting the national tax system is a
question of primordial importance for any country, and particularly for a developing country.
7.665. We also note that the importance of protecting national tax collection systems, particularly
in developing countries and, consequently, the need for measures to facilitate transparency and
the exchange of information as a way of combating tax evasion, have been recognized as a priority
at the international level for more than 15 ye ars. In a 2000 report, for example, the OECD
discussed the harmful effects of tax competition, explaining:
The goal is to secure the integrity of tax systems by addressing the issues raised by
practices with respect to mobile activities that unfairly erode the tax bases of other
countries and distort the location of capital and services. Such practices can also
cause undesired shifts of part of the tax burden to less mobile tax bases, such as
labour, property, and consumption, and increase administrative costs and compliance
burdens on tax authorities and taxpayers … the project is about ensuring that the
burden of taxation is fairly shared and that tax should not be the dominant factor in
making capital allocation decisions. … Tax base erosion as a result of harmful tax
practices can be a particularly serious threat to the economies of developing
countries. The project will, by promoting a co-operative framework, support the
effective fiscal sovereignty of countries over the design of their tax systems.
846
7.666. In 2004, participants in the Global Forum emphasized the crucial importance of ensuring
that countries can obtain from other countries the information necessary to enforce their own tax
laws:
… to facilitate the creation of an environment in which all significant financial centres
meet the high standards of transparency and effective exchange of information on
both criminal and civil taxation matters. This is vital to ensuring that countries can
obtain from other countries the information necessary to enforce their own tax laws,
to ensuring that financial centres that meet such standards are not unduly
disadvantaged by doing so, and to ensuring th at financial centres that meet such high
standards are and remain fully integrated into the international financial system and
the global community. Any significant financia l centre that decides not to adopt high
standards of transparency and effective exchange of information must not be
permitted to profit from that decision.
847
7.667. The same year, the Ministers of Financ e and Central Bank Governors of G-20 members
reaffirmed their commitment to enhancing good gove rnance and fighting illicit use of the financial
system in all its forms:

845 In Argentina – Hides and Leather, the panel recognized the importance of the fight against tax
evasion in Argentina:
We are satisfied that Argentina has adduced argument and evidence sufficient to raise a presumption
that the contested measures, in their general design and structure, are "necessary" even on the
European Communities' reading of that term. Argentina stresses the fact that tax evasion is common in
its territory and that, against this background of low levels of tax compliance, tax authorities cannot
expect to improve tax collection primarily through the pursuit of repressive enforcement strategies (e.g.
aggressive criminal prosecution of tax offenders). In those circumstances, Argentina maintains, tax
authorities must direct their efforts towards preventing tax evasion from occurring in the first place.
See Panel Report, Argentina – Hides and Leather, para. 11.305.
Likewise, in Dominican Republic – Import and Sale of Cigarettes, the panel considered:
The Panel finds no reason to question the Dominican Republic's assertions in the sense that the
collection of tax revenue (and, conversely, the prevention of tax evasion) is a most important interest
for any country and particularly for a developing country such as the Dominican Republic.
See Panel Report, Dominican Republic – Import and Sale of Cigarettes, para. 7.215, upheld by the
Appellate Body in Dominican Republic – Import and Sale of Cigarettes, para. 71.
846 OECD, Towards Global Tax Co-operation - Report to the 2000 Ministerial Council Meeting and
Recommendations by the Committee on Fiscal Affairs, OECD 2000, (Exhibit ARG-6), p. 5, available at
http://www.oecd.org/tax/transparency/44430257.pdf (exhibit provided in English; Spanish translation
available at http://www.ief.es/recursos/publicaciones/libros/informes_OCDE.aspx). See Argentina's first
written submission, para. 35.
847 OECD, A Process for Achieving a Global Level Playing Field, Global Forum on Taxation, Berlin
3-4 June 2004, (Exhibit ARG-10), para. 28 (exhibit provided in English; Spanish translation by Argentina). See
Argentina's first written submission, para. 58; and response to Panel question No. 71, para. 2.

Consequently, we are committed to transparency and exchange of information for tax
purposes. We regard this as vital to enhance fairness and equity in our societies and
to promote economic development. … Financial systems must respect commercial
confidentiality, but confidentiality should not be allowed to foster illicit activity. Lack of
access to information in the tax field has significant adverse effects. It allows some to
escape tax that is legally due and is unfair to citizens that comply with the tax laws. It
distorts international investment decisions which should be based on legitimate
commercial considerations rather than the circumvention of tax laws. The G-20
therefore regards it as a mark of good international citizenship for countries to
eliminate practices that restrict or frustrate the ability of another country to enforce
its chosen system of taxation. … We call on all countries with financial centres to
adopt and implement the high standards articulated by the OECD so that we can move
towards an international financial system that is free of distortions created through
lack of transparency and lack of effective exchange of information in tax matters. It is
important that countries which do meet these standards have confidence that they will
not be disadvantaged and that financial centres in countries that choose not to meet
these standards will not benefit from that choice.
848
7.668. In 2009, within the Global Forum fr amework, 70 jurisdictions and international
organizations reiterated "… the need of governments to protect their tax bases from
non-compliance with their tax laws …".
849 In the same year, the G-20 "welcome with satisfaction"
the expansion of the Global Forum, whose main focus "will be to improve tax transparency and
exchange of information so that countries can fully enforce their tax laws to protect their tax
base".850
7.669. More recently, in 2012, the OECD started work on the tax planning techniques used by
multinationals to minimize their tax burden by tr ansferring profits to countries where there is no
corporate tax or only low levels of income tax ("BEPS" Action Plan 851). In a 2013 report, the OECD
concluded as follows:
What is at stake is the integrity of the corporate income tax. A lack of response would
further undermine competition, as some businesses, such as those which operate
cross-border and have access to sophisticated tax expertise, may profit from BEPS
opportunities and therefore have unintended competitive advantages compared with
enterprises that operate mostly at the dome stic level. … Finally, if other taxpayers
(including ordinary individuals) think that multinational corporations can legally avoid
paying income tax it will undermine voluntary compliance by all taxpayers – upon
which modern tax administration depends.
852
7.670. In September 2014, the G-20 confirmed the importance of assisting developing countries
to protect and increase their tax bases:

848 G-20 Statement on Transparency and Exchange of Information for Tax Purposes,
21 November 2004, (Exhibit ARG-85) (exhibit provided in English; Spanish translation by the WTO
Secretariat).
849 OECD Global Forum, Moving Forward on the Global Standards of Transparency and the Exchange of
Information for Tax Purposes, Mexico, 1-2 September 2009, (Exhibit ARG-17), p. 1
850 Argentina's first written submission, para. 72 (citing the G-20 Leaders' Statement, The Pittsburgh
851 "BEPS" is the acronym for "Base Erosion and Profit Shifting".
852 OECD, Addressing base erosion and profit shifting, (Exhibit ARG-22), p. 50, available at
http://www.oecd.org/tax/addressing-base-erosion-and-profit-shifting-9789264192744-en.htm (exhibit
provided in English; Spanish text available at: http://www.oecd-ilibrary.org/taxation/abordando-la-erosion-de-
la-base-imponible-y-la-deslocalizacion-de-beneficios_9789264201224-es). See also Argentina's first written
submission, paras. 79-82. Argentina also cites the Action Plan on Base Erosion and Profit Shifting (BEPS),
(Exhibit ARG-21). In the Action Plan, the OECD explains that BEPS "undermines the integrity of the tax system,
as the public, the media and some taxpayers deem reported low corporate taxes to be unfair", noting that this
is a special concern in developing countries, where "the lack of tax revenue leads to critical under-funding of
public investment that could help promote economic growth". See the Action Plan on Base Erosion and Profit
Shifting (BEPS), (Exhibit ARG-21), p. 8 (exhibit provided in English; Spanish translation available at
http://www.oecd-ilibrary.org/taxation/plan-de-accion-contra-la-erosion-de-la-base-imponible-y-el-traslado-de-
beneficios_9789264207813-es). See also Argentina's first written submission, para. 82.

We are strongly committed to a global response to cross-border tax avoidance and
evasion so that the tax system supports growth-enhancing fiscal strategies and
economic resilience. … We endorse the fi nalised global Common Reporting Standard
for automatic exchange of tax information on a reciprocal basis which will provide a
step-change in our ability to tackle and dete r cross-border tax evasion. We will begin
exchanging information automatically between each other and with other countries by
2017 or end-2018, subject to the completion of necessary legislative procedures. We
call on all financial centres to make this commitment by the time of the Global Forum
meeting in Berlin, to be reported at the Brisbane Summit, and support efforts to
monitor global implementation of the new global standard. … We will continue to take
practical steps to assist developing countries preserve and grow their revenue bases
and stand ready to help those that wish to participate in automatic information
exchange.
853
7.671. The foregoing statements show us the support at the international level for protection of
national tax collection systems against harmful tax practices, including tax evasion. In our view,
these statements confirm that the objective, interest or value at stake in this dispute in respect of
measures 1, 2, 3, 4 and 7 is of vital importance.
The objective pursued in respect of measure 8

7.672. As regards measure 8, we recall that the objective pursued is prevention of the risks posed
by money laundering transactions.
854 As in the previous case, the importance of this objective has
been acknowledged by previous panels, for example, in US – Gambling, where it was emphasized
that protecting society against the threat of money laundering is an interest that is important in
the highest degree.
855
7.673. In our view, the evidence provided by Argentina confirms that combating money
laundering is an internationally-established priority shared by many countries, both developed and
developing. By way of example, the mandate of the FAFT, whose functioning we described in
section 2.4.4 above, is to establish standards an d promote the effective implementation of legal,
regulatory and operational measures for combating money laundering, the financing of terrorism
and the proliferation of weapons of mass destruction, as well as other related threats to the
integrity of the financial system. The FAFT's Recommendations set out "essential measures" which
its member jurisdictions (including Argentina) should have in place, inter alia, to "combat money
laundering and terrorist financing …".
856
7.674. In a 1998 report, the OECD expressed its concern at non-transparent administrative
practices because they encourage money laundering:
Because non-transparent administrative practices as well as an inability or
unwillingness to provide information not only allow investors to avoid their taxes but
also facilitate illegal activities, such as tax evasion and money laundering, these
factors are particularly troublesome. … The most obvious consequence of the failure to
provide information is that it facilitates tax evasion and money laundering. Thus,
these factors are particularly harmful characteristics of a tax haven and, as discussed
later, of a harmful preferential tax regime.
857
7.675. In a report in 2001, the OECD refers to the FAFT's opinion for the period 1998-1999 on
"Money Laundering Typologies", according to which "problems in obtaining information from
certain jurisdictions on the beneficial owners of shell companies, international business

853 Meeting of G-20 Finance Ministers and Central Bank Governors, Cairns, 20-21 September 2014,
(Exhibit ARG-128), p. 2 (exhibit provided in English; Spanish translation by the WTO Secretariat).
854 Argentina's first written submission, para. 339.
855 Panel Report, US – Gambling, paras. 6.492 and 6.493.
856 FATF, FATF Recommendations, (Exhibit ARG-25), p. 7. The FATF Recommendations were revised for
the second time in 2003, and "have been endorsed by over 180 countries, and are universally recognized as
the international standard for anti-money laundering and countering the financing of terrorism".
857 OECD, Harmful Tax Competition – An Emerging Global Issue, 1998, (Exhibit ARG-5), para. 53
(exhibit provided in English; translation into Spanish by the WTO Secretariat).

corporations (IBCs), and offshore trusts were the primary obstacles in investigating transnational
laundering activities".858
7.676. The evidence provided by Argentina show s that the need to combat money laundering is
also one of the concerns of the G-20.859
7.677. Panama does not deny the importance attached by Argentina to protecting its tax
collection system against harmful tax practices. Panama claims, however, that other interests of
considerable importance also exist, for example, the rule of law and the principle of equality in tax
matters. According to Panama, Argentina's interest in collecting taxes has to be interpreted in
conjunction with the citizen's interest in tax measures that obey these principles of conformity with
statute and equality.
860
7.678. The Panel considers that the fact that there may be "other interests of considerable
importance" does not lessen the importance of the interest or value which Argentina is seeking to
achieve. Secondly, we understand that Panama's argument suggests that the rule of law and the
principle of equality in tax matters are contrary to, or at least irreconcilable with, Argentina's
interest in protecting its tax collection system against harmful tax practices. We do not agree with
Panama. In accordance with the rule of conformity with statute enshrined in the National
Constitution ("No inhabitant of the Nation shall be obliged to perform what the law does not
demand nor deprived of what it does not prohibit"), no one is obliged to pay a tax that has not
been imposed by law.
861 We consider that the corollary of the rule of conformity with statute in tax
matters is that taxpayers must pay their taxes in accordance with tax legislation. The principle of
tax equality requires that taxpayers with equal capacity to pay should pay the same tax.
Accordingly, in our opinion, the principles of co nformity with statute and equality in tax matters
require a government to act against harmful tax practices. Indeed, as the OECD explains,
"[u]ltimately, taxpayer confidence in the integrity and fairness of the tax system, and in
government in general, declines as honest taxpayers feel that they shoulder a greater share of the
tax burden and that government cannot effectively enforce its own tax laws".
862 In our view, the
principles of conformity with statute and tax equality are not "other interests" but form an inherent
part of the interest or common value of ensuring the integrity of the national tax collection system
and, consequently of protecting it against the risks posed by harmful tax practices of
non-cooperative jurisdictions.
7.679. In line with the approach of the panel in Dominican Republic – Import and Sale of
Cigarettes
863, we consider that we have no reason to question Argentina's assertions to the effect
that the "prevention of tax evasion and the proper application of its tax legislation are interests of
maximum importance".
864 The Panel also agrees with Argentina that "the objective of preventing
the risks posed by operations to launder money of criminal origin is an interest of the utmost
importance".865 The Panel considers that this objective is even more vital for a developing country
such as Argentina.
7.680. We recall that, commenting on the relative importance of relevant common interests or
values, the Appellate Body noted that "[t]he more vital or important those common interests or

858 OECD, Behind the Corporate Veil – Using Corporate Entities for Illicit Purposes, 2001,
(Exhibit ARG-24), p. 19 (citing the FAFT report, Money Laundering Typologies, 1998-1999, p. 19).
859 See, for example, G-20, Declaration, Summit on Financial Markets and the World Economy, 2008,
(Exhibit ARG-14), Action Plan to Implement Principles for Reform, p.4; G-20, Leaders' Statement, The
Pittsburgh Summit, 24-27 September 2009, (Exhibit ARG-15), para. 15; G-20, Cannes Summit Final
Declaration: Building our Common Future: Renewed Collective Action for the Benefit of All, 2011,
(Exhibit ARG-19), paras. 35 and 86; Leaders' Declaration, Los Cabos, México, 2012, (Exhibit ARG-20),
860 Panama's second written submission, paras. 2.222-2.223, 2.341-2.342, 2.461, 2.561, 2.760 and
2.761.
861 Constitutional Principles on Tax Matters, (Exhibit PAN-83), p. 2.
862 OECD, OECD's Project on Harmful Tax Practices, The 2001 Progress Report, (Exhibit ARG-7), para. 2,
available at http://www/oecd.org/ctp/harmful/2664450.pdf (exhibit provided in English; Spanish text available
at http://www.ief.es/recursos/publicaciones/libros/informes_OCDE.aspx).
863 Panel Report, Dominican Republic – Import and Sale of Cigarettes, para. 7.215, upheld by the
Appellate Body in Dominican Republic – Import and Sale of Cigarettes, para. 71.
864 Argentina's first written submission, para. 295.
865 Argentina's first written submission, p. 103.

values are, the easier it would be to accept as 'necessary' a measure designed as an enforcement
instrument".866
7.681. In fact, the Panel considers that the common interests or values at stake are particularly
important. In any country, tax collection is an indispensable source of revenue to ensure the
functioning of the State and the various government services to citizens. Protection of the national
tax base guarantees the viability of a country's pu blic finances and, by extension, its economy and
financial system. The risks posed by harmful tax practices 867 are even more important for
developing countries because they deprive their public finances of financial resources vital to
promoting their economic development and implementing their domestic policies. Lastly, there can
be no doubt that combating money laundering, which fits in with the fight against drug trafficking
and terrorism, is a priority for the international community and thus also for Argentina.
7.682. The Panel concludes, therefore, that the protection of its tax collection system and the
fight against harmful tax practices and money laundering are objectives, interests or values of the
utmost importance for Argentina.
2. The contribution of measures 1, 2, 3, 4, 7 and 8 to achieving the
objectives pursued
7.683. We continue our analysis with the contribution made by measures 1, 2, 3, 4, 7 and 8 to
achieving the objectives pursued.
7.684. In Brazil – Retreaded Tyres , the Appellate Body determined various principles which
govern evaluation of a measure's contribution in the context of Article XX of the GATT 1994. The
Appellate Body explained in particular:
A contribution exists when there is a genui ne relationship of ends and means between
the objective pursued and the measure at issue. To be characterized as necessary, a
measure does not have to be indispensable. However, its contribution to the
achievement of the objective must be material, not merely marginal or insignificant,
especially if the measure at issue is as trade restrictive as an import ban. Thus, the
contribution of the measure has to be weighed against its trade restrictiveness, taking
into account the importance of the interests or the values underlying the objective
pursued by it.
868
7.685. We recall that, in the Appellate Body's opinion, "[t]he greater the contribution, the more
easily a measure might be considered to be 'necessary'." 869 The Appellate Body also confirmed
that the analysis of the contribution "can be do ne either in quantitative or qualitative terms". 870
The choice of a methodology for evaluating the contribution of a measure "is a function of the
nature of the risk, the objective pursued, and the level of protection sought. It ultimately also
depends on the nature, quantity, and quality of evidence existing at the time the analysis is
made".
871
7.686. As regards the importance of the measure's contribution, compared to the other
components of the "necessity calculus", in EC – Seal Products, the Appellate Body explained that a
measure's contribution is "only one component of the necessity calculus":
A measure's contribution is thus only one component of the necessity calculus under
Article XX. This means that whether a measure is "necessary" cannot be determined
by the level of contribution alone, but will depend on the manner in which the other
factors of the necessity analysis, including a consideration of potential alternative

866 Appellate Body Report, Korea - Various Measures on Beef, para. 162.
867 The expression "harmful tax practices" covers tax evasion, avoidance and fraud.
868 Appellate Body Report, Brazil – Retreaded Tyres, para. 210. See also the Appellate Body Report, EC
– Seal Products, para. 5.210.
869 Appellate Body Report, Korea – Various Measures on Beef, para. 163.
870 Appellate Body Report, Brazil – Retreaded Tyres, para. 146. See also Appellate Body Report, EC –
Seal Products, para. 5.211.
871 Appellate Body Report, Brazil – Retreaded Tyres, para. 145. See also Appellate Body Report, EC –
Seal Products, para. 5.210.

measures, inform the analysis. It will also depend on the nature, quantity, and quality
of evidence, and whether a panel's analysis is performed in quantitative or qualitative
terms. Indeed, the very utility of examining the interaction between the various
factors of the necessity analysis, and conducting a comparison with potential
alternative measures, is that it provides a means of testing these factors as part of a
holistic weighing and balancing exercise, whether quantitative or qualitative in nature.
The flexibility of such an exercise does not allow for the setting of pre-determined
thresholds in respect of any particular factor. If the level of contribution alone cannot
determine whether a measure is necessary or not, we do not see that mandating in
advance a pre-determined threshold level of contribution would be instructive or
warranted in a necessity analysis. The Appellate Body's approach in Brazil – Retreaded
Tyres is consonant with an assessment of the contribution of a measure as one
element of a holistic necessity analysis under Article XX. It is also consistent with our
understanding that the EU Seal Regime, even if it were highly trade-restrictive in
nature, could still be found to be "necessary" within the meaning of Article XX(a),
subject to the result of a weighing an d balancing exercise under the specific
circumstances of the case and in the light of the particular nature of the measure at
issue.
872
7.687. It is therefore our understanding that the criterion of the measure's contribution to
achieving the goal pursued is no more important than the other factors of the necessity analysis in
determining whether a measure is necessary.
7.688. We first examine the design, structure and operation of the measures in question. We shall
focus in particular on determining whether there is an ends and means relationship between the
objective pursued and the measures in question. Given the nature of the evidence and the
arguments of the parties, the Panel considers it more pertinent to conduct a qualitative analysis.
7.689. We recall that the objective of measures 1, 2, 3, 4 and 7 is to protect Argentina's tax
collection system in accordance with its relevant laws and regulations. As to measure 8, the
objective pursued is to prevent money laundering. We also recall that both the erosion of the
Argentine tax collection system caused by harmful tax practices and money laundering are
shielded by lack of transparency and the ab sence of exchange of information between tax
authorities. In the case of cooperative jurisd ictions, the Argentine authority has access to
information on the actual beneficiaries of transact ions and is therefore able to determine whether
the transaction has a legitimate commercial purpose. In the case of non-cooperative jurisdictions,
the Argentine tax authority has no access to information and is thus not able to identify the
beneficial owner of a transaction.
Contribution of measure 1 to achieving the objective pursued

7.690. We recall that, as described in section 2.3.2 above, measure 1 consists of a legal
presumption that, for the purposes of determining the tax base for the gains tax payable by the
service suppliers, payments made to banks or financial entities located in non-cooperative
countries as consideration for the granting of credits or loans or the placement of funds from
abroad represent a net gain of 100% for such service suppliers. Pursuant to Article 93(c) of the
LIG, Argentina's tax authorities presume, against any evidence to the contrary, a net gain in the
case of interest or remuneration paid as consideration for credits, loans or placements of funds of
any origin or nature from abroad. In order to determine the tax base for gains tax purposes, the
rule defines the percentage applicable according to whether the bank or financial entity that has
supplied the service to the Argentine consumer is located in a cooperative or non-cooperative
country: (i) if it is located in a cooperative country, a net gain of 43% is presumed; (ii) if, on the
other hand, it is located in a non-cooperative country, the presumed net gain is 100%. On these
bases, Argentina applies a rate of 35% in both cases. This means that for every 100 units (of any
currency) transmitted abroad for the purposes mentioned above, the entity granting the loan pays
15.05% tax if it is located in a cooperative jurisdiction and 35% if it is located in a non-cooperative
jurisdiction.
7.691. Argentina explains that measure 1 counters a practice commonly used by Argentine
taxpayers, namely, the simulation of loans from related offshore financial entities (insider loans).

872 Appellate Body Report, EC – Seal Products, para. 5.215 (footnotes omitted).

In our view, the evidence presented by Argentina sh ows that the simulation of financial loans is a
practice used by Argentine taxpayers to evade tax. 873 By taxing the profits earned from loans,
credits or placements of funds from non-cooperative jurisdictions at a higher rate than that on the
same services supplied from cooperative jurisdictions, measure 1 contributes to protecting the tax
base since it serves to (i) discourage the undeclared outflow of capital; and (ii) discourage false
payment of interest (on insider loans) which can then be deducted from gains tax by Argentine
taxpayers.
7.692. We therefore consider that measure 1 contributes to safeguarding Argentina's tax
collection system inasmuch as it prevents harmfu l tax practices, in particular the undeclared
outflow of capital and so-called insider loans from financial entities related to Argentine taxpayers
and located in non-cooperative countries.
Contribution of measure 2 to achieving the objective pursued

7.693. As to measure 2, described in section 2.3.3 above, we recall that it applies to any entry of
funds in favour of Argentine taxpayers from non-cooperative countries in connection with an
ex officio determination of the taxable subject matter by the AFIP for gains tax purposes. Under
this measure, it is presumed that the funds received from entities located in non-cooperative
jurisdictions constitute "unjustified increases in wealth" for the purpose of determining the tax
base in Argentina. Argentina explains that the pu rpose of this measure is to prevent undeclared
funds or income that should have been subject to tax in Argentina but was transferred to
non-cooperative jurisdictions from being repatriated to Argentina through simulated transactions
between the same beneficial owners or related parties.
874
7.694. We note that the presumption may be rebutted, i.e. that a taxpayer who proves that the
income subject to tax originated from lawful activi ties (exports, for example) is released from the
presumption of unjustified increase in wealth. This measure therefore allows Argentina's tax
authorities to obtain the information necessary to determine the true nature of a transaction with a
jurisdiction that does not furnish information on the identity of the service supplier. In our view,
the existence of this presumption discourages tax evasion by Argentine taxpayers (ex ante effect),
as it makes it more difficult to repatriate any funds surreptitiously transferred by those taxpayers
to non-cooperative jurisdictions (for example, to bank accounts in non-cooperative jurisdictions).
In this way, the measure also contributes to combating the erosion of Argentina's tax base.
7.695. We therefore consider that measure 2 contributes to safeguarding Argentina's tax
collection system inasmuch as it enables the Argentine authority to obtain the information
necessary to ensure that a transaction between an Argentine taxpayer and a service supplier
located in a non-cooperative jurisdiction has a legitimate purpose, to adjust the taxpayer's tax
base and to restore tax equality with taxpayers for which the Argentine authority has all the
necessary information.
Contribution of measure 3 to achieving the objective pursued

7.696. Measure 3, as described in section 2.3.4 above, consists of applying methods for valuing
transactions based on transfer prices in order to determine the tax base for gains tax payable by
Argentine taxpayers. The measure consists in the application, at the option of the Argentine
taxpayer, of one of the methods for valuing transact ions provided for in the regulations, and this
involves additional information requirements and the calculation of transactions for the Argentine
taxpayer in the case of transactions with persons in non-cooperative countries. This separate
valuation method enables the Argentine authorities to determine the real value of transactions
with non-cooperative jurisdictions.
875
7.697. We therefore consider that measure 3 contributes to safeguarding Argentina's tax
collection system inasmuch as it enables the Argentine authorities to obtain the information

873 AFIP, Offshore Companies – Fraudulent Manoeuvres and Harmful Tax Planning, (Exhibit ARG-44),
p. 2.
874 Argentina's first written submission, para. 280; and opening statement at the second meeting of the
Panel, para. 31.
875 Argentina's first written submission, para. 282; and opening statement at the second meeting of the
Panel, para. 31.

necessary to determine, in particular, whether the operation takes place between related parties
and its real value. It also contributes to discouraging ex ante harmful tax practices similar to those
mentioned in the preceding paragraphs and to protecting Argentina's tax base by correctly
identifying the value of transactions and the expenses which are legitimately tax-deductible.
Contribution of measure 4 to achieving the objective pursued

7.698. Measure 4, as described in section 2.3.5 above, relates, like measures 1, 2, 3, to the
determination of the tax base for gains tax payable by Argentine taxpayers. In this case, the
measure consists of applying the "payment received rule" when allocating expenses for
transactions between Argentine taxpayers and pe rsons in non-cooperative countries. Under this
measure, outlays by Argentine entities which constitute profits of Argentine source for persons
located, incorporated, based or domiciled in non-cooperative countries must be allocated to the
fiscal year in which payment for the transaction actually takes place. Argentina explains that,
contrary to the general rule of "accrual", the payment received rule enables the tax benefits from
simulated transactions to be eliminated.
876 Measure 4 thus enables the Argentine authorities to
ensure that there has actually been a payment co rresponding to the expenditure deducted by the
Argentine taxpayer from its tax base.
7.699. We note that, in both cases, the expenditure effected may be deducted from the
taxpayer's tax base; the difference is the time at which it may be deducted, i.e. the time at which
the expenditure has been accrued, on the one ha nd, or the time of payment, on the other.
Application of the time of payment as the criterion for determining the expenses deductible from
taxable income does not prevent the expenditure from being deducted and can be resolved by
submitting a sworn declaration of payment for the expenditure.
877
7.700. We therefore consider that measure 4 contributes to safeguarding Argentina's tax
collection system inasmuch as it prevents simulated transactions with service suppliers in
non-cooperative jurisdictions.
Contribution of measure 7 to achieving the objective pursued

7.701. Measure 7, as described in section 2.3.8 above, consists of imposing additional
requirements on branches of companies from non-cooperative jurisdictions for purposes of
registration in the Public Trade Register of the Autonomous City of Buenos Aires. Apart from the
requirements applicable to companies of cooperative countries, branches of companies
established, registered or incorporated in non-cooperative countries must show "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", for which the General Justice
Inspectorate (IGJ) may require additional documentation. The IGJ may also request additional
documentation in order to verify the records of the company's partners.
7.702. Hence, on its face, this measure enables the Argentine authorities to verify that a company
established in a non-cooperative country is effectively engaged in activities in its country of origin
and has not been set up in that country simply to facilitate tax evasion in Argentina ("shell
company").
7.703. We therefore consider that measure 7 contributes to safeguarding Argentina's tax
collection system inasmuch as it seeks to verify that branches of foreign companies setting up in
the City of Buenos Aires have a legitimate commercial purpose, have genuine activities, and have
not been set up by companies related to Argentin e taxpayers solely for the purpose of simulating
transactions with Argentine taxpayers through which the latter may generate fictitious costs or tax
credits and thereby improperly reduce the base for calculating their obligatory taxes.
Contribution of measure 8 to achieving the objective pursued

7.704. Measure 8, as described in section 2.3.9 above, consists of imposing the requirement to
obtain prior authorization from the BCRA in order to be able to repatriate direct investment when

876 Argentina's first written submission, para. 284; and opening statement at the second meeting of the
Panel, para. 31.
877 Argentina's first written submission, para. 301.

the beneficiary abroad (natural or legal person) is in a non-cooperative country. This measure
applies to the repatriation of investments by non-residents to a non-cooperative jurisdiction and
enables the BCRA to verify the genuineness of a repa triation of capital. It can thus be verified
whether the operation involves an actual repatriation of investment and not disguised outflow of
capital or foreign currency.
7.705. We therefore consider that measure 8 contributes to preventing money laundering
operations inasmuch as it makes it compulsory to declare, inter alia, the origin of the funds to be
repatriated for the purpose of preventing such operations.
Conclusion

7.706. In our view, measures 1, 2, 3, 4 and 7 individually contribute to protecting Argentina's tax
collection system and to ensuring the collection of taxes in accordance with the relevant laws and
regulations.
7.707. Measure 1 contributes to safeguarding Argentina's tax collection system inasmuch as it
prevents harmful tax practices, especially the und eclared outflow of capital and so-called insider
loans from financial entities related to Argentine taxpayers and located in non-cooperative
countries.
7.708. Measure 2 contributes to safeguarding Argentina's tax collection system inasmuch as it
enables the Argentine authorities to obtain the information necessary to ensure that a transaction
between an Argentine taxpayer and a service supplier located in a non-cooperative jurisdiction has
a legitimate purpose. This measure also makes it possible to adjust the tax base of the taxpayer in
question and to restore tax equality with taxpayers for which the Argentine authority has all the
necessary information.
7.709. Measure 3 contributes to safeguarding Argentina's tax collection system inasmuch as it
enables the Argentine authorities to obtain the information necessary to determine, in particular,
whether the operations is between related parties and its actual value. The measure also helps to
discourage ex ante harmful tax practices similar to those mentioned in the preceding paragraphs
and to protect Argentina's tax base by correctly identifying the value of transactions and the
expenses that are legitimately tax-deductible.
7.710. Measure 4 contributes to safeguarding Argentina's tax collection system inasmuch as it
prevents simulated transactions with service suppliers in non-cooperative jurisdictions.
7.711. Measure 7 contributes to safeguarding Argentina's tax collection system inasmuch as it
seeks to verify that branches of foreign companies setting up in the City of Buenos Aires have a
legitimate commercial purpose, have genuine activities, and have not been set up by companies
related to Argentine taxpayers solely for the purpose of simulating transactions with Argentine
taxpayers through which the latter may generate fictitious costs or tax credits and thereby
improperly reduce the base for calculating their obligatory taxes.
7.712. Measure 8, for its part, contributes to preventing money laundering operations inasmuch
as it makes it compulsory to declare, inter alia , the origin of funds to be repatriated for the
purpose of preventing such operations.
7.713. At the same time, measures 1, 2, 3, 4 and 7 have an ex ante effect by preventing and
deterring various harmful tax practices. For exam ple, the mere fact of the existence of such
measures, which act as tools for detecting fraudulent manoeuvres, may influence the future
behaviour of taxpayers and dissuade them from resorting to such practices. This has a positive
effect also for honest Argentine taxpayers because they can see that those that engage in illegal
manoeuvres do not benefit from impunity and that the State, through defensive tax measures,
ensures tax equality between Argentine taxpayers. We agree with the OECD that the mere
existence of such measures helps to "educate" taxpayers.
878 Measure 8 also has an ex ante effect

878 OECD, Addressing base erosion and profit shifting, (Exhibit ARG-22), p. 37, available at
http://www.oecd.org/tax/addressing-base-erosion-and-profit-shifting-9789264192744-en.htm (exhibit
provided in English; Spanish text available at:
http://www.oecd-ilibrary.org/taxation/abordando-la-erosion-de-la-base-imponible-y-la-deslocalizacion-de-bene

by preventing money laundering operations. Measures 1, 2, 3, 4, 7 and 8, therefore, contribute to
safeguarding Argentina's tax collection system and preventing money laundering.
7.714. The Panel also considers that it should not disregard the contribution made by measures 1,
2, 3, 4 and 7, operating in conjunction , in the context of a comprehensive policy pursued by
Argentina to ensure the collection of taxes in accordance with its relevant laws and regulations.
The application of a single measure would not make sense in terms of combating harmful tax
practices, given that these may utilize various different channels. In our view, this combined effect
of the measures concerned corresponds to more than the simple sum of each measure taken
separately.
7.715. It also appears significant to us that, in the relevant international fora (especially the
OECD and the G-20), the use of defensive measures has been recognized as a legitimate tool
which countries may utilize to protect their tax systems and prevent harmful tax practices. In this
respect, the evidence presented by Argentina shows that transactions with non-cooperative
jurisdictions pose a greater risk of tax evasion. It also shows that it is precisely the lack of
transparency prevailing in such jurisdictions (security of anonymity) which attracts taxpayers
wishing to evade tax in their countries of reside nce. We find evidence of recognition at the
international level that preventive/defensive measur es which foster tax transparency contribute to
securing compliance with the tax legislation in force, and thus to protecting the integrity of tax
collection systems. It can be seen from the evidence submitted by Argentina that the OECD
considers that such measures are "potentially useful to neutralise the deleterious effects of harmful
tax practices".
879 In addition, the examples provided by the OECD show that Argentina's measures
in this dispute are in line with those envisaged by the OECD.

ficios_9789264201224-es). ("Such deterrence strategies include, for example, influencing taxpayers through
the issuance of public rulings, applying promoter penalties, imposing additional reporting obligations, as well as
implementing effective mass communication strategies".)
879 An OECD report explains:
As noted above, the possible defensive measures that might be co-ordinated must remain flexible. It is
not, therefore, possible to produce an exhaustive or exclusive list of measures that might be used.
Based on the identification of some measures currently in use in OECD member countries and
non-OECD economies, a number of measures have been identified as being potentially useful to
neutralise the deleterious effects of harmful tax practices. These defensive measures are:
- The use of provisions having the effect of disallowing any deduction, exemption, credit or other
allowance in relation to all substantial payments made to persons located in countries or jurisdictions
engaged in harmful tax practices except where the taxpayer is able to establish satisfactorily that such
payments do not exceed an arm's length amount and correspond to bona fide transactions.
- The use of thin capitalisation provisions restricting the deduction of interest payments to persons
located in jurisdictions engaged in harmful tax practices.
- The use of legislative or administrative provisions having the effect of requiring any resident who
makes a substantial payment to a person located in a country or jurisdiction engaged in a harmful tax
practice, enters into a transaction with such a person, or owns any interest in such a person to report
that payment, transaction or ownership to the tax authorities, such requirement being supported by
substantial penalties for inaccurate reporting or non-reporting of such payments.
- The use of legislative provisions allowing the taxation of residents on amounts corresponding to
income that benefits from harmful tax practices that is earned by entities established abroad in which
these residents have an interest and that would otherwise be subject to substantially lower or deferred
taxes.
- The denial of the exemption method or modification of the credit method. Where a country levies no or
nominal tax on most of the income arising therein because of the existence of harmful tax practices, it
may not be appropriate for such income to receive an exemption otherwise intended to relieve double
taxation. Member countries that permit foreign tax credits may wish to modify those rules to prevent
the pooling of income benefiting from harmful tax practices with other income. In addition, such
countries may wish to implement systems to verify the amounts claimed actually constitute creditable
taxes.
- The use of legislative provisions ensuring that withholding taxes at a minimum rate apply to all
payments of dividends, interest and royalties made to beneficial owners benefiting from harmful tax
practices.
- The use of provisions for special audit and enforcement programs to co-ordinate enforcement activities
involving entities and transactions related to countries and jurisdictions engaged in harmful tax
practices.
- Terminating, limiting and not entering into tax treaties. Participating countries could adopt, and make
public, a policy of not entering into tax conventions with countries and jurisdictions involved in harmful
tax practices. Those that are parties to conventions with such countries and jurisdictions may wish to

7.716. Another OECD report which deals with ways of countering the incentives to evade taxes
and explains the usefulness of measures which act ex ante to deter taxpayers from evading tax is
a 2013 report entitled Addressing Base Erosion and Profit Shifting . In this report, the OECD
explains that:
Measures that negate or reduce the tax benefit sought, as well as initiatives aimed at
influencing taxpayer's and third parties' behaviours, are of obvious relevance in the
area of corporate tax planning. In practice, there are a variety of anti-avoidance
strategies that countries use to ensure the fairness and effectiveness of their
corporate tax system. These strategies often focus on deterring, detecting and
responding to aggressive tax planning. Deterrence strategies generally aim at
deterring taxpayers from taking an aggressive position. Such deterrence strategies
include, for example, influencing taxpayers through the issuance of public rulings,
applying promoter penalties, imposing additional reporting obligations, as well as
implementing effective mass communication strategies. Detection strategies aim to
ensure the availability of timely, targeted and comprehensive information, which
traditional audits alone can no longer deliver. The availability of such information is
important to allow governments to identify risk areas in a timely manner and be able
to quickly decide whether and how to respond, thus providing increased certainty to
taxpayers.
In terms of response strategies, the ultimate objective of anti-avoidance measures is
often not only to counter behaviour perceived as inappropriate but also to influence
future behaviour. In other words, anti-avoidance measures are fundamental policy
prohibitions to engage in certain planning and/or to obtain certain results.
880
7.717. In the light of the foregoing, the Panel concludes that measures 1, 2, 3, 4, 7 and 8
contribute to achieving the objectives pursued.
3. The degree of trade restrictiveness of measures 1, 2, 3, 4, 7 and 8
7.718. We turn to an examination of the degree of restriction of measures 1, 2, 3, 4, 7 and 8. The
Panel notes, firstly, that none of the measures in question, i.e. measures 1, 2, 3, 4, 7 and 8,
entails a ban on trade in services in the sectors and modes concerned.

take appropriate measures to ensure that these conventions are limited or terminated. Alternatively,
participating countries could consider that all existing or proposed treaties with a country or jurisdiction
engaging in harmful tax practices contain a limitation of benefits clause which would prevent the
benefits of the treaty from being claimed by third country residents who had no real connection with the
country or jurisdiction. With respect to terminating an existing treaty, it is recognized that such action
has important implications which go beyond the revenue impact of the treaty.
See OECD, The OECD's Project on Harmful Tax Practices, The 2004 Progress Report, (Exhibit ARG-9),
para. 30, available at http://www/oecd.org/ctp/harmful/2664450.pdf (exhibit provided in English; Spanish text
available at http://www.ief.es/recursos/publicaciones/libros/informes_OCDE.aspx). (emphasis added)
880 The OECD mentions various measures to combat tax avoidance which, in its opinion, are "most
relevant":
 General anti-avoidance rules or doctrines, which limit or deny the availability of undue tax
benefits, for example, in situations where transactions lack economic substance or a non-tax business
purpose;
 Controlled foreign company rules (CFC), under which certain base eroding or "tainted" income
derived by a non-resident controlled entity is attributed to and taxed currently to the domestic
shareholders regardless of whether the income has been repatriated to them;
 Thin capitalisation and other rules limiting interest deductions, which disallow the deduction of
certain interest expenses when, e.g. the debt-to-equity ratio of the debtor is considered to be
excessive;
 Anti-hybrid rules, which link the domestic tax treatment with the tax treatment in that foreign
country thus eliminating the possibility for mismatches;
 Anti-base erosion rules, which impose higher withholding taxes on, or deny the deductibility of,
certain payments (e.g. those made to entities located in certain jurisdictions).
See OECD, Addressing Base Erosion and Profit Shifting, (Exhibit ARG-22), pp. 37 and 38, available at
http://www.oecd.org/tax/addressing-base-erosion-and-profit-shifting-9789264192744-en.htm (exhibit
provided in English; Spanish text available at: http://www.oecd-ilibrary.org/taxation/abordando-la-erosion-de-

7.719. We recall that measure 1 results in a higher tax on profits derived from certain services
(loans, credits or other services involving the placement of funds in Argentina) provided by
suppliers located in non-cooperative jurisdictions. There is an irrefutable presumption of
enrichment, in the sense that consumers in Argentina that engage in a transaction with an entity
located in a non-cooperative country shall be required to pay a higher tax even when they are in a
position to show that the purpose of the operation is not to evade taxes in Argentina (for example,
that it is a genuine loan and not an "insider loan"). The effect of measure 1 is that, for
hypothetically the same type of service, the supp lier from a non-cooperative jurisdiction will pay
more gains tax on its transactions in Argentina than a supplier from a cooperative jurisdiction. This
is not, therefore, a ban on trade in services but a measure that could potentially deter trade with
non-cooperative countries by imposing higher taxes.
7.720. Measure 2 consists of a rebuttable presum ption that enables the Argentine authorities to
obtain additional information on certain transactions. We understand and accept Argentina's
explanation that it has access to relevant tax information from those jurisdictions with which it has
signed an agreement on the exchange of ta x information. On the other hand, the same
information is not automatically available in non-cooperative jurisdictions. We also note that
Argentine taxpayers may avoid the tax effects of this measure by providing the additional
information required. We do not therefore consider that measure 2 entails a very high level of
trade restriction.
7.721. Measures 3 and 4 also enable the Argentine authorities to obtain additional information on
certain transactions. These measures do not prevent the conduct of transactions but make them
subject to certain requirements. For example, measure 3 results in the imposition of an accounting
method which implies a greater burden for Argentine taxpayers in their transactions with suppliers
of non-cooperative countries
881 but at no time does it prevent them from carrying out the
transaction. The situation is similar with regard to measure 4, where we see that the rule
applicable to Argentine taxpayers conducting transactions with service suppliers from
non-cooperative countries does not prevent them deducting the value of the transaction from their
tax base, but simply defers the deduction to the fiscal year in which payment takes place, instead
of the time of accrual. However, we also do not consider that measures 3 and 4 imply a very high
level of trade restriction.
7.722. Measure 7 consists of imposing additional requirements on branches of companies from
non-cooperative countries for registration in the Public Trade Register of the Autonomous City of
Buenos Aires. This measure also enables the Argentine authority to obtain information to which it
has no access when dealing with companies related to a non-cooperative jurisdiction.
882
Accordingly, the burden of providing the information required does not appear to us to represent a
significant obstacle to international trade in services.
7.723. Measure 8 comes into play when the service supplier withdraws from the Argentine market
and repatriates its investment. This measure requires service suppliers from non-cooperative
countries established in Argentine territory for a period of 365 days or more to seek prior
authorization from the BCRA in order to repatriate their investment. Argentina claims that this
measure implies closer scrutiny by the BCRA but this cannot prevent the repatriation of direct
investments if they meet the prescribed conditions. Argentina indicates that, to date, all requests
have received prior authorization.
883 Panama has not disputed these facts, but claims that
Argentina does not provide any type of evidence in support of its statements. 884 The burden of
providing the information required by the BCRA when repatriating investment does not appear to
us to represent a significant barrier to international trade in services.
7.724. From the foregoing, it can be seen that measure 1 may have a potentially restrictive
impact on trade in services inasmuch as it is a presumption that cannot be rebutted by the
Argentine taxpayer, not even if the legitimacy of the transaction can be proved. In the case of
measure 2, we note that its restrictive impact on international trade in services is less, since
Argentine taxpayers can be released from the presumption provided that they can prove that the
funds were earned from activities that they actually carried out or that were carried out by a third

881 See para. 7.307 above.
882 Argentina's first written submission, paras. 126 and 127.
883 Argentina's first written submission, Explanatory Annex No. 2, paras. 41 and 43.
884 Panama's second written submission, para. 2.803.

party, or else that the funds had been duly declared. For measure 3, we consider that the impact
on international trade in services is also limited inasmuch as, although it entails a different
accounting methodology in order to determine the market value of the transactions, which may
attract higher tax, at no time does it prevent such transactions. Likewise, we do not see that
measure 4 places significant obstacles in the way of transactions with non-cooperative countries,
as its effect is to defer the deduction of expenses arising from such transactions for Argentine
taxpayers until the time payment is made, but in no way prevents them from deducting the costs
incurred. As regards measure 7, this requires additional information in order to prove the
legitimacy of the commercial activities of the parent company in its home jurisdiction for any
branch wishing to establish a commercial presence in the City of Buenos Aires. Measure 8 also
involves supplying information to the Argentine authorities in order to verify the legitimacy of a
transaction; it seems to us important to bear in mind also that this measure reflects the FAFT's
recommendations.
885
7.725. We stress that none of these measures prevents the supply of services by service suppliers
from non-cooperative countries if the transactions have legitimate purposes. It seems to us,
therefore, that these measures, except for measure 1, have relatively little restrictive impact on
international trade in services. Even in the case of measure 1, the effect on international trade in
services is not equivalent to a ban.
7.726. Panama argues that measures 1, 2, 3 and 4 affect transactions with non-cooperative
jurisdictions which are not a subject of concern for Argentina but which are nevertheless affected
by the measures. We understand that Panama is referring to legitimate transactions with
non-cooperative jurisdictions. We do not share Panama's opinion in this regard. Indeed, the
measures in question have to cover all transactions because they apply ex ante and their purpose
is to detect fraudulent transactions. If 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.
7.727. We recall that the Appellate Body has explained that "[a] measure with a relatively slight
impact upon imported products might more easily be considered as 'necessary' than a measure
with intense or broader restrictive effects".
886 In the case before us, the design of the measures
and the evidence in our record does not permit us to conclude that measures 1, 2, 3, 4, 7 and 8
have a significant distortive effect on international trade in services. The Panel therefore considers
that measures 1, 2, 3, 4, 7 and 8 have a limited restrictive effect on international trade in services.
7.728. Having examined factors such as the importance of the objective, the measure's
contribution to achieving the objective and the de gree of trade restrictiveness of the measure, we
now examine whether we can make a comparison between measures 1, 2, 3, 4, 7 and 8 and
possible alternative measures.
887 This will enable us to determine whether there are other
GATS-consistent measures reasonably available to Argentina.888
4. Possible alternative measures to measures 1, 2, 3, 4, 7 and 8
7.729. We start by recalling that, according to the Appellate Body, it is for Panama, as the
complaining Member, to identify possible alternatives to Argentina's measures 1, 2, 3, 4, 7 and
8.
889 As we explained above, the Appellate Body has also clarified that an alternative measure
must be "reasonably available" to the responding Member and must preserve for the Member the
right to achieve the same desired level of protection with respect to the objective pursued:

885 The FAFT indicates in relation to "higher-risk countries", 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." See the FATF
Recommendations, (Exhibit ARG-25), p. 19. See also Argentina's first written submission, Explanatory Annex
No. 2, para. 48.
886 Appellate Body Report, Korea – Various Measures on Beef, para. 163.
887 See Appellate Body Report, EC – Seal Products, para. 5.214 (referring to Appellate Body Report,
EC – Seal Products, para. 5.169)
888 See Appellate Body Report, EC – Seal Products, para. 5.214 (referring to Appellate Body Reports,
889 Appellate Body Reports, US – Gambling, para. 309; and Brazil – Retreaded Tyres, para. 156.

The requirement, under Article XIV(a), that a measure be "necessary"—that is, that
there be no "reasonably available", WTO-consistent alternative—reflects the shared
understanding of Members that substantive GATS obligations should not be deviated
from lightly. An alternative measure may be found not to be "reasonably available",
however, where it is merely theoretical in nature, for instance, where the responding
Member is not capable of taking it, or where the measure imposes an undue burden
on that Member, such as prohibitive costs or substantial technical difficulties.
Moreover, a "reasonably available" alternative measure must be a measure that would
preserve for the responding Member its right to achieve its desired level of protection
with respect to the objective pursued under paragraph (a) of Article XIV.
890
7.730. Only if the complaining party identifies alternative measures consistent with GATS
provisions and achieving the same level of protection with respect to the objective pursued must
the responding party demonstrate why it does not consider the alternative measure proposed by
the complainant to be appropriate.
891
7.731. It is thus for Panama to identify possible alternative measures reasonably available to
Argentina that would enable Argentina to ensure the collection of taxes in Argentina, in accordance
with its tax legislation, and that they do not involve additional risks of harmful tax practices or
money laundering.
7.732. With regard to measures 1, 2 and 3, Panama basically argues that Argentina could take
measures that target only the problem Argentina wishes to address, but do not affect all
transactions, especially lawful ones.
892 We note, in the first place, that Panama has not specifically
described what type of measure reasonably available to Argentina could be applied to transactions
that are the subject of Argentina's concern, that is, transactions which cover up harmful tax
practices. In fact, by their very nature, transactions which cover up tax evasion manoeuvres are
not readily identifiable as such and the tax authorities therefore must have the means to identify
them. Consequently, measures which would be applicable solely to transactions that constitute tax
evasion could only be ex post measures. Nevertheless, in order to identify any unlawful transaction
in the first instance, other measures are needed, operating ex ante, to enable the tax authorities
to identify those transactions that are lawful and those that are not.
7.733. With regard to measure 1, going beyond the argument we have just expounded, Panama
contends that the presumption "need not be irrebuttable".
893 It is our understanding that Panama
is suggesting that an alternative measure for Argentina would be to transform the irrebuttable
presumption provided for in Article 93(c) of the LIG into a rebuttable presumption. Although we
consider that the possibility of rebutting a presumption could result in a lesser degree of trade
restriction than in the case of an irrebuttable presumption, it is difficult for us to reconcile this
argument of Panama's with its challenge to the rebuttable presumption in measure 2. Panama also
argues that for transactions between related person s, Argentina "has available to it the transfer
pricing regime under Article 15 of the LIG (except for its second paragraph), and other relevant
provisions in the RIG, which would allow prices similar to market prices to be determined".
894 In
any event, Panama does not explain how Argentina could achieve the same level of protection
against the risk of tax evasion. In particular, Panama does not explain how, based on "Article 15 of
the LIG (except for the second paragraph) … and other provisions in the RIG", Argentina could
obtain information on a service supplier located in a non-cooperative jurisdiction in order to
prevent the risk of tax evasion.
7.734. As regards measures 2 and 3, Panama puts forward no alternative measure, beyond
stating, as we have already seen, that Argentina could take measures directed solely at unlawful
transactions.

890 Appellate Body Report, US – Gambling, para. 308. See also Appellate Body Report, Brazil –
891 Appellate Body Report, US – Gambling, para. 311; and Brazil – Retreaded Tyres, para. 156.
(footnotes omitted)
892 Panama's second written submission, paras. 2.226 (measure 1); 2.344 (measure 2); and 2.463
(measure 3).
893 Panama's second written submission, para. 2.227.
894 Panama's second written submission, para. 2.228.

7.735. With regard to measure 4, we note that Panama does not propose measures which could
constitute alternatives reasonably available to Ar gentina and be less trade-restrictive. In the case
of measure 7, Panama proposes as an alternative the elimination of this regulatory provision. 895 In
our view, this is equivalent to not proposing any alternative measure. 896 Lastly, Panama does not
propose possible alternatives to measure 8 either.
7.736. The Panel therefore concludes that Panama has not identified any specific measure
reasonably available to Argentina, that is less trade-restrictive and able to achieve the same level
of protection in respect of the objective pursued as measures 1, 2, 3, 4, 7 and 8.
(ii) Conclusion
7.737. The Panel now has 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 securing
compliance with these laws or regulations, and the effect of the measures on trade in services. In
weighing these three factors, we must also bear in mind that no reasonably available alternative
measures have been identified that would permit achievement of the same level of protection as
measures 1, 2, 3, 4, 7 and 8.
7.738. The Panel has found that the protection of its tax collection system and the fight against
harmful tax practices and money laundering are interests or values of the utmost importance for
Argentina. We have also concluded that measures 1, 2, 3, 4, 7 and 8 contribute to achieving the
objective pursued. We have also considered that measures 1, 2, 3, 4, 7 and 8 have a limited
restrictive effect on international trade in services.
7.739. In addition, we have found that Panama has not identified any measure reasonably
available to Argentina and less trade-restrictive that Argentina could take in order to achieve the
same objectives, that is, to achieve the same level of tax collection and, as regards measure 8,
achieve the same level of protection against money laundering.
7.740. In the light of the foregoing, the Panel concludes on a preliminary basis that measures 1,
2, 3, 4, 7 and 8 are "necessary to secure comp liance with laws or regulations which are not
inconsistent" with the GATS within the meaning of subparagraph (c) of Article XIV of the GATS. We
now proceed to examine whether measures 1, 2, 3, 4, 7 and 8 comply with the requirements of
the chapeau of Article XIV of the GATS.
(c) Third element: Whether measures 1, 2, 3, 4, 7 and 8 comply with the
requirements of the chapeau of Article XIV of the GATS
7.741. Having found that measures 1, 2, 3, 4, 7 and 8 are provisionally justified under
subparagraph (c) of Article XIV of the GATS, we shall now consider whether they comply with the
requirements laid down in the chapeau of that provision, which states:
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…
7.742. Recently, in EC – Seal Products , in connection with the chapeau of Article XX of the
GATT 1994, which has very similar wording, the Appellate Body stated that "it imposes additional
disciplines on measures that have been found to violate an obligation under the GATT 1994, but
that have also been found to be provisionally just ified under one of the exceptions set forth in the
subparagraphs of Article XX of the GATT 1994".
897 The Appellate Body explained that the chapeau
imposes these additional disciplines "by requiring that measures not be 'applied in a manner which

895 Panama's second written submission, para. 2.762.
896 In Colombia – Ports of Entry, the panel considered that when the alternative measure proposed by
the complainant consists of producing the same result as would be obtained if the panel were to uphold any of
its claims, it is not considered that the complainant has identified any reasonably available specific measure.
See Panel Report, Colombia – Ports of Entry, para. 7.611.
897 Appellate Body Report, EC – Seal Products, para. 5.296.

would constitute a means of arbitrary or unjustifiable discrimination between countries where the
same conditions prevail, or a disguised restriction on international trade'."898
7.743. As regards the function of the chapeau, in EC – Seal Products, the Appellate Body indicated
that:
The function of the chapeau of Article XX of the GATT 1994 is to prevent the abuse or
misuse of a Member's right to invoke the exceptions contained in the subparagraphs
of that Article.
899 In that way, the chapeau operates to preserve the balance between
a Member's right to invoke the exceptions of Article XX, and the rights of other
Members to be protected from conduct proscribed under the GATT 1994. 900 Achieving
this equilibrium is called for "so that neither of the competing rights will cancel out the
other and thereby distort and nullify or impa ir the balance of rights and obligations
constructed by the Members themselves".
901 As the Appellate Body stated in US –
Gasoline, the burden of demonstrating that a measure provisionally justified under
one of the exceptions of Article XX does not constitute an abuse of such an exception
under the chapeau rests with the party invoking the exception. 902 The Appellate Body
explained that this is "a heavier task than that involved in showing that an exception
… encompasses the measure at issue."
903904
7.744. In US – Gambling , the Appellate Body explained that the chapeau of Article XIV of the
GATS refers to "the application of a measure already found by the Panel to be inconsistent with
one of the obligations under the GATS but falling within one of the paragraphs of Article XIV".905 In
EC – Seal Products, the Appellate Body clarified that:
Although this suggests that the focus of the inquiry is on the manner in which the
measure is applied, the Appellate Body has noted that whether a measure is applied in
a particular manner "can most often be discerned from the design, the architecture,
and the revealing structure of a measure". 906 It is thus relevant to consider the
design, architecture, and revealing structure of a measure in order to establish
whether the measure, in its actual or expected application, constitutes a means of
arbitrary or unjustifiable discrimination between countries where the same conditions
prevail. This involves a consideration of "both substantive and procedural
requirements" under the measure at issue.
907 ,908 (emphasis original)
7.745. We note that the chapeau of Article XIV of the GATS describes in terms very similar to
those of Article XX of the GATT 1994 the existenc e of three types of situation relating to the
application of measures that may give rise to inconsistency with the said chapeau: (i) arbitrary
discrimination between countries where like conditions prevail; (ii) unjustifiable discrimination
between countries where like conditions prevail; or (iii) a disguised restriction on trade in services.
In disputes under Article XX of the GATT 1994, the first two situations (i.e. arbitrary discrimination

898 Appellate Body Report, EC – Seal Products, para. 5.296.
899 (Footnote original) Appellate Body Report, US – Gasoline, p. 22.
900 (Footnote original) Appellate Body Report, US – Shrimp, para. 156.
901 (Footnote original) The Appellate Body, in US – Shrimp, stated that:
The task of interpreting and applying the chapeau is, hence, essentially the delicate one of
locating and marking out a line of equilibrium between the right of a Member to invoke an
exception under Article XX and the rights of the other Members under varying substantive
provisions (e.g., Article XI) of the GATT 1994, so that neither of the competing rights will cancel
out the other and thereby distort and nullify or impair the balance of rights and obligations
constructed by the Members themselves in that Agreement.
Appellate Body Report, US – Shrimp, para. 159
902 (Footnote original) Appellate Body Report, US – Gasoline, pp. 22-23.
903 (Footnote original) Appellate Body Report, US – Gasoline, p. 23.
904 Appellate Body Report, EC – Seal Products, para. 5.297.
905 Appellate Body Report, US – Gambling, para. 339 (citing Appellate Body Report, US – Gasoline)
(emphasis original). We recall that the text of the chapeau of Article XIV of the GATS is drafted in terms
virtually identical to the chapeau of Article XX of the GATT 1994. Accordingly, the case law developed under
Article XX of the GATT 1994 is relevant for our analysis.
906 (Footnote original) Appellate Body Report, Japan – Alcoholic Beverages II, p. 29.
907 (Footnote original) Appellate Body Report, US – Shrimp, para. 160.
908 Appellate Body Report, EC – Seal Products, para. 5.302.

or unjustifiable discrimination) have often been addressed together. 909 The existence of one of
these situations suffices to conclude that a measure cannot be justified under Article XX of the
GATT 1994.
910
7.746. Bearing in mind this guidance from the Appellate Body, we shall examine whether the
application of the measures in question constitutes "a means of arbitrary or unjustifiable
discrimination between countries where like conditions prevail". In US – Shrimp , the Appellate
Body indicated that in order for a measure to be applied in a manner which constitutes "arbitrary
or unjustifiable discrimination between countries where the same conditions prevail", three
elements must exist: (i) the application of the measure must result in discrimination; (ii) the
discrimination must be arbitrary or unjustifiable in character; and (iii) this discrimination must
occur between countries where the same conditions prevail.
911 As the Appellate Body declared in
Brazil – Retreaded Tyres , "t]he assessment of these factors … was part
of an analysis that was directed at the cause, or the rationale, of the discrimination".912
7.747. We shall accordingly examine whether measures 1, 2, 3, 4, 7 and 8 are applied in such a
manner as to discriminate between services and service suppliers of non-cooperative countries and
like services and service suppliers of cooperative countries (MFN obligation under Article II:1 of the
GATS).
7.748. In order to conduct this examination of the measure's application, we shall be guided by
the Appellate Body's statement in EC – Seal Products . As already indicated, in that dispute the
Appellate Body determined that "whether a measure is applied in a particular manner 'can most
often be discerned from the design, the architecture, and the revealing structure of a measure'".
913
Consequently, below we shall examine "the design , the architecture, and the revealing structure"
of measures 1, 2, 3, 4, 7 and 8 "in order to establish whether the measure, in its actual or
expected application, constitutes a means of arbitrary or unjustifiable discrimination between
countries where the same conditions prevail".
914
7.749. We have found that measures 1, 2, 3, 4, 7 and 8 distinguish between services and service
suppliers of cooperative and non-cooperative countries. This distinction is made pursuant to
Decree No. 589/2013, which we consider inherent in each and every one of the measures at issue
as it is the key piece of legislation which defines their design and operation.
7.750. Article 1 of Decree No. 589/2013 establishes that cooperative countries are countries
which (i) have signed with Argentina an agreement on the exchange of tax information or a
convention to avoid international double taxation with a broad exchange of information clause,
provided that information is effectively exchanged; or (ii) have initiated negotiations with
Argentina for the purpose of signing such an agreement or convention. In the latter case, the AFIP
shall be the body responsible for determining whether the conditions necessary for the initiation of
negotiations have been met.
915
7.751. We note that the text of Decree No. 589/2013 provides that a country may be considered
"cooperative" not only when it has signed a tax information exchange agreement with Argentina
and relevant information is effectively being exchanged, but also when it has initiated negotiations
with Argentina. However, we ob serve that Argentina has no access to tax information from
countries with which it is negotiating. Argentina itself appears to acknowledge this when it states
that the objective of granting cooperative status to those countries with which it is negotiating is
to encourage the conclusion of such agreements. 916 We fail to see, therefore, how Argentina can

909 See, for example, Appellate Body Reports, US – Gasoline, US – Shrimp (Article 21.5 – Malaysia),
US – Gambling, and Brazil – Retreaded Tyres; and Panel Reports, US – Gambling, EC – Tariff Preferences, EC –
Asbestos and Brazil – Retreaded Tyres.
910 Appellate Body Report, US – Shrimp, para. 184.
911 Appellate Body Report, US – Shrimp, para. 150.
912 Appellate Body Report, Brazil – Retreaded Tyres, para. 225. (footnote omitted)
913 Appellate Body Report, EC – Seal Products, para. 5.302 (citing Appellate Body Report, Japan –
Alcoholic Beverages II, p. 29). (emphasis original)
914 Appellate Body Report, EC – Seal Products, para. 5.302. We point out that Article XIV of the GATS
refers to "like conditions", whereas the GATT 1994 refers to "the same conditions".
915 Decree No. 589/2013, (Exhibits PAN-3 / ARG–35).
916 Argentina's second written submission, para. 76. See also Argentina's response to Panel question
No. 12(b) and opening statement at the second meeting of the Panel, para. 36.

systematically have access to the information necessary to prevent harmful tax practices or money
laundering without the existence of an information exchange agreement.
7.752. In our view, it is not simply a question of Argentina not having access to the tax
information of countries with which it is negotiating. Indeed, to this must be added the fact that,
during the negotiations, the negotiating countries are not subject to the requirements laid down in
measures 1, 2, 3, 4, 7 and 8. This means that th e Argentine authorities are not able to ensure the
legitimacy of transactions with suppliers from th ese countries, even though the lack of access to
information means that these countries represent a risk for Argentina's tax system. The mere fact
of initiating and conducting negotiations does not enable Argentina to meet its objectives of
ensuring tax collection and combating harmful tax practices or money laundering. In fact, it could
be argued that this situation is counterproductive with regard to the achievement of these
objectives. We therefore agree with Panama that the mere initiation of negotiations – without the
certainty of concluding an agreement – does not constitute a sufficient mechanism to ensure the
effective exchange of information and compliance with Argentine legislation.
917
7.753. We are not convinced that, as contende d by Argentina, the fact of designating as
cooperative countries those with which negotiations have been initiated in good faith with a view
to signing an information exchange agreement pr omotes the objectives of such agreements and
encourages the rapid conclusion of an agreement.
918 It appears to us, on the contrary, that a
country which has the status of cooperative country despite failing to transmit the information
sought by the Argentine authorities does not really have any incentive rapidly to conclude an
agreement obliging it to exchange the relevant tax information.
7.754. The relations between Panama and Argent ina illustrate this problem. As explained by
Argentina, Panama was included "as of 1 January 2014 as 'a cooperative country for tax
transparency purposes' in the context of Decree No. 589/2013 and the RG AFIP [3576]/2013, after
having initiated negotiations on signing an agreement on the exchange of information for tax
purposes in November 2013 …".
919 In other words, up to 31 December 2013, Argentina considered
Panama to be a "country with low or no taxes"920 and, accordingly, applied defensive tax measures
to it. From 1 January 2014 onwards, Argentina ceased to apply these defensive tax measures to
Panama as it had initiated negotiations with Panama in November 2013. 921 Nevertheless, it would
appear there was no change as regards Argentina's access to tax information from Panama,
despite Panama's new status: Argentina still has no access to such information.
922
7.755. Consequently, the Argentine authorities' application of the initiation of negotiations rule for
granting cooperative country status creates distortions within the category of cooperative countries
itself, since Argentina includes within that category both countries with which it effectively
exchanges information (for example, Germany) and countries with which there is no exchange (as
is the case for Panama). In turn, these distortions are reflected in the application of measures 1,
2, 3, 4, 7 and 8, as they are imposed on no n-cooperative countries in application of Decree
No. 589/2013.
7.756. Together with this situation, we also note distortions in relation to the updating of the list.
We recall that, pursuant to Article 2 of Decree No. 589/2013, the AFIP is empowered to draw up
the list of cooperative countries and to keep it up to date. According to Argentina, this updating
takes place annually at the beginning of the fiscal year.
923 At the time of circulating this Report to
the parties, the list of countries which Argentina considers to be cooperative continues to be the
one published on the AFIP's website on 1 January 2014. Panama, despite have repeatedly stated
that "it has not initiated negotiations on concluding an agreement on exchange of tax

917 Panama's opening statement at the first meeting of the Panel, para. 54.
918 Argentina's opening statement at the second meeting of the Panel, para. 36. See also response to
Panel question No. 9(a).
919 Argentina's response to Panel question No. 10(c) and (d).
920 Decree No. 589/2013 replaced this term by "country not considered 'cooperative for tax
transparency purposes'".
921 Argentina's response to Panel question No. 10(c) and (d).
922 We understand that Panama's refusal to acknowledge that it has initiated negotiations with a view to
signing an agreement on the exchange of information appears to indicate that Panama has not exchanged
information with Argentina. See Panama's response to Panel question No. 7.
923 Argentina's opening statement at the second meeting of the Panel, paras. 41-43.

information"924, remains on the list of cooperative countries. However, other countries with which
Argentina initiated negotiations in 2014 (namely, Belarus, Cameroon, Côte d'Ivoire, Cyprus,
Gabon, Gibraltar and Hong Kong (China))
925 still do not have cooperative country status and are
therefore subject to Argentina's defensive tax measures.
7.757. We also note that the European Union has expressed doubts about the "apparent
discretion" with which Argentina designates cooperative jurisdictions for the purpose of applying
the chapeau of Article XIV of the GATS. The Euro p e a n U n i o n c l a i m s t h a t " t h e d i s c r e t i o n o f
Argentina's authorities does not seem to be curtailed by established criteria provided in law nor do
the distinctions drawn by Argentina appear to be linked to the regulatory objective. Rather, from
Argentina's own description of how Panama was first considered to be a non-cooperating country
… and is designated as a cooperating jurisdiction as of 1 January 2014, it appears that Argentina is
not necessarily making distinctions on the basis of international standards or effective tax
cooperation on a bilateral basis".
926
7.758. In this context, Panama criticizes Argentina for excluding from the "cooperative countries"
category jurisdictions such as Bahrain and Hong Kong (China) which, in the opinion of the Global
Forum itself, are in the same situation as Argentina as regards compliance with the tax
transparency and information exchange standards of that organization. Moreover, Argentina
includes in the list of "cooperative countries" jurisdictions which, in the opinion of the Global
Forum, do not yet meet its basic standards (for example, Luxembourg and the British Virgin
Islands).
927 Panama's argument does not appear to us to be relevant. Argentina's objective is to
exchange tax information. The key factor in enabling Argentina to exchange tax information is
signature of an agreement on the exchange of tax information with a jurisdiction, not the Global
Forum's classification or categorization of the jurisdiction. Thus, the fact that a country is "in the
same situation" as Argentina according to the Forum's criteria (that is, at the same "peer review"
stage) does not necessarily mean that the country is exchanging information with Argentina.
928
Likewise, the fact that a country does not comply with the Global Forum's basic standards does not
mean that it does not exchange tax information with Argentina if it has signed an information
exchange agreement with Argentina.
929 Again, the distortion has its origin in the discretionary
authority which governs the updating of the list, which is expressed in practice in the imposition of
measures 1, 2, 3, 4, 7 and 8, which apply to non-cooperative countries pursuant to Decree
No. 589/2013.
7.759. We also find it difficult to reconcile the application of these measures, pursuant to Decree
No. 589/2013, with the transparency and inform ation exchange standards established by the
Global Forum itself. The "Terms of Reference" fo r the Global Forum's Peer Review Process which
represent, in particular, "the standards and key elements against which jurisdictions' legal and
administrative framework and actual implementati on of the standards will be assessed" explain
that:
Exchange of information for tax purposes is effective when reliable information,
foreseeably relevant to the tax requirements of a requesting jurisdiction is available,
or can be made available, in a timely manner and there are legal mechanisms that
enable the information to be obtained and exchanged. It is helpful, therefore, to
conceptualize transparency and exchange of information as embracing three basic
components:

924 Panama's response to Panel question No. 7.
925 Argentina's response to Panel question No. 10(b)(ii).
926 European Union's third-party submission, para. 121 (Spanish translation by the WTO Secretariat).
927 Panama's response to Panel question No. 1 (referring to Exhibits PAN-3 and ARG-2).
928 It can be seen from the actual terms of reference of the Global Forum that the exchange of
information essentially has a legal basis: "The legal authority to exchange information may be derived from
bilateral or multilateral mechanisms (e.g. double tax conventions, tax information exchange agreements, the
Joint Council of Europe/OECD Convention on Mutual Administrative Assistance in Tax Matters) or arise from
domestic law." See Global Forum, Terms of Reference to Monitor and Review Progress Towards Transparency
and Exchange of Information for Tax Purposes (Terms of Reference), OECD, 2010, (Exhibit ARG-40), para. 14
(exhibit provided in English; Spanish translation by the WTO Secretariat). Paragraph C.2 of this document
provides: "The jurisdictions' network of information exchange mechanisms should cover all relevant partners".
929 In fact, countries which do not yet comply with the Forum's standards have an interest in signing
agreements, since this is one of the criteria taken into account by the Forum when evaluating its Members'
level of compliance with the Forum's standards.

 availability of information
 appropriate access to the information, and
 the existence of exchange of information mechanisms.
In other words, the information must be available, the tax authorities must have
access to the information, and there must be a basis for exchange. If any of these
elements are missing, information exchange will not be effective.930
7.760. As regards the "essential elements" of exch ange of information, the Global Forum explains
that exchange of information mechanisms should "provide for effective exchange of information
and should be in force; where agreements have been signed, jurisdictions must take all steps
necessary to bring them into force expeditiously".
931 Accordingly, the Global Forum lays emphasis
on the exchange of information having a legal basis which guarantees effective exchange. The
mere prospect – whether near or remote – of ob taining such information because negotiations on
an information exchange agreement have been initiated (including negotiations initiated in good
faith between Argentina and another country) does not appear to be in line with the standard
established by the Global Forum.
7.761. From the foregoing, we conclude that, in granting cooperative country status to countries
with which it is negotiating a tax information exchange agreement, without having in force an
agreement that allows effective exchange of such information, Argentina is applying measures 1,
2, 3, 4, 7 and 8 in a manner that is counterproduc tive with regard to the objective it has itself
declared in order to justify the distinction between cooperative and non-cooperative countries. We
recall that this objective is "the ability … to have access to the information necessary to secure
compliance with Argentina's laws and regulations".
932 This situation leads us to the statement by
the Appellate Body in Brazil – Retreaded Tyres in the sense that the absence of a relationship
between the measures and the objectives indicates that the measures discriminate in an "arbitrary
or unjustifiable" way. 933 For example, jurisdictions in different situations as regards Argentina's
access to information are classified in the same category; and jurisdictions in a similar situation as
regards Argentina's access to information are placed in different categories. We also consider that
the annual updating of the list leads to discriminatory treatment between jurisdictions in the same
situation. In both cases, we consider that the di stortions caused by the design and application of
Decree No. 589/2013 are carried over to the application of measures 1, 2, 3, 4, 7 and 8 because
Decree No. 589/2013 is an inherent part of them.
7.762. Consequently, we conclude that the application of measures 1, 2, 3, 4, 7 and 8 constitutes
arbitrary and unjustifiable discrimination within the meaning of the chapeau of Article XIV of the
GATS.
7.763. Taking into account the above, the Pane l concludes that Argentina has not demonstrated
that the measures at issue are applied in accordance with the chapeau of Article XIV of the GATS.
7.3.5.2.5 Conclusion
7.764. In the light of the foregoing, we find that measure 1 (withholding tax on interest or
remuneration payments), measure 2 (presumption of unjustified increase in wealth), measure 3
(transaction valuation based on transfer prices), measure 4 (payment received rule for the
allocation of expenditure), measure 7 (requirements for the registration of branches) and measure
8 (foreign exchange authorization requirement) ar e not covered by the exception in Article XIV(c)
of the GATS because their application constitutes arbitrary or unjustifiable discrimination within the
meaning of the chapeau of Article XIV of the GATS.

930 Global Forum, Terms of Reference, OECD 2010, (Exhibit ARG-40), paras. 8 and 9 (footnotes omitted,
emphasis original) (exhibit provided in English; Spanish translation by the WTO Secretariat).
931 Global Forum, Terms of Reference, OECD 2010, (Exhibit ARG-40), para. C.1.8, p. 8 (exhibit provided
in English; Spanish translation by the WTO Secretariat).
932 Argentina's second written submission, para. 76.
933 Appellate Body Report, Brazil – Retreaded Tyres, para. 232.

7.3.6 Argentina's defence under Article XIV(d) of the GATS
7.3.6.1 Main arguments of the parties
7.3.6.1.1 Argentina
7.765. Argentina claims that its defensive tax measures in respect of Panama's national treatment
claims under Article XVII of the GATS (measures 2, 3 and 4) are justified, alternatively, under
Article XIV(d) of the GATS, as measures which establish " that the difference in treatment is aimed
at ensuring the equitable or effective imposition or collection of direct taxes in respect of services
or service suppliers of other Members".
934
7.766. Argentina claims that the defensive tax measures provided for in the LIG and the LPT
"impose a difference in treatment that ensures the equitable or effective imposition or collection of
direct taxes in respect of services or service su ppliers of other Members" within the meaning of
Article XIV(d) of the GATS, including footnote 6 to subparagraph (d). Argentina contends that, as
can be seen from Panama's description, Argentina's defensive tax measures have been established
to impose different treatment that ensures the equitable or effective imposition or collection of
direct taxes in respect of services or service suppliers from countries not cooperating for tax
transparency purposes. Argentina claims that their very objective means that each of measures 2,
3 and 4 apply different treatment to transactions by Argentine taxpayers which involve service
suppliers in non-cooperative countries in order to ensure the equitable and/or effective imposition
and/or collection of the gains tax on the transactions in which they are involved. This is because
these measures are applied in order to ensure im position or payment of the tax, or for both
reasons, in Argentine territory and to prevent ta x avoidance or evasion and so protect Argentina's
tax base. The different treatment is based on reco gnition of the difference existing as regards the
impossibility of determining the tax base for gains tax when Argentine taxpayers engage in
transactions with service suppliers located in non-cooperative countries, as the Argentine tax
authorities do not have the necessary tax information.
935
7.767. Argentina argues that measures 2 and 4 are designed to secure compliance with the LIG,
according to which taxable income is determined in Argentina. These defensive tax measures have
been created to ensure the imposition and/or collection of gains tax and to protect the tax base,
and to mitigate the risk of their artificial erosion and of avoidance and evasion manoeuvres
between Argentine taxpayers and related entities located in non-cooperative jurisdictions. In
Argentina's opinion, measure 3 accords different treatment to transactions with service suppliers
of non-cooperative countries in order to ensure the effective imposition of gains tax in the absence
of tax information that would make it possible to verify whether the valuations of transactions
reflect actual operations which "determine, allocate or divide income, profits, gains, losses,
deductions or credits of resident persons or bran ches, or between related persons or branches of
the same person", safeguarding Argentina's tax ba se under the general transfer pricing regime in
Argentine law. Argentina points out that its defensive tax measures have been created to accord
different treatment with the objective of "ensuring the equitable and/or effective imposition and/or
collection of gains tax". Argentina claims that these measures are in themselves consistent with
the GATS and are similar to the tax measures widely adopted by WTO Members.
936
7.768. Argentina claims that its defensive tax measures are "necessary" to establish a "difference
in treatment [which is] aimed at ensuring the equitable or effective imposition or collection of
direct taxes in respect of services or service su ppliers of other Members". According to Argentina,
each of the defensive tax measures challenged by Panama is capable of contributing notably – and
does in fact contribute - to guaranteeing the equitable or effective imposition or collection of direct
taxes in respect of services or service suppliers of other Members, and also of preventing tax
avoidance or evasion and safeguarding Argentina's tax base. Argentina argues that the difference
in treatment of domestic transactions with Argentine taxpayers and transactions between
Argentine taxpayers and entities located in non-cooperative tax jurisdictions is justified because
the latter represent a greater risk of tax evasion, tax avoidance and fraud, since it is not possible
for the Argentine authorities to determine whether the transaction has a legitimate commercial
purpose or whether it is solely aimed at avoiding payment of tax in Argentina. According to

934 Argentina's first written submission, para. 355. (emphasis original)
935 Argentina's first written submission, paras. 356-361.
936 Argentina's first written submission, paras. 363-365.

Argentina, its defensive tax measures considerably reduce these risks inasmuch as they eliminate
the potential tax benefits Argentine taxpayers could derive from simulated transactions carried out
solely to avoid paying gains tax in Argentina and the consequent erosion of the tax base.
Argentina reiterates that the defensive tax measures in question constitute a "global strategy"
against the risks posed by the harmful tax practices of non-cooperative jurisdictions.
937
7.769. As to the degree of importance of the in terests protected by the defensive tax measures,
Argentina contends that the objective of securing its tax collection system against the risks posed
by the harmful tax practices of non-cooperative jurisdictions is an interest of the utmost
importance. Argentina recalls that transactions between taxpayers and entities located in
non-cooperative jurisdictions represent a greater ri sk of tax evasion, tax avoidance and erosion of
Argentina's tax base because the Argentine authorities do not have independent access to
information on the identity of the beneficial ow ners of the foreign entities and have no access
either to information on the real value of the transactions in question. By reducing the
opportunities for the occurrence of this type of de ceptive and fraudulent transaction, the defensive
tax measures in question reinforce the overriding interest of protecting Argentina's tax system
against the risks posed by the harmful tax practi ces of non-cooperative jurisdictions. Argentina
reiterates that the level of importance of protecting tax collection and the application of
Argentina's taxation system against the risks posed by the harmful tax practices of
non-cooperative tax jurisdictions is corroborated by the work of the Global Forum.
938
7.770. Argentina argues that the defensive tax measures in question are not excessively
restrictive on trade in financial services provided by service suppliers in non-cooperative tax
jurisdictions.939 Regarding this aspect, Argentina refers to the statement in connection with its
defence under Article XIV(c) of the GATS.940
7.771. Argentina concludes that there is no single factor that works against the conclusion that
measures 2, 3 and 4 are covered by subparagraph (d) of Article XIV.941
7.772. Argentina argues that measures 2, 3 and 4 are applied in accordance with the chapeau of
Article XIV of the GATS. The different treatment of taxpayers established by Argentina's defensive
tax measures for gains tax purposes in relation to domestic transactions and transactions involving
Argentine taxpayers and service suppliers of non-cooperative jurisdictions can hardly be seen as
"arbitrary" or "unjustifiable". From the point of view of the Argentine tax authorities, these two
categories of transaction entail different levels of risk in order "to ensure the equitable or effective
imposition and collection of direct taxes in Argentina in accordance with its tax legislation". While
in the case of suppliers in Argentina, the Argentine tax authorities are able to obtain the
information necessary "to ensure the equitable and effective imposition and collection of direct
taxes", in the case of suppliers from non-cooperative jurisdictions, the Argentine tax authorities
are not able to obtain this information. According to Argentina, this difference has a negative effect
on its capacity "to ensure the equitable or effective imposition and collection of direct taxes" and
protect the integrity of its tax base.
942
7.773. Argentina contends that the difference in treatment of taxpayers for the purposes of gains
tax in transactions involving service suppliers in Argentina and transactions involving Argentine
taxpayers and service suppliers of non-cooperative jurisdictions, as reflected in Argentina's
defensive tax measures, is based on the internationally recognized rules of the Global Forum and
the OECD, to which, moreover, Panama has committed itself. Argentina concludes that the reason
or motive for the different treatment attributed by the rules to service suppliers in Argentina
vis-à-vis service suppliers of non-cooperative jurisdictions is directly related to the legitimate
purpose of "ensuring the equitable or effective imposition or collection of direct taxes in respect of
services or service suppliers of other Members" in the light of the greater risks which transactions
with non-cooperative jurisdictions entail in respect of effective collection, the risks of tax evasion

937 Argentina's first written submission, paras. 367-371.
938 Argentina's first written submission, paras. 381-384.
939 Argentina's first written submission, paras. 386 and 387.
940 See para. 7.536 above.
941 Argentina's first written submission, para. 389.
942 Argentina's first written submission, paras. 392-395.

and avoidance, the transfer of pr ofits and the protection of Argentina's tax base in comparison
with domestic transactions.943
7.3.6.1.2 Panama
7.774. Panama notes that there is no jurisprudence establishing the manner in which this
provision should be interpreted and applied in an actual case, but there is no reason not to apply
by analogy the same approach as that used for the application of Article XIV(c)(i) of the GATS.
Panama recalls that the requirements of the chapeau are the same for a defence under
Article XIV(d) of the GATS. According to Panama, the party invoking this provision in an attempt to
show cause for a measure violating Article XVII of the GATS has the burden of proving that its
measure falls within the scope of this rule. Panama considers that, in order to provisionally justify
a measure under subparagraph (d) of Article XIV, the respondent must prove that it is a measure
whose purpose is to ensure "the equitable or effective imposition or collection of direct taxes in
respect of services or service suppliers of other Members". To do so, a respondent must:
(i) identify the direct taxes; (ii) establish what it considers to be equitable or effective imposition
or collection [of those taxes] in respect of services and service suppliers of other Members; and
(iii) demonstrate that the purpose of the measure is to ensure such imposition or collection.
944
7.775. Panama argues that identification of direct taxes refers to identification of taxes directly
imposed on the person subject to the tax obligation. Direct taxes have to be distinguished from
indirect taxes or any other form of taxation (including levies and tax contributions). As regards the
second element, the respondent must prove that the measure in question relates to equitable or
effective imposition or collection in respect of services or service suppliers of other Members, and
identify what it considers to be equitable or effective in terms of tax collection or imposition.
According to Panama, if a measure does not relate to imposition or collection in respect of services
or service suppliers of other Members, it falls outside the scope of Article XIV(d) of the GATS.
Panama contends that, in the third place, a re spondent must prove that the purpose of the
measure is to ensure the equitable or effective collection or imposition in question. In order to do
this, it must evaluate the specific purpose of the measure, whether it is contained in a rule, as well
as its design, structure and architecture.
945
7.776. Panama argues that measures 2, 3 and 4 are not intended to ensure the collection of
direct taxes in respect of services or service suppliers abroad. According to Panama, measure 2
not only affects the collection of the gains tax – a direct tax – but also VAT and internal taxes,
which are indirect taxes.
946 Panama acknowledges that measure 3 is related to the imposition or
collection of a direct tax, but argues that it is not related to the collection or imposition of taxes on
services or service suppliers of other Members. According to Panama, the purpose of this measure,
as Argentina itself has indicated, is to determin e the accuracy of the actual value between related
parties in order to prevent transactions whose purpose is to evade taxes and/or transfer profits to
non-cooperative jurisdictions. Panama claims that the measure may produce effects and a possible
increase in the tax collected from the consumer of the services, that is, the Argentine taxpayer,
but that it is not related to the imposition or collection of gains tax "in respect of services and
service suppliers of other Members". It thus appears that the measure does not relate to tax
collection or imposition in respect of service suppliers of other Members. Panama argues that it is
also not a measure concerning the collection or imposition of gains tax in respect of services of
other Members because the imposition or collection of gains tax in respect of the services that are
affected in mode 1 is governed by Articles 9 to 13 and Title V of the LIG. With regard to the
services that might be affected in mode 2 – in asmuch as they are activities conducted outside
Argentina – Panama notes that they are not taxed under the LIG pursuant to Article 5 of this
Law.
947 Panama acknowledges that measure 4 is related to collection of a direct tax.948
7.777. Panama argues that measures 2, 3 and 4 ar e not related to the collection or imposition of
tax on services or service suppliers of other Members. These measures may have effects and make

943 Argentina's first written submission, paras. 396-398.
944 Panama's second written submission, paras. 2.350-2.353.
945 Panama's second written submission, paras. 2.354-2.358.
946 Panama's opening statement at the first meeting of the Panel, para. 55; second written submission,
paras. 2.360 and 2.361.
947 Panama's opening statement at the first meeting of the Panel, para. 56; second written submission,
paras. 2.471 and 2.472.
948 Panama's second written submission, para. 2.570.

possible an increase in the tax collected from th e consumer of the services, namely, the Argentine
taxpayer. None of these three measures, however, is related to collection or imposition in respect
of services or service suppliers of other Members.949
7.778. Panama argues that none of the measures 2, 3 and 4 is applied in accordance with the
chapeau of Article XIV of the GATS. Accordin g to Panama, each of these three measures
constitutes a means of arbitrary and unjustifiab le discrimination between countries in similar
situations for the purposes of tax transparency and exchange of information. Panama contends
that Argentina's distinctions based on the list of countries cooperating for purposes of tax
transparency and exchange of information do not reflect impartial and neutral treatment of
countries in similar situations in this context. Panama also claims that these measures are a
disguised restriction on trade in the relevant services from non-cooperative countries between
unrelated persons.
950
7.3.6.2 Assessment by the Panel
7.779. In this dispute, Argentina invokes Article XIV(d) of the GATS as an alternative to its
principal defence presented under Article XIV(c) of the GATS in respect of Panama's claims under
Article XVII in relation to measures 2, 3 and 4.
7.780. Given that we have found that measure 2 (presumption of unjustified increase in wealth),
measure 3 (transaction valuation based on transfer prices), and measure 4 (payment received rule
for the allocation of expenditure) are not inconsis tent with Article XVII of the GATS inasmuch as
they accord to services and service suppliers from non-cooperative countries treatment no less
favourable than that accorded to Argentine like services and like service suppliers, for the relevant
services and modes on which Argentina made specific commitments, the Panel refrains from ruling
on whether these measures are covered by the exception provided for in Article XIV(d) of the
GATS.
7.3.7 Argentina’s defence under paragraph 2(a) of the Annex on Financial Services
("prudential exception")
7.3.7.1 Main arguments of the parties
7.3.7.1.1 Argentina
7.781. Argentina claims that in the event that the Panel were to find measure 5 to be inconsistent
with Articles II:1, XVI:1 and XVI:2(a) of the GATS and measure 6 to be inconsistent with
Article II:1 of the GATS, its measures would be covered by paragraph 2(a) of the GATS Annex on
Financial Services (the prudential exception).
951
7.782. With regard to the scope of the prudential exception, Argentina argues that paragraph 2(a)
provides an exception for GATS-inconsistent measures that are taken for prudential or
precautionary purposes.952 Argentina does not agree with Panama’s argument that the prudential
exception only applies to "domestic regulation" measures taken under Article VI of the GATS.
Argentina sees no textual basis for such a narrow interpretation and, on the contrary, considers
that Panama’s position is in direct contradiction with the text of paragraph 2(a) of the Annex on
Financial Services.
953 Furthermore, Argentina considers that the words "[n]otwithstanding any
other provisions of the Agreement" clearly indicate that paragraph 2(a) relates to any violation of
the GATS, provided that it affects trade in services. Argentina considers this to be confirmed by
the context of the second sentence of paragraph 2(a), which states that "[w]here such measures
do not conform with the provisions of the Agreement", thereby indicating that the first sentence
applies to measures which are otherwise inconsistent with some provision of the GATS. In

949 Panama's second written submission, paras. 2.363, 2.471-2.472 and 2.571-2.572.
950 Panama's second written submission, paras. 2.364-2.365, 2.474-2.475 and 2.573. With regard to
the application of the chapeau of Article XIV to measures 2, 3 and 4, Panama also refers to the arguments it
presented in relation to Argentina's defence under Article XIV(c). See paras. 7.560-7.565 above.
951 Argentina’s first written submission, para. 551. See also Argentina’s response to Panel question
No. 85(a).
952 Argentina’s first written submission, para. 553.
953 Argentina’s second written submission, para. 80.

addition, Argentina considers that the reference to "[n]othing in the Agreement" in paragraph 2(b)
of the Annex on Financial Services indicates that the prudential exception is broad in its scope and
applies to violations of any of the provisions of the GATS.
954
7.783. With respect to the legal standard to be adopted under the prudential exception, Argentina
argues that, in assessing its defence, the Panel should proceed in "three successive steps",
namely:955 (i) establish whether the measure in question is a measure "affecting the supply of
financial services" within the meaning of paragraph 1(a) of the GATS Annex on Financial Services;
(ii) determine whether the measure has been taken "for prudential reasons" – Argentina considers
that "this question requires the existence of a 'rational relationship' between the measure and its
prudential objective" 956; and (iii) determine whether the measure is being "used as a means of
avoiding the Member’s commitments or obligations under the Agreement". With regard to this
latter aspect of the proposed legal standard, Argentina asserts that the second sentence of the
prudential exception performs the same function as the preamble to Article XIV of the GATS, i.e. to
prevent abuse in the use of the exception.
957 Argentina explains that the second sentence of the
prudential exception requires that WTO-inconsistent measures taken for prudential reasons not be,
in actual fact, measures whose objective is to avoid the disciplines of the GATS. 958 According to
Argentina, this provision is aimed at determining whether the measure is genuinely being applied
in a manner consistent with its prudential objective and not for the purpose of avoiding a
Member’s commitments or obligations under the GATS.959
7.784. With respect to the first element of the proposed legal standard, Argentina recognizes that
the measures in question are undoubtedly measures "affecting the supply of financial services"
within the meaning of paragraph 1(a) of the Annex on Financial Services. In fact, both
"reinsurance and retrocession services" and trading "transferable securities" are specifically
mentioned in the definitions of financial services in paragraph 5(a) of the Annex on Financial
Services.
960
7.785. With respect to the second element of the proposed legal standard, Argentina believes that
a "prudential" measure, or one taken "for prudential reasons" within the meaning of the prudential
exception, is a measure intended to prevent an outcome running counter to an objective
previously established or envisaged by the corre sponding authority which could have adverse or
pernicious consequences for the rights protected by that authority. 961 According to Argentina, the
first sentence of paragraph 2(a) of the Annex on Financial Services establishes a non-exhaustive
list of measures that could serve prudential purposes; it does not contain a priori any limitation on
the kinds of measures that a WTO Member can adopt for prudential reasons. The scope of the
GATS-inconsistent measures that could potentially be subject to the prudential exception is
therefore very broad.
962 For Argentina, it includes, at the very least, measures that protect the
interests of consumers or the general public with respect to the provision of financial services, as
well as measures that seek to ensure the integrity and stability of the financial system, such as
measures aimed at preventing a run on the banks or the systemic failure of the financial
institutions or at protecting the financial system against moral hazard.
963 According to Argentina,
the two measures in question are preventive meas ures that seek to protect the insured and the
consumers of financial services from risks that could undermine public confidence and affect the
functioning of Argentina’s financial markets.964
7.786. For Argentina, another central feature of a prudential measure is its fitness for the purpose
of preventing the event, or the effects resultin g therefrom, which the measure is intended to
avoid. In this respect, measure 5 is directly and specifically related with the need to preserve, as
fittingly as possible, the soundness of the Argentine financial system. 965 For Argentina, in both

954 Argentina’s second written submission, para. 81.
955 Argentina’s second written submission, para. 79.
956 Argentina’s second written submission, para. 79.
957 Argentina’s first written submission, para. 556.
958 Argentina’s first written submission, para. 556.
959 Argentina’s second written submission, para. 79.
960 Argentina’s second written submission, para. 85.
961 Argentina’s first written submission, para. 560.
962 Argentina’s first written submission, para. 554.
963 Argentina’s first written submission, para. 555.
964 Argentina’s second written submission, para. 86.
965 Argentina’s second written submission, para. 89.

cases, there is a rational relationship between the measure and its prudential objective, since both
measures ensure the achievement of precautionary or prudential objectives established in relation
to their respective sectors – reinsurance and the capital market.
966 Where measure 5 is concerned,
Argentina points out that the recitals of SSN Resolution No. 35.615/2011 refer to the need to
upgrade the control mechanisms designed to en sure the necessary solvency of insurers and
reinsurers operating within the national territory and, moreover, the fairness and technical
reasonableness of the respective contract conditions. The regulations establish additional
requirements which compensate for the lack of direct and effective access to information.
967
7.787. Argentina considers that measure 5, for example, would normally be targeted at the
reinsurance market to preserve the intrinsic nature of the insurance contract, which is based on a
relationship of trust and good faith between the insurer and the insured.
968 According to Argentina,
in the event of the insolvency or failure of a foreign reinsurer, the policy holder in Argentina would
be unable to collect its claim against that reinsurer, and the original insurer in Argentina would
continue to be responsible for paying out claims made under the original insurance contract.
Therefore, the collapse of the foreign reinsurer implies an additional burden on the financial
capacity of the original insurer, which in its turn could lead to the failure of the original insurer and
thus produce a "domino effect" in the Argentine insurance market.
969 Argentina argues that if the
reinsurer is located in a non-cooperative jurisdiction, the Argentine authorities will not have access
to information on, among other things, the effective ownership of the reinsurer, whether it is
adequately capitalized, whether its sources of fund s are legitimate, or whether there is any risk of
the transaction being used to launder money. Accordingly, transactions of this type expose the
insurance markets in Argentina to greater systemic risk.
970 Argentina maintains that, for this
reason, in imposing measures of a prudential nature that regulate the activity and certain aspects
related to its inherent risks, the Argentine authority – SSN – has not only to protect the fiduciary
relationship between the reinsurance company and the policy holders but also to preserve the
soundness of the system, so as to ensure appropriate conditions for safeguarding insurance
contracts and the fiduciary relationship between the companies and the policy holders.
7.788. In relation to measure 5, Argentina also invokes the prudential exception with respect to
Panama’s claim under Article XVI of the GATS. Argentina considers that the requirement for
insurers to pass on certain additional information to the SSN in order to be authorized to effect
reinsurance operations with foreign reinsurance en tities, from their country of origin, where these
operations correspond to individual risks amounting to less than US$50,000,000, establishes a
reasonable threshold that contributes to the prud ential objective of strengthening the reinsurers
operating within the national territory, by generating an active, sound and competitive domestic
sector capable of confronting systemic risks and en suring the necessary solvency of the reinsurers
developing there.
971 Argentina points out that measure 5 is a measure taken for the prudential
reasons mentioned in paragraph 2(a) of the Annex on Financial Services, namely: (i) to ensure the
integrity and stability of the financial system; (ii) the protection of policy holders or persons to
whom a fiduciary duty is owed by a financial serv ice supplier; and (iii) the protection of investors
and depositors. 972 According to Argentina, a crisis in the insurance and reinsurance sector
involving a loss of insurance or reinsurance capacity could quickly erupt and damage financial
stability and the real economy.973
7.789. Where measure 6 is concerned, Argentina argues that the objective is "the protection of
investors … [and] the integrity and smooth functioning of the Argentine capital market". 974
Argentina considers that it is essential for the smooth functioning of financial markets to safeguard
the financial health of the securities intermediaries and protect investors from systemic failures
involving financial intermediaries.
975 According to Argentina, securities operations with non-
cooperative jurisdictions expose the Argentine financ ial market to greater risk of systemic failure,
since in transactions of this type the Argentine regulator is unable to obtain access to information

966 Argentina’s first written submission, para. 567.
967 Argentina’s first written submission, para. 568.
968 Argentina’s first written submission, para. 561.
969 Argentina’s second written submission, para. 87.
970 Argentina’s second written submission, para. 88.
971 Argentina’s response to Panel question No. 85(a).
972 Argentina’s response to Panel question No. 85(a).
973 Argentina’s response to Panel question No. 85(a).
974 Argentina’s first written submission, para. 562.
975 Argentina’s second written submission, para. 91.

concerning the effective ownership of the party ordering the transaction and the legitimacy of the
source of its funds, nor is it able to establish whether the foreign entity is subject to adequate
supervision in its home jurisdiction. Argentina therefore maintains that securities transactions with
entities located in non-cooperative jurisdictions pose risks that may not be present in transactions
with entities located in cooperative jurisdictions, including risks of money laundering, tax evasion
and non-payment of securities transactions.
976
7.790. Argentina does not agree with Panama’s interpretation that the Spanish term " cautelar"
suggests the need to prove the existence of a "danger in delay" ( periculum in mora). According to
Argentina, the analogy with the requirements for the granting of precautionary measures by the
domestic courts is inappropriate and neither does it follow from the text of the exception. In
confirmation of this, Argentina makes reference to the equivalents of the Spanish term " cautelar"
in English (prudential) and in French (prudentielle). Argentina considers that the ordinary meaning
of the term "cautelar" suggests that the measures adopted under paragraph 2(a) of the Annex on
Financial Services are preventive in nature and that nothing in the ordinary meaning of the word
"cautelar" suggests that the risks which justify the adoption of the measure have to be imminent
or might arise in the near future. On the contrary, as the financial crisis of 2008 showed, risks to
the "integrity and stability of the financial system" are typically latent and extremely difficult to
identify beforehand, making it practically impossible to deal with those risks by taking corrective
measures. This is precisely why paragraph 2(a) of the Annex on Financial Services authorizes WTO
Members to take measures for prudential reasons to deal with risks of a systemic nature ex
ante.
977
7.791. With regard to the third element of the propos ed legal standard, Argentina argues that its
reinsurance and securities regulations are not used as a means of avoiding its commitments or
obligations under the GATS. These measures are aimed at countering systemic risks which only
arise in connection with transactions involving entities located in non-cooperative jurisdictions and
are not applied if there are no such risks. In both cases, the "access to information allows the
regulatory authority to exercise effective supervision and control in order to prevent the capital
market from becoming a vehicle for money laundering, tax evasion, market manipulation and
abuse and other harmful practices and thus ensure the integrity of the financial system by
reducing the systemic risk."
978 For example, securities transactions ordered or effected from non-
cooperative jurisdictions can be processed provided it can be shown that (i) the intermediary is
subject to appropriate regulatory supervision within the jurisdiction of origin, and that (ii) that
body has concluded an information exchange agreement with the CNV.979
7.792. Finally, in relation to measure 5, Argentina stresses the proportionality of the measure
with respect to the objective pursued. 980 In this connection, Argentina points out that in the
recitals of SSN Resolution No. 35.615/2011 themselves it is expressly stated "[t]hat, on the basis
of the experience accumulated, it has been fo und necessary to upgrade the control mechanisms
designed to ensure the necessary solvency of insu rers and reinsurers operating within the national
territory and, moreover, the fairness and technical reasonableness of the respective contract
conditions". Argentina argues that, as explained in the relevant section, the regulations establish
additional requirements that compensate for the lack of direct and effective access to
information.
981
7.3.7.1.2 Panama
7.793. Panama questions whether measures 5 an d 6 are covered by the prudential exception,
arguing that Argentina has failed to establish that the two measures are justified under that
provision.
982 Panama considers that paragraph 2(a) of the Annex on Financial Services "is in the
nature of an exception", as is clear from its initial sentence "[n]otwithstanding any other provisions
of the Agreement".983 Panama therefore considers that any WTO Member that seeks to justify the
inconsistency of a measure under the prudential exception bears the bu rden of proof and will

976 Argentina’s second written submission, para. 92.
977 Argentina’s second written submission, para. 82.
978 Argentina’s first written submission, para. 567.
979 Argentina’s second written submission, para. 94.
980 Argentina’s first written submission, para. 568.
981 Argentina’s first written submission, para. 568.
982 Panama’s second written submission, paras. 2.685-2.686 and 2.722.
983 Panama’s second written submission, para. 2.636.

therefore have to show that the measure m eets all the requirements of that provision. 984 Panama
argues that Argentina has failed to discharge its burden of proof under the prudential exception,
has proposed a legal standard that omits relevant aspects and, in general, has disregarded the
customary rules of interpretation of public international law.
985
7.794. With regard to the legal standard to be adopted under the prudential exception, Panama
suggests that the following four elements need to be verified: (i) that the measure affects the
supply of financial services; (ii) that the measure constitutes a "domestic regulation" and is
covered by the prudential exception; (iii) that the measure has been adopted for "prudential
reasons"; and (iv) that the measure in question is not being used as a means of avoiding
commitments or obligations under the GATS.
986
7.795. Where the first element of the proposed legal standard is concerned, Panama considers
that the respondent bears the burden of proving th at the measure it seeks to justify is covered by
the Annex on Financial Services. It is therefore for the respondent to prove the Annex’s
applicability in the light of the definitions established therein.
987
7.796. With regard to the second element of the legal standard, Panama considers that the
respondent must prove that the measure in question qualifies as a "domestic regulation". 988
Panama considers that the heading "Domestic Regulation" of paragraph 2 of the Annex on
Financial Services informs the interpretation of the prudential exception and confines it to the type
of measures envisaged in Article VI of the GATS, which is also entitled "Domestic Regulation". 989
For Panama, Article VI of the GATS relates to domestic regulations such as the rules and
procedures concerning qualifications, licences and technical standards.
990 Panama considers that it
must be shown that the measure concerns a supplier’s technical standard, qualification or licence,
of the kind related, for example, to the quality of the service provided or the ability of the supplier
to provide the service.991 Panama argues that an objective in terpretation of the GATS cannot give
a divergent meaning to two provisions that exp licitly cover the same subject, unless the terms
used are expressly intended to have a different meaning. 992 According to Panama, a measure that
does not qualify as a domestic regulation might be covered by other exceptions 993, but would
never fall within the scope of the prudential exception.994
7.797. With respect to the third element of the legal standard, Panama considers that the
respondent has to show that the measure satisfies the requirements of the first sentence of the
prudential exception, that is, that the domest ic regulation measure has been adopted "for
prudential reasons".
995 Panama points out that the prudential exception mentions two "prudential
reasons": (i) "the protection of investors, depositors, policy holders or persons to whom a fiduciary
duty is owed by a financial service supplier"; and (ii) "to ensure the integrity and stability of the
financial system". Panama recognizes that although the list of reasons is not exhaustive, whatever
the reason for its adoption the measure must, in any event, be precautionary or "prudential".
996
7.798. In analysing what constitutes a " motivo cautelar" (prudential reason), Panama points out
that the ordinary meaning of the Spanish word "motivo" is "causa o razón que mueve para algo"997
(moving cause or reason for something), while the word " cautelar" means " preventivo,

984 Panama’s second written submission paras. 2.633, 2.636, 2.637 and 2.708.
985 Panama’s second written submission, para. 2.633.
986 Panama’s second written submission, para. 2.637.
987 Panama’s second written submission, para. 2.638.
988 Panama’s second written submission, para. 2.651.
989 Panama’s second written submission, para. 2.643.
990 Panama’s second written submission, para. 2.645.
991 Panama’s second written submission, para. 2.651. (footnote original) Panel Report, US – Gambling,
para. 6.304.
992 Panama’s second written submission, para. 2.643.
993 Panama’s second written submission, para. 2.651. In this paragraph Panama mentions Article XIV of
the GATS, by way of example.
994 Panama’s second written submission, para. 2.651.
995 Panama’s second written submission, para. 2.652.
996 Panama’s second written submission, para. 2.652.
997 Panama’s second written submission, para. 2.653. (footnote original) Diccionario de la lengua
española, Real Academia Española, 22nd edition, 2001, p. 1545.

determinado fin o precaver lo que pueda dificultarlo "998 (preventive, precautionary, said of a
measure or rule intended to prevent a particular outcome or guard against that which might
impede it). In its turn, the ordinary meaning of the Spanish verb " precaver" is "prevenir un riesgo,
daño o peligro, para guardarse de él y evitarlo " (to forestall a risk, injury or danger, to protect
oneself from it and avoid it).
999 Panama considers that it follows from these definitions that
measures which are " cautelares" or taken " por motivos cautelares "1000 "are those adopted for a
specific 'cause or reason', namely, 'to forestall a risk, injury or danger' that might materialize, in
order thus to avoid it and safeguard legitimate interests". 1001 Panama proposes that the term
"medidas cautelares " (prudential measures) should be equated with " medidas provisionales "
(provisional measures) because "within the context of public international law, Spanish-speaking
jurists appear to use 'medidas provisionales' as a synonym of, and interchangeably with, ' medidas
cautelares'".
1002 Panama also makes reference to the French term " mesures conservatoires "
(protective measures).1003 In addition, Panama bases itself on Article [41.1] of the Statute of the
International Court of Justice (ICJ), which empowers the Court to indicate "any provisional
measures which ought to be taken to preserve the respective rights of either party". 1004 Panama
considers that this article allows the Court to indicate "[ prudential] measures only when []
considers that circumstances so require". 1005 Panama points out that the ICJ believes that "one of
the distinctive characteristics of these measures is their objective of preserving or protecting the
rights or legal interests at risk".1006
7.799. As previously mentioned, Panama argues that jurists specializing in different areas of the
law agree that it would be right to adopt prudential measures if at least two requirements that
follow from their legal nature are met: fumus boni iuris and periculum in mora . The first
requirement (likelihood of success on the merit of the case) calls for the claim to have a certain
degree of plausibility, the actual existence of a ri sk and the possibility of its materialization. The
second requirement (danger in delay) is related to the risk of an imminent legal injury being
suffered as a consequence of a delay in the adoption of the measure. It is precisely the risk of
imminent injury that generally lends prudential measures their urgent character.
1007 Furthermore,
Panama considers that, since the existence of an imminent danger does not correspond to a
permanent or structural situation, prudential measures are transitional, provisional or short-term

998 Panama’s second written submission, para. 2.653. (footnote original) Diccionario de la lengua
española, Real Academia Española, 22nd edition, 2001, p. 484.
999 Panama’s second written submission, para. 2.653. (footnote original) Diccionario de la lengua
española, Real Academia Española, 22nd edition, 2001, p. 1817.
1000 Panama’s second written submission, para. 2.653. (footnote original) Like Argentina, Panama
believes that "prudential" measures and measures taken for "prudential reasons" mean the same thing. (See
Argentina’s first written submission, para. 560). In this connection, Panama observes that paragraphs 3 and 4
of the Annex on Financial Services refer to "prudential measures" and "prudential issues", respectively, which
would appear to confirm that the key word for the purposes of the Annex on Financial Services is "prudential"
rather than "reasons", "measures" or "issues".
1001 Panama’s second written submission, para. 2.653.
1002 Panama’s second written submission, para. 2.654. (footnote original) According to some authors,
"[W]e say prudential measure, because we are not satisfied with the distinction made by the internationalists
between prudential measures and provisional, interim or emergency measures, all of the latter being
characteristic of the former" (Augusto Mario Morello and Enrique Véscovi, "La eficacia de la justicia. Valor
Internacional de Justicia: El asunto Breard (Paraguay contra Estados Unidos de América)", Agenda
Internacional, Instituto de Estudios Internacionales, p. 113.
1003 Panama’s second written submission, para. 2.654.
1004 Panama’s second written submission, para. 2.654. (emphasis original).
1005 Panama’s second written submission, para. 2.654. (emphasis original) (footnote original) Augusto
cautela", Revista Uruguaya de Derecho Procesal, No. 4, 1984, p. 165 (citing and translating into Spanish the
Order of the ICJ of 10 May 1984, case of Nicaragua v. United States of America (Request for the indication of
provisional measures of 9 April 1984)).
1006 Panama’s second written submission, para. 2.654. (emphasis original) (footnote original)
Interhandel case, Order of 24 October 1957 in ICJ Reports 1957, pp. 110-112; and Passage through the Great
Belt case (Finland v. Denmark), Order of 29 July 1991, in ICJ Reports 1991, p. 17.
1007 Panama’s second written submission, para. 2.655. (footnote original) See, for example, Andrés
Nogueira Muñoz, "Dos tipos de medidas provisionales en la jurisprudencia de la Corte Interamericana de
Derechos Humanos", Revista Derechos Humanos (2011), p. 3; Jake W Rylatt, "Provisional Measures and the
Authority of the International Court of Justice: Sovereignty vs. Efficiency", Leeds Journal of Law & Criminology,
Vol. 1 No. 1, p. 66; or Gabriel Hernández Villarreal, "Medidas cautelares en los procesos arbitrales,
¿Taxatividad o enunciación de las cautelas?", ISSN 0124-0579 (2007), pp. 189-190.

in nature. Thus, prudential measures can remain in place only for as long as the factual
circumstances that justified their adoption continue to exist.1008
7.800. With respect to the two prudential reasons envisaged in the first sentence of the prudential
exception, Panama considers that the first part, referring to the "protection of investors,
depositors, policy holders or persons to whom a fiduciary duty is owed by a financial service
supplier" covers the protection of financial services consumers in general. Here, Panama makes a
connection with the panel report in EC – Asbestos, where it is stated that "the notion of 'protection'
[implies] the existence of a risk".
1009 For Panama this "fits in perfectly with the requirement of
periculum in mora for the adoption of prudential measures", because "for prudential measures to
be adopted for the protection of financial services consumers there must be a 'risk' of the supplier
failing to fulfil its fiduciary duty and causing pecuniary injury to the consumer".1010
7.801. With regard to the second prudential reason, which consists in "ensur[ing] the integrity
and stability of the financial system", Panama considers that this objective would cover measures
aimed at preventing the imminent disintegration and destabilization of the financial system.
1011
Panama maintains that this prudential reason cannot justify any type of measure relating to
financial services which, in one way or another, has some relationship with the financial system.
On the contrary, it ought to cover only measures directed at avoiding serious and systemic "risks"
that might lead to a crisis affecting the structures of the financial system and a disruption in the
smooth functioning of the economy.
1012 As was mentioned earlier, Panama recognizes that the list
of prudential reasons in the prudential exception is non-exhaustive. In any event, the reasons for
the measure should always be "prudential".
1013 Panama stresses that the prudential nature of the
measure taken by the respondent, namely, that of prevention of a genuine risk that demands an
urgent response, is the element that should be the "subject of closest scrutiny" by a panel.
Panama considers that a panel cannot accept any reason offered by the respondent without further
examination. Panama observes that neither the GATS nor the Annex on Financial Services provides
for special standards of review distinct from those laid down in Article 11 of the DSU.
7.802. Panama concludes its analysis of this el ement by pointing out that when a panel assesses
whether the measure adopted by a Member is "for prudential reasons" within the meaning of
paragraph 2(a) of the Annex on Financial Services, it should examine whether there is a real risk
of imminent injury if that measure is not adopted or if its adoption is delayed. Thus, for example,
in the case of measures to protect consumers, there must be a risk of the financial service supplier
failing to fulfil its obligations and causing pecuniary injury to the consumer. At the same time, in
the case of measures to ensure the integrity and stability of the financial system, there must be a
risk of financial instability that threatens the foundations of the financial system.
1014
7.803. With respect to the fourth element of the proposed legal standard, Panama argues that the
purpose of the second sentence of paragraph 2(a) of the Annex on Financial Services is to limit the
possibility of measures being freely taken for allegedly prudential reasons.
1015 For this condition to
be satisfied, Panama considers that there must be a relationship of means and ends between the
measure taken and the prudential objective pursued. 1016 Panama agrees with Argentina that the
academic literature has described the second sentence of the prudential exception as equivalent to

1008 Panama’s second written submission, para. 2.656. See also second written submission, para. 2.655.
In making these arguments, Panama bases itself on Articles 74.1, 74.2 and 76.1 of the ICJ Rules of Court.
1009 Panama’s second written submission, para. 2.658 (citing Panel Report, EC – Asbestos, para. 8.170
(emphasis original)).
1010 Panama’s second written submission, para. 2.658.
1011 Panama’s second written submission, para. 2.659.
1012 Panama’s second written submission, para. 2.659.
1013 Panama’s second written submission, para. 2.660. Notwithstanding the above, in paragraph 2.654
of its second written submission, Panama acknowledges that the prudential exception, in its English version,
"refers to measures taken for prudential reasons. The ordinary meaning of the word 'prudential' is '[p]ertaining
or relating to prudence', '[w]hat is not exaggerated or excessive'. Therefore, within the context of the GATS,
'prudential measures' (medidas cautelares) have a certain connotation of prudence". See Panama’s second
written submission, para. 2.654.
1014 Panama’s second written submission, para. 2.661.
1015 Panama’s second written submission, para. 2.662.
1016 Panama’s second written submission, para. 2.708.

a good faith obligation that requires a rational relationship of means and ends between the
measure taken and the prudential objective pursued.1017
7.804. Panama argues that a prohibited or improper use is an abuse. Therefore, the prohibition
on using prudential measures as a means of avoiding commitments and obligations is intended to
prevent abuses. Moreover, it ensures that the righ t of Members to avail themselves of exceptions
is exercised reasonably or prudently and in such a way as not to frustrate the rights accorded to
other Members by the substantive rules of the GATS.
1018
7.805. Panama considers that in analysing compliance with the last part of the prudential
exception a panel should examine whether the desi gn, structure and architecture of the measure
(or its application in practice) correspond with the prudential reasons on which it is allegedly
based. In other words, it should examine whether there is a genuine relationship of means and
ends between the measure and its stated objectives.
1019 In this connection, Panama considers that
if a measure is not suitable, fit or appropriate for achieving its presumed prudential objective, then
it should be understood that its utilization is inconsistent (wholly or in part) with the objective
pursued. In these circumstances, the use of a measure that does not match the purported
prudential reason will not be underpinned by a pr udential reason. In the absence of a supporting
prudential reason, such use (or part thereof) should be treated as what it is: a means of avoiding
commitments or obligations, and therefore prohibited under the second sentence of
paragraph 2(a) of the Annex on Financial Services.1020
7.806. Panama considers that the analysis of this element should be based on an objective
assessment.1021 In this connection, Panama makes various references to the Appellate Body
Report in Japan – Alcoholic Beverages II and points out that in previous cases it has repeatedly
been concluded that "[t]his is not an issue of intent" 1022 and that the objective of a measure can
most often "be discerned from the design, the ar chitecture, and the revealing structure" of the
measure.1023
7.807. By way of example, Panama notes that "if a measure is not designed to protect financial
services consumers and its application does not help to achieve that objective, it must be
concluded that the relationship between means and ends required by the second sentence of
paragraph 2(a) of the Annex on Financial Services does not exist". 1024 Panama concludes that
"consequently, it will be understood that the measure is being used as a means of avoiding
commitments or obligations under the GATS and it will not be justified by the prudential
exception".1025
7.3.7.2 Assessment by the Panel
7.3.7.2.1 Introduction
7.808. The question submitted for consideration by the Panel is whether measure 5 (requirements
relating to reinsurance services) and measure 6 (requirements for access to the Argentine capital
market) are covered by paragraph 2(a) of the GATS Annex on Financial Services, as Argentina
maintains.
1026 In response, Panama considers that Argentina has failed to prove that the two
measures are covered by that provision.1027

1017 Panama’s second written submission, para. 2.665.
1018 Panama’s second written submission, para. 2.663 (referring to Appellate Body Report, US –
Gambling, para. 339).
1019 Panama’s second written submission, para. 2.664.
1020 Panama’s second written submission, para. 2.665.
1021 Panama’s second written submission, para. 2.666.
1022 Panama’s second written submission, para. 2.666 (citing Appellate Body Report, Japan – Alcoholic
Beverages II, p. 27).
1023 Panama’s second written submission, para. 2.666 (citing Appellate Body Report, Japan – Alcoholic
Beverages II, p. 29).
1024 Panama’s second written submission, para. 2.666.
1025 Panama’s second written submission, para. 2.666.
1026 Argentina’s first written submission, para. 551.
1027 Panama’s second written submission, paras. 2.685-2.686 and 2.722.

7.809. It should be stressed that this is the first time that a Member has invoked paragraph 2(a)
of the Annex on Financial Services (i.e. the pr udential exception) in a WTO dispute. We will
commence our analysis by establishing the legal standard which we consider appropriate under the
prudential exception, before using it to determine whether measures 5
1028 and 6 are covered by
paragraph 2(a) of the GATS Annex on Financial Services.
7.810. The starting point for our analysis is the wording of paragraph 2(a) of the Annex on
Financial Services.
7.3.7.2.2 The relevant legal provision
7.811. Paragraph 2(a) of the Annex on Financial Services reads as follows:
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 confor m 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.
7.812. As pointed out in the introduction, this pr ovision has not been the subject of interpretation
by the Appellate Body or previous panels. It theref ore falls to us to undertake the arduous task of
interpreting it for the first time. Before proceeding to establish the legal standard which we
consider appropriate under this provision, we deem it relevant to determine the nature of the
provision with a view to ascertaining which party bears the burden of proof.
7.3.7.2.3 The nature of paragraph 2(a) of the Annex on Financial Services. The burden
of proof
7.813. As far as the nature of paragraph 2(a) of the Annex on Financial Services is concerned,
both parties appear to regard this provision as an "exception".
1029
7.814. If we look at the Spanish text of paragraph 2(a) of the Annex on Financial Services, we see
that it begins: "[n]o obstante las demás disposiciones del [AGCS]". Moreover, the first part of the
second sentence of the paragraph states: "[ c]uando esas medidas no sean conformes a las
disposiciones del Acuerdo". In view of this wording, we agree with the parties that paragraph 2(a)
constitutes a justification for measures that are inconsistent with the GATS and is therefore in the
nature of an "exception". The English1030 and French1031 versions of the provision confirm our view.
7.815. Our conclusion is consistent with the categorization of this provision in the revised version
of the Guidelines for the Scheduling of Specif ic Commitments under the General Agreement on
Trade in Services (GATS), adopted by the Council for Trade in Services on 23 March 2001. In that

1028 The Panel recalls that, in the case of measure 5, it has found that the aspects of this measure
maintained by virtue of point 19 of Annex I to SSN Resolution No. 35.615/2011 and Article 4 of SSN Resolution
No. 35.794/2011 are not inconsistent with Articles XVI:1 and XVI:2(a) of the GATS. Accordingly, it will not
examine these aspects of measure 5 in the light of paragraph 2(a) of the Annex on Financial Services. It will
focus exclusively on the aspects of measure 5 maintained by virtue of points 18 and 20(f) of Annex I to SSN
Resolution No. 35.615/2011 (as amended by SSN Resolution No. 38.284/2014), which it has found to be
inconsistent with Article II:1 of the GATS. See sections 7.3.3.2.3.2, 7.3.3.2.4.2 and 7.3.2.2.4 above.
1029 Argentina’s first written submission, para. 553, and Panama’s second written submission,
para. 2.636. We note that this also appears to be the opinion of several third parties. See European Union’s
third-party submission, para. 128; United States’ third-party submission, para. 21; and United States’ and
Brazil’s responses to Panel question No. 13.
1030 In the English version, the first and second sentences of paragraph 2(a) of the Annex on Financial
Services begin as follows: "Notwithstanding any other provisions of the Agreement" … "[w]here such measures
do not conform with the provisions of the Agreement".
1031 In the French version the first and second sentences of paragraph 2(a) of the Annex on Financial
Services begin as follows: "Nonobstant toute autre disposition de l'Accord" … "[d]ans les cas où de telles

document, in a section describing the "Exceptions" under the GATS, it is explained that "any
prudential measure taken in accordance with paragraph 2(a) of the Annex on Financial Services
constitutes an exception to the Agreement".
1032 This is the same language as that used in a
previous Explanatory Note by the Secretariat entitled "Scheduling of Initial Commitments in Trade
in Services" in which, in the course of explaining what should be recorded in a Schedule of Specific
Commitments under the GATS, it is stated that "any prudential measure justifiable under
paragraph 2.1 of the Annex on Financial Services constitutes an exception to the Agreement".
1033
7.816. Given that paragraph 2(a) of the Annex on Financial Services is in the nature of an
exception, the burden of proof lies with Argent ina, which must therefore demonstrate that its
measures 5 and 6 are covered by that provision.1034
7.817. We continue our work of interpretation by examining what should be the requirements that
constitute the legal standard under paragraph 2(a) of the Annex on Financial Services and which
Argentina must demonstrate in order to shield its measures 5 and 6 under that provision.
7.3.7.2.4 The legal standard under paragraph 2(a) of the Annex on Financial Services
7.818. We note that paragraph 2(a) of the Annex on Financial Services consists of two sentences.
The first sentence reads:
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.
7.819. Thus, the first sentence permits the adoption of measures "for prudential reasons" and
includes a list of prudential reasons. The use of the term "including" (in Spanish " entre ellos", in
French "y compris") shows that this is an indicative list.
7.820. The second sentence of paragraph 2(a) of the Annex on Financial Services stipulates that:
Where 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.
7.821. Thus, it can be inferred from the wording of paragraph 2(a) of the Annex on Financial
Services that Argentina must demonstrate that two requirements have been met in order to avail
itself of the exception, namely: (i) that the measure in question was taken for prudential reasons
and (ii) that the measure is not being used as a means of avoiding its commitments or obligations
under the GATS. In this connection, we note that both the parties and various third parties agree
with this interpretation.
1035
7.822. Nevertheless, in addition to these two requirements, both parties and one of the third
parties identify a preliminary requirement which must be demonstrated by the party invoking
paragraph 2(a) of the Annex on Financial Services and which they derive from paragraph 1(a) of
the Annex on Financial Services. This paragraph states that "[t]his Annex applies to measures
affecting the supply of financial services". In their view, the party invoking the prudential

1032 See the 2001 Guidelines, (Exhibits PAN-45 / ARG-39), para. 20.
1033 See the 1993 Guidelines, (Exhibits PAN-46 / ARG-79), para. 13. We recall that in US – Gambling the
Appellate Body considered that this Explanatory Note constituted a supplementary means of interpretation
under Article 32 of the Vienna Convention. See Appellate Body Report, US – Gambling, para. 197.
1034 Appellate Body Report, US – Wool Shirts and Blouses, p. 14.
1035 Argentina’s second written submission, para. 79; Panama’s second written submission, para. 2.637;
European Union’s third-party submission, paras. 131 and 133, and response to Panel question No. 13,
paras. 32 and 33; and United States’ response to Panel question No. 13 (referring to its response to advance
Panel question No. 7, paras. 12 and 16).

exception must also demonstrate that the measure in question is a measure "affecting the supply
of financial services".1036
7.823. We turn to consider whether, as the parties maintain, the legal standard established by
paragraph 2(a) of the Annex on Financial Services requires Argentina to demonstrate that
measures 5 and 6 are measures affecting the supply of financial services.
7.824. We note that paragraph 1(a) of the Annex on Financial Services provides as follows:
ANNEX ON FINANCIAL SERVICES
1. Scope and Definition
 (a) This Annex applies to measur es affecting the supply of financial services.
Reference to the supply of a financial service in this Annex shall mean the supply of a
service as defined in paragraph 2 of Article I of the Agreement.
7.825. Thus, paragraph 1(a) defines the scope of the Annex on Financial Services as being
confined to "measures affecting the supply of fi nancial services". In our view, paragraph 1(a)
serves as context for the interpretation of paragr aph 2(a) of the same Annex. We therefore agree
with the parties that for Argentina to be able to avail itself of the exception of paragraph 2(a) of
the Annex on Financial Services, it must, in addition to meeting the other two requirements
previously mentioned, demonstrate that measures 5 and 6 are "measures affecting the supply of
financial services".
7.826. In addition to these three requirements, on the basis of the heading of paragraph 2 of the
Annex on Financial Services, which reads "Domes tic Regulation", Panama proposes a further
preliminary requirement, namely, that the respondent must demonstrate that the measure
constitutes a "domestic regulation".
1037
7.827. We next examine whether, as maintained by Panama, the legal standard established by
paragraph 2(a) of the Annex on Financial Services requires Argentina to demonstrate that
measures 5 and 6 are "domestic regulations".
7.828. Panama considers that "after proving that a measure falls within the scope of the Annex on
Financial Services, a responding Member must prove that the measure in question qualifies as a
'domestic regulation'".1038 For these purposes, Panama considers that it must be proven 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'".
1039
Considering that the paragraph in which the prudenti al exception is established is preceded by the
heading "Domestic Regulation", Panama refers to the previous rulings of the Appellate Body in
order to affirm that this heading forms part of the text of the prudential exception and informs the
interpretation of the prudential exception by conf ining it to the type of measures envisaged in
Article VI of the GATS, also entitled "Domestic Regulation".
1040
7.829. Panama argues that an objective interpretation of the GATS "cannot give a divergent
meaning to two provisions that explicitly cove r the same subject, unless the terms used are
expressly intended to have a different meaning". 1041 Moreover, Panama points out that other
headings of the Annex on Financial Services are also directly correlated with specific articles of the
GATS such as, for example, "Scope and Definition " (paragraph 1 of the Annex and Article I of the
GATS); "Recognition" (paragraph 3 of the An nex and Article VII of the GATS); "Dispute
Settlement" (paragraph 4 of the Annex and Articles XXII and XXIII of the GATS); and "Definitions"

1036 Argentina’s second written submission, para. 85; Panama’s second written submission, para. 2.637;
and European Union’s third-party submission, para. 129.
1037 Panama’s second written submission, para. 2.651.
1038 Panama’s second written submission, para. 2.651.
1039 Panama’s second written submission, para. 2.651 (citing Panel Report, US – Gambling,
para. 6.304).
1040 Panama’s second written submission, paras. 2.640, 2.642 and 2.643 (citing Appellate Body Reports,
1041 Panama’s second written submission, para. 2.643.

(paragraph 5 of the Annex and Article XXVIII of the GATS). Panama therefore argues that "[g]iven
the limited number of questions covered in the Annex, as compared with those covered by the
GATS, it is obvious that the paragraphs of the Annex refer directly and solely to those specific
areas of the GATS in which it was considered pertinent to establish additional provisions for
financial services" and that "all matters on which no specific provision was established in the
Annex continue to be governed solely by the general provisions of the GATS".
1042 Panama also
draws attention to a statement by the United States during the Uruguay Round which, according to
Panama, appears to acknowledge this, but is not in our record.
7.830. Argentina sees no textual basis for such a narrow interpretation and considers that
Panama’s interpretation is in direct contradiction with the text of paragraph 2(a). 1043 Argentina
considers that the words "[n]otwithstanding any other provisions of the Agreement" clearly
indicate that paragraph 2(a) refers to any violation of the GATS, provided that it affects the supply
of services. Argentina considers that this is confirmed by the context of the second sentence of
paragraph 2(a) beginning "[w]here such measures do not conform with the provisions of the
Agreement", which "clearly indicates that the first sentence applies to measures which are
otherwise inconsistent with some provision of the GATS". Likewise, Argentina considers that the
reference to "[n]othing in the Agreement" in paragraph 2(b) of the Annex "also indicates that the
prudential exception is broad in its scope and applies to violations of any of the provisions of the
GATS".
1044
7.831. We note that the third parties which provided the Panel with input on this point consider
that measures of any kind, not only those covered by Article VI of the GATS but also those
addressed by other provisions of the GATS, ar e covered by paragraph 2(a) of the Annex on
Financial Services.1045
7.832. Our starting point is the text of paragraph 2(a) of the Annex on Financial Services, which is
reproduced in paragraph 7.811. We note that paragraph 2(a) contains two phrases which we find
relevant: "[ n]o obstante las demás disposiciones del Acuerdo " ("[n]otwithstanding any other
provisions of the Agreement") and "[ c]uando esas medidas no sean conformes a las disposiciones
del Acuerdo" ("[w]here such measures do not conform with the provisions of the Agreement"). The
Panel notes that both phrases refer to "provisions of the Agreement" in the plural and not to a
single provision of the GATS. These references to "other provisions of the Agreement" and "the
provisions of the Agreement" appear to concern any measure that is inconsistent with the GATS.
The French text (" Nonobstant toute autre disposition de l'Accord …[d]ans les cas où de telles
mesures ne seront pas conformes aux dispositions de l'Accord ") seems to confirm this conclusion.
Indeed, the reference to "any other provisions of the Agreement" (or " toute autre disposition de
l'Accord"), which could be rendered in Spanish as "cualquier otra disposición del Acuerdo", appears
to indicate that the measures covered by paragraph 2(a) of the Annex on Financial Services are
those which affect the supply of financial services, whatever their nature.
7.833. Likewise, the reference to "[c]uando esas measures no sean conformes a las disposiciones
del Acuerdo " ("[w]here such measures do not conform with the provisions of the Agreement";
"[d]ans les cas où de telles mesures ne seront pas conformes aux dispositions de l'Accord ") in the
second sentence of paragraph 2(a) of the Annex on Financial Services appears to relate to
measures which could be inconsistent with any provision of the GATS.
7.834. As we have explained, Panama bases its position on the fact that paragraph 2 of the Annex
on Financial Services is headed "Domestic Regulation". As Panama also points out, in China – Raw
Materials the Appellate Body, citing previous reports, found the title of Article XI of the GATT 1994

1042 Panama’s second written submission, para. 2.644.
1043 Argentina’s second written submission, para. 80.
1044 Argentina’s second written submission, para. 81.
1045 According to the European Union, "[p]aragraph 2(a) provides an exception from all the GATS
obligations". Brazil points out that paragraph 2(a) "enshrines a particular justification for GATS-inconsistent
measures for prudential reasons". For its part, the United States argues that "the prudential exception
preserves the broad discretion of national authorities to protect the financial system." See European Union’s
third-party submission; para. 128; Brazil’s third-party submission, para. 18; and United States’ third-party
submission, para. 21.

to be relevant for the purpose of interpreting its scope. 1046 We agree with Panama regarding the
relevance of the title of a provision for interpreting the terms of that provision.
7.835. We note that the GATS does not contain any definition of the expressions "domestic
regulation" and "regulation". We also note that the expression "domestic regulation" appears as
the title not only of paragraphs 2(a) and 2(b) of the Annex on Financial Services but also, as
P a n a m a p o i n t s o u t , o f A r t i c l e V I o f t h e G A T S . A s w e h a v e a l r e a d y s e e n , P a n a m a a r g u e s t h a t
"domestic regulations" are the "type of measures envisaged in Article VI of the GATS". Panama
also argues that the respondent must prove that the measure "concerns 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". In arguing in this way, Panama
appears to consider that the "domestic regulati on" to which both Article VI of the GATS and
paragraph 2 of the Annex on Financial Services refer includes only measures relating to
qualifications, technical standards and licensing.
7.836. Panama’s arguments confront us with two separate issues: on 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 "domesti c 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. We begin with the
second issue.
7.837. 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.
1047
Paragraph 4 of Article VI establishes a negotiating mandate for the development of multilateral
disciplines "[w]ith a view to ensuring that measures relating to qualification requirements and
procedures, technical standards and licensing requirements do not constitute unnecessary barriers
to trade in services". We note that such disci plines have not yet been agreed by Members.
Paragraph 5 of Article VI is a transitional provision which stipulates that "[i]n sectors in which a
Member has undertaken specific commitments, pe nding the entry into force of disciplines
developed in these sectors pursuant to paragrap h 4, the Member shall not apply licensing and
qualification requirements and technical standards that nullify or impair such specific commitments
…".
7.838. The Panel also points out that Article VI refers to other "domestic regulations", such as
"measures of general application affecting trade in services" (Article VI:1), "administrative
decisions affecting trade in services" (Article VI:2) and "authorization … for the supply of a service"
(Article VI:3). In other words, the universe of "domestic regulation" is, for Article VI of the GATS
itself, broader than that relating to technical standards, licensing and qualifications. For these
reasons, it seems to us that Panama’s characterization of what constitutes a "domestic regulation"
covered by Article VI of the GATS is erroneous.
7.839. Despite what we consider to be Panama’s erroneous characterization of "domestic
regulation" under Article VI, it remains to be decided 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.
7.840. As already mentioned, in our interpretative exercise we must take into account the
heading of paragraph 2 of the Annex on Financ ial Services in interpreting the terms of

1046 The Appellate Body explained:
In addition, we note that Article XI of the GATT 1994 is entitled "General Elimination of
Quantitative Restrictions". The Panel found that this title suggests that Article XI governs the
elimination of "quantitative restrictions" generally. We have previously referred to the title of a
provision when interpreting the requirements within the provision. In the present case, we
consider that the use of the word "quantitative" in the title of the provision informs the
interpretation of the words "restriction" and "prohibition" in Article XI:1 and XI:2. It suggests
that Article XI of the GATT 1994 covers those prohibitions and restrictions that have a limiting
effect on the quantity or amount of a product being imported or exported.
See Appellate Body Report, China – Raw Materials, para. 320. (footnotes omitted)
1047 Incidentally, we note that Article XVIII of the GATS (Additional Commitments) also refers to
measures "regarding qualifications, standards or licensing matters".

paragraph 2(a). We must also bear in mind that the Appellate Body has stated that "interpretation
must give meaning and effect to all the terms of a treaty" and "[a]n interpreter is not free to adopt
a reading that would result in reducing whole clauses or paragraphs of a treaty to redundancy or
inutility".
1048 Accordingly, we must take care to av oid an interpretation of the scope of
paragraph 2(a) of the Annex on Financial Services that renders useless or redundant the terms
used in that provision or other provisions of the GATS.
7.841. If we interpret the wording of paragraph 2(a) of the Annex on Financial Services as
referring solely to measures that constitute domestic regulation under Article VI of the GATS, we
could be reducing to inutility the explicit reference to " las demás disposiciones del Acuerdo " ("any
other provisions of the Agreement"; "toute autre disposition de l'Accord"), which appears to relate
to any other provision of the GATS and not only to Article VI. Likewise, the references "[ c]uando
esas measures no sean conformes a las disposiciones del Acuerdo " ("[w]here such measures do
not conform with the provisions of the Agreement"; "[d]ans les cas où de telles mesures ne seront
pas conformes aux dispositions de l'Accord ") would be reduced to "a provision", Article VI of the
GATS. We find implausible Panama’s argument to the effect that the fact that the prudential
exception covers only domestic regulations does not mean that it cannot justify violations of any
provision of the GATS.
1049 Panama asserts, by way of example, that an absolute prohibition and a
licensing system could both be inconsistent with the MFN treatment obligation of Article II:1 of the
GATS. According to Panama, under such a scenario, only the licensing system would fall within the
scope of the prudential exception. 1050 In our view, this example of Panama does not make sense.
We cannot see how a system that provides for the granting of a licence for supplying a service can
exist if the supply of that service is absolutely prohibited.
7.842. In this connection, we recall that the Appellate Body has explained that the words used in
a provision must be "interpreted in light of the context, and of the object and purpose, of the
provision at issue, and of the object and purpos e of the covered agreement in which the provision
appears".1051 According to the Appellate Body, although the meaning attributed to the same term
in other provisions of the same agreement may also be relevant context, it need not be identical,
in all respects, to those other meanings.1052
7.843. Accordingly, we now propose to examine the context of paragraph 2(a) of the Annex on
Financial Services. We note that, as immediate context, paragraph 2 of the Annex on Financial
Services includes a subparagraph (b), which reads as follows:
2. Domestic Regulation
…
(b) Nothing in the Agreement shall be construed to require a Member to disclose
information relating to the affairs and accounts of individual customers or any
confidential or proprietary information in the possession of public entities.
7.844. Like paragraph 2(a), paragraph 2(b) is also headed "Domestic Regulation". This
paragraph refers specifically to the right of Members to maintain the confidentiality of certain
information. Like paragraph 2(a), paragraph 2(b) defines its scope with reference to "[n]othing in
this Agreement" ("Ninguna disposición del Acuerdo"; "Aucune disposition de l'Accord"). Here again,
if we interpret paragraph 2(b) as referring exclusively to domestic regulation under Article VI of

1048 Appellate Body Report, US — Gasoline , p. 23 (footnotes omitted). See also Appellate Body Report,
US — Offset Act (Byrd Amendment) , para. 271. In Japan – Alcoholic Beverages II, the Appellate Body
considered that the principle of effectiveness (ut res magis valeat quam pereat) flowed from the general rule of
interpretation set out in Article 31 of the Vienna Convention. See Appellate Body Report, Japan – Alcoholic
Beverages, p. 12.
1049 Panama’s response to Panel question No. 50, p. 52.
1050 Panama’s response to Panel question No. 50, p. 52. In its second written submission, Panama states
that "[a] prohibition or a quota on the number of foreign suppliers, for example, would not appear to be a
domestic regulation, as would be, for example, requirements on the verification of qualifications or procedures
for handling applications for permission to practise". See Panama’s second written submission, para. 2.645.
1051 Appellate Body Report, EC – Asbestos, para. 88. See also Appellate Body Report, US – Clove
Cigarettes, footnote 273.
1052 Appellate Body Report, EC – Asbestos, para. 88. See also Appellate Body Report, US – Clove
Cigarettes, footnote 273.

the GATS, we could be curtailing the right of Memb ers to confidentiality, since that right would not
exist in the case of measures that did not qualify as domestic regulations.
7.845. Panama points out that other headings of the Annex on Financial Services are also directly
correlated with specific articles of the GATS, for example, "Scope and Definition" (paragraph 1 of
the Annex and Article I of the GATS); "Recognition" (paragraph 3 of the Annex and Article VII of
the GATS); "Dispute Settlement" (paragraph 4 of the Annex and Articles XXII and XXIII of the
GATS); and "Definitions" (paragraph 5 of the A nnex and Article XXVIII of the GATS). We do not
share Panama’s view that there is an exact correspondence between the headings of the different
sections of the Annex on Financial Services and th e headings of the different articles of the GATS.
For example, paragraph 4 of the Annex on Financial Services is headed "Dispute Settlement", a
heading which does not appear in the same form in the text of the GATS. At best, the nearest
approximation to this part of the Annex would be Article XXIII of the GATS, which is headed
"Dispute Settlement and Enforcement".
7.846. Moreover, Panama argues that an objective interpretation of the GATS "cannot give a
divergent meaning to two provisions that explicit ly cover the same subject, unless the terms used
are expressly intended to have a different meaning".
1053 According to Panama, "[g]iven the limited
number of questions covered in the Annex, as co mpared with those covered by the GATS, it is
obvious that the paragraphs of the Annex refer dire ctly and solely to those specific areas of the
GATS in which it was considered pertinent to establish additional provisions for financial
services".
1054 It does not seem to us that in all the cases in which there may be a correlation
between the headings of paragraphs of the Anne x and those of the provis ions of the GATS the
matters dealt with are also identical. An obvious case is that of paragraph 2(b) of the Annex itself,
which, as we have said, deals with the right of Members to maintain the confidentiality of certain
information. Article VI of the GATS does not deal with questions concerning the disclosure of
confidential information. These matters are addressed in Article III bis of the GATS.
1055
7.847. In the light of the foregoing, and for the sake of an interpretation that gives meaning to all
the words of the treaty and does not reduce the words of paragraph 2 of the Annex on Financial
Services to inutility or redundancy, we consider that the concept of "domestic regulation" in the
heading of paragraph 2 of the Annex on Financial Services has a scope different from that of the
similar concept in the heading of Article VI of the GATS. In our view, the text of paragraph 2(a) of
the Annex on Financial Services (i.e. "[n]otwithstanding any other provisions of the Agreement"
and "[w]here such measures do not conform with the provisions of the Agreement") indicates a
scope greater than that of Article VI of the GATS, as is confirmed by the immediate context
afforded by paragraph 2(b). The Panel therefore considers 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 said Annex and not only those measures that could be
characterized as "domestic regulations" within the meaning of Article VI of the GATS.
7.848. We would also like to express our concern with regard to the serious systemic implications
of the narrow interpretation proposed by Panama. Indeed, such an 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 wi th Article VI of the GATS and not for those
measures which may be covered by other provisions of the GATS (such as those relating to market
access, national treatment or MFN treatment).
7.849. We agree with the concern expressed by some third parties in this dispute which also
stress the broad policy space which this provision reflects.
1056 In particular, we find relevant the
comment by the United States to the effect that Members’ broad conception of the prudential

1053 Panama’s second written submission, para. 2.643.
1054 Panama’s second written submission, para. 2.644.
1055 Article III bis entitled "Disclosure of Confidential Information" states:
Nothing in this Agreement shall require any Member to provide confidential information, the
disclosure of which would impede law enforcement, or otherwise be contrary to the public
interest, or which would prejudice legitimate commercial interests of particular enterprises,
public or private.
1056 Brazil’s third-party submission, para. 20; United States’ response to Panel question No. 13 (referring
to its response to advance Panel question No. 7, para. 3). See also Council for Trade in Services, Special
Session, "Report of the Meeting held on 3-6 December 2001", S/CSS/M/13, 26 February 2002, paras. 267,
268, 271, 272, and 275, document cited by the United States in its response to Panel question No. 7.

exception informed the scope of the commitments and limitations that they negotiated and
inscribed in their schedules of specific commitments and MFN exemptions lists. 1057 Likewise, the
European Union has stressed that this provision seems to have been left intentionally broad and
notes that it is the result of a delicate compromise. Therefore, a narrow interpretation of the scope
of application of the provision or of the conditions under which the prudential exception can
successfully be invoked would go against the balance of rights and obligations of the
Agreement.
1058
7.850. The relevance of the role played by the broad view of the prudential exception in delimiting
the scope of the specific commitments and the consequent process of recording each Member’s
limitations in their schedules of specific commi tments and lists of exemptions from the MFN
principle appears to be confirmed by paragraph 13 of the previously mentioned Explanatory Note
by the Secretariat entitled "Scheduling of Initial Commitments in Trade in Services". We recall that
in explaining what should be inscribed in a sched ule of specific commitments under the GATS, this
Note states that "any prudential measure justifiable under paragraph 2.1 of the Annex on Financial
Services constitutes an exception to the Agreement and should not be scheduled".
1059
7.851. In view of the foregoing, we consider that to be able to shield its measures 5 and 6 under
the prudential exception, Argentina needs to satisfy three requirements: (i) that measures 5 and 6
are measures "affecting the supply of financial services"; (ii) that measures 5 and 6 were taken
"for prudential reasons"; and (iii) that measures 5 and 6 have not been used "as a means of
avoiding [Argentina’s] commitments or obligations" under the GATS.
7.852. This order of analysis coincides with that proposed by the parties and third parties which
have provided the Panel with input on this issue.
1060 Although panels are not obliged to follow the
order of analysis proposed by the parties1061, this Panel has no reservations about undertaking the
interpretative analysis in the order proposed by the parties to this dispute. Therefore, the Panel
will follow this order of analysis in exam ining whether measures 5 and 6 are covered by
paragraph 2(a) of the Annex on Financial Services . We begin by examining the first requirement,
namely, whether measures 5 and 6 are measures "affecting the supply of financial services".
7.3.7.2.4.1 First requirement: Whether me asures 5 and 6 are measures "affecting the
supply of financial services”
7.853. The first requirement that Argentina must meet is that its measures 5 and 6 are measures
"affecting the supply of financial services" in accordance with paragraph 1(a) of the Annex on

1057 United States’ response to Panel question No. 13 (referring to its response to advance Panel
question No. 7, para. 5).
1058 European Union’s response to Panel question No. 13, para. 35.
1059 See the 1993 Guidelines, (Exhibits PAN-46 / ARG-79), para. 13. We recall that in US – Gambling,
the Appellate Body considered that this Explanatory Note constituted a supplementary means of interpretation
under Article 32 of the Vienna Convention. See Appellate Body Report, US – Gambling, para. 197. Reference
should also be made to paragraph 20 of the revised Guidelines adopted by the Council for Trade in Services on
23 March 2001, which reproduces practically the entire text of paragraph 13 of the 1993 version. See the 2001
Guidelines, (PAN-45 / ARG-39), para. 20.
1060 Argentina’s response to Panel question No. 50, paras. 1-3; Panama’s response to Panel question
No. 50; and European Union’s response to Panel question No. 13, paras. 31-33. In this connection, we note
that Panama considered that there was a fourth requirement which Argentina had to meet in order to
demonstrate that a measure is covered by the prudential exception, namely, "that the measure constitutes a
'domestic regulation'". See Panama’s second written submission, para. 2.637. The Panel considered 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 and not only those measures that can be
characterized as "domestic regulations" within the meaning of Article VI of the GATS. See paragraph 7.847
above.
1061 The freedom of panels to decide the order of their analysis was recognized by the Appellate Body in
Canada – Wheat Exports and Grain Imports, where it stated that "[a]s a general principle, panels are free to
structure the order of their analysis as they see fit. In so doing, panels may find it useful to take account of
the manner in which a claim is presented to them by a complaining Member". See Appellate Body Report,
Canada – Wheat Exports and Grain Imports, para. 126. This could be compared with the manner in which
Argentina is presenting its defence, since it is Argentina that is invoking the prudential exception. In
US - Zeroing (EC) (Article 21.5 – EC), the Appellate Body recognized the possibility of panels opting for an
order of analysis different from that suggested by the complaining party, "in particular, when this is required
by the correct interpretation of the or application of the legal provision at issue". See Appellate Body Report,
US – Zeroing (EC) (Article 21.5 – EC), para. 277.

Financial Services reproduced in paragraph 7.823. Thus, measures 5 and 6 must "affect" the
supply of a particular type of services, namely, financial services.
7.854. With respect to what is meant by a measure "affecting" the supply of financial services, we
recall that in EC – Bananas III , in discussing the scope of the GATS and, in particular, the
interpretation of the words "measures by Members a ffecting trade in services" in Article I:1 of the
GATS, the Appellate Body considered that:
The ordinary meaning of the word "affecting" implies a measure that has "an effect
on", which indicates a broad scope of application. This interpretation is further
reinforced by the conclusions of previous panels that the term "affecting" in the
context of Article III of the GATT 1947 is wider in scope than such terms as
"regulating" or "governing".
1062
7.855. In our view, in determining whether the measure "affects" the supply of financial services
within the meaning of paragraph 1(a) of the Annex on Financial Services, the Panel can be guided
by this jurisprudence of the Appellate Body. This leads us to the view that the word "affecting" in
paragraph 1(a) of the Annex on Financial Services has a broader scope than such terms as
"regulating" or "governing" and therefore covers any measure that has "an effect on" the supply of
financial services.
7.856. We recall that we have already conclude d that the eight measures at issue, and hence
measures 5 and 6, are measures "affecting trade in services" within the meaning of Article I:1 of
the GATS.
1063 Likewise, we have concluded that both measure 5 and measure 6 are inconsistent
with Article II:1 of the GATS. 1064 In our view, if a measure is covered by the GATS since it affects
trade in services and has been found to be inconsistent with that Agreement, it must be
considered to be a measure "affecting" the supply of services. 1065 We must therefore establish
whether the services whose supply is affected by measures 5 and 6 are "financial" in nature.
7.857. Argentina claims that the measures in question are measures "affecting the supply of
financial services" within the meaning of paragraph 1(a) of the Annex on Financial Services
because both "reinsurance and retrocession servic es" (regulated by measure 5) and the trading of
"transferable securities" (regulated by measure 6) are specifically listed under the definitions of
financial services in paragraph 5(a) of the Annex on Financial Services.
1066 We note that the
services identified by Panama are reinsurance services 1067 (for measure 5) and portfolio
management services (for measure 6) 1068, both financial in nature. 1069 We also note that, before
listing the "financial services" to which we have referred, paragraph 5 of the Annex on Financial
Services defines the concept of "financial service" as "any service of a financial nature offered by a
financial service supplier of a Member". It is therefore our understanding that all the services
subsequently listed in paragraph 5 of the Annex are services of "a financial nature".
7.858. Consequently, we consider that both measure 5 and measure 6 are measures affecting the
supply of financial services within the meaning of paragraph 1(a) of the Annex on Financial
Services. We now proceed to examine whether Argentina has also demonstrated that measures 5
and 6 are measures taken "for prudential reasons".

1062 Appellate Body Report, EC – Bananas III, para. 220.
1063 See section 7.3.1.2.4 above.
1064 See section 7.3.2.2.4 above.
1065 We also recall that in the context of the claims under Article XVII of the GATS we found that the
concept of measures "affecting the supply of services" is closely linked to the concept of "affecting trade in
services", given that the concept of "trade in services" is defined in Article I of the GATS as the "supply of a
service" by means of one of the four modes of supply identified in that provision. See para. 7.474 above.
1066 Argentina’s second written submission, para. 85. The Panel notes that the trading of transferable
securities is covered by the services cited in paragraph 5(a)(x) of the Annex on Financial Services.
1067 We recall that Panama also made claims in relation to the retrocession services sector but the Panel
considered that these services are not covered by measure 5. See section 7.1.4 above.
1068 See paragraph 7.97 above.
1069 Reinsurance services are mentioned in paragraph 5(a)(ii) of the Annex on Financial Services, while
portfolio management services are covered by the services indicated in paragraph 5(a)(xiii) of that Annex
("Asset management, such as cash or portfolio management, all forms of collective investment management,
pension fund management, custodial, depository and trust services").

7.3.7.2.4.2 Second requirement: Whether me asures 5 and 6 were taken for prudential
reasons
7.859. Once it has been established that measures 5 and 6 affect the supply of financial services
within the meaning of paragraph 1(a) of the Annex on Financial Services, the next requirement
that Argentina must demonstrate is that measures 5 and 6 were taken for prudential reasons.
7.860. The crux of the matter is therefore what is meant by a measure taken "for prudential
reasons". In this connection, we note that Panama uses the terms "measures taken for prudential
reasons" and "prudential measures" as synonyms. 1070 In a footnote in its second written
submission, Panama observes in this respect that paragraphs 3 and 4 of the Annex on Financial
Services refer to "prudential measures" and "prudential issues", respectively, which, according to
Panama, confirms that the key term for the purposes of the Annex on Financial Services is
"prudential", and not so much the terms "reasons", "measures" or "issues".
1071 Argentina does not
refer specifically to this question, but uses both terms without distinction.1072
7.861. The Panel is not convinced by this assertion of Panama nor is it convinced that the two
concepts – "measures for prudential reasons" and "prudential measures" – signify the same thing
or have the same effects. Firstly, we note that the prudential exception does not speak of
"prudential measures" but of "measures for prudential reasons". We therefore consider that it is
the reason which must be "prudential" and not the measure per se . The meaning of the two
expressions cannot be the same and, in our opinion, this is an important aspect to be borne in
mind when interpreting this provision. In othe r words, the GATS does not seek to identify
measures that could be characterized as specifically prudential, such as those usually cited in the
context of the standards defined by th e Basel Committee on Banking Supervision.
1073 Nor does
paragraph 2(a) of the Annex on Financial Services refer to any international norm to be used as a
guide when deciding on the nature of a measure in the light of the Agreement. Rather, instead of
exempting a specific type of measures from the obligations and commitments under the GATS, the
exception makes it possible to exempt or exonerate any measure affecting the supply of financial
services that has been taken "for prudential reasons".
7.862. Contrary to what Panama suggests, we consider that the use made of expressions such as
"prudential measures" and "prudential issues" in paragraphs 3 and 4 of the Annex on Financial
Services, respectively, corresponds to actual provisions of the Annex and has a specific meaning
whose interpretation is not at issue in this dispute. The interpretation proposed by Panama would
run counter to an effective interpretation of paragraph 2(a) since it would not give meaning to the
term "reasons" used in that provision.
7.863. Therefore, in answering the question of what is meant by a measure being taken "for
p r u d e n t i a l r e a s o n s " , w e c o n s i d e r i t u s e f u l t o d i v i d e o u r a n a l y s i s i n t o t w o p a r t s : f i r s t , w e w i l l
examine the meaning of the concept "prudential reasons" in paragraph 2(a) of the Annex on
Financial Services; and second, we will analyse what is meant by a measure having been taken
"for" prudential reasons.
(a) The meaning of the concept of "prudential reasons"
7.864. We begin by analysing the meaning of the term " motivos cautelares" (prudential reasons)
in the Spanish version of paragraph 2(a) of the Annex on Financial Services of the GATS.
7.865. The dictionary of the Spanish Royal Academy defines "motivo" (motive) as "[q]ue mueve o
1074 (that which moves or
has efficacy or power to move; moving cause or reason for something) and " cautelar" (prudential)

1070 Panama’s second written submission, para. 2.653 and footnote 624; and Argentina’s first written
submission, para. 560.
1071 Panama’s second written submission, footnote 624.
1072 Argentina’s first written submission, para. 560.
1073 See the "Core principles for effective banking supervision", established by the Basel Committee on
Banking Supervision, in particular Principles 14 to 29 relating to "prudential regulations and requirements"
(September 2012 version, Spanish text can be viewed at: http://www.bis.org/publ/bcbs230_es.pdf).
1074 Diccionario de la Lengua Española, 23rd edition, Real Academia Española (Espasa Calpe, 2014),
Vol. II, p. 1503.

as "[ p]reventivo, precautorio; Dicho de una measure o de una regla: Destinada a prevenir la
consecución de determinado fin o precaver lo que pueda dificultarlo "1075 ([p]reventive,
precautionary; said of a measure or rule intended to prevent a particular outcome or guard against
that which might impede it). The same dictionary defines " preventivo" (preventive) as "[ q]ue
previene"
1076 (that which prevents) and the verb "prevenir" as "[p]reparar, aparejar y disponer con
o perjuicio; Precaver, evitar, estorbar o impedir algo; Advertir, informar o avisar a alguien de algo;
Imbuir, impresionar, preocupar a alguien, induciéndole a prejuzgar personas o cosas; Anticiparse a
algo"
1077 ([p]repare, get ready, and provide in advanc e for that which is necessary for a purpose;
foresee, see, be aware beforehand or in advance of possible harm or injury; guard against, avoid,
hamper or hinder something; warn, inform or notify someone of something; imbue, impress or
worry someone, thereby inducing him to prejudge persons or things; anticipate an obstacle,
difficulty or objection; make provision in advance or prepare for something beforehand). The
definition of " precautorio" (precautionary) in the same dictionary is "[ q]ue precave o sirve de
precaución"1078 ([t]hat which guards against or serves as a precaution). The definition of
"precaver" (guard against, forestall) is "[ p]revenir un riesgo, daño o peligro, para guardarse de él
y evitarlo"1079 ([t]o anticipate a risk, injury or danger, to protect oneself from it and avoid it).
7.866. As on previous occasions, we consider it appropriate to refer to the ordinary meaning of
the equivalent terms in the equally authentic Englis h and French versions of paragraph 2(a) of the
Annex on Financial Services. The English version of this paragraph refers to "prudential reasons".
In the Shorter Oxford Dictionary , the word "prudential" is defined as " [o]f, involving or
characterized by prudence; exercising prudence, esp. in business affairs ".1080 In French, the words
used are " raisons prudentielles ". The dictionary Le Petit Robert does not define the word
"prudentiel" but we do find the word " prudent" which is defined as "[ q]ui a, montre de la
prudence” (having or showing prudence). 1081 The definition of " prudence" i s " [a]ttitude d'esprit
pouvoir être source de dommage "1082 ([a]ttitude of a person who, reflecting on the significance
and consequences of his acts, takes steps to avoid mistakes and possible mishaps, and refrains
from anything that might be a source of harm).
7.867. All these definitions, whatever the official language we examine, tend to characterize the
expression "prudential reasons" (" motivos cautelares ", " raisons prudentielles ") as "causes" or
"reasons" of a "preventive" or "precautionary" natu re. In this respect, we note that Argentina and
third parties such as Brazil and the United States also consider that the term "prudential"
("cautelar") should be interpreted in the sense of "precautionary".
1083
7.868. In our view, this understanding of the concept "prudential reasons" as referring to
"preventive or precautionary reasons" finds suppor t in the list of prudential reasons set out in
paragraph 2(a) of the Annex on Financial Services. In the Panel’s opinion, this list throws light on
the type of "prudential reasons" envisaged in this paragraph. The list, which constitutes the
immediate context for the concept "prudential reasons", follows the word "including" so that, as
mentioned above
1084, the list of reasons should be regard ed as indicative and not exhaustive,
unlike, for example, the subparagraphs of Article XIV of the GATS. We note that the parties and

1075 Diccionario de la Lengua Española, 23rd edition, Real Academia Española (Espasa Calpe, 2014),
Vol. I, p. 470.
1076 Diccionario de la Lengua Española, 23rd edition, Real Academia Española (Espasa Calpe, 2014),
Vol. II, p. 1783.
1077 Diccionario de la Lengua Española, 23rd edition, Real Academia Española (Espasa Calpe, 2014),
Vol. II, p. 1783.
1078 Diccionario de la Lengua Española, 23rd edition, Real Academia Española (Espasa Calpe, 2014),
Vol. II, p. 1770.
1079 Diccionario de la Lengua Española, 23rd edition, Real Academia Española (Espasa Calpe, 2014),
Vol. II, p. 1770.
1080 Shorter Oxford English Dictionary, 6th edition, W.R. Trumble, A. Stevenson (editors) (Oxford
University Press, 2007), p. 2386.
1083 United States’ third-party submission, footnote 13; and Brazil’s third-party submission, para. 18.
1084 See para. 7.819 above.

third parties that have commented on this provision are in agreement as regards the indicative
and non-exhaustive nature of the list of prudential reasons included in the prudential exception.1085
7.869. The indicative list of prudential reasons in paragraph 2(a) of the Annex on Financial
Services includes by way of example "the protec tion 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". 1086 These examples are in themselves extremely
broad and point to various aspects of prudential reasons – aspects that have to do, inter alia, with
the protection of consumers of financial services broadly speaking or with the maintenance of the
integrity and stability of the financial system. Being merely illustrative, the list contained in
paragraph 2(a) could include other prudential reasons beyond those explicitly cited.
1087
7.870. In the Panel’s opinion, the meaning and importance that Members attach to these
prudential reasons may vary over time, depending on different factors, including the perception of
t h e r i s k p r e v a i l i n g a t d i f f e r e n t p o i n t s i n t i m e . I n t h i s c o n n e c t i o n , w e r e c a l l t h a t o n v a r i o u s
occasions the Appellate Body has stated that Members, in applying concepts equally important for
society, such as those covered by Article XX of the GATT 1994, are entitled to determine the level
of protection they consider appropriate.
1088 This was also the conclusion of the panel in US –
Gambling, with reference to other policy objectives under Article XIV of the GATS.1089
7.871. Although these statements were made in the context of Articles XX of the GATT 1994 and
XIV of the GATS, we believe that they also apply to prudential reasons such as "the protection of
investors, depositors, policy holders or persons to whom a fiduciary duty is owed by a financial
service supplier" or "the integrity and stability of the financial system" within the framework of
paragraph 2(a) of the Annex on Financial Services. The nature and scope of financial regulation at
different times reflect the knowledge, experience and scales of values of governments at the
moment in question. We therefore consider that WTO Members should have sufficient freedom to
define the prudential reasons that underpin their measures, in accordance with their own scales of
values.
7.872. In our view, this interpretation corresponds to the object and purpose of the GATS, as set
out in its own preamble, which recognizes "the right of Members to regulate, and to introduce new
regulations, on the supply of services within their territories in order to meet national policy
objectives".
1090

1085 Argentina’s first written submission, para. 553, and response to Panel question No. 52; Panama’s
response to Panel question No. 52; Brazil’s response to Panel question No. 14; United States’ response to
advance Panel question No. 7; and European Union’s response to Panel question No. 14.
1086 We note that it is not clear that the phrase "to ensure the integrity and stability of the financial
system" is one of the possible prudential reasons, since this expression is preceded by the conjunction "or"
after a comma, which would appear to indicate that it concerns another type of measures in addition to those
for "prudential reasons". Thus, the first sentence of the prudential exception could be understood as
authorizing Members to take "measures for prudential reasons, including …, or to …". The same structure can
be found in the authentic versions in Spanish and French. However, the parties and the third parties appear to
consider that this is one more prudential reason. The Panel takes note of the relevant arguments of the parties
and third parties, but does not consider it necessary to examine these arguments any further since there is no
need to resolve this issue for the purposes of the present dispute.
1087 The United States expressed a similar view in its response to advance Panel question No. 7.
1088 See Appellate Body Report, Korea – Various Measures on Beef, para. 176; and EC – Asbestos,
para. 168.
1089 The panel reasoned as follows:
We are well aware that there may be sensitivities associated with the interpretation of the terms
"public morals" and "public order" in the context of Article XIV. In the Panel's view, the content
of these concepts for Members can vary in time and space, depending upon a range of factors,
including prevailing social, cultural, ethical and religious values. Further, the Appellate Body has
stated on several occasions that Members, in applying similar societal concepts, have the right to
determine the level of protection that they consider appropriate. Although these Appellate Body
statements were made in the context of Article XX of the GATT 1994, it is our view that such
statements are also valid with respect to the protection of public morals and public order under
Article XVI of the GATS. More particularly, Members should be given some scope to define and
apply for themselves the concepts of "public morals" and "public order" in their respective
territories, according to their own systems and scales of values.
See Panel Report, US – Gambling, para. 6.461 (footnotes omitted).
1090 Fourth recital of the GATS.

7.873. We therefore agree with the third parties concerning the evolutionary nature of the
concept of "prudential reasons". Thus, for the European Union, the concept of "prudential reasons"
is "of an intrinsically evolutionary nature", and the fact that Members have agreed on a non-
exhaustive list of reasons is evidence of that. According to the European Union, as the recent
financial crisis has revealed, it is not always possible to anticipate the consequences of turbulence
in the financial markets or the financial system or to avoid them, and the prudential toolbox is in
constant evolution, as is shown by the plethora of recommendations made by the international
financial organizations in recent years.
1091 According to the United States, as the financial crisis of
2008 and its aftermath have amply demonstrated, the risks in the financial sector can evolve over
time, on the basis of the changing circumstances in that sector, and have consequences that can
threaten the entire economy and the well-being of nations.
1092 Likewise, Brazil argues that not only
may measures be taken broadly to protect investors, depositors and the financial system as a
whole, but may also be adopted in a precautionary manner. 1093 According to Brazil, the prudential
exception allows Members to act broadly and plan ahead, taking into account the fact that many of
the threats to financial stability come from multiple and complex market factors, as shown by the
financial crisis of 2008.1094
7.874. We also note that the international community has recognized that the build-up of financial
risks can be hard to discern and address. In the words of the G-20:
Policy-makers, regulators and supervisors, in some advanced countries, did not
adequately appreciate and address the risks building up in financial markets, keep
pace with financial innovation, or take into account the systemic ramifications of
domestic regulatory actions.
1095
7.875. Accordingly, our interpretation appears to be consistent with the concerns of the
international community regarding the nature and impact of the financial risks and the consequent
need to preserve sufficient flexibility when determining the prudential reasons to which the
regulation should respond.
7.876. We note that Panama takes a view of "pru dential" different from that which we have just
described. In this connection, we recall that Panama confuses the concept of "measures … for
prudential reasons" with that of "prudential measures". As previously indicated, Panama considers
that the prudential nature of the measure necessi tates the existence of at least two requirements:
fumus boni iuris and periculum in mora . According to Panama, the first requirement (appearance
of good law) calls for the claim to have a certain amount of plausibility, the actual existence of a
risk and the possibility of its materialization. The second requirement (danger in delay) is related
to the risk of an imminent legal injury being suffered as a consequence of a delay in the adoption
of the measure. It is the risk of imminent injury that bestows on prudential measures their
generally urgent character.
1096 Panama maintains that there must be a risk whose materialization
is imminent if the adoption of the measure is delayed.1097
7.877. We do not see in the text of paragraph 2(a) of the Annex on Financial Services any
indication that the only prudential reasons envisaged are those which, as Panama argues, involve
avoiding "a risk whose materialization is imminent if the adoption of the measure is delayed".
1098
In fact, the indicative nature of the list of prudential reasons in paragraph 2(a) of the Annex on
Financial Services on the one hand reflects the difficulty of having an exhaustive list of reasons
capable of underpinning specific measures in the financial sector, and on the other denotes a
desire to allow Members to adapt their measures in the financial sector to the changing and
unpredictable nature of the risks that might aris e. Therefore, taking into account the ordinary
meaning of the words "prudential reasons" and th e illustrative list of these reasons, there is
nothing in the text of paragraph 2(a) to suggest this idea of "imminence".

1091 European Union’s response to Panel question No. 13, para. 36.
1092 United States’ response to Panel question No. 13 (referring to its response to advance Panel
question No. 7, para. 13).
1093 Brazil’s third-party submission, para. 18.
1094 Brazil’s third-party submission, para. 20.
1095 G20, Declaration of the Summit on Financial Markets and the World Economy (2008),
(Exhibit ARG-14), para. 3 (exhibit provided in English and translated into Spanish by the WTO Secretariat).
1096 Panama’s second written submission, para. 2.655.
1097 Panama’s second written submission, para. 2.708.
1098 Panama’s second written submission, para. 2.708.

7.878. In our view, it is important to understand that "systemic" problems may be incubating or
gestating over the course of time and erupt rapi dly; hence the importance of being prepared for
them in advance. 1099 For example, in the particular case of the insurance sector, a situation of
failure – and, ultimately, the possibility of contagion and financial instability, together with a threat
to the protection of the consumers of these services – might be slow to emerge.1100
7.879. In the light of the foregoing, we conclude that the expression " motivos cautelares "
(prudential reasons) refers to those "causes" or "reasons" that motivate financial sector regulators
to act to prevent a risk, injury or danger that does not necessarily have to be imminent.
(b) Measures taken "for" prudential reasons
7.880. Having determined the meaning of the term "prudential reasons", we continue our analysis
by examining the question of when a measure is taken "for" prudential reasons.
7.881. We recall that Argentina argues that this step in the analysis under paragraph 2(a) of the
Annex on Financial Services requires the determination of whether there is a "rational relationship"
between the measure and its prudential objective.
1101 For Argentina, a measure taken "for
prudential reasons" is a measure intended to avoid an outcome that conflicts with an objective
established or envisaged by the corresponding au thority, which may have adverse or pernicious
consequences for the rights protected by that authority. 1102 Moreover, for Argentina, a central
aspect of what makes a measure prudential has to do with its fitness for the purpose of preventing
the event, or the effects resulting therefrom, which the measure is intended to avoid.1103
7.882. Panama considers that the measures must have been taken for a "specific cause or
reason". According to Panama, it is the prudential nature of the measure taken by the respondent
that should be subjected to the closest scrutiny by a panel in this phase of the examination. 1104
Moreover, Panama maintains that when a panel assesses whether a measure taken by a Member
is "for prudential reasons" within the meaning of paragraph 2(a) of the Annex on Financial
Services, it should examine whether there is a real risk of imminent injury if that measure is not
adopted or its adoption is delayed.
1105
7.883. We note that several third parties have commented on the sort of examination we should
carry out in order to determine whether a measure has been taken for prudential reasons. The
European Union agrees with the parties that the use of the preposition "for" implies a rational
relationship of ends and means between the measure and the prudential reason.
1106 For the United

1099 In this connection, we note that the third parties share this reading with the Panel with respect to
the first sentence of paragraph 2(a) of the Annex on Financial Services in the sense of allowing Members not
only to respond to situations of imminent peril for the financial system but also to foresee sufficiently in
advance the emergence of situations that pose a threat to the financial system. Thus, Brazil argues that not
only may the measures be taken broadly to protect investors, depositors and the financial system as a whole,
but may also be adopted in a precautionary manner. According to Brazil, the prudential exception allows
Members, instead of reacting to individual risks posed in specific sectors or areas of the financial world, to act
broadly and plan ahead, since many of the threats to financial stability may come from multiple and complex
factors in various markets, as the recent global financial crisis of 2008 proved. See Brazil's third-party
submission, paras. 18 and 19.
1100 The International Association of Insurance Supervisors, the sector’s governing body at world level,
recognizes this possibility:
[S]ystemic risk with a bearing on financial stability and the real economy posed
by the insurance sector is of a different nature because of the insurance business model.
In the insurance sector the time horizon plays a relevant role, for systemic problems tend
to emerge over a longer time horizon than for banking. While banking failures may arise
in a matter of hours or days, insurance failures usually take months or years, although
loss of insurance capacity could emerge in weeks, if insurers or reinsurers cease offering
cover after serious problems are discovered.
See International Association of Insurance Supervisors, Systemic Risk and the Insurance Sector,
25 October 2009, (Exhibit ARG-140), para. 25 (exhibit provided in English and translated into Spanish by the
WTO Secretariat).
1101 Argentina’s second written submission, para. 79, and responses to Panel questions No. 53 and 87.
1102 Argentina’s first written submission, para. 560.
1103 Argentina’s second written submission, para. 89.
1104 Panama’s response to Panel question No. 87.
1105 Panama’s second written submission, para. 2.661.
1106 The European Union offers the following explanation:

States, the Member must, as an initial matter, identify a "prudential reason" "for" which the
measure was taken.1107
7.884. Carrying out an appropriate examination to determine whether a measure has been taken
for prudential reasons is no easy task. If we compare paragraph 2(a) of the Annex on Financial
Services with the general exceptions of Articles XIV of the GATS and XX of the GATT 1994, we
note that, unlike some of the subparagraphs of these provisions 1108, the prudential exception does
not require the measures to be "necessary". Hence it does not seem obvious to us a priori that the
text of paragraph 2(a) of the Annex on Financial Services justifies the imposition of a "necessity"
test requiring the measure to be the least trade-restrictive, as established within the context of the
general exceptions of the GATT 1994 and the GATS. In this respect, we agree with the parties and
various third parties. For Argentina, the prudential exception does not justify the use of a
"necessity" test or other more deferential standa rd, such as that stemming from the expression
"relating to". 1109 Panama does not refer to a "necessity" test, but considers that the measures
must have been taken for a "specific cause or reason". According to Panama, it is the prudential
nature of the measure taken by the respondent th at should be the subject of the closest scrutiny
by a panel in this phase of the examination.1110 The European Union considers that, unlike many of
the paragraphs in Article XX of the GATT 1994 and Article XIV of the GATS, which specify that the
measure must be "necessary" for achieving the legitimate objective, paragraph 2(a) does not
require that the measure should be the least trade-restrictive means of achieving the stated
objective.
1111 According to the United States, the expression "for prudential reasons" neither
requires nor permits an assessment of the extent to which the measure contributes to the
realization of the end pursued.1112

Unlike many of the paragraphs in Article XX of the GATT 1994 and XIV of the GATS, which
specify that the measure must be "necessary" for achieving the legitimate objective,
paragraph 2(a) does not require that the measure should be the least trade-restrictive means to
achieve the stated objective. The use of the word "for" in the phrase "measures for prudential
reasons" signifies a means-ends relation between the measure and the prudential objective.
Hence, the Member taking the measure at issue must demonstrate a rational relationship of ends
and means between the objective and the measure at issue.
See European Union’s third-party submission, para. 132 (translated into Spanish by the WTO
Secretariat). The European Union reiterates this argument in its response to Panel question No. 13.
1107 The United States considers that:
Thus, according to the text, for a Member’s measure to fall within the exception, the Member
must, as an initial matter, identify a "prudential reason" "for" which the measure was "tak[en]".
These reasons are not exclusive; the exception makes clear that its scope is broad and
encompasses other prudential reasons or considerations beyond those expressly listed in the
provision.
See United States’ response to Panel question No. 13 (referring to its response to advance Panel
question No. 7, para. 12) (translated into Spanish by the WTO Secretariat).
1108 Namely, subparagraphs (a), (b) and (c) of Article XIV of the GATS and subparagraphs (a), (b) and
(d) of Article XX of the GATT 1994.
1109 For Argentina,
[I]f the authors of the prudential exception had wanted that exception to be applied more
strictly, they would have provided a less deferential standard, such as that of 'necessity' which,
according to the Appellate Body, 'is located … closer to the pole of indispensable than to …
making a contribution to'. They could also have subjected the prudential exception to an
intermediate level of deference, such as 'relating to', which, according to the Appellate Body,
refers to measures which are 'primarily aimed at the conservation of exhaustible natural
resources, within the meaning of Article XX(g) of the GATT'. However, the authors of the
prudential exception agreed that the text of that provision should be couched in the broadest
possible terms, requiring only that the measure be taken 'for prudential reasons'. This language
implies a very deferential standard, which requires the Panel to examine the prudential
objectives of the measure and try to determine whether there is a rational relationship between
those prudential objectives and the measure in question.
See Argentina’s response to Panel question No. 53 (emphasis original).
1110 Panama’s response to Panel question No. 87.
1111 See footnote 1106 above.
1112 In the response of the United States we find the following:
By its terms and unlike the general exceptions, the prudential exception provides that a measure
must be taken "for prudential reasons". That text neither requires nor permits an assessment of
"the extent to which the measure contributes to the realization of the end pursued", whether
under a test related to "necessity", or whether the measure is "relating to" a particular end (e.g.,
"rational relationship" or "reasonableness" test). Some of the general exceptions in GATT and
GATS, for example, expressly require a measure to be "necessary" to achieve a purpose, such

7.885. Nor does it seem to us that we can simply transpose the previous rulings by the Appellate
Body with respect to Article XX(g) of the GATT 1994, which allow the adoption of inconsistent
measures "relating to the conservation of … resour ces …". In this respect, we agree with Argentina
that the prudential exception does not justify the use of a standard such as that stemming from
the expression "relating to".1113
7.886. We must therefore proceed to interpret the text of paragraph 2(a) of the Annex on
Financial Services on the basis of the ordinary mean ing of its terms, in their context, while taking
into account the object and purpose of the GATS.
7.887. We note that the Spanish Royal Academy defines the preposition " por" (for), in its most
relevant sense, as "[d]enota causa" (denoting cause).1114 In English, the Shorter Oxford dictionary
defines the preposition "for" as "[a]ffecting, with regard to, or in respect of" or "[h]aving (the thing
mentioned) as a reason or cause ".1115 In French, the dictionary Le Petit Robert defines the
preposition "pour" as " destiné à (qqn, qqch.) " (intended for (someone, something)) or " à cause
de" (because of"). Thus, the meaning is similar in all three languages.1116
7.888. A measure taken "for" prudential reasons would therefore be a measure with a prudential
cause. This interpretation is reinforced by the meaning of the Spanish word " motivo", which also
suggests the "cause or reason" for something.
7.889. In this connection, Argentina’s interpretation – in proclaiming a "rational relationship"
between the measure and its prudential objective 1117 and that the measure must be fit for the
purpose of preventing the event, or the effects resulting therefrom, which the measure is intended
to avoid1118 – seems to us to be in keeping with the idea derived from the meaning of the words
"for" and "reasons" that in the measure’s design, structure and architecture there must be a
rational relationship of cause and effect between the measure and the prudential reason for it. In
this connection, we note that this is also, at least partially, the interpretation favoured by Panama.
Certainly, Panama considers that the measures must have been taken for a "specific cause or
reason". According to Panama, it is the prudential nature of the measure taken by the respondent
that should be the subject of the closest scrutiny by a panel in this phase of the examination.
1119
7.890. We do not agree with Panama’s interpretation that "prudential measures" should be
transitional, provisional or short-term in nature 1120 and therefore can remain in place only for as
long as the factual circumstances that justified their adoption continue to exist. 1121 Firstly, we
recall that, as indicated earlier, the expression "prudential measures" does not appear as such in
paragraph 2(a), since that paragraph refers to "measures for prudential reasons". Secondly,
nothing in the ordinary meaning of the words "prudential reasons" conveys the idea of a
time-limit, either for the reasons or for the measures. Finally, even if we were to accept that
precautions are limited to situations of imminent danger, we cannot agree with Panama’s premise
that the existence of "imminent" danger necessarily and solely calls for measures of a
"transitional, provisional or short-term" nature.
1122 As a matter of principle, an "imminent" danger
may give rise to long-lasting measures to avoid the recurrence of similar situations in the future.
Therefore, in our opinion, the measures for pruden tial reasons envisaged in paragraph 2(a) of the
Annex on Financial Services may be urgent measur es to confront an imminent risk, temporary or

as: "necessary" to protect public morals or to maintain public order; "necessary" to protect
human, animal or plant life or health; or "necessary" to ensure compliance with laws or
regulations that are not inconsistent with the agreement.
See United States’ response to Panel question No. 13 (referring to its response to advance Panel
question No. 7, para. 14) (translated into Spanish by the WTO Secretariat).
1113 See footnote 1109 above.
1114 Diccionario de la Lengua Española, 23rd edition, Real Academia Española (Espasa Calpe, 2014),
Vol. II, p. 1756.
1115 Shorter Oxford English Dictionary, 6th edition, A. Stevenson (ed.) (Oxford University Press, 2007),
p. 1010.
1117 Argentina’s second written submission, para. 79.
1118 Argentina’s second written submission, para. 89.
1119 Panama’s response to Panel question No. 87.
1120 Panama’s second written submission, para. 2.656.
1121 Panama’s second written submission, para. 2.656. Panama bases these arguments on Articles 74.1,
74.2 and 76.1 of the ICJ Rules of Court.
1122 Panama’s second written submission, para. 2.656.

provisional measures, or even permanent (or long-lasting) measures, which might be taken even
in the absence of an imminent risk that would pr event fulfilment of one of the motives or reasons
mentioned in that paragraph. 1123 In our view, it is the nature of the situation that threatens a
particular prudential objective that will dictate the nature of the measure.
7.891. Hence, it seems to us that the use of the word "for" in the phrase "measures for prudential
reasons" denotes a rational relationship of cause and effect between the measure and the
prudential reason. Thus, the Member taking the measure in question must demonstrate that in its
design, structure or architecture there is a rational relationship of cause and effect between the
measure it seeks to justify under paragraph 2(a) and the prudential reason provided. 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. Whether a measure has been taken "for prudential
reasons", that is, whether there is a rational rela tionship of cause and effect between the measure
and the reason, can only be determined on a case-by-case basis, taking account of the particular
characteristics of each situation and each dispute.
7.892. We continue our analysis by examining whether Argentina has demonstrated that its
measures 5 and 6 were taken for prudential reasons, that is, whether the reasons identified by
Argentina qualify as "prudential" within the meaning of paragraph 2(a) of the Annex on Financial
Services and, if so, whether there exists a rati onal relationship of cause and effect between
measures 5 and 6 and their respective prudential reasons. We begin by examining measure 5.
(c) Whether measure 5 was taken "for prudential reasons"
7.893. Argentina maintains that the prudential purpose for which measure 5 was taken was to
protect the financial consumer, in its different variants, including insurance, from the distortions,
manipulations and abusive situations that may arise precisely when the institution responsible for
reinsuring a particular risk is not known, for lack of an effective exchange of information.
According to Argentina, "[i]f the reinsurer is located in a non-cooperative jurisdiction, the
Argentine authorities will not have access to information on, among other things, the effective
ownership of the reinsurer, whether it is adequate ly capitalized, whether its sources of funds are
legitimate, or whether there is any risk of the transaction being used to launder money. Thus,
transactions of this type expose the insurance markets in Argentina to greater systemic risk."
1124
According to Argentina, measure 5 responds to the need to preserve the integrity of the financial
system insofar as the funds involved in many suspected money-laundering operations often come
from countries which, precisely because they are non-cooperative for tax transparency purposes,
draw a veil – intentionally or unintentionally – over information needed to carry out controls.
Argentina argues that, where non-cooperative jurisdictions are concerned, it is impossible for the
Argentine authority regulating securities to dete rmine whether the sources of funds are legitimate
or whether the financial services supplier is subject to proper control and supervision by a
regulatory body in its home jurisdiction.
7.894. Argentina claims that "another central aspect of a prudential measure has to do with its
suitability for the purpose of prev enting the event, or the effect s resulting therefrom, which the
measure is intended to avoid. In this respect, measure 5 is directly and specifically related to the
need to preserve, as fittingly as possible, the soundness of the Argentine financial system".
1125
Argentina explains that this is due to the import ance of the insurance sector – defined in broad
terms and including companies operating in the reinsurance and retrocession segment – as the
second largest institutional investor in the Argentine capital market. 1126 Argentina explains that
reinsurance and retrocession services enable the country’s insurers to transfer part of their

1123 Moreover, we note that in other provisions of the WTO Agreements, when the authors wanted to
limit the scope of a provision to measures of a temporary or urgent nature they did so explicitly. Examples
include Article XI:2(a) of the GATT 1994, which refers to "[E]xport prohibitions or restrictions temporarily
applied" and Article XII of the GATT 1994, which includes expressions such as "imminent threat"
(Article XII:2(a)), "parties … shall progressively relax [the application of restrictions under Article XII:2(a)] as
such conditions improve … and shall eliminate the restrictions when conditions would no longer justify their
institution or maintenance" (Article XII:2(b)). This provision, in its turn, specifies how to proceed "[i]f there is
a persistent and widespread application of import restrictions under this Article" (Article XII:5).
1124 Argentina’s second written submission, para. 88.
1125 Argentina’s second written submission, para. 89.
1126 Argentina’s second written submission, para. 89.

portfolio risk to third parties located in Argentina or abroad, thus freeing up additional capital to
finance more insurance policies in Argentina. However, in the event of the insolvency or failure of
a foreign reinsurer, the insured party in Argentina would be unable to collect its claim against that
reinsurer, but would continue to be responsible for paying out claims under the original insurance
contract. Therefore, the failure of the foreign re insurer presupposes an additional burden on the
financial capacity of the original insurer, which in turn could lead to the failure of the original
insurer and thus produce a "domino effect" on the Argentine insurance market.
1127 For this reason,
the Argentine authority – SSN – has not only to protect the fiduciary relationship between the
reinsurance company and the policy holders but also to preserve the soundness of the system, so
as to ensure appropriate conditions for safeguarding insurance contracts and the fiduciary
relationship between the companies and the policy holders.
1128
7.895. Argentina claims that measure 5 is duly proportional to the objective pursued. 1129
According to Argentina, in the recitals of SSN Resolution No. 35.615/2011 themselves it is
expressly stated "[t]hat, on the basis of the expe rience accumulated, it has been found necessary
to upgrade the control mechanisms designed to ensure the necessary solvency of insurers and
reinsurers operating within the national territory and, moreover, the fairness and technical
reasonableness of the respective contract conditions". Argentina points out that the regulations
establish additional requirements, which compensate for the lack of direct and effective access to
information.
1130
7.896. Panama replies that Argentina has not explained why its measure should be considered to
have been taken "for prudential reasons". According to Panama, although Argentina maintains that
its measure pursues the objective of "safeguarding the financial consumer" and responds to the
need "to preserve the integrity of the financial system", the vague and extremely general
references to "distortions, manipulations and abusive situations" suffered by consumers and to
"many suspected money-laundering operations" are far from constituting an adequate explanation
of the specific risks that Argentina seeks to avoid by means of the measure relating to reinsurance
services. Panama maintains that the mere assertion that a measure has been taken to protect
consumers and the financial system cannot suffice to show that it is in fact a prudential
measure.
1131 In Panama’s opinion, Argentina should have explained, for example, what would be
the specific risk or risks to which the Argentine consumers would be exposed by contracting for
reinsurance services with non-cooperative country suppliers, or what systemic risk created by non-
cooperative country reinsurers could affect the stability of the Argentine financial system, or how
the imposition of "additional requirements" on non-cooperative country reinsurers could be
considered to be a measure designed to deal with and "mitigate the [existing] risks" by preventing
them from materializing.
1132
7.897. Panama also doubts whether the necessary solvency of the reinsurance companies could
be ensured by the existence of an agreement or memorandum of understanding between two
government agencies. Panama does not understand how the risk that the Argentine consumer
might not receive the agreed coverage because of the reinsurance company’s lack of funds is in
any way forestalled or mitigated by the SSN’s ability to contact ex post facto its counterpart in
another jurisdiction once the risk has materialized. For Panama, to avoid the risk of insolvency
ex ante, it is not necessary or effective to discriminate between reinsurance companies on the
basis of their origin or impose conditions on the official counterparts of the SSN. According to
Panama, what would be effective would be to apply control measures or impose minimum capital
requirements on every reinsurance company, regardless of its origin.
1133
7.898. For the purpose of determining whether measure 5 was taken "for prudential reasons", the
Panel will proceed in two stages. First, we will analyse whether the reasons identified by Argentina
with respect to measure 5 are "prudential" within the meaning of paragraph 2(a) of the Annex on
Financial Services. That is to say, whether the issue is one of "causes" or "reasons" that prompt
the regulatory authorities of the insurance sector to act to forestall a risk, injury or danger which,
as previously mentioned, does not have to be imminent. If we find that there are "prudential

1127 Argentina’s second written submission, para. 87.
1128 Argentina’s second written submission, para. 90.
1129 Argentina’s first written submission, para. 568.
1130 Argentina’s first written submission, para. 568.
1131 Panama’s second written submission, paras. 2.676 and 2.677.
1132 Panama’s second written submission, para. 2.677.
1133 Panama’s second written submission, para. 2.678.

reasons", the next step will be to analyse whether the measure was taken "for" the said prudential
reasons, that is, whether there exists a rational relationship of cause and effect between measure
5 and the prudential reasons identified by Argentina.
(i) Whether the reasons identified by Argentina are "prudential" within the
meaning of paragraph 2(a) of the Annex on Financial Services
7.899. We recall that Argentina has identified the following prudential reasons for adopting
measure 5, namely: as a precaution to protect the insured; to ensure the solvency of insurers and
reinsurers; to guard against the systemic risk that might arise as a result of the insolvency and
failure of reinsurance companies and lead to the collapse of direct insurance companies; and to
guarantee the integrity of the market.
1134
7.900. We note first of all that, as Argentina points out, the recitals of SSN Resolution
No. 35.615/2011 mention among its objectives the need to upgrade "the control mechanisms
designed to ensure the necessary solvency of insu rers and reinsurers operating within the national
territory and, moreover, the fairness and technical reasonableness of the respective contract
conditions".1135
7.901. We also note that, as argued by Argent ina, reinsurance services are vital for the smooth
functioning of the insurance market. 1136 In a document entitled "General Solvency Criteria.
Reinsurance Operations", the Association of Latin American Insurance Supervisors (ASSAL) states
that "[r]einsurance is an essential part of the insurance industry since, from a technical point of
view, it enables the institutions to spread their risks adequately and, from a financial point of view,
it expands their ability to underwrite risks by limiting their potential losses, particularly where the
risks are high."
1137 Moreover, as is also argued by Argentin a, ensuring the solvency of the insurers
and reinsurers is a sine qua non condition for ensuring financial stability and preventing systemic
risk.1138 This is confirmed by ASSAL, which points out that "in planning its surveillance activities
the supervisory authority for the insurance industry should always pay due attention to the
solvency and liquidity of the institutions". 1139 ASSAL also explains that an insurance institution is
exposed to solvency problems due to "[t]he foreign reinsurers to which it cedes risks: depending
on their quality or 'security', it is feasible for them to encounter problems stemming from the
failure to fulfil these transferred responsibilities, for which, in general, they lack the backing of
technical reserves or minimum liable equity capital".1140
7.902. Moreover, in a 2009 document of the Inte rnational Association of Insurance Supervisors,
entitled "Systemic Risk and the Insurance Sector", it is indicated that "[s]ystemic risk may arise in
the insurance sector when insurance market capacity declines or disappears. It could be caused
by, for example, the failure of one or more in surers or by the withdrawal of insurance or
reinsurance cover."
1141 Further on, in the same document, it is explained that one source of an
insurance failure could be via reinsurance exposure: "A sudden failure of a reinsurer may cause
direct insurers to lose protection for lines of direct insurance and thus come under financial
stress."
1142
7.903. We note that Argentina makes a similar argument, pointing out that SSN Resolution
No. 35.615/2011 is part of a series of "actions and measures taken to avoid reinsurer insolvency,

1134 Argentina’s first written submission, para. 563; and second written submission, paras. 86-90.
1135 Argentina’s first written submission, para. 568, and Exhibits PAN-36 / ARG-27.
1136 Argentina’s second written submission, para. 87.
1137 Association of Latin American Insurance Supervisors (ASSAL), General solvency criteria –
Reinsurance operations, August 1999, (Exhibit ARG-88), para. 1.
1138 Argentina’s second written submission, para. 87.
1139 ASSAL, General solvency criteria – Reinsurance operations, (Exhibit ARG-88), para. 16.
1140 ASSAL, General solvency criteria – Reinsurance operations, (Exhibit ARG-88), para. 18(a).
1141 See International Association of Insurance Supervisors, Systemic Risk and the Insurance Sector,
25 October 2009, (Exhibit ARG-140), para. 16 (exhibit provided in English and translated into Spanish by the
WTO Secretariat).
1142 See International Association of Insurance Supervisors, Systemic Risk and the Insurance Sector,
25 October 2009, (Exhibit ARG-140), para. 20 (exhibit provided in English and translated into Spanish by the
WTO Secretariat).

it being understood that the failure of an entity would affect the stability of the direct insurers and,
in general, the insured and the injured parties".1143
7.904. In our view, in the light of the argume nts and evidence presented above, the reasons
identified by Argentina with respect to measure 5 – to protect the insured, to ensure the solvency
of insurers and reinsurers, and to avoid the possible systemic risk of the insolvency and failure of
direct insurance companies – are prudential in nature and in conformity with our interpretation of
the expression "prudential reasons" in paragraph 2(a) of the Annex on Financial Services.
7.905. It remains to determine whether measure 5 was taken "for" these prudential reasons, that
is, as we previously indicated, whether there is a rational relationship of cause and effect between
the measure and these prudential reasons. We recall 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 contributes to achieving the desired effect.
(ii) Whether measure 5 was taken for the prudential reasons identified by
Argentina
7.906. As described in section 2.3.6 above, measur e 5 consists of the imposition of requirements
on non-cooperative country service suppliers in order for them to be able to gain access to the
Argentine reinsurance services market. Argentina maintains this measure under points 18 and
20(f) of Annex I to SSN Resolution No. 35.615/2011.
7.907. According to the actual wording of tw o of the provisions under which measure 5 is
maintained (paragraphs 18 and 20(f) of Annex I to SSN Resolution No. 35.615/2011 as amended
by SSN Resolution No. 38.284/2014), Argentina imposes different treatment on reinsurance
service providers depending on whether or not they are established and registered in cooperative
countries. Thus, if a foreign company is unable to show that it or its parent company is established
and registered in a cooperative country, it must be shown that: (i) the foreign company or its
parent company is subject to control and supervisio n by a body that performs functions similar to
those of the SSN; and (ii) that the body in ques tion has signed a memorandum of understanding
on cooperation and information exchange with the SSN.
7.908. It will be recalled that the conditions under which a country is considered to be
"cooperative for tax transparency purposes " are laid down in Decree No. 589/2013. As explained
in section 2.2 above, Decree No. 589/2013 establishes the following conditions for a country to be
considered cooperative, namely: (i) to have signed with Argentina a tax information exchange
agreement or an international double taxation convention with a broad information exchange
clause, provided that the information is effectively exchanged; or (ii) to have initiated with
Argentina the negotiations necessary for concluding such an agreement and/or convention.
1144 If
neither of these requirements is met, the country is deemed to be non-cooperative.1145
7.909. At the beginning of our analysis, we expressed agreement with Argentina that a crisis in
the insurance and reinsurance sector involving a loss of insurance or reinsurance capacity might
occur within a short period of time and harm financial stability and the real economy. 1146 As we

1143 Argentina’s first written submission, para. 459.
1144 Article 1 of Decree No. 589/2013, (Exhibit PAN-3 / ARG-35).
1145 We note, however, that AFIP Resolution No. 3.576/2013, "adopted in exercise of the powers
conferred by Article 2(b) of Decree No. 589" exhibits slight differences in comparison with Decree
No. 589/2013. On the one hand, Article 1 of this Resolution establishes three categories of cooperative
country: "(a) cooperative countries which have signed a double taxation convention or information exchange
agreement, with a positive assessment of effective exchange of information; (b) cooperative countries with
which a double taxation convention or information exchange agreement has been signed but it has not been
possible to assess effective exchange; and (c) cooperative countries with which the process of negotiating or
ratifying a double taxation convention or information exchange agreement has been initiated". We also note
that the third category refers to initiation of the negotiation or ratification process, whereas Decree
No. 589/2013 refers only to negotiation. See AFIP Resolution No. 3.576/2013, (Exhibits PAN-3 / ARG-37).
1146 Argentina’s response to Panel question No. 85, para. 22.

saw above, the International Association of Insu rance Supervisors (IAIS) has expressed a similar
view.1147
7.910. As this Panel has already stated1148, measures taken "for prudential reasons" include those
that seek to look ahead and make the necessary arrangements in advance to achieve a certain
prudential objective in the financial sector. In this respect, it seems to us that requesting relevant
information from the regulatory authorities of other jurisdictions forms part of measures intended
to look ahead and make the arrangements necessary to achieve a certain prudential objective in
the financial sector, in this case to ensure the solvency of insurers and reinsurers and avoid the
systemic risk that could arise from the insolvency and failure of direct insurance companies, as is
argued by Argentina. In our view, having adequa te and timely information concerning the foreign
reinsurance company is fundamental for the purpose of anticipating crises or systemic risks which,
as we have seen, could be incubating in an imperceptible manner over time and suddenly erupt.
Viewed from this standpoint, we understand the reasoning behind the requirement of information
exchange between insurance supervisors in points 18(a) and 20(f) I) of Annex I to SSN Resolution
No. 35.615/2011, which we find perfectly valid.
7.911. Nevertheless, as stated above, a central aspect of the rational relationship of cause and
effect is the adequacy of the measure to the prudential reason, that is to say, whether the
measure, through its design, structure and architecture, contributes to achieving the desired
effect. We will consider this aspect next.
7.912. We begin by noting that the determination as to who is "cooperative" and who is
"non-cooperative" is made by applying Decree No. 589/2013. Decree No. 589/2013 establishes the
conditions for a country to be considered cooperative, namely: (i) to have signed with Argentina a
tax information exchange agreement or an international double taxation convention with a broad
information exchange clause, provided that the information is effectively exchanged; or (ii) to
have initiated with Argentina the negotiations necessary for concluding such an agreement and/or
convention.
1149 If neither of these requirements is met, the country is deemed to be non-
cooperative.1150
7.913. In other words, Decree No. 589/2013 serves to determine not only those that are
cooperative and exchange information but also, by default, those that are "non-cooperative" and
whose companies will be required, under the second paragraphs of points 18(a) and 20(f) I), to
show that they are subject to control and supe rvision by a body: (i) which performs functions
similar to those of the SSN, and (ii) with which the SSN has signed a memorandum of
understanding on cooperation and information exchange. It is in the mechanism under
Decree No. 589/2013 for determining who is cooperative and who is non-cooperative that we see,
as explained below, a crucial problem.
7.914. Decree No. 589/2013 also authorizes the AFIP to "draw up a list of the countries,
dominions, jurisdictions, territories, associate States and special tax regimes considered
cooperative for tax transparency purposes, to pu blish it on its websit e (http://www.afip.gob.ar)
and to keep that publication up to date". In fact, this list has practical effects. In the case of
measure 5, inclusion in the list enables a reinsurance company of the country concerned
automatically to meet the first requirement laid down in points 18(a) and 20(f) I) of Annex I to
SSN Resolution No. 35.615/2011.
7.915. We note that the first criterion of Decree No. 589/2013 stipulates that, for a country to be
considered a cooperative country, it must have signed with Argentina a tax information exchange
agreement or an international double taxation convention with a broad exchange-of-information
clause, provided that the information is effectiv ely exchanged. We also note that the Global
Forum’s Standard C.1.8 in the section "Exchanging Information – Essential Elements" states that
"[e]xchange of information mechanisms should provide for effective exchange of information and

1147 See International Association of Insurance Supervisors, Systemic Risk and the Insurance Sector,
25 October 2009, (Exhibit ARG-140), para. 25 (exhibit provided in English and translated into Spanish by the
WTO Secretariat).
1148 See paragraphs 7.867 and 7.879 above.
1149 Article 1 of Decree No. 589/2013, (Exhibits PAN-3 / ARG-35).
1150 See footnote 1145 above.

should … be in force; where agreements have been signed, jurisdictions must take all steps
necessary to bring them into force expeditiously".1151
7.916. However, we note that, in the case of the criterion relating to the initiation of the
negotiation of a double taxation convention or an information exchange agreement, there is no
formal mechanism for the effective exchange of information between Argentina and the country
with which it is negotiating. Argentina nonetheless grants cooperative country status to countries
that are in the negotiating process, with respect to which it does not have access to tax
information given that there is as yet no agreement or convention in place. Leaving aside the
dispute between the parties as to whether Panama met this requirement and did, in fact, initiate
negotiations
1152, this would be the case of Panama, for example, which Argentina considers to be a
cooperative country, even though it has not signed any of the agreements provided for in
Decree No. 589/2013.1153 This means that jurisdictions with which Argentina is in the process of
negotiating tax information exchange agreements are considered cooperative despite the fact that
Argentina continues to have no access to tax information, the exchange of which is the raison
d’être of its defensive measures.
7.917. The situation between Panama and Argentin a illustrates the consequences of using this
criterion. As Argentina explains, Panama was included "as from 1 January 2014 as a 'cooperative
country for tax transparency purposes' und er Decree No. 589/2013 and AFIP Resolution
No. [3576]/2013, after negotiations to conclude an agreement on the exchange of information for
tax purposes had been initiated as from November 2013 … ".
1154 That is to say that, up until 31
December 2013, Argentina regarded Panama as a "non-cooperative" country. From 25 March
2014,1155 by virtue of Panama’s inclusion in the list of cooperative countries from 1 January 2014,
simply because Argentina considered that negotiations had been initiated, reinsurance companies
established and registered in Panama were considered to be in compliance with the first of the
requirements laid down by points 18(a) and 20(f) I) of Annex I to SSN Resolution
No. 35.615/2011. In both cases, that is, both before 31 December 2013 and after 31 December
2013, Panama did not exchange any kind of tax information with Argentina, as follows from
Panama’s constant refusal during these proceedings to consider that it had initiated negotiations or
that it intended to open negotiations with Argentina for the purposes of signing a tax information
exchange agreement.
1156
7.918. Moreover, the use of this criterion of initiation of negotiations (but without the existence of
a formal agreement or effective information exchan ge), together with the periodicity with which
the list of cooperative countries is updated, crea tes other problems. According to Argentina, this
list is updated annually at the beginning of the fiscal year. At the time of distribution of this report
to the parties, the list of countries that Argentina considers to be cooperative continues to be the
one published on the AFIP web page on 1 January 2014. Panama, which, according to Argentina,
initiated negotiations with Argentina in November 2013, is on the list of cooperative countries.
However, other jurisdictions (Belarus, Cameroon, Côte d'Ivoire, Cyprus, Gabon, Gibraltar and
Hong Kong (China)) with which Argentina initiated negotiations in the course of 2014
1157, still do
not have the status of cooperative countries. In other words, these jurisdictions are in the same
situation as Panama – they are negotiating, according to Argentina, but presumably not

1151 See Global Forum, Terms of Reference (2010), (Exhibit ARG-40), p. 8 (exhibit provided in English
and translated into Spanish by the WTO Secretariat).
1152 We recall that Panama maintains that it never initiated negotiations with Argentina, whereas
Argentina asserts that these negotiations began in November 2013. See Panama’s response to Panel question
No. 7(a); and Argentina’s response to Panel question No. 10(c).
1153 In this connection, it should be pointed out that the parties disagree as to whether negotiations on a
double taxation convention or information exchange agreement were initiated. Whereas Argentina considers
that the negotiations began in November 2013, Panama claims that these negotiations were never initiated.
See Panama’s response to Panel question No. 7 and Argentina’s first written submission, paras. 131 and 132.
1154 Argentina’s response to Panel question No. 10(c) and (d), p. 21.
1155 As previously mentioned, points 18 and 20(f) of SSN Resolution No. 35.615/2011 were amended by
SSN Resolution No. 38.284/2014, which entered into force on 25 March 2014. Points 18 and 20(f) of Annex I
to SSN Resolution No. 35.615/2011, as worded prior to the amendment of March 2014, established
prohibitions on the supply of reinsurance services by suppliers from non-cooperative countries via modes 1 and
3. The amendment introduced by SSN Resolution No. 38.284/2014 eliminated that prohibition and made the
supply of reinsurance services by suppliers from non-cooperative countries conditional upon the satisfaction of
certain requirements. See paras. 2.25-2.33 above.
1156 Panama’s response to Panel question No. 7, p. 12.
1157 Argentina’s response to Panel question No. 10(b)(i), p. 21.

exchanging information. However, given that Panama was included in the list, Panamanian
reinsurance companies are treated differently, for the purposes of measure 5, from reinsurance
companies established and registered in any of the other jurisdictions mentioned.
7.919. In view of the foregoing, we consider that measure 5, and in particular the fact that
Argentina does not require relevant information from the insurance regulators of jurisdictions
which are officially cooperative but have not concluded an information exchange agreement or
effectively exchanged information, does not have a rational relationship of cause and effect with
the prudential reasons identified by Argentina.
7.920. Hence we conclude that Argentina has not demonstrated that measure 5 was taken for
prudential reasons within the meaning of paragraph 2(a) of the Annex on Financial Services.
(d) Whether measure 6 was taken "for prudential reasons"
7.921. Argentina argues that measure 6 is intended to protect investors from the distortions,
manipulations and abusive situations that occur when the beneficial owner of the securities
operation is unknown for lack of an effective exchange of information
1158, and to preserve the
integrity and smooth functioning of the Argentine capital market. 1159 According to Argentina,
securities operations with non-cooperative jurisdictions expose the Argentine financial market to
increased risk of systemic failure, since in transactions of this kind the Argentine regulator is
unable to obtain access to information about the effective ownership of the party ordering the
transaction and the legitimacy of the source of its funds, and neither can it know whether the
foreign entity is subject to appropriate supervision in its home jurisdiction. For this reason,
Argentina maintains that securities transactions with entities located in non-cooperative
jurisdictions pose risks which may not be present in transactions with entities located in
cooperative jurisdictions, including risks of money laundering, tax evasion and non-payment for
securities operations.
1160
7.922. Argentina argues that seeking transparen cy and knowledge of the beneficial owner of
foreign legal persons is one of the ways of combating the above-mentioned threats. According to
Argentina, this is why the FATF recommends that countries adopt measures to prevent the misuse
of legal persons for money laundering or terrorist financing. Argentina maintains that countries
should ensure that there is adequate, accurate an d timely information on the beneficial ownership
and the control of legal persons that the competent authorities can obtain or have access to in a
timely fashion.
1161
7.923. Argentina explains that prominent among the "preventive measures" that countries should
impose on their financial institutions to achieve these various objectives are those relating to
"customer due diligence", namely:
1162 identifying the customer and verifying the customer’s
identity; identifying the beneficial owner and the ownership and control structure of the customer;
and conducting ongoing due diligence on the business relationship and scrutiny of transactions
undertaken throughout the duration of that relationship to ensure that the transactions being
conducted are consistent with the institution’s knowledge of the customer and their business and
risk profile, including, where necessary, the source of funds. Argentina argues that the purpose of
these due diligence measures is twofold: first, to prevent the unlawful use of legal persons and
other legal structures, by gaining a sufficient understanding of the customer to be able to properly
assess the potential money laundering and terrorist financing risks associated with the business
relationship; and second, to take appropriate steps to mitigate the risks.
1163
7.924. According to Argentina, in the case of transactions ordered by persons from non-
cooperative countries, as a consequence of the lack of a tax information exchange agreement with
Argentina or a memorandum of understanding on cooperation and information exchange with the
CNV, it is impossible to ensure compliance with any of the above-mentioned preventive measures.

1158 Argentina’s first written submission, paras. 564-566.
1159 Argentina’s first written submission, para. 562.
1160 Argentina’s second written submission, para. 92.
1161 Argentina’s response to Panel question No. 85(b), para. 11. See also the FATF Recommendations,
(Exhibit ARG-25), Recommendations 24 and 25.
1162 FATF, Recommendations, (Exhibit ARG-25), Recommendation 10.
1163 FATF, Recommendations, (Exhibit ARG-25), Interpretive Note to Recommendation 10, p. 64.

Likewise according to Argentina, in the case of non-cooperative countries, neither the stock market
intermediaries (nor the CNV or any other government agency) are assured of being able to identify
the customer or the beneficial owner ordering the transactions, or who it is that stands behind
them, as in the case of the customers of investment portfolio managers.
1164 Argentina points out
that FATF Recommendation 10 itself explicitly states that if the financial institution is unable to
comply with the due diligence measures in question it should not perform the requested
transaction:
Where the financial institution is unable to comply with the [customer due diligence
measures] … it should be required not to open the account, commence business
relations or perform the transaction; or shou ld be required to terminate the business
relationship; and should consider making a suspicious transactions report in relation
to the customer.1165
7.925. Argentina explains that the FATF methodology for assessing compliance with the said
recommendation, established in 2013, reiterates the same requirement not to perform the
transaction when the customer and/or beneficial owner and the ownership and control structure
cannot be identified. 1166 In this respect, the regulations of the CNV could not be more in keeping
with what is required by the FATF. It is the international standards themselves which stipulate
that, as a prudential measure, the institution should "not … perform the transaction", thus
reinforcing compliance with the recommendation of the International Organization of Securities
Commissions (IOSCO) to establish policies and procedures intended to minimize the risk of
intermediaries being used as vehicles for money laundering. In questioning measures of this kind,
Panama’s claim clashes head-on with the international efforts to safeguard the integrity of the
financial system against the risks that stem from money laundering and with prudential regulation
in general.
7.926. Argentina argues that IOSCO’s principles include one that calls on different jurisdictions to
establish information exchange mechanisms that specify when and how to exchange public and
non-public information with their domestic and foreign counterparts, which is precluded in the case
of countries that do not comply with these international standards.
1167 According to Argentina,
information exchange agreements are strongly recommended by IOSCO, which points out that
such agreements make it possible to assist foreign regulators when evidence of a possible violation
of the regulations lies outside th eir jurisdiction. According to Arge ntina, without such agreements,
regulators such as the CNV lack the tools to carry out their regulatory tasks. Argentina cites the
following paragraph from an IOSCO document:
Securities regulators have long used information-sharing arrangements, typically
known as memoranda of understanding or MOUs, to facilitate consultation,
cooperation and the exchange of information in securities enforcement matters. These
enforcement MOUs permit regulators who suspect there has been a violation of their
laws … to seek ad hoc assistance from their overseas counterparts when evidence of
the possible violation may lie outside their jurisdictions.
1168
7.927. Argentina argues that, in accordance with international standards, countries should ensure
that competent authorities such as the CNV can rapidly, constructively and effectively provide the
widest range of international cooperation in relation to money laundering, associated predicate

1164 Argentina’s response to Panel question No. 85(b), para. 15.
1165 Argentina’s response to Panel question No. 85(b), para. 16 (referring to FATF Recommendations,
(Exhibit ARG-25), Recommendation 10, p. [16]) (emphasis original).
1166 Argentina’s response to Panel question No. 85(b), para. 17 (referring to FATF, "Methodology for
assessing technical compliance with the FATF Recommendations and the effectiveness of AML/CFT systems",
2013, p. 44, viewed at http://www.fatf-
gafi.org/media/fatf/documents/methodology/FATF%20Methodology%2022%20Feb%202013.pdf: "Where a
financial institution is unable to comply with relevant CDD measures: (a) it should be required not to open the
account, commence business relations or perform the transaction; or should be required to terminate the
business relationship."
1167 Argentina’s first written submission, para. 530.
1168 See Argentina's response to Panel question No. 85(b), para. 19 (referring to IOSCO, Principles
Regarding Cross-Border Supervisory Cooperation – Final Report, May 2010, p. 31.
http://www.iosco.org/library/pubdocs/pdf/IOSCOPD322.pdf) (exhibit provided in English and translated into
Spanish by the WTO Secretariat).

offences and terrorist financing. Argentina explains that countries should do so both spontaneously
and upon request and that there should be a legal basis for providing cooperation. According to
Argentina, FATF’s international recommendations in this respect are very clear and encourage
countries to negotiate and sign memoranda of understanding with their foreign counterparts:
1169
Should a competent authority need bilateral or multilateral agreements or
arrangements, such as a Memorandum of Understanding (MOU), these should be
negotiated and signed in a timely way with the widest range of foreign
counterparts.1170
7.928. Panama argues that, since Argentina has sought to justify the restrictions on the
reinsurance and capital markets concurrently under the prudential exception, its justification of the
discriminatory measure affecting access to the Argentine capital market suffers from the same
defects that Panama has already identified with respect to the measure relating to reinsurance
services.
1171 According to Panama, the general references to "distortions, manipulations and
abusive situations" suffered by consumers or to "many suspected money laundering operations" do
not suffice clearly and understandably to explain the nature of the specific risks that Argentina
seeks to guard against by means of the measure, which discriminates between portfolio managers
of different origins.1172
7.929. According to Panama, Argentina had a duty to explain what would be the specific risk to
which Argentine consumers would be exposed by contracting for the services of an investment
portfolio manager of some non-cooperative country, and how the imposition of the conditions
envisaged in the CNV’s Rules is a measure designed to take into account and "mitigate the risks"
created by managers of non-cooperative countries. According to Panama, Argentina has not
explained how the alleged risks for consumers and the financial system in general can be
prevented or guarded against ex ante by imposing conditions not on the asset managers or the
banking entities that operate in the Argentine market but on their governments.
1173
7.930. According to Panama, even if the Panel we re to consider that the prudential exception
applies to the Argentine measure relating to the access of foreign portfolio managers to the
securities market, paragraph 2(b) of the Annex on Financial Services of the GATS would not
appear to allow measures such as those that Argentina seeks to impose. 1174 For Panama, the aim
of the Argentine measure is precisely to force other Members to disclose information to the
Argentine Government, by making access of foreign portfolio managers to the Argentine market
conditional on the negotiation and signat ure of information exchange agreements.
1175 Panama
considers that the exception in paragraph 2(a) of the Annex on Financial Services of the GATS,
when read in the light of paragraph 2(b), in no way makes it possible to justify measures of this
kind.
1176 Panama therefore considers that Argentina has failed to meet its burden of proving that
the measure relating to access to the Argentine capital market was taken "for prudential reasons"
within the meaning of paragraph 2(a) of the Annex on Financial Services of the GATS.
1177
(i) Whether the reasons identified by Argentina are "prudential" within the
meaning of paragraph 2(a) of the Annex on Financial Services
7.931. As with measure 5, for the purpose of determining whether measure 6 was taken "for
prudential reasons", the Panel will proceed in two stages. First, we will analyse whether the
reasons identified by Argentina with respect to measure 6 are "prudential" within the meaning of
paragraph 2(a) of the Annex on Financial Services. That is to say, whether they are "causes" that
motivate the financial sector regulators to act to prevent a risk, injury or danger which, as we
have already said, does not have to be immine nt. If we determine that there are "prudential
reasons", then, as the next step, we will analyse whether the measure was taken "for" those

1169 Argentina’s response to Panel question No. 85(b), para. 20.
1170 See FATF, Recommendations, (Exhibit ARG-25), Recommendation 40, p. 31.
1171 Panama’s second written submission, para. 2.714.
1172 Panama’s second written submission, para. 2.714.
1173 Panama’s second written submission, para. 2.715.
1174 Panama’s second written submission, para. 2.716.
1175 Panama’s second written submission, para. 2.716.
1176 Panama’s second written submission, para. 2.716.
1177 Panama’s second written submission, para. 2.717.

prudential reasons, i.e., whether there is a rati onal relationship of cause and effect between
measure 6 and the prudential reasons identified by Argentina.
7.932. We begin our analysis by noting that measure 6 forms part of the New Text of the CNV’s
Rules (N.T. 2013) issued by the CNV under the regula tory powers conferred on it by Article 155 of
Law No. 26.831 on the Capital Market, enacted on 27 December 2012.1178 This Law is regulated by
N.T. 2013. Among the objectives of the Capital Market Law, its first article mentions the following:
"To strengthen the mechanisms for protecting and preventing abuses against small investors,
within the framework of the protective function of consumer law". In our view, this objective
relates specifically to investor protection (within the framework of the consumer protection
function), as argued by Argentina.
7.933. Moreover, we note that Article 39 of the Capital Market Law, in dealing with negotiable
securities trading systems, imposes upon them the obligation to "ensure the full effectiveness of
the principles of investor protection, fairness, efficiency, transparency, non-fragmentation and
reduction of systemic risk".
1179 All these objectives and principles are, in this Panel’s opinion,
prudential reasons that may fall within the framework of paragraph 2(a) of the Annex on Financial
Services.
7.934. We also note that the Capital Market Law empowers the CNV not only to regulate,
supervise, inspect, monitor and sanction all persons that engage in activities related to the public
offering of negotiable securities, but also to issue regulations for preventing money laundering and
terrorist financing, which therefore appear, in this Panel’s opinion, to be additional prudential
reasons that should inform the regulatory provisions of the Law.
1180 It is in this context that, in our
opinion, Title XI of N.T. 2013, which heads measure 6 and is entitled "Prevention of Money
Laundering and Terrorist Financing", should be understood. In our view, this confirms the
Argentine argument that the prudential reasons of measure 6 include the prevention of money
laundering and terrorist financing.
1181
7.935. The Panel also agrees with Argentina that the prevention of money laundering and
terrorist financing strengthens the integrity and stability of the financial system. Argentina cites
the International Monetary Fund (IMF), which considers that money laundering and terrorist
financing can undermine the integrity and stability of the financial system and its institutions and
destabilize a country’s finances and macroeconomy and, ultimately, global financial stability.
1182 As
the IMF points out, the prevention of money la undering and terrorist financing strengthens the
integrity of the financial system and macroeconomic stability at both national and international
level.1183 According to Argentina, prominent among the numerous international initiatives adopted

1178 Law No. 26.831 on the Capital Market of 27 December 2012 (Capital Market Law),
(Exhibits PAN-48 / ARG-49).
1179 Capital Market Law, (Exhibits PAN-48 / ARG-49).
1180 See Article 19 of the Capital Market Law, in particular its paragraphs (a), (c), (d) and (p),
(Exhibits PAN-48 / ARG-49).
1181 Argentina’s response to Panel question No. 85(b), para. 21.
1182 Argentina’s response to Panel question No. 85(b), para. 7 (reproducing the following passage from
an IMF publication):
The international community has made the fight against money laundering and terrorist financing
a priority. The IMF is especially concerned about the possible consequences money laundering,
terrorist financing, and related crimes have on the integrity and stability of the financial sector
and the broader economy. These activities can undermine the integrity and stability of financial
institutions and systems, discourage foreign investment, and distort international capital flows.
They may have negative consequences for a country’s financial stability and macroeconomic
performance, resulting in welfare losses, draining resources from more productive economic
activities, and even have destabilizing spillover effects on the economies of other countries. In an
increasingly interconnected world, the negative effects of these activities are global, and their
impact on the financial integrity and stability of countries is widely recognized … Strong AML/CFT
[anti-money laundering and combating the financing of terrorism] regimes enhance financial
sector integrity and stability, which in turn facilitate countries’ integration into the global financial
system. They also strengthen governance and fiscal administration. The integrity of national
financial systems is essential to financial sector and macroeconomic stability both at the national
and international levels.
See IMF, "The IMF and the Fight Against Money Laundering and the Financing of Terrorism",
5 September 2014 (English text available at: http://www.imf.org/external/np/exr/facts/aml.htm).
1183 Argentina’s response to Panel question No. 85(b), para. 8 (where Argentina reproduces the following
excerpt from an IMF publication in English): "Strong AML/CFT [anti-money laundering and combating the

in pursuit of these objectives is the Financial Action Task Force (FATF), which is recognized as the
body primarily responsible for developing global standards for combating money laundering and
terrorist financing.
1184 We find these arguments, as well as the IMF's assessment, convincing.
7.936. Moreover, as Argentina explains, the exchange of information is an objective promoted by
the international community, within the contex t of the FATF and IOSCO, among others. The
recommendations emanating from these organizations are aimed at preventing and/or
discouraging commercial transactions when the customer or beneficial owner ordering the
transactions, or those behind them, cannot be identified, as in the case of the customers of
investment portfolio managers. In our view, it is not necessary to reiterate Argentina’s arguments
in this respect, which we find convincing.
1185
7.937. In our view, in the light of the argume nts and evidence submitted by Argentina, the
reasons for measure 6, including investor protection, the reduction of systemic risk, and the
prevention of money laundering and terrorist financing offences, are prudential in nature and in
conformity with our interpretation of the expressi on "prudential reasons" in paragraph 2(a) of the
Annex on Financial Services.
7.938. It remains to be determined whether meas ure 6 was taken "for" these prudential reasons,
that is, as indicated above, whether the measure has a rational relationship of cause and effect
with these prudential reasons. We recall 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
contributes to achieving the desired effect.
(ii) Whether measure 6 was taken for the prudential reasons identified by
Argentina
7.939. As we described in section 2.3.7 above, measure 6 consists in the imposition of
requirements which stock market intermediaries 1186 m u s t m e e t in o r d e r t o be a b le t o c a r r y o u t
transactions ordered by persons from non-cooperative countries. Argentina maintains this measure
under Title XI, Section III, Article 5 of the Rules of the National Securities Commission (CNV).1187
7.940. Title XI, Section III, Article 5 of the CNV Rules allows Argentine stock market
intermediaries to pursue transactions undertaken or ordered by persons established, domiciled or
resident in non-cooperative countries in the context of a public offering of negotiable securities,
forward contracts, futures or options of any kind and other financial instruments and products
provided that two requirements are met: (i) that the persons established, domiciled or resident in
non-cooperative countries who place the order with the stock market intermediary have the status
of intermediaries registered with an entity und er the control and supervision of a body that
performs functions similar to those of Argentina’s CNV, and (ii) that this body has signed a
memorandum of understanding on cooperation and information exchange with Argentina’s
CNV.
1188 However, Argentine stock market intermediaries are not subject to these requirements
when carrying out transactions undertaken or ordered by persons from cooperative countries.
7.941. It will be recalled that the conditions under which a country is considered to be
"cooperative for tax transparency purposes" are laid down in Decree No. 589/2013. As explained

financing of terrorism] regimes enhance financial sector integrity and macroeconomic stability both on a
national and international level". See IMF, Anti-money laundering and combating the financing of terrorism –
Inclusion in surveillance and financial stability assessments, p. 6 (English text available at:
http://www.imf.org/external/np/pp/eng/2012/121412a.pdf; translated into Spanish by the WTO Secretariat).
1184 See Argentina’s response to Panel question No. 85(b), para. 8 (referring to IMF, "The IMF and the
Fight Against Money Laundering and the Financing of Terrorism", 5 September 2014 (English text available at:
https://www.imf.org/external/np/exr/facts/aml.htm).
1185 See footnote 1182 above; Argentina’s response to Panel question No. 85(b), paras. 9 and 10
(referring to IOSCO, Objectives and Principles of Securities Regulation, May 2003, p. 16 (English text available
at: http://www.iosco.org/library/pubdocs/pdf/IOSCOPD154.pdf); and FATF Recommendations
(Exhibit ARG-25), Recommendations 24 and 25.
1186 The term "stock market intermediaries" is taken to mean the persons indicated in Article 1 of the
CNV’s Rules, including "trading agents, settlement and clearing agents, distribution and placement agents, and
collective investment product management agents".
1187 CNV Rules 2013, (Exhibits PAN-58 / ARG-50).
1188 See section 2.3.7 above.

in section 2.2 above, Decree No. 589/2013 establishes the following conditions for a country to be
considered cooperative, namely: (i) to have signed with Argentina a tax information exchange
agreement or an international double taxation convention with a broad information exchange
clause, provided that the information is effectively exchanged; or (ii) to have initiated with
Argentina the negotiations necessary for concluding such an agreement and/or convention.
1189 If
neither of these requirements is met, the country is deemed to be non-cooperative.1190
7.942. As this Panel has already stated, the measures that can be taken for prudential reasons
include those that seek to look ahead and make the necessary arrangements in advance to
achieve a certain prudential objective in the financial sector. In this respect, it seems to us that
requesting relevant information from the regulatory authorities of other jurisdictions forms part of
actions designed to look ahead and make the arrangements necessary to achieve a certain
prudential objective in the financial sector, in this case, investor protection, the reduction of
systemic risk and the prevention of money laundering and terrorist financing offences. In
particular, the effective availability of information about the identity of the customer or beneficial
owner who orders or effects the transactions, or those that stand behind them, is, as we have
seen, essential for preventing money laundering and terrorist financing offences. Viewed from this
standpoint, we understand the reasoning behind the measure 6 requirement that when persons
who order or effect operations through Argentin e stock market intermediaries come from non-
cooperative countries, they must show that (i) in their home jurisdiction, they have the status of
intermediaries registered with an entity under th e control and supervision of a body that performs
functions similar to those of Argentina’s CNV and (ii) that this body has signed a memorandum of
understanding on cooperation and information exchange with Argentina’s CNV. However, as stated
above, a central aspect of this rational relationship of cause and effect is the conformity of the
measure itself with the prudential reason, that is, whether the measure, through its design,
structure and architecture, contributes to achieving the desired effect. We will address this aspect
below.
7.943. We note, first of all, that the determination as to those that are "cooperative" and those
that are "non-cooperative" under measure 6 is based on the application of Decree No. 589/2013.
In other words, the Decree serves to determine no t only those that are cooperative and exchange
information but also, by default, those that are "non-cooperative" and on which the requirements
mentioned in the previous paragraph are to be impo sed (that is, having to show (i) that in their
home jurisdiction, they have the status of inte rmediaries registered with an entity under the
control and supervision of a body that performs f unctions similar to those of Argentina’s CNV; and
(ii) that the body in their home jurisdiction has signed a memorandum of understanding on
cooperation and information exchange with Argentina’s CNV). As with measure 5, it is in the
mechanism used by measure 6 for determining who is cooperative and who is not that we see a
fundamental problem. The arguments we used in paragraphs 7.912-7.918 above apply, mutatis
mutandis, to measure 6.
7.944. In the light of the foregoing, we consider th at measure 6, in particular the fact that it does
not impose specific requirements on persons who order or effect stock market operations in
Argentina and come from jurisdictions which are officially cooperative but have not concluded an
information exchange agreement or effectively exchanged information, does not have a rational
relationship of cause and effect with the prudenti al reasons identified by Argentina. We therefore
conclude that measure 6 was not adopted for the prudential reasons identified by Argentina.
7.3.7.2.4.3 Third requirement: Whether me asures 5 and 6 have not been used "as a
means of avoiding [Argentina’s] commitments or obligations" under the GATS
7.945. Having concluded that Argentina has failed to demonstrate that measures 5 and 6 were
taken for prudential reasons within the meaning of paragraph 2(a) of the Annex on Financial
Services, we consider it unnecessary to continue our examination under paragraph 2(a) of the
Annex on Financial Services and, therefore, we will not examine whether Argentina has
demonstrated that measures 5 and 6 have not b een used as a means of avoiding Argentina’s
commitments or obligations under the GATS.

1189 Article 1 of Decree No. 589/2013, (Exhibits PAN-3 / ARG-35).
1190 See footnote 1145 above.

7.3.7.2.5 Conclusion
7.946. We have concluded that the reasons identified by Argentina in relation to measures 5 and
6, respectively, are "prudential" reasons within the meaning of paragraph 2(a) of the Annex on
Financial Services.
7.947. We have also concluded that measure 5, and in particular the fact that it does not require
relevant information from the insurance regulators of jurisdictions that are officially cooperative
but have not concluded an information exchange agreement or effectively exchanged information,
does not have a rational relationship of cause and effect with the prudential reasons identified by
Argentina.
7.948. Moreover, we have concluded that measure 6, and in particular the fact that it does not
impose specific requirements on persons that order or effect stock market operations in Argentina
and come from jurisdictions that are officially cooperative but have not concluded an information
exchange agreement or effectively exchanged information, does not have a rational relationship of
cause and effect with the prudential reasons identified by Argentina.
7.949. Accordingly, the Panel concludes that measure 5 (requirements relating to reinsurance
services) and measure 6 (requirements for access to the Argentine capital market) 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.
7.4 Findings under the GATT 1994
7.4.1 Introduction
7.950. In the present case, in addition to its claims under the GATS, Panama also challenges
measures 2 and 3 under the GATT 1994. As explained in section 7.2 above, the possibility of a
measure being simultaneously inconsistent with the GATS and the GATT 1994 has been accepted
by the Appellate Body in previous disputes. We th erefore now turn to an examination of Panama’s
claims under the GATT 1994.
7.4.2 Panama’s claims under Article I:1 of the GATT 1994
7.4.2.1 Main arguments of the parties
7.4.2.1.1 Panama
7.951. Panama maintains that both measure 2 and measure 3 are inconsistent with Article I:1 of
the GATT 1994.
1191
7.952. With respect to measure 2, Panama claims that the presumption of unjustified increase in
wealth imposed by the unnumbered article added af ter Article 18 of the LPT qualifies as a "rule
and formality in connection with exportation",1192 as well as a "charge imposed on the international
transfer of payments" for exports1193 and is therefore covered by Article I:1 of the GATT 1994.
7.953. Panama maintains that the measure is covered by the GATT 1994 since, although the
measure affects the tax status of a buyer or seller of a product "with respect to a direct tax (e.g.
gains tax), at the same time it affects aspects of the merchandise transactions (e.g.
payments)".
1194 Panama explains that if the payment of direct taxes or the appearance of related
tax contingencies is linked with the purchase or sale of certain products, those products will be
implicitly affected by the rule governing the tax situation of the buyer or seller as the payer of a
direct tax.
1195 Panama points out that the direct or indirect nature of the taxes linked with this
measure is not a relevant aspect when analysing whether it falls within the scope of Article I:1 of

1191 Panama’s request for the establishment of a panel, pp. 3 and 4.
1192 Panama’s first written submission, para. 4.187. See also Panama’s responses to Panel questions
Nos. 55 and 89.
1193 Panama’s first written submission, para. 4.187.
1194 Panama’s second written submission, para. 2.370.
1195 Panama’s second written submission, para. 2.370.

the GATT 1994. 1196 Panama observes that the fact that a measure is contained in tax legislation
that taxes wealth or imposes direct taxes is not an impediment to finding that the measure affects
trade in goods. Panama relies on the US – FSC
1197 dispute, claiming that both the panel and the
Appellate Body found that a measure which offered be nefits with respect to a direct tax influenced
the decision-making of the taxpayer to the detrimen t of the imported product, in contravention of
Article III:4 of the GATT.1198
7.954. In Panama’s opinion, measure 2 qualifies as a "rule and formality in connection with
exportation".1199 Panama argues that the expression "all rules and formalities in connection with
importation and exportation" in Article I:1 of the GATT 1994 has been broadly interpreted by
previous panels, which makes it possible to bring within the scope of this provision measures
related to exports such as, for example, measure concerning payment for exports.
1200 Panama
cites the panel report in US – Poultry (China) in s u p p o r t o f it s a r g u m e n t t h a t " t h is c a t e g o r y of
measures has a broad scope, since it encompasses not only measures directly related to the
import or export process, but also those relating to other aspects of exportation or measures that
affect export performance.
1201"1202 Panama maintains that the requirement or formality to keep the
usual supporting documents for the transaction indicates that the measure is based on (and
therefore linked with) the export process. Panama explains that the moment of declaration of the
tax is irrelevant, as is the fact that the export operation has been completed before the
presumption arises.
1203 Moreover, Panama observes that the fact that the requirement presumably
has to be met in the same way by other exporters only goes to show that the measure is
redundant and unnecessary.
1204
7.955. In its first written submission Panama also claims that the presumption of an unjustified
increase in wealth imposed by the unnumbered article following Article 18 of the LPT qualifies as a
"charge imposed on the international transfer of payments" for exports.
1205 According to Panama,
the fiscal consequences of a finding of unjustified increase in wealth constitute a "charge" insofar
as they consist in the obligation to pay gains tax, VAT and internal taxes with respect to the
international transfer of payments for exports.
1206
7.956. Panama asserts that this is the case for Argentine residents who export goods to non-
cooperative countries and who therefore receive payments as consideration which result in the
application of the above-mentioned presumption. Panama maintains that the broad coverage
accorded to the word "advantage" encompasses the fact that Argentine exporters who export to
cooperative countries are not affected by the pr esumption of unjustified increase in wealth,
whereas this presumption does apply to income received by exporters who export to non-
cooperative countries.
1207
7.957. Panama argues that the products of no n-cooperative countries and those of cooperative
countries may be considered "like" since they differ only in their origin. 1208 Moreover, Panama
claims that the advantage is not granted immediately and unconditionally to like products exported
to non-cooperative countries.1209
7.958. Where measure 3 is concerned, Panama claims that the measure, which requires products
imported from persons located in non-cooperative countries to be valued on the basis of the
transfer pricing regime, is covered by Article I: 1 of the GATT 1994 because it is a rule connected
with the determination of the tax base for an internal tax levied on the taxpayers who market the

1196 Panama’s response to Panel question No. 89.
1197 Panama refers to Appellate Body Report, US – FSC (Article 21.5 - EC), paras. 207-222. See
Panama’s response to Panel question No. 55.
1198 Panama’s response to Panel question No. 55.
1199 Panama’s comments on Argentina’s response to Panel question No. 92.
1200 Panama’s first written submission, para. 4.188.
1201 (Footnote original) Panel Report, US – Poultry (China), para. 7.410.
1202 Panama’s response to Panel question No. 55.
1203 Panama’s response to Panel question No. 55.
1204 Panama’s comments on Argentina’s response to Panel question No. 92.
1205 Panama’s first written submission, para. 4.187.
1206 Panama’s first written submission, para. 4.190.
1207 Panama’s first written submission, para. 4.193; and second written submission, para. 2.379.
1208 Panama’s first written submission, paras. 4.196 and 4.197.
1209 Panama’s first written submission, paras. 4.200 and 4.201.

products and not on the products themselves. Panama considers that this measure would be
covered by Article III:4 of the GATT 1994.1210 Alternatively, according to Panama, the measure is a
rule or formality in connection with the importation or exportation of goods within the meaning of
Article I:1 of the GATT 1994.
1211
7.959. As in the case of measure 2, Panama argues that the products of non-cooperative
countries and those of cooperative countries may be considered to be "like" since they differ only
in origin.1212
7.960. Panama maintains that the measure imposes additional requirements and charges on
Argentine taxpayers which are not imposed on import and export transactions conducted with
persons located in cooperative countries. According to Panama, for imports of goods from non-
cooperative countries, subjection to the transfer pricing regime means additional declaration
formalities, uncertainties, and costs involved in the collection, processing and assessing of
information and the hiring of an accountant. Panama explains that none of this affects imports of
like goods from cooperative countries.
1213 Panama argues that these latter goods receive an
advantage, favour, privilege or immunity not extended to goods from non-cooperative countries.
Hence, in Panama’s opinion, for those taxpayer s who decide to do business with persons from
cooperative countries there is an advantage that is not extended to the services and service
suppliers of non-cooperative countries, thereby al tering the conditions of competition to the
detriment of the services and service suppliers of non-cooperative countries.1214
7.4.2.1.2 Argentina
7.961. For its part, Argentina asserts that measure 2 is not a "rule or formality in connection with
exportation".
1215 In this respect, Argentina considers that measure 2 does not affect international
trade in goods because the tax is declared only after the foreign trade operation has been
completed.
1216 According to Argentina, taxing the weal th of the domestic taxpayer does not
constitute an aspect of the import process or affect the actual imports. 1217 Argentina explains that
measure 2 imposes a method for the determination of the income liable to domestic taxation in
Argentina and that the fact that this income may partly derive from import or export transactions
does not imply that Argentina’s domestic tax measures are border measures subject to the
disciplines of Article I:1 of the GATT 1994.
1218 Argentina bases its argument on the Appellate Body
report in China – Auto Parts, according to which a "panel must then seek to identify the leading or
core features of the measure at issue, those that define its 'centre of gravity' for purposes of
characterizing the charge that it imposes as an ordinary customs duty or an internal charge." 1219
According to Argentina, the fact that part of the income taxable in Argentina may come from
import or export operations does not suffice to sh ow that the "centre of gravity" of gains tax in
Argentina is the importation or exportation of goods.
1220 For Argentina, measure 2 is part of the
tax and therefore inseparable from it.1221
7.962. Argentina also questions whether the panel report in US – Poultry (China) serves to
support the description of measure 2 as a "rule in connection with exportation". According to
Argentina, in the present case the fact of being able to exercise the power of imposing a lawful tax
on the wealth of all domestic taxpayers cannot be understood as "another aspect of exportation",
particularly if the taxpayers can prove that the export operation has actually been completed.
Moreover, Argentina explains that measure 2 does not affect the tax liability of the Argentine

1210 The arguments of the parties relating to whether measure 3 is a measure covered by Article III:4
are set out in section 7.4.3.1 below.
1211 Panama’s first written submission, para. 4.263.
1212 Panama’s first written submission, paras. 4.264 and 4.265; and second written submission,
para. 2.479.
1213 Panama’s first written submission, para. 4.241; and second written submission, para. 2.481.
1214 Panama’s first written submission, paras. 4.266-4.268.
1215 Argentina’s response to Panel question No. 92.
1216 Argentina’s first written submission, para. 661.
1217 Argentina’s first written submission, para. 671.
1218 Argentina’s second written submission, para. 97.
1219 Argentina’s second written submission, para. 97 (citing Appellate Body Report, China – Auto Parts,
para. 171).
1220 Argentina’s second written submission, para. 97.
1221 Argentina’s comments on Panama’s response to Panel question No. 89.

taxpayer or related contingencies with respect to the product exported. In Argentina’s opinion, the
tax liability remains the same provided it is possible to demonstrate the origin of the payments
received in connection with activities duly carried out. Argentina considers that Panama has not
identified the negative effect on payment for exports to which it alludes or how it impacts on
payment.
1222 Argentina also considers that the measures at issue in this case and those examined
in US – Poultry (China) differ with regard to their "purpose, architecture and design, … context and
… effect and scope", so that the analytical framework used by the panel in US – Poultry (China)
would not apply in the present dispute.1223
7.963. Argentina recalls that the panel in US – Poultry (China) believed that "the establishment
and implementation of a rule by the FSIS is a pr erequisite for the importation of poultry products
into the United States. We also recall that we have concluded that the effect of Section 727, which
is a legislative provision, was to prohibit the importation of Chinese poultry products into the
United States." 1224 Argentina argues that measure 2 is not a "necessary condition" for the
purchase or sale of a product. The measure does not have the effect of prohibiting, in any respect,
sales of products from Argentina to Panama, so that it is not a prerequisite for being able to carry
out an export operation. Nor do its effects result in a prohibition on exports of products to
Panama.
1225
7.964. Argentina argues in its defence that neither does measure 2 qualify as a "charge imposed
on the international transfer of payments" since it admits evidence to the contrary (rebuttable
presumption) and the tax treatment affects the asse ts of the taxpayer and not the income derived
from the international transaction per se .
1226 Moreover, Argentina recalls that the presumption
becomes applicable once the export transaction has been completed, for the purpose of
determining the tax base for gains tax. 1227 Argentina points out that Panama has confined itself to
asserting, in its second written submission, that measure 2 is covered by the expression "rules and
formalities in connection with … exportation", without offering any arguments concerning the
characterization of the measure as a "charge". In Argentina’s opinion, Panama’s argument for
determining the inconsistency of the measure with Article I:1 of the GATT 1994 is not coherent
since Panama describes measure 2 as a "rule or formality in connection with exportation" which
has a negative effect on payment (and not as a "charge imposed on the international transfer of
payments for … exports"), whereas in endeavouring to prove that there is an advantage, Panama
asserts that the measure imposes procedural and fiscal charges on the exporter.
1228
7.965. Argentina maintains that measure 2 does not generate an advantage, privilege or
immunity for exporters who ship their products to cooperative countries, since they are also
required to produce all the documentation necessary to carry out the export operation. 1229 In this
connection, Argentina points out that the measure does not discriminate between like products
according to their destination and does not accord differential treatment on the basis of the
destination of Argentine exports. According to Argentina, the destination of the product exported is
not a variable that forms part of the measure. The measure is not related with the destination of
the Argentine goods but rather with the assets of the Argentine taxpayer.
1230
7.966. Argentina believes that, in the context of export operations, Article I of the GATT 1994
concerns the treatment accorded to the products destined for Panama and not the treatment
accorded to the exporters of those products. Un der the legislation challenged by Panama, the
presumption of unjustified increase in wealth is not necessarily triggered when products originating
in Argentina are exported to Panama. The dest ination of the product exported is not the
application variable used by the measure at issue, since that variable is the country of origin of the

1222 Argentina’s response to Panel question No. 92.
1223 Argentina’s response to Panel question No. 93.
1224 Argentina’s response to Panel question No. 92 (citing Panel Report, US – Poultry (China),
para. 7.409). In US – Poultry (China) the abbreviation FSIS stands for "Food Safety and Inspection Service”.
1225 Argentina’s response to Panel question No. 92.
1226 Argentina’s first written submission, paras. 673 and 674.
1227 Argentina’s first written submission, para. 675.
1228 Argentina’s response to Panel question No. 92.
1229 Argentina’s first written submission, para. 682; and response to Panel question No. 92.
1230 Argentina’s response to Panel question No. 92.

payments which accrue to the Argentine taxpayer, irrespective of the destination of the product
exported.1231
7.967. Where measure 3 is concerned, Argentina considers that it imposes a method on the
determination of the income subject to internal taxation in Argentina and that the fact that the
i n c o m e i n q u e s t i o n m a y d e r i v e i n p a r t f r o m i m p o r t o r e x p o r t t r a n s a c t i o n s d o e s n o t i m p l y t h a t
Argentina’s domestic tax measures are border measures subject to the disciplines of Article I:1 of
the GATT 1994.
1232 According to Argentina, this type of valuation is not a requirement, but applies
when it is not possible to establish the international price for import or export operations. 1233
Argentina claims that the different requirements that may be imposed, depending on the entity
with which the transaction is effected (cooperative or non-cooperative jurisdiction), "are not for
the purpose of customs valuation and do not involve the granting of any advantage, favour,
privilege or immunity with respect to customs duties or charges of any kind".
1234
7.4.2.2 Assessment by the Panel
7.4.2.2.1 Introduction
7.968. The issue before the Panel is whether meas ure 2 (presumption of unjustified increase in
wealth) and measure 3 (transaction valuation based on transfer prices) are inconsistent with
Article I:1 of the GATT 1994.
1235 In reply to these claims made by Panama, Argentina asserts that
the two measures are not covered by the legal provision in question.1236
7.969. We will begin by examining the wordin g of Article I:1 of the GATT 1994 in order to
establish the legal standard applicable, taking into account the way in which it has been
interpreted by previous panels and the Appellate Body. We will then proceed to determine whether
measures 2 and 3 infringe that provision.
7.4.2.2.2 The relevant legal provision
7.970. Article I:1 of the GATT 1994 reads as follows:
With respect to customs duties and charges of any kind imposed on or in connection
with importation or exportation or imposed on the international transfer of payments
for imports or exports, and with respect to the method of levying such duties and
charges, and with respect to all rules and formalities in connection with importation
and exportation, and with respect to all ma tters referred to in paragraphs 2 and 4 of
Article III*, any advantage, favour, privilege or immunity granted by any contracting
party to any product originating in or destined for any other country shall be accorded
immediately and unconditionally to the like product originating in or destined for the
territories of all other contracting parties.
7.971. In EC – Seal Products , the Appellate Body recalled that Article I:1 sets out a fundamental
non-discrimination obligation under the GATT 1994
1237, which is "pervasive" and a "cornerstone of
the GATT", as well as being "one of the pillars of the WTO trading system".1238

1231 Argentina’s response to Panel question No. 92; and comments on Panama’s response to Panel
question No. 89.
1232 Argentina’s second written submission, para. 97.
1233 Argentina’s first written submission, para. 690, (footnote original) Law on Gains Tax, text amended
by Decree 649/97. ARG-42.
1234 Argentina’s first written submission, para. 704.
1235 Panama’s first written submission, paras. 5.1.b(iii) and 5.1.c(iii).
1236 Argentina’s first written submission, paras. 668-687 and 696-706; and second written submission,
para. 97. See also Argentina’s response to Panel questions Nos. 92 and 93.
1237 Appellate Body Report, EC – Seal Products, para. 5.86. In Canada – Autos, the Appellate Body
explained that the object and purpose of Article I:1 of the GATT 1994 is "to prohibit discrimination among like
products originating in or destined for different countries". Moreover, it noted that this prohibition of
discrimination "also serves as an incentive for concessions, negotiated reciprocally, to be extended to all other
Members on an MFN basis". See Appellate Body Report, Canada – Autos, para. 84.
1238 Appellate Body Report, EC – Seal Products, para. 5.86 (referring to Appellate Body Reports, Canada

7.972. In that same dispute, the Appellate Body summarized the existing case law in relation to
the legal standard applicable to the examination of a claim under Article I:1 of the GATT 1994.
Thus, the Appellate Body identified four elements that must be demonstrated in order to establish
an inconsistency with Article I:1 of the GATT 1994:
Based on the text of Article I:1, the following elements must be demonstrated to
establish an inconsistency with that provision: (i) that the measure at issue falls
within the scope of application of Article I:1; (ii) that the imported products at issue
are "like" products within the meaning of Article I:1; (iii) that the measure at issue
confers an "advantage, favour, privilege, or immunity" on a product originating in the
territory of any country; and (iv) that the advantage so accorded is not extended
"immediately" and "unconditionally" to "like" products originating in the territory of all
Members. Thus, if a Member grants any advantage to any product originating in the
territory of any other country, such advantage must be accorded "immediately and
unconditionally" to like products originating from all other Members.
1239
7.973. Our analysis of Panama’s claims under Article I:1 of the GATT 1994 therefore begins by
establishing whether measures 2 and 3 fall within th e scope of that provision. Only if they do may
we extend our analysis to the other elements which make up the legal standard of Article I:1 of
the GATT 1994.
7.974. From the wording of the provision it follows that the following types of measures fall within
its scope: (i) customs duties and charges of any kind imposed on or in connection with importation
or exportation or imposed on the international transfer of payments for imports or exports; (ii) the
method of levying such duties and charges; (iii) all rules and formalities in connection with
importation and exportation; and (iv) all matters referred to in paragraphs 2 and 4 of Article III of
the GATT 1994.
1240
7.975. In the case of measure 2, Panama first claimed that this measure "qualifies as a 'rule and
formality in connection with exportation'" 1241 and was so designed that it "imposes 'a charge on
the international transfer of payments' for exports".1242 However, in its second written submission,
Panama appears to focus solely on the consideration of this measure as a rule or formality in
connection with exportation.1243
7.976. With regard to measure 3, Panama maintains that there are two ways in which this
measure can be covered by Article I:1 of the GATT 1994: (i) by regarding it as a rule linked with
the determination of the tax base for an internal tax that falls not on the products but on the
taxpayers and is thus covered by Article III:4 of the GATT 1994 and, consequently, by Article I:1
as well; or (ii) alternatively, by regarding the measure as a rule or formality in connection with
importation or exportation within the meaning of Article I:1 of the GATT 1994.1244
7.977. Below, we examine each of these measures for the purpose of establishing whether they
are covered by Article I:1 of the GATT 1994.
7.4.2.2.3 The question of whether measure 2 is covered by Article I:1 of the GATT 1994
7.978. As previously explained, in support of its claim under Article I:1 of the GATT 1994, Panama
characterizes measure 2 as a "rule and formality in connection with exportation" or as a "charge
imposed on the international transfer of payments for … exports".
1245 In order to determine
whether measure 2 can be deemed to belong to one or both of these categories, we consider it
relevant to recall the content of measure 2.
7.979. As described in detail in section 2.3.3 above, measure 2 consists of a presumption of
unjustified increase in wealth applicable to any entry of funds "irrespective of its nature or

1239 Appellate Body Report, EC – Seal Products, para. 5.86 (emphasis original).
1240 Panel Report, EC – Commercial Vessels, para. 7.80.
1241 Panama’s first written submission, para. 4.187.
1242 Panama’s first written submission, para. 4.190.
1243 Panama’s second written submission, para. 2.373.
1244 Panama’s first written submission, para. 4.263.
1245 See para. 7.954 above.

category or the type of transaction involved" – for the benefit of Argentine taxpayers – coming
from non-cooperative countries in the context of an ex officio determination by the AFIP of the
taxable subject matter for the purpose of gains ta x. This presumption can be rebutted if the
taxpayer proves conclusively that the funds were ea rned from activities actually carried out by the
taxpayer or by a third party in those countries or from placements of "duly declared funds".
Argentina maintains this measure pursuant to the unnumbered article following Article 18 of the
LPT.
1246
7.4.2.2.3.1 Whether measure 2 is a rule and formality in connection with exportation
7.980. Below, we examine whether Panama has demonstrated that measure 2 constitutes a rule
and formality in connection with exportation within the meaning of Article I:1 of the GATT 1994.
7.981. In accordance with the usual rules of inte rpretation of public international law, we first
explore the ordinary meaning of the words " reglamento" and " formalidad" used in the Spanish
text. The Spanish Royal Academy defines " reglamento" as "[ c]olección ordenada de reglas o
de una corporación, una dependencia o un servicio " ([o]rdered collection of rules or precepts laid
down by the competent authority for the implementation of a law or for the regulation of a
corporation, agency or service) or "[ n]orma jurídica general y con rango inferior a la ley, dictada
por una autoridad administrativa " (general legal rule of lower status than a law, issued by an
administrative authority).
1247 The corresponding term used in the English text of Article I:1 of the
GATT 1994 is "rules", which can be understood to mean "a principle, regulation, or maxim
governing individual conduct; a principle governing scholarly or scientific procedure or method" or
"a principle regulating practice or procedure; a dominant custom or habit. Also, accepted or
prescribed principles, method, practice, custom"
1248, which appears to give the word a broad
meaning as compared with the more formal definition of the Spanish Royal Academy, which makes
reference to a type of legal rule that elaborates on a rule of higher standing. The term chosen for
use in the French version, " réglementation" ("ensemble de règles, de règlements, de prescriptions
qui concernent un domaine particulier " (set of rules, regulations, requirements relating to a
particular area) or " action de réglementer " (act of regulating)) 1249 also appears to refer to
instruments of a legal nature in general. In our view, the unnumbered article added after
Article 18 of the LPT to maintain measure 2 can be characterized as a "rule", " reglamento", or
"réglementation".
7.982. However, it does not appear that this legal provision can be characterized as a
"formalidad" (formality), understood to mean "[ c]ada uno de los requisitos para ejecutar algo "
(each of the requirements for carrying something out) or "[ m]odo de ejecutar con la exactitud
debida un acto público " (way of correctly executing a public instrument).
1250 Our view appears to
be confirmed by the panel in Argentina – Import Measures , which also investigated the ordinary
meaning of the word "formality" in the context of Article VIII of the GATT 1994. The panel stated
that the word "'formality' is [a] small point of practice that, though seemingly unimportant, must
[usually] be observed to achieve a particular legal result." More generally, a "formality" is related
to "[c]onformity to rules; propriety; rigid or merely conventional observance of forms".
1251 The
est liée à l'accomplissement de certains actes (juridiques, administratifs, religieux) comme
condition de leur validité ")1252 (operation prescribed by law or regulation and linked with the
performance of certain acts (legal, administrative, religious) as a condition of their validity) also
appears to confirm our view that measure 2 does not have the characteristics of a "formality".
7.983. Having concluded that measure 2 can be characterized as a "rule", we must now
determine whether measure 2, insofar as it is a rule, is "in connection with exportation". Indeed,

1246 Law on Tax Procedure, (Exhibits PAN-9 / ARG-45).
1247 Diccionario de la Lengua Española, 23rd edition, Real Academia Española (Espasa Calpe, 2014),
Vol. II, p. 1882.
1248 Shorter Oxford English Dictionary, 6th edition, A. Stevenson (ed.) (Oxford University Press, 2007),
p. 2628.
1250 Diccionario de la Lengua Española, 23rd edition, Real Academia Española (Espasa Calpe, 2014),
Vol. I, p. 1047.
1251 Panel Report, Argentina – Import Measures, para. 6.432 (emphasis original; footnotes omitted).

Article I:1 of the GATT 1994 does not apply to any rule but only to those "in connection with
importation and exportation". As we have pointed out, Panama characterizes measure 2 as a "rule
in connection with exportation".
7.984. The words " relativo a las … exportaciones " (in connection with … exportation) help to
define the types of measures that must conform with the obligation not to grant "less favourable
treatment" to like products. The ordinary meaning of the term " relativo a " is "[ q]ue guarda
relación con alguien o con algo " (having a relationship with someone or something).
1253 If we
examine the English version of this provision, we find that the term chosen by the negotiators is
not "relating to" but "in connection with". The term "in connection with" performs a similar function
in Article VIII:1 of the GATT 1994, where the types of measures subj ect to the disciplines of that
provision are also defined. In China – Raw Materials , when interpreting similar terminology
("imposed on or in connection with … exportatio n") in the context of Article VIII:1 of the GATT
1994, the panel defined the word "connection" ( conexión) as "[a] causal or logical relationship or
association" and the verb "connect" (conectar) as "associate in occurrence or action".
1254 The panel
considered that this terminology indicated that Article VIII:1 of the GATT 1994 applied to the
charges imposed at the time of ("on") or in association with ("in connection with") exportation. 1255
The panel explained that "[b]eyond temporal connotations, the phrase 'on or in connection with ...
exportation' may also mean that fees or charges that are associated with exportation, or that are
linked or logically related to exportation, would fall within the scope of Article VIII". 1256 We agree
with that panel in considering that for a measure to be considered a rule "in connection with"
exportation, there must be a certain association, link or logical relationship between the measure
and the exports.
7.985. We note that in French the term used is " afférentes aux" which could be defined as "qui se
1257 Hence, in the French version of the Agreement, as in the
English version, we encounter the idea that the measure must be associated, linked or have a
logical relationship with exportation, which goes to confirm the interpretation indicated in the
previous paragraph.
7.986. We also find support for this interpretation in measures that previous panels have
considered to be included in the category of "rules and formalities in connection with importation"
within the context of Article I:1 of the GATT 1994, for example, rules on the allocation of tariff
quotas and import licensing procedures ( EC – Bananas III )
1258, advance import declaration,
additional legalization fees and customs control requirements ( Colombia – Ports of Entry )1259, the
rules and formalities for the revocation of counter vailing duties in the context of anti-dumping
investigations ( US – Anti-Dumping and Countervailing Duties (China) )1260 or the measure that
prohibited the use of funds to make it possible to import poultry from China ( US – Poultry
(China)), which we examine below. In all these cases, there was an association, link or logical
relationship between the measure at issue and imports.
7.987. Argentina refers us to the Appellate Body report in China – Auto Parts , asserting that "a
panel must then seek to identify the 'leading or core features' of the measure at issue, those that
define its 'centre of gravity' for purposes of characterizing the charge that it imposes as an
ordinary customs duty or an internal charge".
1261 We agree with Argentina that in this case also it
is important to examine the core features that define the centre of gravity of measure 2 to
establish whether there actually is such an association, link or logical relationship between the
measure and exportation.
7.988. As already explained, measure 2 consists in a rebuttable presumption of an unjustified
increase in wealth in the case of any entry of funds "irrespective of its nature or category or the

1253 Diccionario de la Lengua Española, 23rd edition, Real Academia Española (Espasa Calpe, 2014),
Vol. II, p. 1888.
1254 Panel Report, China – Raw Materials, para. 7.822 (emphasis original).
1255 Panel Report, China – Raw Materials, para. 7.823.
1256 Panel Report, China – Raw Materials, para. 7.824 (emphasis original).
1258 Panel Report, EC – Bananas III, paras. 7.189, 7.221, 7.240 and 7.255.
1259 Panel Report, Colombia – Ports of Entry, para. 7.342.
1260 Panel Report, US – Anti-Dumping and Countervailing Duties (China), para. 14.167.
1261 Argentina’s second written submission, para. 97 (citing Appellate Body Report, China – Auto Parts,
para. 171).

type of transaction involved" – in favour of Ar gentine taxpayers – from non-cooperative countries.
This presumption, for which the LPT provides, is a tool used by the AFIP in the context of an ex
officio determination of the tax base for the purpose of calculating the gains tax payable by
Argentine taxpayers. We take tax base to mean the monetary base to which the tax rate is applied
for calculating the tax liability, in this case, with respect to gains tax. 1262 Hence, measure 2 would
be fiscal in nature, being a tool for calculating one of the elements of the tax.
7.989. We note that the measure 2 presumption operates in relation to "any" entry of funds,
irrespective of its nature or category or the type of transaction involved, so that it would not, a
priori, be related, linked or logically associated wi th exports effected by the Argentine taxpayer.
Although measure 2 does not rule out the possibility that, hypothetically, certain entries of funds
from non-cooperative countries might derive from payments for goods exported by Argentine
taxpayers, it does not seem to us that its ce ntre of gravity resides in the possible logical
relationship, association or link with exportation. The presumption, which is rebuttable, is applied
according to the geographical provenance of the funds and not according to whether or not they
derive from export operations. In our view, the fact that, hypothetically, part of the income of an
Argentine taxpayer subject to gains tax might come from payments for exports does not suffice to
support the conclusion that measure 2 has, as a core feature or "centre of gravity", its
relationship, linkage or association with exports made by the Argentine taxpayer.
7.990. We do not consider correct Panama's argument that the requirement to retain the usual
supporting documents relating to the transaction in order to rebut the presumption of unjustified
increase in wealth indicates that measure 2 is founded on (and linked with) the process of
exportation.
1263 Measure 2 establishes a requirement applicable to all taxpayers in general,
regardless of the activity that gives rise to the payments on which the tax in question is
imposed.
1264 This is indicated by the unnumbered article following Article 18 of the LPT itself, in
providing for the presumption to be applied to any entry of funds "irrespective of its nature or
category or the type of transaction involved".
7.991. In defence of its position that a measure related to a direct tax (such as gains tax) can be
regarded as a rule in connection with exportation, Panama cites the US – FSC case.1265 Panama
claims that both the panel in that dispute an d the Appellate Body found that a measure that
conferred benefits with respect to a direct tax influenced the taxpayer’s decision-making to the
detriment of the product imported, in contravention of Article III:4 of the GATT 1994.1266 From this
precedent, Panama concludes that the fact that a measure is contained in fiscal legislation that
levies a tax on assets or imposes direct taxes is no obstacle to it being found that that legislation
affects trade in goods. According to Panama, if the measure that affects the tax status of a buyer
or seller of a product "with respect to a direct tax (e.g. gains tax) simultaneously affects aspects of
the goods transactions (e.g. payments), it is a measure that will be covered by the GATT".
1267
7.992. Firstly, we note that the precedent in qu estion concerns the interpretation of the words
"affecting … use" in the context of Article III:4 of the GATT 1994, so that its relevance for the
purposes of our discussion under Article I:1 is not obvious. Leaving this aside, we note that the
measure at issue in US – FSC consisted of the exemption from United States income tax of the
part of the foreign-source income received by a foreign sales corporation that came from exports.

1262 In "Constitutional Principles on Tax Matters ", (Exhibit PAN-83), the elements of the taxable event
are indicated, by way of illustration, as being: the subject, the object, the tax base, the tax rate, etc. In
developing the theory of reservation to law in favour of the State in tax matters, jurists have established the
following fundamental elements of the tax: the obligor, the taxable event, the tax base and the tax rate. The
obligor is the one who pays the tax, i.e. the taxpayer; the taxable event is that which gives rise to the tax
liability (for example, income or profit); the tax base is the expression of the taxable event in monetary terms,
i.e. the base to which the relevant tax rate or percentage is applied in order to calculate the tax liability. See
Menéndez Moreno, Alejandro and others, Derecho Financiero y Tributario. Parte general. Lecciones de cátedra,
2009, 10
th edition, p. 92, Editorial Lex Nova, Spain; and Romero-Flor, Luis María, La reserva de ley como
principio fundamental del derecho tributario, in Derecho y Políticas Públicas, Vol. 15, No. 18,
July-December 2013.
1263 Panama’s comments on Argentina’s response to Panel question No. 92.
1264 Article 33 of the LPT stipulates that all taxpayers must keep invoices for a period of ten years. See
Argentina’s response to Panel question No. 92.
1265 Panama refers to Appellate Body Report, US – FSC (Article 21.5 - EC), paras. 207-222. See
Panama’s response to Panel question No. 55.
1266 Panama’s response to Panel question No. 55.
1267 Panama’s second written submission, para. 2.370.

These corporations were engaged in certain activities related to the sale of goods produced in the
United States for export. 1268 The centre of gravity of this measure, that is, the core feature that
triggered the application of the tax exemption, was precisely exportation. As we have explained,
we do not consider that this is the case with measure 2.
7.993. We note that Panama’s arguments concerning the characterization of measure 2 as a rule
and formality in connection with exportation are mainly based on the panel report in US – Poultry
(China). According to Panama, it follows from this report that the category of "rule and formality in
connection with exportation" has a broad scope, since it encompasses not only measures directly
related to the process of importation or exportation, but also those measures which relate to other
aspects of exportation or have an impact on actual exports.
1269
7.994. We recall that the measure at issue in US – Poultry (China) prohibited the use of funds by
the United States authorities to allow poultry products to be imported from China. 1270 As Argentina
points out, the decision of the United States au thorities concerning the equivalence of the Chinese
sanitary measures in this respect was a prerequisite for the importation of the products into the
United States. Hence the lack of funds for carry ing out such an examination had the effect of
prohibiting the importation of Chinese poultry products into the United States. 1271 In the light of
these facts, the panel considered that the measure in question, although it did not directly regulate
imports of poultry products from China, had an impact on the actual imports since its immediate
effect was to prohibit them.
7.995. We agree with Panama that the panel in US – Poultry (China) accorded a broad meaning to
this category of measures covered by Article I:1 of the GATT 1994. Nevertheless, we consider that
the broad interpretation adopted by that pane l does not mean that any measure that has a
hypothetical or remote connection with importation or exportation can be considered to be covered
by Article I:1 of the GATT 1994.
7.996. In this respect, it should be pointed out that, in US – Poultry (China), the panel based itself
on a previous case, India – Autos, in interpreting the expression "import restrictions" in the
context of Article XI of the GATT 1994. The panel in India – Autos explained that "import
restrictions" within the meaning of Article XI of the GATT 1994 consisted of restrictions "with
regard to" or "in connection with" the importation of the product. Therefore, the expression was
not limited to measures which directly relate to the "process" of importation, but might also
encompass measures which otherwise relate to other aspects of the importation of the product.
1272
On the basis of this ruling in India – Autos, the panel in US – Poultry (China) took a broad view of
a rule in connection with importation according to which this expression covered measures related
to aspects of importation over and above the process of importation per se. More particularly, that
panel concluded that the measure at issue was "in connection with importation" because, although
it did not relate specifically to the process of importation itself, it had an impact such that it
prohibited actual importation.
7.997. In our view, this is not the case with the measure with which we are currently concerned.
Measure 2 does not have the effect of prohibiting exportation nor does it seem to have an impact
on actual exports, beyond the fact that there is a possibility that, on certain occasions, some of the
income of an Argentine taxpayer might result from exports for which the payments come from
non-cooperative countries, or some Argentine taxpayers might decide not to receive payments
from non-cooperative countries so as not to be subject to measure 2. As we have already
mentioned, what triggers the application of measure 2 is not the export operation but the entry of
funds from non-cooperative countries, which could be the result of numerous situations or
operations, including exportation to the countries in question.

1268 Appellate Body Report, US – FSC, para. 11.
1269 Panama’s response to Panel question No. 55 (referring to Panel Report, US – Poultry (China),
para. 7.410).
1270 The measure at issue was Section 727 of the 2009 Agriculture, Rural Development, Food and Drug
Administration, and Related Agencies Appropriations Act which stipulated: "None of the funds made available in
this Act may be used to establish or implement a rule allowing poultry products to be imported into the
United States from the People's Republic of China". See Panel Report, US – Poultry (China), para. 2.2.
1271 Argentina’s response to Panel question No. 92 (citing Panel Report, US – Poultry (China),
para. 7.409).

7.998. We agree with Argentina that the difference between the measures analysed in US –
Poultry (China) and measure 2 with regard to their nature, design, structure, scope and effects
makes it reasonable to assume that the analytical framework within which that panel examined
the measure at issue, as well as its conclusions, cannot readily be transposed to the present
dispute.
1273
7.999. If we were to opt for the interpretati on advocated by Panama, we would be broadening
the scope of Article I:1 of the GATT 1994 to include a government measure that might
hypothetically affect exports or imports. Indeed, such an interpretation might mean that any
government measure would be covered by that provision if it were possible to prove a remote and
hypothetical relationship with imports or expo rts. We believe that this would generate an
expansion of the scope of Article I:1 that would result in an almost unlimited number of measures
being encompassed by that provision, since it would cover every type of measure that had any
sort of connection with the process of exportation or importation, however tenuous.
7.1000. The Panel therefore considers that Pana ma has failed to demonstrate that measure 2
constitutes a "rule and formality in connection with exportation" within the scope of Article I:1 of
the GATT 1994.
7.4.2.2.3.2 Whether measure 2 is a charge imposed on the international transfer of
payments for exports
7.1001. We turn to examine Panama’s claim that measure 2 is a "charge imposed on the
international transfer of payments for exports" within the meaning of Article I:1 of the GATT 1994.
In this connection, we note that, in its first written submission, Panama briefly argues that the
fiscal consequences of a finding of an unjustified increase in wealth constitute a "charge" insofar as
they involve the payment of gains tax, VAT and internal taxes with respect to the international
transfer of payments for exports.
1274 However, as Argentina points out, in its subsequent
submissions and statements Panama does not return to this line of argument but concentrates on
maintaining that measure 2 is a "rule or formality in connection with exportation". The Panel views
Panama’s attitude as an abandonment of the line of argument in question. However, for
precautionary reasons, we will examine whether measure 2 is a charge imposed on the
international transfer of payments for exports, as Panama maintains in its first written submission.
7.1002. In this connection, Argentina claims that measure 2 does not qualify as a "charge
imposed on the international transfer of payments" either, since it admits evidence to the contrary
(rebuttable presumption) and the tax treatment af fects the assets of the taxpayer and not the
actual income from the international transaction.
1275 Moreover, Argentina recalls that the
presumption is applied once the export operation has been completed, for the purpose of
determining the tax base for gains tax.1276
7.1003. We note that the Spanish Royal Academy defines the Spanish word " carga" (charge) as
"[i]mpuesto o tributo ligado a una propiedad o a un estado y al uso que de estos se hace" ([t]ax or
levy linked to a property or a situation and the use made thereof). 1277 In the context of
Article VIII:1 of the GATT 1994, the panel in China – Raw Materials defined the equivalent English
term "charge" as "pecuniary burden, cost", "expen se", or "[a] price required or demanded for
service rendered or goods supplied".1278
7.1004. However, Article I:1 of the GATT 1994 does not govern any charge but only, according to
the Spanish version, those "que gravan las transferencias internacionales de fondos efectuadas en
concepto de pago de … exportaciones " (imposed on the international transfer of payment for …
exports). The Spanish Royal Academy defines the verb " gravar" as "[i]mponer un gravamen" ([t]o

1273 Argentina’s response to Panel question No. 93.
1274 Panama’s first written submission, para. 4.190.
1275 Argentina’s first written submission, paras. 673 and 674.
1276 Argentina’s first written submission, para. 675.
1277 Diccionario de la Lengua Española, 23rd edition, Real Academia Española (Espasa Calpe, 2014),
Vol. I, p. 438.
1278 Panel Report, China – Raw Materials, para. 7.820. (footnote original) Shorter Oxford English
Dictionary, 5th edition, L. Brown (editor) (Oxford University Press, 2002), Vol. 1, p. 382.

impose a levy). 1279 To fall within the scope of Article I:1 of the GATT 1994, that levy or charge
must be imposed on the international transfer of payments for imports or exports. Panama
maintains that, in the present case, the charge affects the international transfer of payments for
exports.
7.1005. Our interpretation appears to be conf irmed by the English version which speaks of
"charges" "imposed on the … exportation". In the context of Article VIII:1, which also refers to
"charges imposed on", the panel in China – Raw Materials defined the word "impose" as "put,
apply, or bestow", "lay or inflict (a tax, duty, charge, obligation, etc.) (on or upon), esp. forcibly;
compel compliance with".
1280 The English word "on" is defined as "[d]uring, or at some time during
(a specified day or part of day); contemporaneously with (an occasion )", "in or at", "exactly at or
j u s t c o m i n g u p t o ( a s p e c i f i e d t i m e ) , j u s t b e f o r e o r a f t e r i n t i m e " , " o n t h e o c c a s i o n o f ( a n
action)".1281 T h e r e f o r e , t o f a l l w i t h i n t h e s c o p e o f Article I:1 of the GATT 1994, the charge in
question must be imposed on the international transfer of payments during, contemporaneously
with or on the occasion of the said transfer. The French text " impositions … qui frappent les
transferts internationaux de fonds" confirms this interpretation.
7.1006. According to Panama, the fiscal consequenc es of a finding of unjustified increase in
wealth constitute a "charge" insofar as they lead to the payment of gains tax, VAT and internal
taxes with respect to the international transfer of payments for exports. In our view, the measure
at issue and hence what should constitute a "charge" are not the fiscal consequences of a finding
of unjustified increase in wealth, i.e. the possibl e consequences of the application of measure 2.
Our task is to determine whether measure 2 is a "charge". Measure 2 is a tool that takes the form
of a presumption that the AFIP uses to calculate one of the elements of the gains tax, namely, the
tax base, and is therefore fiscal in nature. It does not seem to us that it can be characterized as a
"charge" as defined above, since the presumption challenged by Panama cannot be characterized
as a "pecuniary burden, cost", "expense", or "[a] price required or demanded for service rendered
or goods supplied ".
1282
7.1007. Even assuming that measure 2 could be considered a charge, we note that, in accordance
with the wording of Article I:1 of the GATT 199 4, such a charge must be imposed on the
international transfer of payments for exports. The presumption in question affects not the
international transfer of payments but the assets of the taxpayer. In fact, the presumption is not
applied during or on the occasion of the transfer of payments but at the time of calculating the tax
on the gains of the Argentine taxpayer, irrespective of the time at which the transfer took place.
7.1008. Consequently, the Panel considers that Panama has failed to demonstrate that measure 2
constitutes a "charge imposed on the international transfer of payments for … exports" under
Article I:1 of the GATT 1994.
7.4.2.2.3.3 Conclusion
7.1009. Having concluded that Panama has 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, the Panel
does not consider it necessary to continue the analysis of Panama’s claim concerning the
inconsistency of measure 2 with Article I:1 of the GATT 1994.
7.1010. In view of the foregoing, the Panel di smisses Panama’s claim under Article I:1 of the
GATT 1994 because Panama has failed to demonstrate that measure 2 (presumption of unjustified
increase in wealth) constitutes a "rule and formality in connection with … exports" or a "charge …
imposed on the international transfer of payments for … exports" within the meaning of Article I:1
of the GATT 1994.

1279 Diccionario de la Lengua Española, 23rd edition, Real Academia Española (Espasa Calpe, 2014),
Vol. I, p. 1124.
1280 Panel Report, China – Raw Materials, para. 7.822. (footnote original) Shorter Oxford English
Dictionary, 5th edition, L. Brown (editor) (Oxford University Press, 2002), Vol. 1, p. 1331.
1281 Panel Report, China – Raw Materials, para. 7.822. (footnote original) Shorter Oxford English
Dictionary, 5th edition, L. Brown (editor) (Oxford University Press, 2002), Vol. 2, p. 1996.
1282 See para. 7.1002 above.

7.4.2.2.4 The question of whether measure 3 is covered by Article I:1 of the GATT 1994
7.1011. We continue our analysis by examining the second measure challenged by Panama in
relation to Article I:1 of the GATT 1994, namely , measure 3. As previously explained, Panama
maintains that there are two ways in which this measure may be included under Article I:1 of the
GATT 1994: (i) as a measure covered by Article III:4 of the GATT 1994; or (ii) alternatively, as a
rule or formality in connection with importation and exportation within the meaning of Article I:1
of the GATT 1994.
1283 In order to determine whether measure 3 can be regarded as belonging to
one or both of these categories, we consider it pertinent to recall the content of measure 3.
7.1012. As described in detail in section 2.3.4 above, measure 3 consists in the application of
methods of transaction valuation based on transfer prices for the purpose of determining the tax
base for the gains tax payable by Argentine taxpayers with respect to transactions effected with
persons from non-cooperative countries. Therefore, like measure 2, measure 3 is a tool for
determining the tax base for the gains tax payable by the Argentine taxpayer. As far as the claims
under the GATT 1994 are concerned, Argentina maintains this measure by virtue of paragraph 5 of
Article 8 of the LIG.
1284
7.1013. We will therefore begin by examining whether Panama has demonstrated that measure 3
is covered by Article I:1 of the GATT 1994 as a matter referred to in Article III:4 of the GATT
1994.
7.4.2.2.4.1 Whether measure 3 is a matter referred to in Article III:4 of the GATT 1994
7.1014. Below, we examine whether measure 3 is a matter referred to in Article III:4 of the GATT
1994. We begin by reproducing the text of that Article:
The products of the territory of any contracting party imported into the territory of
any other contracting party shall be accorded treatment no less favourable than that
accorded to like products of national origin in respect of all laws, regulations and
requirements affecting their internal sale, offering for sale, purchase, transportation,
distribution or use. The provisions of this paragraph shall not prevent the application
of differential internal transportation charges which are based exclusively on the
economic operation of the means of transport and not on the nationality of the
product.
7.1015. It follows from the wording of this provision that for a measure to be covered by
Article III:4 of the GATT 1994 it must (i) consist of a "law, regulation or requirement" and (ii)
"affect[ing] the internal sale, offering for sale, purchase, transportation, distribution or use" of the
products concerned.
7.1016. With regard to the first element, Panama claims that measure 3 is derived from a law,
regulation or requirement since it stems from Articles 8, 14 and 15 of the LIG, in conjunction with
Article 21 of the RIG and the articles incorpor ated after Article 21 of the RIG, and General
Resolution No. 1122.
1285 Argentina does not appear to contest this point. In our view, the
provisions cited by Panama fall within the category of laws, regulations or requirements.
7.1017. The main difference between the parties resides in the second element, namely, whether
measure 3 "affect[s] the internal sa le, offering for sale, purchase, transportation, distribution or
use" of the products. Taking into account the scope of Panama’s claims, our task is to examine
whether measure 3 affects the sale, offering for sale, purchase or use of imported products. 1286
Below, we recall the existing precedents that we could use as a guide.
7.1018. In US – FSC (Article 21.5 – EC) , the Appellate Body determined that the measure at
issue, under which a taxpayer seeking to obta in a tax exemption must "ensure that, in the
manufacture of qualifying property, it does no t 'use' imported input products, whose value
comprises more than 50 per cent of the fair market value of the end-product", "affected" the

1283 Panama’s first written submission, para. 4.263.
1284 Gains Tax Law, (Exhibits PAN-4 / ARG-42).
1285 Panama’s first written submission, para. 4.276.
1286 Panama’s first written submission, para. 4.281.

internal use of the imported products because it created an incentive for a manufacturer not to use
imported inputs.1287 In its analysis, the Appellate Body observed that the clause in which the word
"affecting" appears – "in respect of all laws, regulations and requirements affecting their [the
products’] internal sale, offering for sale, purchase, transportation, distribution or use" – serves to
define the scope of application of Article III:4. The word "affecting" would therefore operate as a
link between the identified types of government action (laws, regulations and requirements) and
specific transactions, activities and uses relating to products in the marketplace ("internal sale,
offering for sale, purchase, transportation, distribution or use"). The Appellate Body explained that
it is, therefore, "not any 'laws, regulations and requirements'" which are covered by Article III:4,
but "only those which ' affect' the specific transactions, activities and uses mentioned in that
provision. Thus, the word 'affecting' assists in defining the types of measure that must conform to
the obligation not to accord 'less favourable treatment' to like imported products, which is set out
in Article III:4."1288
7.1019. The Appellate Body also considered that the word "affecting" performs a similar function
in Article I:1 of the GATS1289 and referred to its findings in EC – Bananas III, where it stated that:
[t]he ordinary meaning of the word "affecting" implies a measure that has "an effect
on", which indicates a broad scope of application . This interpretation is further
reinforced by the conclusions of previous panels that the term "affecting" in the
context of Article III of the GATT is wider in scope than such terms as "regulating" or
"governing".
1290 (emphasis added; footnote omitted)
7.1020. After referring to its previous report, the Appellate Body in US – FSC (Article 21.5 – EC)
concluded that in view of the similar function of the identical word, "affecting", in Article III:4 of
the GATT 1994, this word, in that provision, had a "broad scope of application".1291
7.1021. The panel in India – Autos found that the "indigenization requirements" (requirements to
use a minimum quantity of domestically produced parts) and the "trade balancing requirements"
(requirements to export products equivalent in value to the products imported) created incentives
for car manufacturers to purchase Indian parts and components rather than imported parts and
components and, consequently, "affected" the intern al sale, offering for sale, purchase and use of
imported parts and components in the Indian ma rket within the meaning of Article III:4 of the
GATT 1994.
1292 The panel maintained that "the fact that a provision is not necessarily primarily
aimed at regulating the offering for sale or use of the product on the domestic market is thus not
an obstacle to its 'affecting' them".1293
7.1022. In a subsequent case, China – Auto Parts, the Appellate Body, after referring to the
above-mentioned reports, confirmed the panel’s finding 1294 according to which the measures at
issue created an incentive for manufacturers to limit their use of imported parts relative to

1287 In paragraph 212 of its report in US – FSC (Article 21.5 of the DSU – EC), the Appellate Body
offered the following explanation:
A manufacturer's use of imported input products always counts against the 50% ceiling in the
fair market value rule, while in contrast, the same manufacturer's use of like domestic input
products has no such negative implication.
1288 Appellate Body Report, US – FSC (Article 21.5 – EC), para. 208.
1289 Appellate Body Report, US – FSC (Article 21.5 – EC), para. 209.
1290 Appellate Body Report, EC – Bananas III, para. 220.
1291 Appellate Body Report, US – FSC (Article 21.5 – EC), para. 210.
1292 This panel reasoned that to meet the "indigenization requirement", car manufacturers had to
purchase Indian parts and components rather than imported goods. Where the trade balancing requirements
are concerned, the panel thought that they imposed an additional burden on car manufacturing companies
which imported parts (an obligation to export goods of equivalent value). The panel took the view that as the
use of domestic parts by a manufacturer would not carry this burden, the trade balancing condition created an
incentive to use domestic parts. See Panel Report, India – Autos, paras. 7.195-7.198 and 7.307-7.309.
1294 The panel found that "the administrative procedures imposed on any auto manufacturer using
imported auto parts as well as the criteria set out in the measures, combined with the assessment of the
charge which is based on the final assembly internally, create an incentive for auto manufacturers to use
domestic auto parts instead of imported auto parts". See Panel Report, China – Auto Parts, para. 7.257.

domestic parts. The Appellate Body explained that these incentives "affect" the conditions of
competition for imported auto parts on the Chinese internal market.1295
7.1023. Consequently, the precedents accord a broad meaning to the scope of application of
Article III:4 of the GATT 1994 and indicate that that provision also covers those measures which,
even though their main objective is not to regulate the internal sale, offering for sale, purchase or
use of the product, affect the conditions of competition of the products in question on the domestic
market.
7.1024. In order to understand the scope of th e broad interpretation described above, we
consider it appropriate to examine the measures at issue in the different cases concerned. We
observe that the common denominator of these measures was the granting of all kinds of
incentives to encourage the use of local products to the detriment of imports, that is, in such a
way as to protect the domestic industry
1296, so that the measures were found to affect the
conditions of competition in the domestic market. We note that in the case of all these measures
there was an obvious link between the incentives and the origin of the products in question. It was
therefore logical and reasonable that these measur es, even though they did not directly regulate
the internal sale, offering for sale, purchase, transportation, distribution or use of these products,
should nevertheless have affected these activities because of the advantages they accorded to
those who opted for the domestic product rather than the imported one.
7.1025. In our case, measure 3, judging from its own wording, does not appear to incorporate an
incentive to encourage the use of local products to the detriment of imports; in fact, it makes no
mention of local or imported products. We recall that measure 3 consists of a tool used by the AFIP
to calculate the tax base for the gains tax in situations in which the Argentine taxpayer has carried
out transactions with persons established in non-cooperative countries. In these cases, measure 3
orders the use of the transfer price rules and proc edures between related parties, irrespective of
whether such a relationship exists.
7.1026. The fact that measure 3 does not directly regulate the sale, purchase or use of imported
products would not a priori be an obstacle to its being able to "affect" those activities within the
broad meaning of Article III:4, so that Argentina’s argument that measure 3 does not directly
govern the conditions of purchase or sale of products would not be valid in this respect.
1297
However, that is not to say that a broad interpretation of the term "to affect" implies that any
measure can fall within the scope of Article III:4 of the GATT 1994. If we follow the pattern of
previous cases, for measure 3 to fall within the scope of that provision, it would have to include a
certain link with the imported or local products so that it could be established that it affected the
conditions of competition of the imported products on the Argentine market.
7.1027. Panama argues that measure 3 affects the conditions of competition on the Argentine
market because the onerous nature of transaction valuation based on the transfer pricing regime,
due to its administrative and related fiscal consequences, makes it a measure that affects the
decision-making process of the purchaser of import ed products and, ultimately, the sale. Panama
also maintains that this measure affects the purchase and use of these imported products, since,
given the obligatory onerousness of the measure, a buyer aware of the administrative burdens will
obviously be discouraged from purchasing and then using products imported from non-cooperative
countries.
1298
7.1028. We are unconvinced by Panama’s summary reasoning in this respect. In our view, the
broad scope attributed in previous cases to the interpretation of the term "affect" does not mean
that any measure that might hypothetically affect the conditions of competition of hypothetical
products could be covered by Article III:4 of the GATT 1994. In this case, we do not consider it
proven that, once products from non-cooperative countries have entered the Argentine market,

1295 Appellate Body Report, China – Auto Parts, para. 195.
1296 In this connection, we recall that the Appellate Body stated that "[i]t is well established that the
general principle expressed in Article III:1 – that internal measures should not be applied to afford protection
to domestic production – informs the rest of Article III, including Article III:4. … Article III:4 is, itself, an
expression of the principle set forth in Article III:1". See Appellate Body Report, EC – Seal Products,
paras. 5.114 and 5.115 (referring to Appellate Body Report, Japan – Alcoholic Beverages II, p. 18).
1297 Argentina’s first written submission, para. 712.
1298 Panama’s responses to Panel questions No. 57 and 90.

measure 3 affects the conditions of competition of imports from non-cooperative countries on the
Argentine market in such a way that the domestic industry is protected.
7.1029. Consequently, the panel considers that Panama has failed to demonstrate that measure 3
(transaction valuation based on transfer prices) falls within the scope of Article III:4 of the
GATT 1994, and that it is therefore also not covered by Article I:1 of the GATT 1994.
7.1030. We proceed now to examine Panama’s alternative argument, namely, whether measure 3
is a rule and formality in connection with importation or exportation within the meaning of
Article I:1 of the GATT 1994.
7.4.2.2.4.2 Whether measure 3 is a rule and formality in connection with importation or
exportation within the meaning of Article I:1 of the GATT 1994
7.1031. We recall that measure 3 consists in th e application of transaction valuation methods
based on transfer prices for the purpose of dete rmining the tax base for the gains tax payable by
Argentine taxpayers, with respect to transactio ns effected with persons from non-cooperative
countries. Accordingly, like measure 2, measure 3 is a tool for determining the tax base for the
gains tax payable by the Argentine taxpayer. Argentina maintains this measure under paragraph 5
of Article 8 of the LIG.1299
7.1032. With respect to the notion of "rule", we refer to the conclusions of our examination of
measure 2.1300 We therefore consider that paragraph 5 of Article 8 of the LIG, by which measure 3
is maintained, can be characterized as a "rule" (" reglamento", "réglementation"). However, as in
the case of measure 2, it does not seem that such legal provisions can be characterized as
"formalities", in the Spanish sense of "[c]ada uno de los requisitos para ejecutar algo" (each of the
requirements for carrying something out) or "[ m]odo de ejecutar con la exactitud debida un acto
público" (way of correctly executing a public instrument).
1301
7.1033. We also refer to our conclusions in relation to measure 2, according to which for a
measure to be regarded as a rule in connection with (" relativo a") exportation (or importation),
there must be a certain association, link or logical relationship between the measure and
exportation (or importation).
1302 To establish whether there is such an association, link or logical
relationship between measure 3 and exportation or importation, we will examine the core features
that define the centre of gravity of the measure.
7.1034. However, we note that Panama has not explained how, in its view, measure 3 is "in
connection with" importation or exportation. As it has not put forward any arguments in this
respect, we conclude that Panama has failed to demonstrate that measure 3 is a rule and formality
in connection with importation or exportation within the meaning of Article I:1 of the GATT 1994.
7.1035. Consequently, the Panel refrains from making a finding in relation to Panama’s claim
under Article I:1 of the GATT 1994.
7.4.2.2.5 Conclusion
7.1036. Having concluded that Panama has 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, the Panel does not deem it
necessary to continue the analysis of Panama’s claim concerning the inconsistency of measure 3
with Article I:1 of the GATT 1994.
7.1037. In view of the foregoing, the Panel di smisses Panama’s claim under Article I:1 of the
GATT 1994, because Panama has failed to demonstrate that measure 3 (transaction valuation
based on transfer prices) 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.

1299 Gains Tax Law, (Exhibits PAN-4 / ARG-42).
1300 See paras. 7.981 and 7.982 above.
1301 Diccionario de la Lengua Española, 23rd edition, Real Academia Española (Espasa Calpe, 2014),
Vol. I, p. 1047.
1302 See paras. 7.984 and 7.985 above.

7.4.3 Panama’s claims under Article III:4 of the GATT 1994
7.4.3.1 Main arguments of the parties
7.4.3.1.1 Panama
7.1038. Panama claims that measure 3 is inconsistent with Article III:4 of the GATT 1994
1303
because making Argentine taxpayers subject to th e transfer pricing regime for the valuation of
imported goods when sold by persons from non-cooperative countries means that those goods are
accorded treatment less favourable than that granted to domestic goods sold by persons located in
Argentina.
1304
7.1039. According to Panama, to be covered by this provision a measure does not have to govern
the purchase or sale of products directly. What is important is to determine that (i) the measure is
contained in a law, regulation or requirement, with in the meaning of Article III:4, and that (ii) it
affects the sale, offering for sale, purchase or use of imported products. Panama claims that both
requirements are met in relation to measure 3.
1305
7.1040. Panama claims that measure 3 is cove red by Article III:4 of the GATT 1994 since it
derives from a law, regulation or requirement, inas much as it is based on Articles 8, 14 and 15 of
the LIG, in conjunction with Article 21 of the RIG and the articles incorporated after Article 21 of
the RIG, and General Resolution No. 1122. 1306 According to Panama, measure 3 is "a measure
linked with the determination of gains tax". 1307 Panama argues that measure 3 is a measure that
affects the internal sale, purchase or use of products on the Argentine market and that,
accordingly, it falls within the scope of applicat ion of Article III:4 and, hence, Article I:1 of the
GATT 1994. Panama explains that the onerous na ture of transaction valuation based on the
transfer pricing regime, due to its administrative and related fiscal consequences, makes it a
measure that affects the process of decision-makin g by the purchaser of imported products and,
ultimately, the sale. Panama maintains that this measure also affects the purchase and use of the
imported products, since, given the obligatory on erousness of the measure, a buyer aware of the
administrative burdens will obviously be discour aged from purchasing and then using products
imported from non-cooperative countries. Panama stresses that it is not a measure which imposes
a tax, as such.
1308
7.1041. Panama argues that in previous case s the scope of Article III:4 of the GATT 1994 was
understood to be broad and to cover all those measures that alter or could alter the conditions of
competition in the marketplace. Panama cites the Appellate Body report in US – FSC in order to
argue that, as in the context of Article I:1 of th e GATS, the word "affect" in Article III:4 of the
GATT 1994 denotes a measure that has "an effect on" and, therefore, the word "affecting" has "a
broad scope of application".
1309 Moreover, Panama explains that, in China – Auto Parts , the
Appellate Body considered that the measures at issue created incentives for the use of domestic
parts since they imposed administrative procedures, and associated delays, on automobile
manufacturers using imported parts. In the opinion of the Appellate Body, such incentives
"affected" the conditions of competition for imported auto parts relative to domestic auto parts on
the Chinese internal market.
1310
7.1042. Panama claims that, since the distinction is based on the origin of the products, the
requirement of likeness between the imported and the domestic products is met. 1311 Panama
considers that a measure does not have to mention specific products as long as it affects
importation within the framework of Article III:4 of the GATT 1994. In its opinion, if a measure
distinguishes between import transactions on the basis of origin, the case law has established that

1303 Request for the establishment of a panel submitted by Panama.
1304 Panama’s first written submission, para. 4.271.
1305 Panama’s response to Panel question No. 57.
1306 Panama’s first written submission, para. 4.276.
1307 Panama’s first written submission, para. 4.263.
1308 Panama’s response to Panel questions No. 57 and 90.
1309 Panama’s response to Panel question No. 90 (citing Appellate Body Report, US – FSC, para. 210).
1310 Panama’s response to Panel question No. 90 (citing Appellate Body Report, China – Auto Parts,
para. 195).
1311 Panama’s first written submission, paras. 4.277 and 4.278 (citing Panel Report, China – Publications
and Audiovisual Products, para. 7.975).

the measure affects like products. 1312 In reply to Argentina’s argument to the effect that products
imported from non-cooperative countries and those of domestic origin have "intrinsic differences",
Panama argues that the criterion of product "liken ess" based on the origins indicated by Argentina
in a politically established list in no way corresponds to "intrinsic differences" between the
products.
1313
7.1043. According to Panama, the subjection of goods imported from persons located in non-
cooperative countries to the transfer pricing regi me imposes on the Argentine taxpayer additional
administrative requirements, economic charges and tax contingencies not imposed on transactions
involving goods of Argentine origin. In Panama’s opinion, because of their onerous nature for a
purchaser in Argentina, these requirements and charges deprive the imported products of effective
opportunities for competing in the Argentine market
1314 and therefore the measure in question
accords products originating in or coming from non-cooperative countries treatment less
favourable than that granted to like products of domestic origin.1315
7.4.3.1.2 Argentina
7.1044. Argentina responds that Panama has failed to demonstrate that measure 3 is inconsistent
with Article III:4 of the GATT 1994. According to Argentina, the transfer price regulations establish
rules relating to the calculation of income subject to tax in Argentina in transactions between
Argentine taxpayers and related parties located abroad. Argentina explains that this "measure lays
down the criteria for establishing the true value of the transaction as if it were an 'arm's [length]
transaction for the purposes of gains tax assessment and collection in Argentina". 1316 In
Argentina’s opinion, requesting detailed information with respect to the value of each transaction,
like the estimation of alternative values derived from the application of the various methods of
valuation provided for in Article 15 of the LIG, does not affect the internal sale, offering for sale,
purchase, transportation, distribution or use of these products or alter the conditions of
competition to the detriment of the imported products.
1317
7.1045. Argentina maintains that even assuming, for the sake of argument, that the transfer
pricing regime is a measure that falls within the scope of Article III:4 of the GATT 1994, Panama
has not identified the specific products affected by the measure challenged, so that it is not
possible to assess their likeness with the domestic products.1318 Argentina argues that Panama has
failed to demonstrate that the products in question are "like" within the meaning of Article III:4 of
the GATT 1994.1319 Argentina refers to the Appellate Body report in US – Clove Cigarettes in order
to argue that the regulatory concerns underlying a measure may be relevant to the analysis of the
likeness criteria under Article III:4 of the GATT 1994, "'to the extent they have an impact on the
competitive relationship between and among the products concerned'". 1320 For Argentina, the
regulatory concerns that led it to distinguish between cooperative and non-cooperative countries
have a direct impact on the conditions of competition between the market products of the
categories of countries in question, and for the same reasons it suggests that these products are
not "like" within the meaning of Article III:4 of the GATT 1994.
1321
7.1046. Argentina argues that it is not enough to assert that measure 3 has an effect "in favour
of" products of domestic origin to affirm that the measure accords "less favourable treatment", but
that Panama should have shown that measure 3, linked to a direct tax applicable to all Argentine
taxpayers, is applied to imported products in such a way as to protect the domestic industry.
1322

1312 Panama’s second written submission, para. 2.485.
1313 Panama’s second written submission, para. 2.486 (referring to Argentina’s first written submission,
para. 721).
1314 Panama’s first written submission, para. 4.279; and second written submission, para. 2.486.
1315 Panama’s first written submission, para. 4.280.
1316 Argentina’s second written submission, para. 99.
1317 Argentina’s first written submission, para. 712; and second written submission, para. 99.
1318 Argentina’s first written submission, paras. 718 and 719.
1319 Argentina’s second written submission, para. 100.
1320 Argentina’s second written submission, para. 100 (citing Appellate Body Report, US – Clove
Cigarettes, para. 119) (emphasis original).
1321 Argentina’s second written submission, para. 100.
1322 Argentina’s comments on Panama’s response to Panel question No. 90.

7.1047. Argentina asserts that any differential tr eatment there may be derives from the intrinsic
characteristics of the products and is not the resu lt of the application of the measure. Argentina
points out that the requirements laid down for imported products are not "additional requirements"
since they are aimed at obtaining adequate informat ion. As evidence of this, Argentina notes that
these requirements also apply to domestic products in the case of related enterprises.
1323
7.4.3.2 Assessment by the Panel
7.1048. Given our conclusion in paragraph 7.1036 above, to the effect that Panama has failed to
demonstrate that measure 3 is a matter referred to in Article III:4 of the GATT 1994, the Panel
does not consider it necessary to continue the analysis of Panama’s claim relating to the
inconsistency of measure 3 with Article III:4 of the GATT 1994.
7.1049. In view of the foregoing, the Panel di smisses Panama’s claim under Article III:4 of the
GATT 1994 because Panama has failed to demonstrate that measure 3 (transaction valuation
based on transfer prices) is a matter referred to in Article III:4 of the GATT 1994.
7.4.4 Panama’s claims under Article XI:1 of the GATT 1994
7.4.4.1 Main arguments of the parties
7.4.4.1.1 Panama
7.1050. Panama claims, alternatively to its cl aim under Article III:4 of the GATT 1994, that
transaction valuation based on the transfer pricing regime is inconsistent with Article XI:1 of the
GATT 1994.
1324 According to Panama, the measure in question is a restriction on the importation
and exportation of goods within the meaning of Article XI:1 of the GATT 1994 because "the
requirements, procedures and charges deriving from the transfer pricing regime impose restrictive
conditions on the importation and exportation of goods sold by persons located in [non-
cooperative] countries".
1325
7.1051. In response to Argentina’s argument that the requirement of transaction valuation based
on transfer prices is in the nature of a tax an d hence is not covered by the GATS, Panama claims
that the measure is based on methodological requirements, administrative formalities and costs
even though it does not impose a tax as such. In Panama’s opinion, if Argentina’s assertion were
correct, Argentina would be acknowledging that the measure is a tax measure and, as such,
clearly covered by Article I:1 of the GATT 1994.
1326 According to Panama, measure 3 is "a measure
linked with the determination of gains tax" 1327 but is not a measure that qualifies as a customs
duty, tax or other charge. The charges imposed by measure 3 do not, as such, impose a tax but
impose costs on the purchase of goods coming from or destined for non-cooperative countries,
altering the decision-making process with respect to the purchase or sale of those products.1328
7.1052. Panama observes that the procedure imposed by measure 3 is complex 1329 and does not
necessarily lead to a clear solution. In Panama’s opinion, if taxpayers fail to meet the information
requirements imposed by the regulations, th ey could be exposed to sanctions and fines. 1330
Panama points out that even compliance with the relevant requirements and procedures could give
rise to corrections leading to an increase in the tax burden or sanctions of other kinds. 1331
According to Panama, given the complexities of the regime, the pragmatic alternative would be to
avoid goods transactions with persons domiciled in non-cooperative countries and thus be spared

1323 Argentina’s first written submission, paras. 721-723.
1324 Panama’s request for the establishment of a panel, p. 4.
1325 Panama’s first written submission, para. 4.291. See also Panama’s second written submission,
para. 2.490.
1326 Panama’s second written submission, para. 2.489 (referring to Argentina’s first written submission,
para. 728).
1327 Panama’s first written submission, para. 4.263.
1328 Panama’s response to Panel questions No. 58 and 91.
1329 Panama indicates that the procedure takes between 3 and 10 weeks. See Panama’s first written
submission, para. 4.237.
1330 Panama’s first written submission, para. 4.238.
1331 Panama’s first written submission, para. 4.241.

the fiscal, economic and administrative charges to which that option would give rise. 1332 Hence
Panama believes that measure 3 acts as a limiting condition on purchases (imports) and sales
(exports), thereby constituting a restriction on the importation and exportation of goods.
1333
7.4.4.1.2 Argentina
7.1053. Argentina claims that Panama has failed to show that measure 3 constitutes a measure
maintained "on the importation" or "on the exportation" of any product under Article XI:1 of the
GATT 1994. Argentina points out that the challenged measure does not fall within the scope of
Article XI:1 since it is a tool for determining the tax base which, by its design, structure and
architecture, takes the form of a tax.
1334 For Argentina, this measure imposes methods for
determining income subject to internal taxation in Argentina. In its opinion, the fact that that
income may derive in part from import or export transactions does not suggest that Argentina’s
internal tax measures are border measures subject to the obligation under Article XI:1 of the GATT
1994.
1335 Argentina recalls that Articles 8 and 15 of the LIG fall within the context of Chapter I
"Subject and Object of the Tax", so that they are part of the tax insofar as they determine two of
its basic elements. In Argentina’s opinion, it is not possible, as Panama contends, to separate the
components of the tax, as if there could be a tax without a subject or object or a tax base.1336
7.1054. It is Argentina’s understanding that what Panama calls "methodological requirement" is
that which defines the basis of assessment within the object of the tax, in accordance with the title
of Chapter I of the LIG. Argentina refers to the exhibit " Principios Constitucionales en Materia
Tributaria" (Constitutional Principles on Tax Matters) submitted by Panama (Exhibit PAN-83) and
explains that the table in which the rule of law is summarized states that "there can be no tax
without a legal basis" and that "in order to be imposed a tax must meet the formal requirements
of a law" and that "the law must define the ta xable event and the elements thereof: subject,
object, tax base and tax rate". For Argentina, this means that "the determination of the tax base is
subject to a constitutionally enforced legality requirement that is inherent in the tax as such" and
that "'tax' is nothing other than the conjunction of subject, object, tax base and tax rate".
Therefore, Argentina argues, "tax as such", as defined by Panama, must be similarly understood.
So measure 3 is excluded from the scope of Arti cle XI:1 of the GATT 1994 since that provision is
not applicable with respect to taxes.
1337
7.1055. Argentina also claims that, in the event that the Panel might consider that the measure in
question does not constitute a tax and is subjec t to Article XI:1 of the GATT 1994, Panama has
failed to show that the measure constitutes a "limiting condition" within the meaning of
Article XI:1 of the GATT 1994. 1338 Argentina maintains that the measure does not constitute a
"limiting condition" on importation given that it only operates once the products have entered the
Argentine market and has a tax assessment and collection function. 1339 It is the tax authorities,
not the customs authorities, that verify compliance with the measure. 1340 Moreover, Argentina
claims that Panama has failed to show that this measure involves a restriction on importation
and/or exportation that can be expressed in "quantitative terms".1341
7.1056. Argentina seeks support in the Appellate Body report in China – Auto Parts , according to
which a panel should examine the "core features" of the measure in question, that is to say, those
that define its "centre of gravity", in order to determine whether it is a border measure or an
internal measure.
1342 Argentina argues that measure 3 is clearly aimed at determining the amount
of income received by Argentine taxpayers with a view to assessing their internal taxes, separately
from and independently of the duties or charges that may have been levied at the border when the
goods were originally imported or exported. In Argentina’s opinion, the fact that part of the income

1332 Panama’s first written submission, para. 4.284.
1333 Panama’s second written submission, para. 2.490.
1334 Argentina’s first written submission, paras. 728 and 731.
1335 Argentina’s second written submission, para. 97.
1336 Argentina’s response to Panel question No. 94.
1337 Argentina’s response to Panel question No. 94.
1338 Argentina’s first written submission, para. 727; and response to Panel question No. 94.
1339 Argentina’s first written submission, para. 734.
1340 Argentina’s first written submission, para. 735.
1341 Argentina’s first written submission, para. 743.
1342 Argentina’s second written submission, para. 97 (citing Appellate Body Report, China – Auto Parts,
para. 171).

subject to taxation in Argentina may come from import or export operations does not suffice to
show that the "centre of gravity" of the taxes on income or profits in Argentina is the importation
or exportation of goods. 1343 Argentina maintains that Panama appears to agree with Argentina in
this respect.1344 Argentina also relies on the panel report in Dominican Republic – Import and Sale
of Cigarettes, according to which "not every measure affecting the opportunities for entering the
market would be covered by Article XI, but only those measures that constitute a prohibition or
restriction on the importation of products, i.e. those measures which affect the opportunities for
importation itself."
1345
7.4.4.2 Assessment by the Panel
7.4.4.2.1 Introduction
7.1057. The question placed before the Panel is whether, as Panama maintains, measure 3 is
inconsistent with Article XI:1 of the GATT 1994. This is an alternative claim to that made under
Article III:4 of the GATT 1994. As we have concluded that measure 3 is not covered by
Article III:4, we now proceed to examine Panama’s alternative or subsidiary claim under
Article XI:1 of the GATT 1994.
7.1058. As with Panama’s other claims under the GATT 1994, Argentina argues that the
challenged measure does not fall within the scope of application of Article XI:1 of the
GATT 1994.
1346
7.1059. We will begin by examining the text of Article XI:1 of the GATT 1994 in order to establish
the legal standard applicable, taking into account the way in which it has been interpreted by
previous panels and the Appellate Body.
7.4.4.2.2 The relevant legal provision
7.1060. Article XI:1 of the GATT 1994 reads as follows:
No prohibitions or restrictions other than duties, taxes or other charges, whether
made effective through quotas, import or ex port licences or other measures, shall be
instituted or maintained by any contracting party on the importation of any product of
the territory of any other contracting party or on the exportation or sale for export of
any product destined for the territory of any other contracting party.
7.1061. Thus, this provision seeks to eliminate prohibitions and restrictions (i) on the importation
of any product of the territory of any other contracting party, or (ii) on the exportation or sale for
export of any product destined for the territory of any other contracting party. We note that the
text of Article XI:1 provides for the elimination of prohibitions and restrictions "other than duties,
taxes or other charges". In China – Raw Materials , the Appellate Body confirmed that "duties,
taxes or other charges" were excluded from the scope of application of Article XI:1 of the GATT
1994.
1347
7.1062. In that case the Appellate Body examined the concepts of "prohibition" and "restriction".
The Appellate Body pointed out that the word "prohibition" ( "prohibición") is defined as "a legal
ban on the trade or importation of a specified commodity" 1348 and "restriction" ( "restricción") is
defined as "[a] thing which restricts someone or something, a limitation on action, a limiting
condition or regulation"
1349 "and thus refers generally to something that has a limiting effect". 1350

1343 Argentina’s second written submission, para. 97.
1344 Argentina’s second written submission, footnote 64 (referring to Panama’s first written submission,
para. 4.263).
1345 Argentina’s response to Panel question No. 94 (citing Panel Report, Dominican Republic – Import
1346 Argentina’s first written submission, paras. 728 and 731.
1347 Appellate Body Report, China – Raw Materials, para. 321.
1348 Appellate Body Report, China – Raw Materials, para. 319 (referring to the Shorter Oxford English
Dictionary, 6th edition, W.R. Trumble, A. Stevenson (editors) (Oxford University Press, 2007), Vol. 2, p. 2363).
1349 Appellate Body Report, China – Raw Materials, para. 319 (referring to the Shorter Oxford English
Dictionary, 6th edition, W.R. Trumble, A. Stevenson (editors) (Oxford University Press, 2007), Vol. 2, p. 2553).

In previous cases, panels opted to accord a broad meaning to the concept of "restriction" 1351,
concluding that Article XI:1 is applicable to conditions which are "limiting" or have a "limiting
effect".
1352
7.1063. The Appellate Body also noted that Article XI of the GATT 1994 is entitled "General
Elimination of Quantitative Restrictions". After mentioning previous occasions on which reference
had been made to the title of a provision in in terpreting the requirements laid down therein 1353, it
considered that the use of the word "quantitative" in the title of Article XI informs the
interpretation of the terms "restriction" and "pro hibition". The Appellate Body concluded that the
title "suggests that Article XI of the GATT 1994 covers those prohibitions and restrictions that have
a limiting effect on the quantity or amount of a product being imported or exported".1354
7.1064. We begin by examining whether measure 3 is covered by Article XI:1 of the GATT 1994.
7.4.4.2.3 The question of whether measur e 3 is covered by Article XI:1 of the
GATT 1994
7.1065. We recall that Panama claims that measure 3 is a restriction on the importation and
exportation of goods. Before examining whether measure 3 constitutes a quantitative restriction,
we will proceed to determine whether, as Argentina argues, this measure constitutes a tax, which
would exclude it from the scope of Article XI:1 of the GATT 1994 by virtue of the wording of the
provision itself, which bans prohibitions and restrictions "other than duties, taxes or other
charges".
7.1066. We agree with the panel in Brazil – Retreaded Tyres
1355 that to determine whether a
measure falls within the types of measures covered by Article XI:1 of the GATT 1994 we must
examine its nature.
7.1067. We recall that measure 3 consists in th e application of transaction valuation methods
based on transfer prices for the purpose of dete rmining the tax base for the gains tax payable by
Argentine taxpayers in connection with transactio ns effected with persons from non-cooperative
countries. Therefore, measure 3 is a tool for determining the tax base for the tax on the gains of
the Argentine taxpayer. Argentina maintains this measure under paragraph 5 of Article 8 of the
LIG.
1356 As Argentina points out1357, both provisions come within the framework of Chapter I of the
LIG entitled "Subject and Object of the Tax", so th at they form part of the provisions that govern
two of the elements of a tax. As Argentina also points out (and as we have previously explained)
the " Principios Constitucionales en Materia Tributaria " (Constitutional Principles on Tax Matters)
specify that "there can be no tax without a legal basis" and that "the law must define the taxable
event and the elements thereof: subject, object, tax base and tax rate".
1358 In our view, the
nature of a tool used to calculate the tax base, that is, one of the elements of gains tax, cannot, in
the present case, be other than fiscal. Consequently, we consider that the fiscal nature of
measure 3 excludes it from the scope of application of Article XI:1 of the GATT 1994.
7.4.4.2.4 Conclusion
7.1068. Having concluded that measure 3 is fiscal in nature and therefore is not covered by the
disciplines of Article XI:1, the Panel does not consider it necessary to continue its analysis of
Panama’s claim concerning the inconsistency of measure 3 with Article XI:1 of the GATT 1994.

1350 Appellate Body Report, China – Raw Materials, para. 319.
1351 Panel Report, India – Quantitative Restrictions, para. 5.128.
1352 Panel Reports, India – Autos, para. 7.270; Colombia – Ports of Entry, paras. 7.233 and 7.234; Brazil
– Retreaded Tyres, para. 7.371; and Dominican Republic – Import and Sale of Cigarettes, paras. 7.252 and
7.258.
1353 The Appellate Body in China – Raw Materials refers to its reports in US – Softwood Lumber IV,
1354 Appellate Body Report, China – Raw Materials, para. 320.
1355 Panel Report, Brazil – Retreaded Tyres, para. 7.372.
1356 Gains Tax Law, (Exhibits PAN-4 / ARG-42).
1357 Argentina’s response to Panel question No. 94.
1358 Constitutional Principles on Tax Matters, (Exhibit PAN-83), pp. 1 and 2.

7.1069. In view of the foregoing, the Panel dismisses Panama’s claim under Article XI:1 of the
GATT 1994 because measure 3 (transaction valuatio n based on transfer prices), being fiscal in
nature, is not covered by that provision.
7.4.5 Argentina’s defence under Article XX(d) of the GATT 1994
7.4.5.1 Main arguments of the parties
7.4.5.1.1 Argentina
7.1070. In the event that the Panel should 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
argues that it has shown that its measures are justified under Article XX(d) of the GATT 1994. To
this end, Argentina incorporates for reference the arguments it provided in relation to
Article XIV(c) of the GATS as a basis for concludi ng that the treatment it applies to the entry of
funds as an unjustified increase in wealth (measure 2) and its transaction valuation regime based
on transfer price methodologies (measure 3) are "necessary to secure compliance with laws or
regulations" within the meaning of Article XX(d) of the GATT 1994.
1359
7.4.5.1.2 Panama
7.1071. In response to Argentina’s defence under Article XX(d) of the GATT 1994, Panama argues
that Argentina has invoked that provision without even identifying the specific laws or regulations
with which it is sought to secure compliance through the application of the transfer pricing regime.
According to Panama, without this basis, it is impossible to establish whether the measure in
question is intended, or necessary, to achieve the compliance objective protected under
Article XX(d) of the GATT 1994.
1360
7.1072. Panama argues that the application of the presumption of unjustified increase in wealth
(measure 2)1361 and the transfer pricing regime (measure 3) 1362, on the basis of a list of
cooperative countries that does not correspond to objective criteria with respect to countries that
face like conditions with regard to tax transparency and information exchange, constitutes a
means of arbitrary and unjustifiable discrimination between countries where like conditions prevail.
7.4.5.2 Assessment by the Panel
7.1073. We recall that, in the event of measure 2 being found to be inconsistent with Article I:1 of
the GATT 1994 and measure 3 inconsistent with Articles I:1, III:4 and/or XI:1 of the GATT 1994,
Argentina invokes the exception under Article XX(d) of the GATT 1994 to justify both
measures.
1363 Having dismissed Panama’s claims under Article I:1 of the GATT 1994 (in relation to
measure 2 and measure 3) and under Articles III:4 and XI:1 of the GATT 1994 (in relation to
measure 3), the Panel refrains from ruling on whether these measures are covered under the
exception provided for in Article XX(d) of the GATT 1994.
8 CONCLUSIONS AND RECOMMENDATIONS
8.1. As set out in greater detail above, the Panel finds that, with respect to the Panel’s terms of
reference:
a. the replacement of Decree No. 1344/1998, as amended by Decree No. 1037/2000, by
Decree No. 589/2013 does not prevent us from examining the eight measures at issue in
the light of the system introduced by Decree No. 589/2013, in which a distinction is
made between cooperative and non-cooperative countries;

1359 Argentina’s second written submission, para. 101.
1360 Panama’s second written submission, paras. 2.384 and 2.493.
1361 Panama’s second written submission, para. 2.385.
1362 Panama’s second written submission, para. 2.493.
1363 Argentina’s first written submission, para. 746. See also second written submission, para. 101.

b. measure 5 (requirements relating to reinsurance services), as elaborated by Article 4 of
SSN Resolution No. 35.794/2011 and in conformity with the amendment introduced by
SSN Resolution No. 38.284/2014, forms part of the Panel’s terms of reference;
c. measure 5 (requirements relating to reinsu rance services) covers only reinsurance
services and therefore does not cover retrocession services.
8.2. With respect to the claims made by Panama under the GATS, the Panel finds as follows:
a. having determined that Panama has demonstr ated that there is trade in services and
that the eight measures at issue in the present dispute are measures "affecting trade in
services" within the meaning of Article I:1 of the GATS, the GATS is applicable to
measure 1 (withholding tax on payments of interest or remuneration), measure 2
(presumption of unjustified increase in wealth), measure 3 (transaction valuation based
on transfer prices), measure 4 (payment received rule for the allocation of expenditure),
measure 5 (requirements relating to reinsura nce services), measure 6 (requirements for
access to the Argentine capital market), measure 7 (requirements for the registration of
branches) and measure 8 (foreign exchange authorization requirement);
b. measure 1 (withholding tax on payments of interest or remuneration), measure 2
(presumption of unjustified increase in wealth), measure 3 (transaction valuation based
on transfer prices), measure 4 (payment received rule for the allocation of expenditure),
measure 5 (requirements relating to reinsura nce services), measure 6 (requirements for
access to the Argentine capital market), measure 7 (requirements for the registration of
branches) and measure 8 (foreign exchange au thorization requirement) are inconsistent
with Article II:1 of the GATS because they do not accord, immediately and
unconditionally, to services and service supp liers of non-cooperative countries treatment
no less favourable than that which they accord to like services and service suppliers of
cooperative countries;
c. measure 2 (presumption of unjustified increase in wealth), measure 3 (transaction
valuation based on transfer prices), and measure 4 (payment received rule for the
allocation of expenditure) 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, in the relevant services and modes in which Argentina has undertaken specific
commitments;
d. measure 1 (withholding tax on payments of interest or remuneration), measure 2
(presumption of unjustified increase in wealth), measure 3 (transaction valuation based
on transfer prices), measure 4 (payment received rule for the allocation of expenditure),
measure 7 (requirements for the registration of branches) and measure 8 (foreign
exchange authorization requirement) ar e 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;
e. measure 5 (requirements relating to reinsurance services) and measure 6 (requirements
for access to the Argentine capital market) are not covered by paragraph 2(a) of the
Annex on Financial Services because they we re not taken for prudential reasons within
the meaning of that provision.
8.3. Further in relation to Panama’s claims under the GATS, the Panel dismisses Panama’s claim
under Article XVI:2(a) of the GATS because me asure 5 (requirements relating to reinsurance
services) is not covered by that provision, inasmuch as it does not regulate service suppliers within
the meaning of Article XVI:2(a) of the GATS.
8.4. The Panel also dismisses Panama’s claim under Article XVI:1 of the GATS with respect to
measure 5 (requirements relating to reinsurance services) because Panama has failed to establish
a prima facie case of inconsistency in this respect.

8.5. Moreover, as we have found that measure 2 (presumption of unjustified increase in wealth),
measure 3 (transaction valuation based on transfer prices) and measure 4 (payment received rule

for the allocation of expenditure) are not inconsis tent 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, in the relevant
services and modes in which Argentina has undertaken specific commitments, the Panel refrains
from ruling on whether these measures are covered under the exception provided for in Article
XIV(d) of the GATS.
8.6. With respect to Panama’s claims under the GATT 1994:
a. the Panel dismisses Panama’s claim under Article I:1 of the GATT 1994, because Panama
has failed to demonstrate that measure 2 (presumption of unjustified increase in wealth)
constitutes a "rule and formality in connection with exportation" or "a charge imposed on
the international transfer of payments for … ex ports" within the meaning of Article I:1 of
the GATT 1994;
b. the Panel also dismisses Panama’s claim under Article I:1 of the GATT 1994, because
Panama has failed to demonstrate that measure 3 (transaction valuation based on
transfer prices) 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;
c. likewise, the Panel dismisses Panama’s claim under Article III:4 of the GATT 1994,
because Panama has failed to demonstrate that measure 3 (transaction valuation based
on transfer prices) is a matter referred to in Article III:4 of the GATT 1994;
d. the Panel also dismisses Panama’s claim under Article XI:1 of the GATT 1994, because
measure 3 (transaction valuation based on transfer prices), being fiscal in nature, is not
covered by that provision.
8.7. Finally, also with respect to Panama’s claims under the GATT 1994, having dismissed
Panama’s claims under Article I:1 of the GATT 1994 (in relation to measure 2 – presumption of
unjustified increase in wealth – and measure 3 – transaction valuation based on transfer prices)
and Articles III:4 and XI:1 of the GATT 1994 (in relation to measure 3 – transaction valuation
based on transfer prices), the Panel refrains from ruling on whether these measures are covered
under the exception provided for in Article XX(d) of the GATT 1994.
8.8. In accordance with the provisions of Article 19.1 of the DSU, having found Argentina’s actions
to be inconsistent with its obligations under Article II:1 of the GATS, we recommend that the DSB
request Argentina to bring its measures into conformity with its obligations under the GATS.

APPENDIX 1. – ARGENTINA'S SCHEDULE OF SPECIFIC COMMITMENTS (GATS/SC/4) OF 15 APRIL 1994
(This is authentic in Spanish only)
Modes of supply: (1) Cross-border supply (2) Consumption abroad (3) Commercial presence (4) Presence of natural persons
Sector or subsector Limitations on market access Limi tations on national treatment Additional commitments
I. HORIZONTAL COMMITMENTS
ALL SERVICES INCLUDED IN
THIS SCHEDULE

 (3) Acquisition of land: unbound in frontier
areas (150 km in land frontier areas and
50 km in coastal areas)

 (4) Unbound, except for measures concerning
the following categories of personnel:
(4) Unbound, except for measures concerning
the categories of personnel indicated in the
market access column

 Senior personnel
 Managers: persons in an enterprise or
organization who primarily direct a
department or subdivision. They supervise
and control the work of other supervisory,
professional or managerial staff. They have
the authority to hire or dismiss personnel,
recommend their hiring or dismissal or take
other personnel action such as promotion or
leave authorization. They exercise
discretionary authority over day-to-day
activities. Does not include first-line
supervisors unless those supervised are
professionals, nor employees who primarily
perform tasks required for the provision of
the service.

Modes of supply: (1) Cross-border supply (2) Consumption abroad (3) Commercial presence (4) Presence of natural persons
Sector or subsector Limitations on market access Limi tations on national treatment Additional commitments
 Executives: persons in the organization
who primarily direct the management of the
organization. They exercise wide latitude in
decision-making and receive only supervision
or direction from high-level executives, the
board of directors or stockholders. They do
not directly perform tasks related to the
provision of the service(s) of the
organization
 Specialists: persons in an enterprise or
organization who possess knowledge at an
advanced level of expertise and who possess
proprietary knowledge of the organization's
services, research equipment, techniques or
management. Independent professionals
may be included in this category.

Modes of supply: (1) Cross-border supply (2) Consumption abroad (3) Commercial presence (4) Presence of natural persons
Sector or subsector Limitations on market access Limi tations on national treatment Additional commitments
II. SECTOR SPECIFIC COMMITMENTS
1. BUSINESS SERVICES

A. Professional services

(1), (3), (4) Persons seeking to provide
professional services must obtain
recognition of their professional
degree, enrol in the relevant college
and establish legal domicile in
Argentina
 Legal domicile: does not involve
residence requirement

(a) Legal services
 (CPC 861)
(1) None

(2) None

(3) None

(4) Unbound, except as indicated in the
horizontal section
(1) None

(2) None

(3) None

(4) Unbound, except as indicated in the
horizontal section

(b) Accounting, auditing and
book-keeping services
 (CPC 862)
(1) None

(2) None

(3) None

(4) Unbound, except as indicated in the
horizontal section
(1) None

(2) None

(3) None

(4) Unbound, except as indicated in the
horizontal section

(d) Architectural services
 (CPC 8671)
(1) None

(2) None

(3) None

(4) Unbound, except as indicated in the
horizontal section
(1) None

(2) None

(3) None

(4) Unbound, except as indicated in the
horizontal section

Modes of supply: (1) Cross-border supply (2) Consumption abroad (3) Commercial presence (4) Presence of natural persons
Sector or subsector Limitations on market access Limi tations on national treatment Additional commitments
(e) Engineerin g services
 (CPC 8672)
(1) None

(2) None

(3) None

(4) Unbound, except as indicated in the
horizontal section
(1) None

(2) None

(3) None

(4) Unbound, except as indicated in the
horizontal section

B. Computer and related
services

(a) Consultancy services
related to the installation
of computer hardware
 (CPC 841)
(1) None

(2) None

(3) None

(4) Unbound, except as indicated in the
horizontal section
(1) None

(2) None

(3) None

(4) Unbound, except as indicated in the
horizontal section

(b) Software implementation
services
 (CPC 842)
(1) None

(2) None

(3) None

(4) Unbound, except as indicated in the
horizontal section
(1) None

(2) None

(3) None

(4) Unbound, except as indicated in the
horizontal section

(c) Data processing services
 (CPC 843)
(1) None

(2) None

(3) None

(4) Unbound, except as indicated in the
horizontal section
(1) None

(2) None

(3) None

(4) Unbound, except as indicated in the
horizontal section

Modes of supply: (1) Cross-border supply (2) Consumption abroad (3) Commercial presence (4) Presence of natural persons
Sector or subsector Limitations on market access Limi tations on national treatment Additional commitments
(d) Database services
 (CPC 844)
(1) None

(2) None

(3) None

(4) Unbound, except as indicated in the
horizontal section
(1) None

(2) None

(3) None

(4) Unbound, except as indicated in the
horizontal section

(e) Other
 (CPC 845 + 849)
(1) None

(2) None

(3) None

(4) Unbound, except as indicated in the
horizontal section
(1) None

(2) None

(3) None

(4) Unbound, except as indicated in the
horizontal section

F. Other business services
(a) Advertising services
 (CPC 871)
(1) None

(2) None

(3) None

(4) Unbound, except as indicated in the
horizontal section
(1) None

(2) None

(3) None

(4) Unbound, except as indicated in the
horizontal section

(b) Market research and
public opinion polling
services
 (CPC 864)
(1) None

(2) None

(3) None

(4) Unbound, except as indicated in the
horizontal section
(1) None

(2) None

(3) None

(4) Unbound, except as indicated in the
horizontal section

Modes of supply: (1) Cross-border supply (2) Consumption abroad (3) Commercial presence (4) Presence of natural persons
Sector or subsector Limitations on market access Limi tations on national treatment Additional commitments
(c) Management consulting
services
 (CPC 865)
(1) None

(2) None

(3) None

(4) Unbound, except as indicated in the
horizontal section
(1) None

(2) None

(3) None

(4) Unbound, except as indicated in the
horizontal section

(h) Services incidental to
mining
 (CPC 833 + 5115)
(1) None

(2) None

(3) None

(4) Unbound, except as indicated in the
horizontal section
(1) None

(2) None

(3) None

(4) Unbound, except as indicated in the
horizontal section

(o) Building cleaning services
 (CPC 874)
(1) None

(2) None

(3) None

(4) Unbound, except as indicated in the
horizontal section
(1) None

(2) None

(3) None

(4) Unbound, except as indicated in the
horizontal section

(s) Assembly or convention
services
 (CPC 87909*)
(1) None

(2) None

(3) None

(4) Unbound, except as indicated in the
horizontal section
(1) None

(2) None

(3) None

(4) Unbound, except as indicated in the
horizontal section

Modes of supply: (1) Cross-border supply (2) Consumption abroad (3) Commercial presence (4) Presence of natural persons
Sector or subsector Limitations on market access Limi tations on national treatment Additional commitments
(t) Other
 (CPC 8790)
(1) None

(2) None

(3) None

(4) Unbound, except as indicated in the
horizontal section
(1) None

(2) None

(3) None

(4) Unbound, except as indicated in the
horizontal section

2. COMMUNICATION
SERVICES

B. Courier services
 (CPC 7512)
(1) None

(2) None

(3) None

(4) Unbound, except as indicated in the
horizontal section
(1) None

(2) None

(3) None

(4) Unbound, except as indicated in the
horizontal section

C. Telecommunication
services

(h) Electronic mail
 (CPC 7523**)
(1) None

(2) None

(3) None

(4) Unbound, except as indicated in the
horizontal section
(1) None

(2) None

(3) None

(4) Unbound, except as indicated in the
horizontal section

(i) Voicemail
 (CPC 7523**)
(1) None

(2) None

(3) None

(4) Unbound, except as indicated in the
(1) None

(2) None

(3) None

(4) Unbound, except as indicated in the

Modes of supply: (1) Cross-border supply (2) Consumption abroad (3) Commercial presence (4) Presence of natural persons
Sector or subsector Limitations on market access Limi tations on national treatment Additional commitments
horizontal section horizontal section
(j) On-line information and
database retrieval
 (CPC 7523**)
(1) None

(2) None

(3) None

(4) Unbound, except as indicated in the
horizontal section
(1) None

(2) None

(3) None

(4) Unbound, except as indicated in the
horizontal section

(k) Electronic data
interchange services
 (CPC 7523**)
(1) None

(2) None

(3) None

(4) Unbound, except as indicated in the
horizontal section
(1) None

(2) None

(3) None

(4) Unbound, except as indicated in the
horizontal section

(l) Enhanced/value-added
facsimile services
(including store and
forward, store and
retrieve)
 (CPC 7523**)
(1) None

(2) None

(3) None

(4) Unbound, except as indicated in the
horizontal section
(1) None

(2) None

(3) None

(4) Unbound, except as indicated in the
horizontal section

(m) Code and protocol
conversion

(1) None

(2) None

(3) None

(4) Unbound, except as indicated in the
horizontal section
(1) None

(2) None

(3) None

(4) Unbound, except as indicated in the
horizontal section

Modes of supply: (1) Cross-border supply (2) Consumption abroad (3) Commercial presence (4) Presence of natural persons
Sector or subsector Limitations on market access Limi tations on national treatment Additional commitments
(n) On-line information and/or
data processing (including
transaction processing)
 (CPC 843**)
(1) None

(2) None

(3) None

(4) Unbound, except as indicated in the
horizontal section
(1) None

(2) None

(3) None

(4) Unbound, except as indicated in the
horizontal section

(o) Other

(1) None

(2) None

(3) None

(4) Unbound, except as indicated in the
horizontal section
(1) None

(2) None

(3) None

(4) Unbound, except as indicated in the
horizontal section

3. CONSTRUCTION AND
RELATED ENGINEERING
SERVICES

A. General construction work
for buildings
 (CPC 512)
(1) None

(2) None

(3) None

(4) Unbound, except as indicated in the
horizontal section
(1) None

(2) None

(3) None

(4) Unbound, except as indicated in the
horizontal section

C. Assembly and erection of
prefabricated
constructions
 (CPC 514 + 516)
(1) None

(2) None

(3) None

(4) Unbound, except as indicated in the
horizontal section
(1) None

(2) None

(3) None

(4) Unbound, except as indicated in the
horizontal section

Modes of supply: (1) Cross-border supply (2) Consumption abroad (3) Commercial presence (4) Presence of natural persons
Sector or subsector Limitations on market access Limi tations on national treatment Additional commitments
D. Building completion and
finishing work
 (CPC 517)
(1) None

(2) None

(3) None

(4) Unbound, except as indicated in the
horizontal section
(1) None

(2) None

(3) None

(4) Unbound, except as indicated in the
horizontal section

E. Other
 (CPC 511 + 515 + 518)
(1) None

(2) None

(3) None

(4) Unbound, except as indicated in the
horizontal section
(1) None

(2) None

(3) None

(4) Unbound, except as indicated in the
horizontal section

4. DISTRIBUTION SERVICES

B. Wholesale trade services
 (CPC 622)
(1) None

(2) None

(3) None

(4) Unbound, except as indicated in the
horizontal section
(1) None

(2) None

(3) None

(4) Unbound, except as indicated in the
horizontal section

C. Retail trade services
 (CPC 631 + 632)
 6111 + 6113 + 6121
(1) None

(2) None

(3) None

(4) Unbound, except as indicated in the
horizontal section
(1) None

(2) None

(3) None

(4) Unbound, except as indicated in the
horizontal section

Modes of supply: (1) Cross-border supply (2) Consumption abroad (3) Commercial presence (4) Presence of natural persons
Sector or subsector Limitations on market access Limi tations on national treatment Additional commitments
D. Franchising services
 (CPC 8929)
(1) None

(2) None

(3) None

(4) Unbound, except as indicated in the
horizontal section
(1) None

(2) None

(3) None

(4) Unbound, except as indicated in the
horizontal section

7. FINANCIAL SERVICES 1

A. All insurance services and
insurance-related services

(a) Life, accident and health
insurance services
 (CPC 8121)

(1) Unbound

(2) Unbound

(3) Authorization of the establishment of new
entities is suspended

(4) Unbound, except as indicated in the
horizontal section

(1) Unbound

(2) Unbound

(3) None

(4) Unbound, except as indicated in the
horizontal section

(b) Non-life insurance services
 (CPC 8129)
(1) Unbound

(2) Unbound

(3) Authorization of the establishment of new
entities is suspended

(4) Unbound, except as indicated in the
horizontal section
(1) Unbound

(2) Unbound

(3) None

(4) Unbound, except as indicated in the
horizontal section

1 Processed data must remain in the country so as to be available for consultation by the competent authority. This measure does not prevent the data from also
being transferred abroad.

Modes of supply: (1) Cross-border supply (2) Consumption abroad (3) Commercial presence (4) Presence of natural persons
Sector or subsector Limitations on market access Limi tations on national treatment Additional commitments
 - Maritime and air
transport insurance
services
 (CPC 8129(3)
(1) None

(2) None

(3) Authorization of the establishment of new
entities is suspended

(4) Unbound, except as indicated in the
horizontal section
(1) None

(2) None

(3) None

(4) Unbound, except as indicated in the
horizontal section

(c) Reinsurance and
retrocession services
 (CPC 81299*)
(1) None

(2) None

(3) Authorization of the establishment of new
entities is suspended

(4) Unbound, except as indicated in the
horizontal section
(1) None

(2) None

(3) None

(4) Unbound, except as indicated in the
horizontal section

B. Banking and other
financial services
(excluding insurance)
Financial operations by the Government and
State-owned enterprises are excluded from the
conditions specified in this schedule; they may
carry out their operations through the entities they
designate.

In order to engage in stock market transactions it
is necessary to be a member and share-holder of
the Securities Exchange.

(a) Acceptance of deposits
and other repayable funds
from the public
 (CPC 81115-81119)
(1) Unbound

(2) None

(3) None

(4) Unbound, except as indicated in the
horizontal section
(1) Unbound

(2) None

(3) None

(4) Unbound, except as indicated in the
horizontal section

Modes of supply: (1) Cross-border supply (2) Consumption abroad (3) Commercial presence (4) Presence of natural persons
Sector or subsector Limitations on market access Limi tations on national treatment Additional commitments
(b) Lending of all types
including consumer credit,
mortgage credit, factoring
and financing of
commercial transactions
 (CPC 81113)
(1) Unbound

(2) None

(3) None

(4) Unbound, except as indicated in the
horizontal section
(1) Unbound

(2) None

(3) None

(4) Unbound, except as indicated in the
horizontal section

(c) Financial leasing services
 (CPC 8112)
(1) Unbound

(2) None

(3) None

(4) Unbound, except as indicated in the
horizontal section
(1) Unbound

(2) None

(3) None

(4) Unbound, except as indicated in the
horizontal section

d) Payment and money
transmission services
 (CPC 81339**)
(1) Unbound

(2) None

(3) None

(4) Unbound, except as indicated in the
horizontal section
(1) Unbound

(2) None

(3) None

(4) Unbound, except as indicated in the
horizontal section

(e) Guarantees and
commitments
 (CPC 81199**)
(1) Unbound

(2) None

(3) None

(4) Unbound, except as indicated in the
horizontal section
(1) Unbound

(2) None

(3) None

(4) Unbound, except as indicated in the
horizontal section

Modes of supply: (1) Cross-border supply (2) Consumption abroad (3) Commercial presence (4) Presence of natural persons
Sector or subsector Limitations on market access Limi tations on national treatment Additional commitments
(f) Trading on own account or
for clients, whether on an
exchange or not, or in any
other form, of the
following:

 - Money market
instruments
(cheques, bills,
certificates of
deposit, etc.)
 (CPC 81339**)
(1) Unbound

(2) None

(3) None

(4) Unbound, except as indicated in the
horizontal section
(1) Unbound

(2) None

(3) None

(4) Unbound, except as indicated in the
horizontal section

- Foreign exchange
 (CPC 8133(3)
(1) Unbound

(2) None

(3) None

(4) Unbound, except as indicated in the
horizontal section
(1) Unbound

(2) None

(3) None

(4) Unbound, except as indicated in the
horizontal section

- Derivative products,
including, but not
limited to, futures
and options
 (CPC 81339**)
(1) Unbound

(2) None

(3) None

(4) Unbound, except as indicated in the
horizontal section
(1) Unbound

(2) None

(3) None

(4) Unbound, except as indicated in the
horizontal section

Modes of supply: (1) Cross-border supply (2) Consumption abroad (3) Commercial presence (4) Presence of natural persons
Sector or subsector Limitations on market access Limi tations on national treatment Additional commitments
- Exchange rate and
interest rate
instruments, such as
swaps, forward
interest-rate
agreements, etc.
 (CPC 81339*)

(1) Unbound

(2) None

(3) None

(4) Unbound, except as indicated in the
horizontal section

(1) Unbound

(2) None

(3) None

(4) Unbound, except as indicated in the
horizontal section

- Transferable
securities
 (CPC 81321*)
(1) Unbound

(2) None

(3) None

(4) Unbound, except as indicated in the
horizontal section
(1) Unbound

(2) None

(3) None

(4) Unbound, except as indicated in the
horizontal section

- Other negotiable
instruments and
financial assets,
including bullion
 (CPC 81339**)
(1) Unbound

(2) None

(3) None

(4) Unbound, except as indicated in the
horizontal section
(1) Unbound

(2) None

(3) None

(4) Unbound, except as indicated in the
horizontal section

(g) Participation in issues of
all kinds of securities,
including underwriting and
placement as agent
(whether publicly or
privately) and provision of
services related to such
issues
 (CPC 8132)
(1) Unbound

(2) None

(3) None

(4) Unbound, except as indicated in the
horizontal section
(1) Unbound

(2) None

(3) None

(4) Unbound, except as indicated in the
horizontal section

Modes of supply: (1) Cross-border supply (2) Consumption abroad (3) Commercial presence (4) Presence of natural persons
Sector or subsector Limitations on market access Limi tations on national treatment Additional commitments
(h) Money broking
 (CPC 81339**)
(1) Unbound

(2) None

(3) None

(4) Unbound, except as indicated in the
horizontal section
(1) Unbound

(2) None

(3) None

(4) Unbound, except as indicated in the
horizontal section

(i) Asset management, such
as cash or portfolio
management, all forms of
collective investment
management, pension
fund management,
custodial depository and
trust services
 (CPC 8119** + 81323*)
(1) Unbound

(2) None

(3) None

(4) Unbound, except as indicated in the
horizontal section
(1) Unbound

(2) None

(3) None

(4) Unbound, except as indicated in the
horizontal section

(j) Settlement and clearing
services for financial
assets, including
securities, derivative
products, and other
negotiable instruments
 (CPC 81339** or
81319**)
(1) Unbound

(2) None

(3) None

(4) Unbound, except as indicated in the
horizontal section
(1) Unbound

(2) None

(3) None

(4) Unbound, except as indicated in the
horizontal section

Modes of supply: (1) Cross-border supply (2) Consumption abroad (3) Commercial presence (4) Presence of natural persons
Sector or subsector Limitations on market access Limi tations on national treatment Additional commitments
(k) Advisory and other
auxiliary financial services
for any of the activities
listed in Article IB of
document MTN.TNC/W/50,
including credit reference
and analysis, investment
and portfolio research and
advice, and advice on
acquisitions and on
corporate restructuring
and strategy.
 (CPC 8131 or 8133)
(1) None

(2) None

(3) None

(4) Unbound, except as indicated in the
horizontal section
(1) None

(2) None

(3) None

(4) Unbound, except as indicated in the
horizontal section

(l) Provision and transfer of
financial information,
financial data processing
and related software by
suppliers of other financial
services
 (CPC 8131)
(1) None

(2) None

(3) None

(4) Unbound, except as indicated in the
horizontal section
(1) None

(2) None

(3) None

(4) Unbound, except as indicated in the
horizontal section

New financial services (1) Unbound

(2) Unbound

(3) Unbound

(4) Unbound, except as indicated in the
horizontal section
(1) Unbound

(2) Unbound

(3) None

(4) Unbound, except as indicated in the
horizontal section

Modes of supply: (1) Cross-border supply (2) Consumption abroad (3) Commercial presence (4) Presence of natural persons
Sector or subsector Limitations on market access Limi tations on national treatment Additional commitments
9. TOURISM AND
TRAVEL-RELATED
SERVICES

A. Hotels and restaurants
(including catering)
 (CPC 641/643)
(1) None

(2) None

(3) None

(4) Unbound, except as indicated in the
horizontal section
(1) None

(2) None

(3) None

(4) Unbound, except as indicated in the
horizontal section

B. Travel agencies and tour
operators services
 (CPC 7471)
(1) None

(2) None

(3) None

(4) Unbound, except as indicated in the
horizontal section
(1) None

(2) None

(3) None

(4) Unbound, except as indicated in the
horizontal section

C. Tourist guide services
 (CPC 7472)
(1) None

(2) None

(3) None

(4) Unbound, except as indicated in the
horizontal section
(1) None

(2) None

(3) None

(4) Unbound, except as indicated in the
horizontal section

D. Other (1) None

(2) None

(3) None

(4) Unbound, except as indicated in the
horizontal section
(1) None

(2) None

(3) None

(4) Unbound, except as indicated in the
horizontal section