Time: 2013-09-11    Writer: choice_lantos

US suspends Argentina from trade preference scheme Trade frictions are on the rise between Washington and Buenos Aires, after US President Barack Obama announced on Monday that the US would be suspending Argentina from its Generalised System of Preferences programme - which waives duties on thousands of imports from developing countries - for failure to pay arbitration awards in two disputes involving US investors. The suspension goes into effect in 60 days, according to the White House announcement. 

Us suspends argentina trade benefits

President Obama announced on March 26, 2012 that Argentina will be suspended in 60 days time from the US Generalized System of Preferences which waives import tariffs on thousands of goods from developing countries, due to its failure to pay more than $300 million in compensation to two US companies over investment disputes.

The US Generalised System of Preferences (GSP), which was re-authorised and re-entered into effect in November 2011 following an eleven-month lapse, provides preferential duty free access for up to 4800 products from 129 designated beneficiary countries and territories. “[US law] provides that the President shall not designate any country a beneficiary developing country under the GSP if such a country fails to act in good faith in enforcing arbitral awards in favour of US-owned companies,” the White House said in explaining Argentina’s suspension. The decision follows a 2010 request by two US companies - Azurix and Blue Ridge Investments - asking that Argentina be suspended from the preferential trading scheme in light of Buenos Aires’ not paying compensation awarded to both companies in two separate investment disputes. The two countries have a bilateral investment treaty that entered into force in 1994. The treaty, among other provisions, allows investors from one country, if operating in a foreign country party to that agreement, to refer disputes to an international arbitrator rather than having to use the foreign country’s own court system. In 2005, the World Bank’s International Centre for the Settlement of Investment Disputes (ICSID) requested that Argentina pay US$133.2 million, plus interest, to CMS Gas Transmission Co. on the grounds that Argentina had taken action damaging the US company’s investment; that award was later transferred to another company, Blue Ridge Investments. The following year, ICSID ordered the South American country to pay Azurix US$165.2 million in a separate dispute. While Buenos Aires asked that both awards be annulled, the request was denied by ICSID. “These are not new issues,” US State Department spokesperson Victoria Nuland told reporters on Tuesday. “So the White House’s decision yesterday to suspend Argentina particularly from GSP should not have come as much of a surprise. It was based on a finding that they were not in compliance with the GSP eligibility criteria set by the Congress.” The White House, she continued, “didn’t have a lot of choice in this case,” adding that while Washington is open to working with Buenos Aires on the matter, the latter must pay the awards to move things forward. Argentina is the ninth-highest source of US imports under the preference scheme, with the US importing US$477 million worth of goods from Argentina in 2011 under the GSP, or 11 percent of total imports from the South American country. - See more at: