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WTO Members Question Argentine Auto Sector Tax Break

by Mike Godfrey, Tax-News.com, Washington

24 October 2016


Several members of the World Trade Organization have taken issue with a proposed new law in Argentina, complaining that it will offer tax incentives to automakers that give preference to the use of local auto parts.

At a meeting of the WTO Committee on Trade-Related Investment Measures (TRIMs) on October 17, 2016, some WTO members voiced concern that such "local content requirements" may run counter to commitments under the WTO TRIMs Agreement.

Concerns that the Argentine measure may breach TRIMs were raised in particular by Mexico and the European Union, which said that the law contradicts Argentina's obligation to treat imported components no less favorably than local products.

Japan, Chinese Taipei, and South Korea also shared the concerns and said they would closely monitor the issue.

Meanwhile, Canada said that the proliferation of local content requirements in the automotive industry is of broader concern.

For its part, the Argentine delegation responded that the measure in question is intended to promote the domestic automotive sector and the law has not yet been implemented. According to the WTO, Argentina "is willing to talk with members bilaterally" about their concerns.

TAGS: tax | value added tax (VAT) | tax incentives | law | World Trade Organisation (WTO) | Mexico | manufacturing | Canada | trade | Argentina | Japan | Investment | Europe | Invest | Investment

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