I'm a little late to the party on the most recent Argentine debt crisis. I hadn't been paying much attention, but someone asked me to speak about it at a conference in October, so I thought I better try to figure it out! There are a lot of aspects of the issue to sort through. Here's one that I hadn't thought of: Todd Tucker argues that Argentina might have a pretty good WTO claim against the U.S. court decision which prevents Argentina from make certain of its debt payments.
My understanding of all this is a little fuzzy, so feel free to correct me or clarify in the comments, but here's what I gather. A U.S. judge ruled that Argentina can't pay off bondholders who have agreed to a restructuring of their debt without first paying off some "vulture fund" bondholders who would not agree to a restructring (i.e., they want the full amount). If Argentina is enjoined by the court from making these payments on the restructured debt, they are technically in default, which sounds bad (although it's not clear to me exactly what the implications of this are).
Todd argues that Argentina might have a WTO claim against these court-ordered restrictions on making financial transfers, on the following basis. The U.S. made broad GATS commitments in the area of financial services, requiring "free transfer flows" and "non-discrimination." The U.S. court ruling -- which is a "measure" that can be challenged at the WTO -- restricts financial transfers, and also discriminates against some European bondholders (although I couldn't follow exactly how).
Therefore, Todd sees the possibility of a GATS violation, with no good defense under prudential measures or balance of payments exceptions.
With the caveat that I haven't looked at any of these provisions closely, he may be on to something here. However, it seemed to me that GATS Article XIV(c) could offer a defense. This provision allows measures that are:
necessary to secure compliance with laws or regulations which are not inconsistent with the provisions of this Agreement ...
Again, I'm new to this topic, but isn't the U.S. court simply enforcing a contract between the bondholders and Argentina? In other words, this is just a measure necessary to secure compliance with basic contract law. Unless the court's interpretation of the contract in question is completely off the wall, I would think the court's decision would satisfy the Article XIV chapeau, and thus be justified under Article XIV.
