Argentina: January 1999
Members praised Argentina's economic performance since the last Review, due to macroeconomic discipline, and wide-ranging structural adjustment, under the Convertibility Plan.
POLICY REVIEW BODY: REVIEW OF ARGENTINA
The Trade Policy Review Body of the World Trade Organization (WTO) concluded its second review of Argentina's trade policies on 20 and 22 January 1999. The text of the Chairperson's concluding remarks is attached as a summary of the salient points which emerged during the discussion. The review enables the TPRB to conduct a collective examination of the full range of trade policies and practices of each WTO member country at regular periodic intervals to monitor significant trends and developments which may have an impact on the global trading system.
The review is based on two reports which are prepared respectively by the WTO Secretariat and the government under review and which cover all aspects of the country's trade policies, including its domestic laws and regulations, the institutional framework, bilateral, regional and other preferential agreements, the wider economic needs and the external environment. A record of the discussion and the Chairperson's summing-up together with these two reports, will be published in due course as the complete trade policy review of Argentina and will be available from the WTO Secretariat, Centre William Rappard, 154 rue de Lausanne, 1211 Geneva 21.
Since December 1989, the following reports have been completed: Argentina (1992 & 1999), Australia (1989, 1994 & 1998), Austria (1992), Bangladesh (1992), Benin (1997), Bolivia (1993), Botswana (1998), Brazil (1992 & 1996), Cameroon (1995), Canada (1990, 1992, 1994, 1996 & 1998), Chile (1991 & 1997), Colombia (1990 & 1996), Costa Rica (1995), Côte d'Ivoire (1995), Cyprus (1997), the Czech Republic (1996), the Dominican Republic (1996), Egypt (1992), El Salvador (1996), the European Communities (1991, 1993, 1995 & 1997), Fiji (1997), Finland (1992), Ghana (1992), Hong Kong (1990, 1994 & 1998), Hungary (1991 & 1998), Iceland (1994), India (1993 & 1998), Indonesia (1991,1994 & 1998), Israel (1994), Japan (1990, 1992, 1995 & 1998), Kenya (1993), Korea, Rep. of (1992 & 1996), Lesotho (1998), Macau (1994), Malaysia (1993 & 1997), Mauritius (1995), Mexico (1993 & 1997), Morocco (1989 & 1996), New Zealand (1990 & 1996), Namibia (1998), Nigeria (1991 & 1998), Norway (1991 & 1996), Pakistan (1995), Paraguay (1997), Peru (1994), the Philippines (1993), Poland (1993), Romania (1992), Senegal (1994), Singapore (1992 & 1996), Slovak Republic (1995), the Solomon Islands (1998), South Africa (1993 & 1998), SriLanka(1995),Swaziland (1998), Sweden (1990 & 1994), Switzerland (1991 & 1996), Thailand (1991 & 1995), Trinidad and Tobago (1998), Tunisia (1994), Turkey (1994 & 1998), the United States (1989, 1992, 1994 & 1996), Uganda (1995), Uruguay (1992 & 1998), Venezuela (1996), Zambia (1996) and Zimbabwe (1994).
POLICY REVIEW BODY: REVIEW OF ARGENTINA
CONCLUDING REMARKS BY THE CHAIRPERSON Back to top
The second Trade Policy Review of Argentina was conducted by the TPR Body on 20 and 22 January 1999. These remarks, prepared on my own responsibility, are intended to summarize the main points of the discussion; they are not intended as a full report. Further details of the discussion will be fully reflected in the minutes.
The discussion developed under three main themes: (i) economic environment; (ii) trade measures; and (iii) policies and measures by sector.
Members praised Argentina's economic performance since the last Review, due to macroeconomic discipline, and wide-ranging structural adjustment, under the Convertibility Plan. GDP per capita had doubled, inflation drastically reduced and Argentina had become a major FDI destination, although unemployment remained high. In tribute to its sound fundamentals, Argentina had weathered well the Asian financial crisis. With Brazil the major export destination, there were questions about the effect of the recent depreciation of the Brazilian Real, particularly with respect to the currency board, the external accounts and further liberalization of the MERCOSUR market.
Participants welcomed Argentina's active participation in, and support of the WTO and recognized the importance of the MERCOSUR process. Questions were asked on the nexus between multilateral and regional trade objectives, trade diversion and progress on common régimes for sugar and automobiles.
In reply, the representative of Argentina expressed confidence in the soundness of the Argentinian economy and in its ability to deal with the potential effects of the recent economic evolution in Brazil, which would be handled within MERCOSUR and in a manner fully consistent with the WTO. Unemployment was down to around 12% and continued prudent fiscal and debt management, improved levels of investment, and economic and export diversification should contribute to lower rates; in this context, tariffs on imports of capital goods from non-MERCOSUR sources had yesterday been lowered from 14 to 6%.
He noted that MERCOSUR was built on the principle of open regionalism, and was consistent with the process of multilateral liberalization, which was actively promoted. No visible trade distortions had emerged and both intra- and extra-regional trade had grown rapidly; this also reflected the profound structural reform by the regional partners in recent years. On 1 January 2001, the CET would cover all tariff lines; tariffs now affected only a minimal volume of intra-regional trade. MERCOSUR aimed to establish a common market by 2005, including the free movement of production factors and the harmonization of national standards.
Members warmly commended Argentina's trade reforms, making it a considerably more outward-oriented, secure market. The tariff was bound and ceiling rates had been considerably reduced; progress was clear in the reduction of non-tariff measures; and trade procedures had been simplified. Timely notification of measures to the WTO was encouraged. Questions arose on a number of issues including, preshipment inspection, price bands for customs purposes, non-preferential rules of origin, the temporary 3 percentage point tariff increase, the implementation of anti-dumping, countervailing and safeguard actions, fiscally-driven production and trade measures, and plans to eliminate Argentina's two remaining export assistance schemes.
Noting the importance of the procurement market, some Members encouraged Argentina to accede to the Government Procurement Agreement and asked, in particular, about contract procedures and the participation of foreign firms. Efforts for harmonizing standards within MERCOSUR attracted attention, as did matters such as certification arrangements and mutual recognition agreements. There were also inquiries about the legal framework for competition policy. On intellectual property rights, a number of Members expressed interest in the establishment of a common regime for MERCOSUR and questions were raised in several areas including patents, copyrights and enforcement.
In response, the representative said that Argentina attached great importance to its WTO notifications requirements and the relevant authorities were periodically reminded of those obligations. Pre-shipment inspection aimed to deal with a number of issues including tax evasion, unfair trade practices, and improved compliance with standards; the system was temporary. Origin certificates were used mainly for products subject to trade defence measures. Price bands for customs allowed price comparisons for goods from different sources.
The 3 percentage points increase in the CET would be phased out on 31 December 2000. For a small number of products bound rates had been exceeded and the list had been submitted to the WTO for negotiations. The number of antidumping measures had increased only relative to the limited measures in force under the earlier less open import regime. Recent investigations had not exceeded the 18 months time-limit. A common MERCOSUR anti-dumping regime would be considered before the end 2000. Argentina had notified its export incentive regimes in 1998: benefits under the Industrial Specialization Regime, which had been suspended in 1996, would end on 31 December 1999.
On government procurement, Argentina was an observer to the GPA but had no plans to accede to the Agreement; it took part in regional initiatives within MERCOSUR and the FTAA. Aspects of Argentinian procurement were explained. Argentina sought to improve international cooperation in the area of sanitary and phytosanitary measures, having signed bilateral agreements with a number of partners. New competition statutes had been submitted to Congress in late 1998, amending and expanding the existing legislation.
On intellectual property, patents submitted after 1 January 1995 were granted 20 years protection; problems were being handled by the judicial system. Protection to software had been granted in 1998 under copyright legislation. Details were given on the link between marketing permits and patents, exclusive marketing rights, the Confidentiality Law, and the protection of vegetable varieties. MERCOSUR was working on various regional protocols for the protection of intellectual property rights.
Policies and measures by sector
Members welcomed the fact that Argentina's trade policies were largely free of distortive elements and that resource allocation was mainly market driven. In this context, Argentina was asked about its sectoral trade policy objectives. The health, viability and efficiency of Argentine agriculture was noted as was the suggestion that further multilateral trade liberalization would improve sectoral prospects. Improvements in Argentina's meeting of international sanitary requirements, opening export markets for beef, were recognized. Questions arose on variable import levies on sugar, price support for tobacco, and export taxes on oilseeds, hides and skins. In manufacturing, the automobile sector came under some question, especially with respect to local-content requirements. There were also queries about protection for toys, textiles
and clothing and particularly for footwear. Argentina was encouraged to participate in the Information Technology Agreement. Members recognized and welcomed the openness of Argentina's services sector. Information was requested on privatization in banking and on criteria for FDI in financial services. In telecommunications, the implementation by November 2000 of liberalization commitments in basic services was noted, and questions arose about mobile telephone services and personal communication systems. Maritime and air services were of particular interest to some Members, including cargo-sharing and rights for the national carrier, respectively. Information was sought on Argentina's MFN exemptions under GATS and on MERCOSUR negotiations in services.
In reply, the representative said that Argentina did not implement sectoral policies except for automobiles. He explained the operation of the import levy on sugar and noted that the export tax on oilseeds compensated for tariff escalation on downstream products; he confirmed that export taxes were applied on hides and skins. On the automobiles, he noted that the 1996 changes to its regime had been notified to the TRIMs Committee; the regime was transitory and would be replaced by a common MERCOSUR policy in 2000, entailing free intra-MERCOSUR trade, and common external tariffs and export promotion policies. Footwear measures were subject to dispute settlement, and any provision on toys would meet WTO provisions.
In financial services, a regulation restricting market access in the insurance sector had been eliminated in October 1998; however, Argentina was not envisaging to modify its WTO schedule of commitments. The liberalization of basic telecommunication services was proceeding according to schedule; Argentina complied with its specific commitments on mobile telephones. There were no restrictions on the supply of maritime transport services but Argentina had bilateral maritime agreements containing cargo-sharing provisions. Under MERCOSUR, negotiations had begun to define sector-specific commitments.
Conclusions Back to top
In conclusion, it is my feeling that this Body welcomed Argentina's robust macroeconomic performance and structural reforms, including sustained trade liberalization efforts; not only has GDP per capita increased sharply but sound fundamentals have allowed Argentina to cope well with a series of external shocks. This bodes well for Argentina's capacity to deal with the recent depreciation of the Brazilian Real. It is my feeling that delegations appreciate Argentina's involvement in and commitment to the multilateral trading system, and look forward to Argentina's constructive role in the preparatory process for the upcoming negotiations. Members encouraged Argentina to pursue the liberalization of its economy, based on WTO principles and thus take steps to address allocative distortions, including in sensitive manufacturing sectors. It is also my sense that Members saw the importance for further trade liberalization within MERCOSUR to contribute to the strengthening of the multilateral trading system.