Argentina’s economy has been volatile over the last few decades—the country has still not made good on its international debts following the 2001 economic crisis.
Faced with increasing inflation and decreasing economic production, President Cristina Kirchner this year introduced new tariffs designed to protect domestic industry and save workers’ jobs. However, her economic policies have skewed on the protectionist side for years now.
Since 2008, Argentina has continued to expand the products that require licensing to include laptops, machines, toys, textiles and footwear. As of May 2012, the nation has import licenses on 608 categories of products and companies may wait up to six months to gain approval to import.
In April, Argentina’s government appropriated the YPF unit of Spanish oil giant Repsol (The New York Times).
In July 2012, imported capital products that compete against domestic producers will face a 14 percent tariff and those that do not have a domestic substitute will be levied a 2 percent tariff. (NASDAQ)
Overall, the country continues to make it difficult for private companies to do business, which is hurting the nation’s investment climate.
Argentina’s protectionist trade measures are upsetting its international allies and trading partners. And the international community has not sat silent in response—with both the European Union and World Trade Organization (WTO) challenging the South American nation’s unwise moves.
On May 25, 2012, the United States, European Union, Australia, Israel, Japan, South Korea, New Zealand, Norway, Panama, Switzerland, Taiwan, Thailand and Turkey, issued a statement requesting Argentina remove or end “import restrictive measures and practices,” or provide explanation why the policies do not conflict with WTO rules.
The statement expressed “continuing and deepening concerns regarding the nature and application of trade-restrictive measures taken by Argentina.” The WTO members say that the measures are negatively impacting imports into Argentina for multiple nations and request that Argentina take steps to address their concerns. (EUBusiness)
It remains to be seen how President Kirchner and the Argentine government will respond but the country appears to be continuing down its chosen economic path of import restriction and substitution.
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