Non-tariff measures are generally defined as policy measures, other than ordinary customs tariffs, which may have economic repercussions on international trade in goods, modifying the volume of transactions, prices or both (UNCTAD/DITC/TAB/2009/3)”.[1]
Tariff measures arise in the development of international trade as a kind of international “rules of the game” in relation to their commercial relationship. But these rules are not imposed by a particular country in isolation or by simple decision of the country itself, but rather, they were opportunely generated in harmony and with the approval of the participating countries, through supranational organizations that became the basis of treaties, rules and regulations for the operation of international trade.
We are talking here then, about supranational organizations that, beyond contributing to a normal and equitable development of international trade, established rules of universal application by which the entire international legal structure is governed, in relation to the topic at hand.
The supranational bodies we are talking about emerged after the Second World War. But each country obviously has its own. In our case, it is the Constitution of the Argentine Nation, modified in 1994. This is the date on which the jurisprudential conflict over the hierarchy of international treaties was normalized.
International transactions are regulated by supranational bodies, basically through the rules of the GATT. To this end, all alternatives are provided for by the relevant legislation. One of them concerns restrictions on international trade.
While it is desirable for every country to be a dynamic player on the international stage, it also faces restrictions when it comes to carrying out a commercial transaction.
In principle, the permitted restrictions are those called "tariff" restrictions, which may be ad valorem or specific, whether they are made by a percentage calculation on the value of the transaction, or a fixed sum, respectively.
So far we have talked about restrictions agreed upon by all actors in international trade through the use of common rules, emanating from the agreement known as GATT, General Agreement on Trade and Taxes, and on which the legal structure of international trade is based.
To understand the system of non-tariff restrictions that Argentina manages, it is essential to analyze it as an attempt to solve the range of problems that the country suffers from the point of view of economic, monetary and financial policy.
The SIMIS [2] and the exchange rate problem
…And Argentina decided to correct the exchange rate problems by intervening in foreign trade.
In the beginning it was the DJAI [3] –advance import declaration- in 2012, literally import permits.
As expected, the DJAI received a negative ruling from the WTO, in response to repeated complaints from the United States, the European Union and Japan, for violating Article XI of the GATT and considering them harmful to foreign trade.[4] For this reason, they were repealed in 2015, implementing a new system, SIMI (comprehensive import monitoring system), giving rise to automatic and non-automatic import licenses.
It is not a matter of protectionism or defense of the national industry, but rather a foreign exchange restriction, Elizondo describes. "The SIMI can be diverted to restrict imports due to exchange factors: it is not stated that it is to reduce the demand for dollars, but in practice, that is the reason."
And we all know it. Import barriers are nothing new in Argentina. The country has always been in the top 10 of the world's nations with the lowest import/GDP ratio. In the world, imports account for 30% of the product, while here they account for 14%: we import few, we have very high tariffs and also non-tariff barriers.
A situation that has resulted in long, tedious and uneconomical precautionary measures that companies have had to take.
Import licenses [5]
Import licensing remains one of the main elements of trade policy in Argentina. All goods imported for final consumption are subject to an import licensing requirement, whether automatic or non-automatic. The lists of products subject to the various licenses are updated without a predetermined periodicity, as circumstances require, so the number of products subject to licenses varies frequently.
In 2020, 14,3% of the tariff universe was subject to non-automatic licensing, which is a substantial increase compared to 2012, when only 6% was subject to non-automatic licensing. As for the products affected by this measure, these have not changed substantially since 2012. The majority of non-automatic licensing continues to affect textiles, machinery and equipment, and common metals.
Excessive discretion of officials
There are operational situations that are disconcerting and generate conditions that threaten the healthy development of foreign trade operations. Scenarios that are not even framed as restrictions, but which ultimately are. Such is the case of, as the title indicates, the excessive discretion of officials, at the time of considering themselves extremely rigid in apparent compliance with the law, when in reality it is nothing more than a show of power at the very least, if not a possibility of corruption is glimpsed, without ruling out ineffectiveness. Such is the case of the arrest of the office. The delay in the clearance of goods generates million-dollar losses for the trade and industry of our country every year. If you want to see examples, see: “The critical moment of an import: the delay in clearance by Julio Carlos Lascano[6]"
Exports – Withholdings
Although there are withholdings (although not as much), in the case of Argentina the interventions are much deeper and for more than a decade now the export, especially of products from the land, of those products that without labor that adds value, are affected by the interventionist and tax-collecting hand of the State.
The so-called "retentions" are actually customs duties applicable to exports, as clearly stated in Article 724. - The export duty taxes exports for consumption. (Law 22415)
Mobile retentions
Withholdings: are the export duties levied on goods destined for foreign countries. It has been said, with little reason, that withholdings are increased to better distribute wealth, when this is not the objective that the law sets for these taxes. This is what Resolution 24 was intended to be under the title of "Bill on Withholdings and Creation of Social Redistribution Fundl«.
Resolution 125/2008 as a precedent for current prohibitions
“Let history judge me. I apologize if I am wrong. I vote… My vote is not positive, my vote is against.” Julio Cobos, Vice President of the Argentine Republic. (2008)
On Friday, February 29, 2008, Guillermo Moreno presented to Néstor Kirchner the idea of imposing a 63% retention on soybeans and faced with this scenario, Martín Lousteau requested a few days to present an alternative and prepared the scheme of mobile retentions, according to the story.
This was the birth of the controversial resolution 125, which established the determination formula applicable to certain tariff items corresponding to cereals and oilseeds. y which kept the country in suspense during that year. But especially the night that it was debated in the Senate of the Nation and when Julio Cobos broke the tie with his now famous phrase: "My vote is not positive."
The national Constitution in its articles 4, 17, 51 and 75 is very specific: taxes are imposed by the National Congress, with exclusive initiative in the Chamber of Deputies, hence the impossibility of the Executive Branch in this regard. While 76:
Article 76. CNA: It's prohibited the legislative delegation to the Executive Branch, except in certain matters de administration or de public emergency, with a fixed term for its exercise and within de the bases de the delegation established by Congress.
One of the matters in which the impossibility of delegation in the broad sense is not discussed is precisely in tax matters, since contributions not only arise from the law, but must also begin their process before the Chamber of Deputies.
However, the Argentine Government continues with the same interventionist methodology to the point of prohibiting the export of certain cuts of beef.
The so-called “Cepo a la carne” (Meat Clampdown) began with export suspensions. And it continues.
Argentina uses a series of requirements for exporting, such as exporter registrations and Foreign Sales Declarations (DJVE), which are used to register exports of some agricultural products. The use of DJVE, which aims to achieve a more fluid inflow of foreign currency and to know in advance the projected volume of exports, was modified several times between 2012 and 2021.
Currently, all Argentine exports are subject to export duties, the rates of which are They range from 0% to 33%. Between 2012 and 2021, the products subject to export duties, as well as the rates, have been modified several times.
Export duties are an important source of tax revenue; export duty collections increased progressively until reaching a peak in 2019.
In 2020, export tax revenues decreased due to the reduction in rates and export volumes due to the health crisis, and represented 13,5% of SNPF tax revenues, 5,7% of total revenues, and 12,7% of the total value of exports. As Argentina is a "major exporter" (with a share of total world exports exceeding 5%) of certain cereals, oilseeds and oilcakes, and vegetable oils, the use of sometimes high export duties (such as for soybeans), could affect to some extent the terms of trade for these products.
In summary
Having highlighted some of the most important and relevant practices regarding the restrictions imposed on foreign trade by the National State. And, from the perspective of the Foreign Trade Directorate under my charge, of a city in the interior of the province of Buenos Aires (Pergamino), whose greatest dependence on the development of international trade is based on the production of the land and its related industries, Every obstacle that arises for the local exporter and importer is of vital importance..
It is not only about the economic difficulty, but also about all the vicissitudes that the businessman must go through to complete the bureaucratic framework that arises from the regulations, in order to be able to frame each operation.
This would not be the biggest problem if it were understood that it would at least benefit the development of the country's foreign trade. But this is definitely not the case.
It is certainly safe to say that every regulation that stands in the way of trade development has negative consequences. Not only for local entrepreneurs, but it also restricts the possibility of generating a higher level of business by discouraging the large mass of entrepreneurs and businessmen with a low turnover who could enter the international market.
It is well known that the constant changes and modifications in the regulations of a country, which, like ours, constantly oscillates between one crisis and another, generate a level of legal uncertainty that also discourages the possibility of receiving foreign capital investments.
Pergamino is a city that has been a recipient of investments. Its geographical position places it in a privileged place for the development of businesses that are related in one way or another to the activities of primary production. But little by little, these investments have had to change their central work activity or, the parent companies have become disassociated from the business units that operated in our city.
Not only because of the specific restrictions I have mentioned here, but also, and with great emphasis, the regulations of the foreign exchange market, which, although it has not been the subject of this work, is one of the pressing problems of our country.
Given the relationship between the powers of the State, between the political and the legal, without leaving aside the question of the exercise of justice, there are no easy, much less free, solutions in sight to reposition Argentina in the global concert of nations.
Today, tax withholdings and other types of restrictions on foreign trade are based on the possibility of generating foreign currency income for the National Treasury. They do not promote the development of trade or protect national industry, and much less are they based on a long-term plan that justifies disinvestment and the loss of genuine jobs that achieve the development of a country in the search for social well-being. This is the ultimate goal that should be the basic motto of any government.
What else is the role of the State?
Although it may seem that these regulations do not reach the core of the country's trade, throughout its length and breadth, in all the different realities that Argentina houses, I can affirm that they do. Only through the experience lived in 23 years of management at the head of the aforementioned Foreign Trade Directorate, has it been possible for me to verify the moments of boom and deterioration of the terms of trade of international trade.
Export duties affect profit margins, as do withholding taxes, and most restrictions, in one way or another, whether import or export, hinder the normal development of a business.
International trade is a business, just like any other. Anyone who sells or buys abroad expects to make a profit.
How is it that private companies (because they are the ones that generate wealth) have less and less room to maneuver just to supply the treasury coffers of the country that hosts them?
How is it that cutting off inputs to production is a benefit for the business sector and the development of the country? Just to avoid consuming foreign currency?
These and many other concerns of the same nature are what motivate this document. It is brief in content, since the subject matter is not exhausted, but on the contrary, multiplies in trying to arrive at a coherent response oriented towards the healthy development of a country with the characteristics of Argentina.
It is not because of arbitrariness or excessive indulgence on the part of countries that international treaties promote freedom of international trade, but because it is the only way of generating genuine foreign currency in a country.
Any action that generates unnecessary restrictions and obstacles to trade has as its sole objective immediate results in a global context in which immediacy clashes with planning, development and therefore the possibility of belonging to a country standard that today describes us as “stand alone”.
Araceli Campisteguy She is Director of Foreign Trade of Pergamino
