Creative protectionism: Argentina requires firm-level balanced trade

The Economist describes some very unusual trade policies implemented by Argentina:

Argentine manufacturers have been booming ever since the 2001 crash. Over most of that period, a cheap peso has ensured their competitiveness. But since 2005 inflation has been in double digits. As the trade surplus has dwindled, Cristina Fernández, the president, has beefed up her industrial policy. According to Global Trade Alert, a database of restrictions on international commerce, Argentina now imposes more trade limitations deemed “harmful” than any country save Russia…

On the import side, Argentina cannot raise tariffs on its own because it belongs to the Mercosur customs union. So it is resorting to informal tools. Its main method is “non-automatic licensing”, a tactic recognised by the World Trade Organisation that lets countries delay imports for 60 days.

Argentina has made no pretence of honouring that time period. In January it expanded the list of products requiring licences from 400 to 600. It was a limit on phone imports that led Research in Motion to hire Brightstar to make BlackBerrys in Argentina (tax incentives then led the firm to Tierra del Fuego). Other affected goods include toys, pharmaceutical ingredients, tyres, fabrics, leather and farm machinery. On September 15th Argentina blocked imports of books, and over 1m piled up at the borders. Imports of Harley-Davidson motorcycles are frozen until 2012.

For firms that refuse to (or cannot) move production to Argentina, the government offers another option: deals to export goods worth at least as much as a company’s imports. In January customs officials stopped letting Nordenwagen import Porsches. Its cars languished in port for three months before the firm succumbed to a deal. Since its owners also possess Pulenta Estate, a vineyard, they agreed to launch a new line of mass-market wines for export, erasing the family’s trade deficit. They are also considering canning fruits. “It’s not the same margins as fine wines, but it takes time and investment. We’re trying to make it profitable,” says Eduardo Pulenta, the company’s export manager. “We’ll keep working to import cars. That’s what we know how to do.”


The policy was adopted in March. Here’s the Global Trade Alert entry from July, which relies on Spanish-language news stories. Here’s an English-language story from April. Thanks to Bernardo Astarloa, who passed along this Spanish-language story in Argentina’s La Nación. It details the products being exported by various car manufacturers in exchange for importing autos into Argentina:

  • Porsche: wine and olive oil
  • Hyundai: peanuts and soy biofuels
  • BMW: rice and leather upholstery
  • Alfa Romero: biofuel
  • Kia: auto parts, plastics, refrigerators
  • Mitsubishi: mineral water, pet food, peanuts
  • Nissan: biofuels and soy

An Argentinian commenter at the Economist post argues that these policies don’t add up to much, but their novelty is certainly notable!

1 thought on “Creative protectionism: Argentina requires firm-level balanced trade

  1. Bernardo

    Follow-up: Interestingly, what seems to be happening is that exporters sell their balance to an importer, so that the importer can present it as own exports. So a secondary market for export balances has emerged, with intermediaries and everything. Effectively, then, there are no new exports but a reallocation of existing ones through “rights to export” or directly by the importer buying the goods domestically and selling them abroad.

    Nice experiment…


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