WTO critical of Argentina

Says the country’s restrictive policies could fuel price pressures

The World Trade Organization added its voice yesterday to criticism of Argentina’s inflation data, and said the country’s restrictive trade policies could fuel price pressures.

“The acceleration of inflation is a source of concern, although it does not appear to be fully reflected in the official data,” the WTO said in a survey of Argentina’s trade policies.

The inflation data took into account only variations in the consumer price index in Greater Buenos Aires, the document said.

The documents were drafted by the WTO secretariat for this week’s periodic country review at the WTO headquarters in Geneva.

Trade policy reviews, which come around every six years for developing countries like Argentina, are a very rare opportunity for WTO officials to pass comment. Normally they remain entirely neutral, leaving the WTO’s 159 members to challenge each other.

Argentina has already been reprimanded by the International Monetary Fund for the quality of its data, and it has been given until September 29 to take action.

The WTO also stated that while the country’s export policy was seeking to stabilise the price of exportable products in the domestic market by applying duties, a policy of discouraging imports could push up the price of imported products, affecting inflation.

According to official data, Argentina’s inflation rate was 0.5 percent in February, down from 1.1 percent in January. But the figures are widely disputed and private economists estimate consumer prices rose by 1.8 percent in February.

On the matter of their export policy, the organization stated that though the country wants to promote exports, their policy of trying to stabilize prices and have enough supply for the domestic market had been counterproductive to this aim.

With regard to their import regulation, the WTO pointed out that Argentina was using more non-tariff restrictions such as import licensing and registration requirements, but the clarity of some of its rules “ended to be undermined by the apparent lack of transparency.” The organization believed that the country’s unpredictable economic policies will have additional costs for the economy. And explained that many of the economic policies being implemented were aimed at short term objectives leading to a constant adjustment of policies which only accentuates the complexity of their commercial regulations.

The report cited a customs tax statistic to demonstrate the .5 percent customs value tax applied to the majority of imports with a value maximum of 500 dollars or the destination tax that has a value of 2 percent in the customs office. Argentina was also reproached for their automatic or none automatic licences, that are affecting an increasing amount of products, especially in the textile sector.

Five WTO members launched trade disputes against Argentina last year, alleging overly restrictive rules on goods imports. One of the five, Mexico, later withdrew its complaint after the two countries signed a pact on car imports.

But litigation brought by another three — the United States, European Union and Japan — is going ahead. The fifth, Panama, has made a wider-ranging complaint.

Between 2006-2011, Argentina created 57 anti-dumping measures but at the same time did not offer any compensatory measures during the same period, the WTO report stated. Argentina is the fourth biggest member that has the most anti-dumping measures in the WTO.

In response the government presented more than 35 pages defending its policies stating that the “country had been further developing an economic model based on social inclusion since 2003.” They stated that their policies were due to the “unfavourable international situation” that begun in 2008 and claimed that their economic policies have led to increasing levels of economic growth, greater competivity and a favourable evolution of all the social indicators.

Argentina will face a barrage of questions about its policies during the closed-door meeting yesterday and tomorrow, and WTO members have already sent written questions, resulting in a confidential 322-page dossier of Argentina’s responses.

The Foreign Ministry’s press release defended Argentina’s policies saying that the country had been helping world commerce by contributing to the global aggregate demand as can be seen by the country’s GDP growth rates and trade volume increase. The ministry said that the majority of the 35 WTO member countries had congratulated Argentina’s strong economic performance in the last few years.

— Herald with DyN, Reuters