A Protectionist Policy and Issues Surrounding It - Essay Example

Ever since the 2008 economic crisis, Argentina has been employing protectionist measures, bilaterally or multilaterally, and continues to add more and more items to its list of goods subject to non-automatic import licensing requirements. Under non-automatic licensing requirements, importers need to approach authority for the pre-registration and pre-approval of all imports into the country (USTR, 2012). Over time, rather than eliminating these measures, Argentina brought almost 600 items that include textiles, consumer electronics, bicycle parts, glass, metallurgical products, and many more under the ambit of non-automatic import licensing procedures from February 1, 2012. The new requirement served two purposes: firstly, discouraging importers with lengthy and expensive customs procedures and secondly, strengthening the domestic economy by supporting local producers. This has impacted many countries worldwide including European Union, the US, Japan, Mexico for they will not be able to export goods to Argentina. 

Arguments for Setting Such Policy

It is important to note that Argentina, apart from being a WTO member, is also a member country of the Mercosur Customs Union and cannot arbitrarily change its tariffs. That is why it has resorted to a novel practice of imposing a non-automatic import licensing system for all goods precisely to circumvent WTO and Mercosur free trade rules (Bendini, 2012).  Mercopress (2012), a South Atlantic News Agency, reports that Argentina has imposed new restrictions on imports in the garb of non-automatic import policy to safeguard domestic producers of the country. 

European Union Substantially Impacted

The European Commission is of the view that licensing procedures adopted by Argentina are cumbersome, lengthy taking more than six months or longer (WTO prescribes 60 days) to complete. It also lacks transparency. Even goods that are not subjected to non-automatic import licensing procedures need to pass through a long and tiresome preapproval import procedure. In 2011, European Union export to Argentina was valued at EUR8.3 billion. Obviously, the EU has been impacted significantly due to this protectionist policy of Argentina to curb imports (Bendini, 2012).  According to European trade commissioner, Karel De Gucht, the Argentine restrictions on imports have impacted a wide range of European exports of products such as mobile phones, laptops, cars, and household appliances. De Gucht argued that as many as 19 WTO members have raised concerns against the protectionist policies of Argentina and they would initiate a consultative process to solve the issue and if not resolved, then the EU would approach WTO to establish a panel of arbitrators to decide on the legality of Argentine action (Moss, 2012).

Several Other Countries also Affected

It is pertinent to note that Mexico, Japan, and the US have filed their separate complaints with the global trade arbiter regarding Argentina's new import policies (ICTSD (2012).  In April 2012, at the Import Licensing Committee Meeting of WTO, several member countries that included Japan, Australia, the EU, Turkey, Thailand, Norway, the US, Costa Rica, New Zealand,  Colombia, Peru, Chinese Taipei, Korea, Canada, and Switzerland complained that their exports to Argentina had gone down due to Argentina's licensing requirements. They further complained that the Argentinean government had put almost 600 products under a list that required individual approval for import (WTO, 2013).  In 2012, similar concerns were raised by the office of the United States Trade Representative's office and appealed to Argentina to eliminate such import restrictions (USTR, 2012).  Bendini (2012) argues that all these measures have a substantial impact, regardless of their origin, to the tune of around EUR50 billion.

The benefit to Argentine Industries

Débora Giorgi, the industry minister, of Argentina, categorically says, “We are defending our domestic market from unfair competition. We cannot permit any damage to our national industry which would mean a deterioration of labor conditions for our workers” (Webber, 2011).  From the statement of the industry minister, it is quite clear that these protectionist measures have been taken to benefit the domestic manufacturers of Argentina.

From the above, it is amply clear that Argentina’s protectionist policy has created a significant impact on the manufacturers of the European Union, Japan, the US, Mexico, Australia, New Zealand, Turkey, Norway, Canada, Switzerland, and many more. The industries in the field of consumer electronics, glass, bicycle, metallurgy, food, agriculture, and several others have been affected. Since almost 600 items have been covered restricting their imports by Argentina, it has immensely benefitted the domestic manufacturers of the country at the cost of other nations.