RESTRICTEDWORLD TRADE
ORGANIZATIONWT/TPR/S/47
2 October 1998
(98-3768)
Trade Policy Review Body
TRADE POLICY REVIEW
ARGENTINA
Report by the Secretariat
This report, prepared for the second Trade Policy Review of Argentina, has been
drawn up by the WTO Secretariat on its own responsibility.  The Secretariat has,
as required by the Agreement establishing the Trade Policy Review Mechanism
(Annex 3 of the Marrakesh Agreement Establishing the World Trade
Organization), sought clarification from  the Government of Argentina on its
trade policies and practices.
Document WT/TPR/G/47 contains the policy statement submitted by the
Government of Argentina
Note: This report is subject to restricted circulation and press embargo until the end of the meeting
of the Trade Policy Review Body on Argentina.Argentina WT/TPR/S/47
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CONTENTS
Page
SUMMARY OBSERVATIONS xiii
(1) The Economic Environment xiii(2) Trade Policy Framework xiii(3) Trade Policy Developments xiv
(4) Sectoral Policy Developments xvi
(5) Trade Policies and Foreign Trading Partners xviii
I. ECONOMIC ENVIRONMENT 1
(1) Introduction 1(2) Recent Economic Developments 1
(i) Growth, incomes and employment 1
(ii) Prices 6(iii) Public finances 6
(iv) Exchange rate developments and the money supply 7
(v) Balance-of-payments 8
(vi) External debt 10
(3) Developments in Merchandise Trade 11
(i) Composition of trade 12
(ii) Direction of Trade 12
(4) Trends and Patterns in Foreign Investment 17
II. TRADE AND INVESTMENT REGIME:  FRAMEWORK AND OBJECTIVES 19
(1) Introduction 19(2) General Framework 19(3) Structure of Trade Policy Formulation 20
(i) Legislative and executive branches of government 20
(ii) Advisory bodies 22
(4) Trade Policy Objectives 22
(i) General trade policy objectives 22
(ii) Sectoral trade policy objectives 22WT/TPR/S/47 Trade Policies Review
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(iii) The Uruguay Round and the WTO agenda 23
(5) Trade Laws and Regulations 25
(6) Trade Agreements and Arrangements 26
(i) Multilateral agreements 26
(ii) Regional agreements 26
(iii) Bilateral and other arrangements 32
(7) Trade Disputes and Consultations 33
(i) Dispute settlement under the GATT/WTO 33
(ii) Disputes outside WTO 37
(8) Investment Policy Framework 37
III. TRADE POLICIES AND PRACTICES BY MEASURE 41
(1) Overview 41
(2) Measures Directly Affecting Imports 42
(i) Registration and documentation requirements 42
(ii) Tariffs 44
(iii) Customs valuation and preshipment inspection 53(iv) Variable import levies 55
(v) Other levies and charges 56
(vi) Import prohibitions 60
(vii) Import licensing 61
(viii) Import quotas 61(ix) State trading 65
(x) Countertrade 65
(xi) Standards and other technical requirements 68
(xii) Government procurement 72
(xiii) Local-content requirements 74(xiv) Anti-dumping and countervailing measures 75
(xv) Safeguard actions 78
(3) Measures Directly Affecting Exports 79
(i) Export taxes, charges and levies 79
(ii) Index prices 80(iii) Export prohibitions 80
(iv) Export licensing 80
(v) Access-related export quotas 80
(vi) Export subsidies 81
(vii) Duty and tax concessions 82(viii) Export finance 83Argentina WT/TPR/S/47
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(ix) Export insurance and guarantees 83
(x) Export promotion and marketing assistance 84
(xi) Export performance requirements 84
(xii) Free-trade and export-processing zones 84
(4) Measures Affecting Production and Trade 85
(i) Adjustment and regional assistance 85
(ii) Assistance for research and development 86(iii) Production assistance and tax concessions 87
(iv) Competition and consumer policy 89
(v) Enforcement of intellectual property rights 90
(vi) Other measures (environmental) 95
IV. TRADE POLICIES BY SECTOR 97
(1) Overview 97(2) Agriculture, Fisheries and Forestry 100
(i) Agriculture (including livestock) and fisheries 100
(ii) Forestry 111
(3) Mining and Energy 112
(i) Mining other than energy 112
(ii) Energy 114
(4) Manufacturing 117
(i) Food processing 120
(ii) Textiles and clothing 121
(iii) Footwear 122
(iv) Motor vehicles 124
(5) Services 128
(i) Overall Commitments under the General Agreement on Trade
in Services and MERCOSUR 130
(ii) Financial services 131
(iii) Telecommunications 136
(iv) Audio-visual and broadcasting 139
(v) Transport 139(vi) Construction 142
REFERENCES 143WT/TPR/S/47 Trade Policies Review
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CHARTS
Page
I. ECONOMIC ENVIRONMENT
I.1 Trade in goods and non-factor services, 1980-97 4
I.2 Indices of real (RER) and nominal exchange rates, 1989-97 9
I.3 Product composition of merchandise trade, 1992 and 1996 13
I.4 Argentina's trade with Latin America, 1992-96 14
I.5 Argentina's trade with MERCOSUR by sector, 1992-96 15I.6 Merchandise trade by main origin and destination, 1992 and 1996 16
I.7 Net inflows and inward stock of foreign direct investment, 1992-97 18
III. TRADE POLICIES AND PRACTICES BY MEASURE
III.1 Distribution of MFN tariff rates, 1996, 1998 and 2006 46
III.2 Tariff escalation by 2-digit ISIC industry, 1998, 2001 and 2006 49
III.3 Share in trade-related taxes in value trade and total collection 56
III.4 Structure and evolution of revenue from domestic and other taxes
affecting foreign trade 57
III.5 Anti-dumping cases, 1991-97 76
IV. TRADE POLICIES BY SECTOR
IV.1 Evolution of merchandise exports  by main product groups, 1991-97 98
IV.2 Tariff average by 2-digit ISIC industry, 1995, 1998 and 2006 99
IV.3 Agriculture and livestock production, 1992 and 1996 101IV.4 Motor vehicle industry developments, 1991-96 125
IV.5 Value added, employment and trade in services, 1991-97 129
IV.6 Nominal interest rates and spread, 1993-98 (February) 135Argentina WT/TPR/S/47
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TABLES
Page
I. ECONOMIC ENVIRONMENT
I.1 Economic developments, 1990-97 2
I.2 Structure of the economy, 1990-97 4
I.3 Balance-of-payments, 1990-97 10
I.4 External debt structure, 1991-97 11
III. TRADE POLICIES AND PRACTICES BY MEASURE
III.1 Exceptions to the MERCOSUR CET, 1998 47
III.2 Structure of charges on imports of selected products, 1998 58
III.3 Main import licensing or prior authorization requirements in force, 1998 62III.4 Allocation of import quotas for motor vehicles 64
III.5 State involvement in enterprises in Argentina, 1998 66
III.6 Threshold values for selecting public tender procedures 73
IV. TRADE POLICIES BY SECTORIV.1 Main features of the Argentinian tariff schedule, 1998 and 2006 100
IV.2 Manufacturing in Argentina, 1996 118
IV.3 Structure of the banking and finance system, 1997 (May) 131WT/TPR/S/47 Trade Policies Review
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APPENDIX TABLES
Page
II. TRADE AND INVESTMENT REGIME:  FRAMEWORK AND OBJECTIVES
AII.1 Notifications made by Argentina under the WTO legal framework, May 1998 149
AII.2 Notifications under the WTO legal framework, due for 1998 154
III. TRADE POLICIES AND PRACTICES BY MEASURE
AIII.1 Tariff escalation and ta riff ranges, 1998 and 2006 155
AIII.2 Anti-dumpi ng and countervailing cases, August 1992-December 97 158
AIII.3 Anti-dumpi ng and countervailing cases against Argentine exports, 1991-96 163
IV. TRADE POLICIES BY SECTORIV.1 Tariff rates for Argentina, by ISIC category, 1998 164
IV.2 Summary of Argentina's sector specific commitments under the GATS 168Argentina WT/TPR/S/47
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GLOSSARY
Advisory Council on Foreign Trade Consejo Asesor de Comercio Exterior, CACE
Argentina Film Institute Instituto Nacional de Cine y Artes Audiovisuales
Argentine Accreditation Agency Organismo Argentino de Acreditación
Argentine Centre for Macroeconomic Studies Centro de Estudios Macroeconómicos de
Argentina , CEMA
Argentine Food Code Código Alimentario Argentino
Argentine Interconnected System Sistema Argentino de Interconexión
Argentine Standards Institute Instituto Argentino de Normalizacón, IRAM
Argentine Technology Fund Fondo Tecnológico Argentino, FONTAR
Automotive Industries Association Asociación de Fábricas de Automotores, ADEFA
Central Bank of Argentina Banco Central de la República Argentina, BCRA
Chamber of Argentine Exporters Cámara de Exportadores de la República
Argentina, CERA
Chamber of Deputies Cámara de Diputados
Council of Magistrates Consejo de Magistratura
Customs Administración Nacional de Aduanas, ANA
Directorate General of Taxation Dirección General Impositiva, DGI
Directorate of Technology, Quality and Industrial
PropertyDirección de Tecnología, Calidad y Propiedad
Industrial
Federal Administration of Public Revenue Administración Federal de Ingresos Públicos ,
AFIP
Federal Council of Fisheries Consejo Federal Pesquero
Federal Hydrocarbon Authority Ente Federal de Hidrocarburos
Federal Radio Broadcasting Committee Comité Federal de Radiodifusión, COMFER
General Customs Directorate Dirección General de Aduanas, DGA
Head of Cabinet Jefe de Gabinete de Ministros
Investment and Foreign Trade Bank Banco de Inversión y Comercio Exterior, BICE
Judge's Jury Jurado de Enjuiciamiento
League for Consumer Defence or Consumer
ActionLiga de Defensa del Consumidor, o Acción del
Consumidor, ADELCO
Ministry of Defence Ministerio de Defensa
Ministry of Economy, Works and Public Services Ministerio de Economía, Obras y Servicios
Públicos, MEOSP
Ministry of Education and Culture Ministerio de Cultura y Educación
Ministry of External Relations, International Ministerio de Relaciones Exteriores, ComercioWT/TPR/S/47 Trade Policies Review
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Trade and Worship Internacional y Culto
Ministry of Interior Ministerio del Interior
Ministry of Justice Ministerio de Justicia
Ministry of Labour and Social Security Ministerio de Trabajo y Seguridad Social
Ministry of Public Health and Social Action Ministerio de Salud y Acción Social
Mixed Technical Committee of Maritime Front Comisión Técnica Mixta del Frente Marítimo
Multilateral Agreement on Maritime Transport Acuerdo de Transporte Marítimo Multilateral
National Administration of Food Health and
QualityServicio Nacional de Sanidad y Calidad
Agroalimentaria, SENASA
National Agency for the Promotion of Science
and TechnologyAgencia Nacional de Promoción Científica y
Tecnológica, AGENCIA
National Commission for Posts and Telegraphs Comisión Nacional de Correos y Telégrafos,
CNCT
National Commission for the Protection of
CompetitionComisión Nacional de Defensa de la
Competencia, CNDC
National Commission for Transport Regulation Comisión Nacional de Regulación del Transporte
National Commission on Foreign Trade Comisión Nacional de Comercio Exterior, CNCE
National Council of Scientific and Technical
ResearchConsejo Nacional de Investigaciones Científicas
y Técnicas, CONICET
National Customs Administration Administración Nacional de Aduanas, ANA
National Directorate of Domestic Trade Dirección Nacional de Comercio Interior
National Drugs, Food and Medical Technology
AdministrationAdministración Nacional de Medicamentos,
Alimentos y Tecnología Médica
National Fisheries Fund Fondo Nacional Pesquero, FONAPE
National Fund for Electric Energy Fondo Nacional de la Energía Eléctrica
National Institute for Agricultural and Livestock
TechnologyInstituto Nacional de Tecnología Agropecuaria,
INTA
National Institute of Industrial Property Instituto Nacional de Propiedad Industrial, INPI
National Institute of Industrial Technology Instituto Nacional de Tecnología Industrial, INTI
National Institute of Research and Development
of FisheriesInstituto Nacional de Investigaciones y
Desarrollo Pesquero, INIDEP
National Mortgage Bank Banco Hipotecario Nacional, BHN
National Procurement Office Oficina Nacional de Contrataciones
National Regulatory Agencies for Electricity Ente Nacional Regulador de la Electricidad,
ENRE
National Regulatory Agencies for Gas Ente Nacional Regulador del Gas, ENARGAS
National Securities Commission Comisión Nacional de ValoresArgentina WT/TPR/S/47
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National Seeds Institute Instituto Nacional de Semillas, INASE
National Telecommunications Commission Comisión Nacional de Comunicaciones, CNC
National Telecommunications Committee Comité Nacional de Telecomunicaciones, CNT
National Treasury Tesoro Nacional
Office of the Attorney-General Ministerio Público
Office of the Auditor-General Sindicatura General de la Nación, SIGEN
Official Bulletin Boletín Oficial
Permanent Bicameral Commission Comisión Bicameral Permanente
Regional Valuation Centres Centros Regionales de Valoración, Secretaría del
Interior
Scientific and Technical Cabinet Gabinete Científico Tecnológico, GACTEC
Secretariat of Agriculture, Livestock, Fisheries
and FoodSecretaría de Agricultura, Ganadería, Pesca y
Alimentación, SAGPA
Secretariat of Communications Secretaría de Comunicaciones
Secretariat of Coordination Secretaría de Coordinación
Secretariat of Culture Secretaría de Cultura
Secretariat of Economic Planning Secretaría de Programación Económica
Secretariat of Energy Secretaría de Energía
Secretariat of Finance Secretaría de Hacienda
Secretariat of Industry, Trade and Mining Secretaría de Industria, Comercio y Minería
Secretariat of International Economic Relations Secretaría de Relaciones Económicas
Internacionales
Secretariat of Natural Resources and Human
EnvironmentSecretaría de Recursos Naturales y Ambiente
Humano, SRNAH
Secretariat of Natural Resources and the
EnvironmentSecretaría de Recursos Naturales y Dessarrollo
Sustentable
Secretariat of Public Works and Services Secretaría de Servicios y Obras Públicas
Secretariat of Science and Technology Secretaría de Ciencia y Tecnología, ScyT
Secretariat of Social Development Secretaría de Desarrollo Social
Secretariat of Sports and Tourism Secretaría de Deportes y Turismo
Special Tobacco Fund Fondo Especial del Tabaco, FET
Superintendency of Financial and Exchange
EntitiesSuperintendencia de Entidades Financieras y
Cambiarias
Supreme Court of Justice Corte Suprema de Justicia
Under-secretariat of Agriculture, Livestock, and
FoodSubsecretaría de Agricultura, Ganadería y
Alimentación
Under-secretariat of Fisheries Subsecretaría de PescaWT/TPR/S/47 Trade Policies Review
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Under-secretariat of Food and Markets Subsecretaría de Alimentación y Mercados
Valuation Division División Valoración, Secretaría Metropolitana
Wholesale Electricity Market Management
CompanyCompañía Administradora de Mercado
Mayorista Eléctrico Sociedad Anónima,
CAMMESAArgentina WT/TPR/S/47
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SUMMARY OBSERVATIONS
(1) THE ECONOMIC ENVIRONMENT
1. Since the early 1990s, Argentina has
pursued its economic reform and restructuring
process with notable success.  Themacroeconomic disciplines introduced under
the Convertibility Plan of 1991, together with
built-in initiatives in the areas of trade
liberalization, de-regulation, privatization as
well as regional integration developments,have allowed for a doubling of real per capita
income since 1990 and led to price stability
(less than one per cent inflation in the last two
years).  These basic changes permitted a fast
recovery from the impact of the 1994 Mexicanfinancial crisis, although not without some
major adjustments in the banking sector.
Unemployment remains relatively high, but the
labour market shows some signs of
improvement.  There has been a marked
improvement in public finances, resulting from
major tax reforms and the elimination of anumber of fiscal supports to various sectors of
the economy.  Nevertheless, in response to
periodic fiscal pressures, there have been
frequent adjustments to tariffs and the
statistical tax;  while the thrust of the reformsremains unchanged, these policy adjustment
lend an appearance of some uncertainty to the
trade and investment regimes.  So far, there
are few signs that the Asian crisis has had any
serious impact on the Argentine economy, andthe reform programme, including banking
reforms after the financial crisis of 1995,
means that the economy is more resilient than
before;  however, any global slowdown would
inevitably have some spillover effects.
2. The success in reducing inflation owes
much to the currency board system, which has
prevented the monetization of fiscal deficits,
but has thrown the burden of macro-economic
management on to fiscal policy.  Initially, the
fixed exchange regime had a negative effect on
international competitiveness, but this hasbeen recovered mainly because of the
reduction in inflation and productivity gains
under the reform package.  Although current
account and merchandise trade deficitspersisted, these were maintained at
manageable levels, and international reserves
reached record levels by mid-1998 (eight
months of imports).  Although external debt
rose, the share of foreign debt of the non-
financial public sector has dropped; recourseto the issue of public bonds and titles has
increased.
3. Under the changed economic climate,
the far-reaching privatization programme and
various improvements in the regulatoryframework for investment have turned
Argentina into a major destination for foreign
direct investment.  This has further stimulated
the transformation of the Argentine economy,
contributing to the productivity gains.
4. The composition of trade has also
changed under the reforms: outward-looking
sectoral development has induced import
concentration in investment-related items,
while there has been a reduction in the
dominance of agricultural and agro-industrial
exports.  Since the establishment ofMERCOSUR, Brazil has become the largest
single market for Argentine exports.  The EU,
Brazil and the United States remain
Argentina's main suppliers, but imports from
East and South Asia have declined.
(2) T
RADE POLICY FRAMEWORK
5. Since the previous review, Argentina
has consolidated and continued to extend its
autonomous reforms in trade and related
policies, while pursuing greater integration inthe world economy through the completion
and implementation of the results of the
Uruguay Round, and in the sub-regional
economy through MERCOSUR and other
bilateral agreements.  As a result, Argentinahas become a more open and secure market
for trading partners.  While trade has grown
more rapidly within MERCOSUR, trade with
third countries has also expanded strongly.
Competition is expected to further intensify in
the Argentine market as tariff protection on
imports of sensitive items originating in otherMERCOSUR countries is to be largely
eliminated by the end of 1998.  In the nearWT/TPR/S/47 Trade Policies Review
Page xiv
future, this may entail further adjustments,
particularly in sectors such as sugar and
motor vehicles where the establishment of
common regimes was still pending at the time
of completion of this report.  MERCOSUR
negotiations for freeing trade in services, forwhich the framework was agreed in
December 1997, may be expected to have a
positive impact on the Argentine economy.
The expansion of the network of free trade
treaties within Latin America should extendthe regional market, but the exclusion of
"sensitive" items would reduce the benefits
from improved resource allocation across the
sub-region.
6. Among the more important extra-
regional initiatives is the Free-trade Area for
the Americas for which negotiations were
launched at the Second Summit of the
Americas in Chile in 1998 and are due to be
concluded by 2005.  A framework has also
been agreed between MERCOSUR and the
European Union for negotiations on anAssociation Agreement with an FTA as a long-
term goal.  Such regional initiatives indicate a
willingness of Argentina and MERCOSUR to
pursue wider market opening;  they also pose
a challenge to the WTO system to provideequivalent opportunities for negotiating trade
liberalization at the multilateral level through
the scheduled agricultural and services
negotiations, the built-in agenda and, perhaps,
a new, comprehensive round of multilateralnegotiations.
7. Since the previous Review, Argentina
has undertaken an extensive reform of its
legislative framework, driven by the adoption
of a new Constitution and the incorporation oftrade commitments at the regional and
multilateral levels.  In order to implement
WTO commitments, new legislation has been
adopted in a number of areas, including on
price bands (1996), preshipment
inspection (1997), patents (1995/96), data
exclusivity, industrial design and utilitymodels protection (1996), and sanitary and
phytosanitary standards (1997).  MERCOSUR
regulations have been adopted in areas such
as investment, anti-dumping, safeguards,sanitary and phytosanitary standards,
competition protection and trademarks.  In the
same context, further legislative reforms are
being considered for customs clearance,
standards, government procurement, anti-
dumping, export taxes, patents and copyrights,competition policy, trademarks and
copyrights, fisheries, hydrocarbons and
services.  In addition, Argentina has
autonomously adopted new legislation in the
area of consumer defence (1993, 1997).
8. Argentina has met regular
GATT/WTO notification requirements relating
to the legislation and responded to periodic
questionnaires in various areas.  However, the
transparency of the Argentine trade regimecould be further enhanced through timely
communication of the adoption of all trade
measures affecting the operation of
GATT 1994.   For example, a series of
measures have not yet been communicated to
the WTO, including variable import levies on
sugar, changes in statistical tax rates,increases in ad valorem duties on
footwear (1997) and on most tariff
items (1998), price bands (1996), import
quotas on certain paper products (period
1993-94), "mirror" export subsidies (period1992-93) and free-trade zones and similar
fiscal regimes.  Information on the regime of
minimum specific duties (textiles, clothing,
footwear) was only made available in the
context of the Dispute Settlement Mechanism.
(3) T
RADE POLICY DEVELOPMENTS
9. Since the previous review, Argentina
has been adapting its customs tariff to
converge progressively to MERCOSUR's
Common External Tariff (CET); this processwill bring a modest decrease in the average
MFN rate from 13.5% in 1998 to 11.1% in
2006.  Recourse to other forms of border
protection has been limited to a few
instruments and sectors.
10. Under the CET, Argentina's previous,
basic four-tier applied tariff structure is beingenlarged to a more disperse eleven-tier
system, with common rates of 0, 2, 4, 6, 8, 10,Argentina WT/TPR/S/47
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12, 14, 16, 18 and 20%; in 1998, the average
applied MFN tariff level was increased by
3 percentage points to offset the reduction of
the statistical tax rate (see below);  the
increase will apply only until 2000.  Peak
applied ad valorem rates, exceptions to thebasic structure, were reduced to 33%,
applying to imports of passenger motor
vehicles.  However, the precise level of duty
charged on certain types of automobiles,
sugar, textiles, clothing and footwear isdifficult to compute because of additional or
alternative para-tariff measures.  The CET
convergence process has reversed the earlier
trend towards reducing tariff escalation,
which is now more pronounced in virtually allsectors.
11. In the Uruguay Round, binding
commitments were expanded considerably to
cover the entire tariff; the ceiling was reduced
from 140% to 35%, implying an average gap
of over 20% between bound and applied rates.
Argentina's bindings are subject to a waiverunder GATT 1994.  Provisions for tariff
exemptions or concessions on imported inputs
have been revised with a view to promote
sectoral and/or regional development as well
as to meet input supply shortages withinMERCOSUR.  There is as yet no agreement on
any timetable for a common regime of
concessional entry under MERCOSUR.
12. Despite trade liberalization, as a
result of the growth of trade and efforts toimprove tax collection on imports, the share of
trade taxes in total tax revenues has risen in
recent years, reversing the trend noted at the
time of the previous review.  The rate of the
statistical tax, affecting non-MERCOSURorigin imports, has varied frequently
depending on the fiscal situation; in 1998 it
was reduced to 0.5% ad valorem and a
proposal was made to set maximum amounts.
A preshipment inspection regime was adopted
in 1997, but certain inputs for the automotive,
electronics and telecommunications industriesare exempt from such requirements. In 1996
price bands were introduced to monitor
invoicing practices of certain items.  Since the
early 1990s anticipated payment of VAT andthe profits tax has been required for imports.
Maximum rates for container handling fees
seem to differentiate between imports and
exports.
13. Since the last Trade Policy Review, no
new import prohibitions have been introducedon commercial grounds.  For contingency
protection, Argentina has become an
important user of anti-dumping measures,
mainly against imports from Brazil, China and
the EU; however, there has been a slightdeclining trend in the application of
provisional measures in recent years.
Countervailing measures and safeguards have
been applied in a few cases.  A few product-
specific measures have affected imports ofsugar, automobiles, textiles, clothing and
footwear.
14. Export prohibitions on commercial
grounds have been eliminated.  Export taxes,
now covering a few unprocessed products,
apply to ensure supplies to domestic
processors and to counter tariff escalation inexport markets; those on cattle-derived raw
materials are to be phased-out by the end of
1999.  Export licensing has been used to
administer tariff quotas related to access to
certain markets, such as sugar and beef and inthe United States, various meats and cheese in
the European Union and textiles and clothing
items.
15. Direct assistance has been provided to
exports under turnkey plant contracts andfrom Patagonian ports; the latter is to be
phased out by the year 2005. The drawback
regime now covers virtually all export items,
including most agricultural products;
maximum drawback rates were cut by half dueto fiscal constraints. Concessional rates for
export finance are limited to small- and
medium-sized producers of capital goods
under certain regional criteria. In addition,
since 1994, legislation authorizing the
establishment of free-trade zones has allowed
operators exemption from the payment ofduties and all internal taxes as well as from
taxes affecting basic utilities (such as
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Page xvi
and sewage).  Argentina is expected to bring
any measures considered as prohibited export
subsidies into line with relevant
WTO provisions by the year 2003.
16. The large-scale privatization,
franchising and de-regulation programme hasdramatically reduced the degree of State
involvement in the econom y.  Preference for
domestic bidders in government procurement
was eliminated and remaining provisions for
telecommunications equipment do not apply inpractice. In the light of the increasingly higher
degree of market concentration in the
economy, competition legislation has been
implemented more efficiently in recent years.
Consumer defense and conciliation actionhave become important issues, particularly in
relation to pricing by certain public utilities.
17. Restructuring and diversification as
well as regional, scientific and technological
development projects have been encouraged
through a complex network of fiscal, credit,
direct financial and technical assistanceavailable at national and/or regional level.
The form of assistance has varied depending
on the sector and the size of the beneficiary
firm.  There have been improvements in the
coordination in the use of a number of federaland regional incentives since 1994.
18. Wide-ranging legislative efforts have
been made recently to reinforce the protection
of intellectual property rights on patents and
utility models, thus paving the way for theimplementation of the provisions of the TRIPs
Agreement by the end of the transition period;
nevertheless, progress remains to be made in
enforcement of measures against software and
video tape piracy.
(4) S
ECTORAL POLICY DEVELOPMENTS
19. Government assistance for the
agriculture, livestock, forestry and fisheries
sectors has been falling and is now modest,mainly consisting of border measures, tax
breaks, subsidized credit and debt
rescheduling.  Nominal tariff protection standsat 9.5% in 1998, below the overall averagelevel.  General liberalization has reduced the
bias against the sector.  However, this process
will be partly reversed by full implementation
of the CET under which tariff protection for
the sector by will be reduced by another third
while industrial protection is maintained athigher levels, a situation similar to that under
the earlier import-substitution policy.  This
policy shift will only be partly offset by fiscal
incentives in form of deferrals of tax payments
and explicit tax breaks introduced toencourage structural adjustment and new
investment.  Subsidized credit has been made
available for regional development purposes .
20. Some sectors benefit from higher than
average assistance.  Thus, in addition to thead valorem tariff of 23% on imports of sugar,
variable import levies have been applied since
1992.  Tobacco has benefited from a price
support mechanism, which has been discussed
in the WTO Committee on Agriculture in
November 1997.  Special debt write-off
facilities are also available for the tobaccosector in certain provinces.  In its WTO
commitments, Argentina has made no use of
tariffication, tariff quotas, special safeguards
nor was any notification made of domestic or
export subsidies that would become subject toreduction commitments (except that the
tobacco price support, initially thought to be
de minimis,  is now subject to such
commitments).
21. In the Uruguay Round Argentina
obtained improved access to the US and
EU markets for several agricultural items;
however, certain factors have impeded making
full use of such improvements depending on
the item and the market.  In the meat sector, aparticular effort has been made to ensure
compliance with export-related sanitary
requirements, re-opening some export markets
for beef.
22. In the light of rapid expansion in
fisheries, efforts have been focused in
rationalizing operations of foreign vessels andrestraining overfishing of certain species.
Fiscal incentives in forestry were replaced byArgentina WT/TPR/S/47
Page xvii
direct subsidies for re-afforestation and
trimming.
23. The mining and energy sectors have
experienced a rapid, reform-led expansion
thus turning Argentina into an oil and gas
exporter; by the end of the century, ongoingmining projects may also produce exportable
surpluses.  Mining was assisted by the
introduction of an attractive framework of
investment incentives including tax breaks;
efforts have also been made to co-ordinateprovincial incentives and procedures at
federal level.  State involvement in oilfield
exploration, petrochemicals, electricity
generation and distribution, and gas
distribution has decreased.
24. Under the reform programme, the
manufacturing sector has experienced
increased concentration towards largeconglomerates, but the reforms have led to
important increases in labour productivity.
Nominal tariff protection of 13.8% in 1998
(including the three percentage point increaseto offset the reduction of the statistical tax)
stands slightly above the average level and
this will decline to 11.4% by 2001.  Since
1993, minimum specific duties have protected
domestic producers of textiles, clothing andfootwear;  in 1997 duties affecting footwear
were revoked but safeguards in the same form
were adopted, while ad valorem duties on this
item were increased concurrently.  Previously,
the manufacturing sector benefited fromspecific assistance schemes such as the
industrial specialization regime and tax breaks
for the purchase of capital goods, but these
have now been suspended for new contracts in
the light of fiscal constraints.
25. Liberalization in the automotive sector
on an MFN basis has been limited, but some
recent flexibility in the application of policies
has helped increase production and trade
while cutting car retail prices.  Complicated
protection measures, coupled by a managed
trade agreement with Brazil, remain in force;these include high peak tariffs for completely-
built up vehicles (and in certain cases a
surcharge), quantitative restrictions, localcontent and export performance requirements.
The combination of a high rate on vehicles
and concessional entry on parts and
components implies levels of effective
protection for domestic value added well
above that for any other sector of theeconomy. Under the transitional arrangements
of the TRIMS Agreement, local content and
export performance requirements should be
eliminated in principle by the year 2000 when
a MERCOSUR Common Automotive Regime isto be introduced.
26. Economic reforms resulted in
pronounced changes in the services sector; the
elimination of State involvement in mostactivities has encouraged an expanding supplyof services at largely competitive prices.
Commerce is the leading services activity, but
travel and transportation are the main
components of trade in services.  The
restructuring and strengthening of the
financial sector was greatly accelerated
following the Mexican crisis; foreign-ownedbanks are allowed to operate on the same
basis as domestic banks. The suspension in the
establishment of new insurance firms was to
be eliminated by October 1998 and taxes
affecting fees are to be progressively cut.Competition in the telecommunications sector
is being increased through the gradual
introduction of more operators, and tariffs for
basic telecommunications services are falling.
Reforms have produced more efficient andcheaper passenger and cargo transportation
as well as merchandise handling; however,
cabotage rights and bilateral cargo sharing
agreements persist in maritime transport.  The
satellite broadcast transmission is subject toan MFN exemption under the WTO, while
taxation and other administrative measures
have been introduced to support the local film
industry.
27. Argentina's commitments under the
General Agreement on Trade in
Services (GATS) cover a large number ofsectors.  The provision of fixed satellite
communication geo-stationary services, which
are subject to conditions of reciprocity, were
exempt from MFN treatment as envisagedWT/TPR/S/47 Trade Policies Review
Page xviii
under GATS Article II; no such exemption was
made with respect to preferential treatment
granted in the context of agreements on audio-
visual, cinematographic and transport
services.  Argentina participated in the
negotiations in financial, maritime transportand basic telecommunications services but no
interest was expressed in signing the
Information Technology Agreement.
(5) T
RADE POLICIES AND FOREIGN
TRADING PARTNERS
28. At the time of the previous review in
1992, the major reforms of the Argentina
economy had just begun.  In the last six years,
these reforms have been extended across
practically all areas of the economy, radicallychanging the economic life of the country.
Pressures from some sectors to reverse the
liberalization process have largely been
resisted, although the resort to anti-dumping
and other trade-restricting measures as well
as frequent variations in trade taxes gives
cause for vigilance, both for their effects onmarket  access and for the threat they pose tothe reform process.  From the perspective of
trading partners, the market opening of the
last decade has been strengthened by
increased security of access resulting from
extended trading commitments at the
multilateral level. So far, regionalcommitments have largely complemented the
domestic reforms and the multilateral
commitments, and, while trade within the
region has grown more rapidly, trade with
third countries has also benefited from thegreater opening and economic stability within
the region. However, tariff escalation under
MERCOSUR's CET continues to distort
resource allocation, providing higher than
average effective protection for certainprocessing industries, especially automobiles.
Despite the results of the Uruguay Round,
Argentine agricultural exports face barriers or
unfair competition in certain markets.  In this
sense, Argentina's own reforms and its
regional integration represent a challenge to
the WTO system to encourage multilateralliberalization through a new round which
allows a balancing of interests across the
entire range of issues.