RESTRICTED  WORLD TRADE  
ORGANIZATION  WT/TPR/G/176 
8 January 2007 
 
 (07-0038) 
Trade Policy Review Body Original: Spanish 
  
 
   
 
TRADE POLICY REVIEW 
 
Report by 
 
ARGENTINA 
 
   
Pursuant to the Agreement Establishi ng the Trade Policy Review Mechanism 
(Annex 3 of the Marrakesh Agreement Establishing the World Trade 
Organization), the policy statement by Argentina is attached. 
 
 
Note: This report is subject to restricted circ ulation and press embargo until the end of the first 
session of the meeting of the Trade Policy Review Body on Argentina. Argentina WT/TPR/G/176 
 Page 3 
 
 
 CONTENTS 
 
  Page 
I. INTRODUCTION 5 
II. ECONOMIC ENVIRONMENT 6 
 (1) I MPLEMENTATION OF CONVERTIBILITY AND THE CRISIS  6 
 (2) R ECOVERY  7 
 (3) T HE PROCESS OF RESTRUCTURING THE PUBLIC DEBT 8 
 (4) S PECIFIC ISSUES  10 
(a) Economic activity 10 
(b) Fiscal front 11 (c) External front 12 
(d) Social situation 12 
 (5) S
ECTORAL TRENDS  13 
(a) Industrial sector 13 
(b) Agricultural sector 18 
 (6) T RADE AND EMPLOYMENT  22 
(a) The experience of the previous decade 22 
(b) New growth model:  economic liberalization and job creation 24 
(c) The need to strengthen the growth model 26 
III. TRADE POLICY 27 
 (1) T RENDS IN FOREIGN TRADE 2002-2005 27 
 (2) T RADE POLICY  29 
(a) Argentina and the WTO 30 
(b) Argentina and the Doha Round 31 (c) Argentina and regional integration 33 
  (i) Argentina and MERCOSUR 34 
  (ii) MERCOSUR and the LAIA 36   (iii) MERCOSUR and the FTAA 37 
  (iv) Extra-regional agreements in MERCOSUR 37 
  (v) MERCOSUR and the European Union 37   (vi) Global system of trade preferences 38 
 (3) T
RADE PROMOTION  38 
IV. SUSTAINABILITY OF TRADE POLICY 40 
 
 
 Argentina WT/TPR/G/176 
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 I. INTRODUCTION 
1. Since its previous Trade Policy Review in 19 98, Argentina has experi enced a deep recession 
caused by the economic and social crisis of 2001-2002 , the most serious in its history, which placed 
its institutional framework at risk.  This situ ation necessitated a major policy overhaul and a 
substantive redesign of the economic model.  An economic programme characterized by fiscal 
solvency, monetary prudence, flexible exchange rat es, social inclusion and export dynamism has been 
instituted and consolidated since mid-2002 and, more particularly, as from 2003, when the new 
constitutional Government took office, with th e aim of reversing the disparities in economic 
development between different regions of the country. 
2. The results of the above-mentioned policies, af ter nearly four years of implementation, are 
indicative of the correctness of the course of action adopted.  Strong economic growth has been achieved, with a 9 per cent average annual increase in GDP, while the rates of unemployment, poverty 
and destitution have been significantly reduced.  Priv ate consumption, the engine of the economy, has 
shown a recovery, and there has also been a revi val of investment, which is key to expanding 
Argentina's production capacity and preventing rising demand from stoking inflation. 
3. At the same time, a trade policy based on WTO principles and disciplines has been 
introduced, which is characterized by pragmatism and an effort to expand Argentina's foreign trade on 
a sustainable basis, through a combination of multila teral, regional and bilateral approaches aimed at 
maximizing market access opportunities for exporte rs of goods and services.  Argentina's exports 
have thus practically doubled in less than four years,  growing at an average annual rate of 16 per cent.  
This non-stop growth during the period 2002-2006 is explained by the continuo us expansion of trade 
flows in agriculture (boosted by the recovery of international prices) and agricultural and industrial 
manufactures (which have shown a strong increase in sales volumes).  As a result and despite the strong upsurge in imports in response to the demand for inputs, capital goods and components, 
Argentina has a healthy trade surplus, a novelty in  terms of the country's economic growth cycles. 
4. During this period, Argentina confirmed and exte nded its commitment to the liberalization of 
world trade, especially in the negotiations conduc ted within the World Trade Organization (WTO), 
without neglecting its strategy of improving trade links with the MERCOSUR countries and the rest of Latin America, as well as with other countries around the world. WT/TPR/G/176 Trade Policy Review 
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 II. ECONOMIC ENVIRONMENT 
General aspects 
5. After the recession that started at the end of 1998 and culminated in the economic and social 
crisis of 2001-2002, considered the most serious in its contemporary history, Argentina initiated a 
process of recovery which is currently produc ing strong and sustained economic growth. 
6. A number of features distinguish this upturn from previous cycles of increased economic 
activity:  combined fiscal and ex ternal surpluses of unprecedented duration;  reduction of the debt 
burden;  monetary prudence reflected in the adju stment of the money supply to public demand;  
vigorous growth and diversification of exports;  in creased investment in production;  halting of capital 
flight;  creation of millions of genuine jobs;  recovery of wage purchasing power;  reduction of 
poverty and destitution; and reversal of th e deterioration in income distribution. 
(1) IMPLEMENTATION OF CONVERTIBILITY AND THE CRISIS  
7. Implementation of the convertibility model in the 1990s culminated in the 2001-2002 crisis.  
The chain of events that led to that crisis is summarized below.  The starting point for the 
convertibility cycle was the adoption of a programme of privatization and deregulation at a time of 
increasing capital flows to emerging markets.  The launch of the programme was followed by massive 
inflows of capital, with an initial phase of reser ve accumulation and high m onetary and credit growth 
rates.  This resulted in a strong surge in domestic demand and bubble increases in the prices of real and financial assets, such as land, immovable property and shares.  The effects of this trend were far-reaching, given the increased flight of capital in relation to the local capital stock and the 
unsophisticated financial system.  This situati on coincided with a phase in which governmental 
supervisory capacity was overstretched by a system  that was expanding rapidly, in terms of both 
volume and the number of intermediaries. 
8. With a fixed nominal exchange rate which initia lly enjoyed strong credibility, investment in 
local assets implied high dollar profitability, and this  encouraged the adoption of positions that were 
financed with international currenc y indebtedness.  The real exchange rate, already high when it was 
fixed in 1991, appreciated even further in the pe riod of expansion because inflation was higher than 
the sum of the devaluation rate (zero) plus intern ational inflation.  As a result of exchange rate 
appreciation and expanding domestic demand, imports grew rapidly, leading to a substantial current 
account deficit in the balance of payments.  A fu rther contributing factor to the external account 
situation was the interest burden resulting from th e increased public indebtedness caused by the loss 
of revenues resulting from privatization of the pension system in 1994 and increased factorial 
transfers in payment of royalties and dividends due  to the increased level of foreign capital in the 
economy.  Relative price changes in favour of non- tradeable sectors, as a re sult of exchange rate 
appreciation, slanted real investment towards t hose sectors, thereby having a negative impact on 
investment in production and exports of goods. 
9. One general feature of the period of convertib ility under the conditions described is that it 
leads to a continuous increase in the current account deficit that is not offset by capital flows at a 
particular point in time.  This leads to a contraction in reserves, money supply and credit and an increase in the interest rate.  The persistent in crease in the current account deficit diminishes the 
credibility of the exchange rate regime and makes it more likely that the issued debt will not be 
honoured in a proper and timely fashion.  The main tenance of the exchange rate regime and the 
regular servicing of external obligations in such ci rcumstances require enhanced capital inflows, with Argentina WT/TPR/G/176 
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 an attendant increase in risk.  Economic activity c ontracts and episodes of illiquidity and insolvency 
further contribute to reducing exchange rate credibility .  At the end of the process, interest rates are 
not high enough to sustain the demand for local financial assets.  There are runs against Central Bank reserves, which finally result in the co llapse of the exchange rate system. 
10. There is no doubt as to the presence of an obvi ous public sector financial imbalance in the 
final stages of the convertibility regime.  However, that obvious fact does not by itself justify a causal inference.  Although the assessment of fiscal perfo rmance in the 1990s was obscured by the serious 
deficiencies in available data, the fiscal deteri oration occurred not in the first decade cycle (from 
1991-1995) but in the second, beginning in 1996, following the economic crisis in Mexico.  The 
appearance of the fiscal deficit can be traced to the so cial security system.  On the one hand, under the 
reform instituted at the end of 1994, a substan tial proportion of social security revenues were 
transferred to the private pensions sub-system (the  retirement and pension fund administrators), while 
public expenditure on social security remained int act.  On the other hand, the Government ordered a 
reduction in employers' contributions, in an a ttempt to improve competitiveness that had been 
weakened by the exchange rate appreciation.  As a result of the successive debt-financed budget 
deficits, the main component of public sector cu rrent expenditure in the second half of the 1990s 
became the sector's own interest payments on public de bt.  The rise in interest rates that characterized 
the contractive phase of the cycle had a direct impact on rising indebtedness, contributing to a perverse dynamic of increased debt and increased risk.  In short, the crisis was a combination of the 
compound effect of external fragility caused by the convertibility regime, poor evaluation and 
organization of privatization processes, as in the case of the pension regime, lack of adequate 
regulatory frameworks for the capital market, the fiscal deficit and the contagious effect of the crises 
in Asia, Russia and Brazil. 
(2) R
ECOVERY  
11. The Argentine economy is experiencing its fourth  consecutive year of growth after the crisis 
of 2001-2002, having substantially exceeded the high est level of gross domestic product (GDP) prior 
to that crisis, which was recorded in 1998.  Current growth trends have significantly boosted 
employment and this, in conjunction with the gra dual recovery of wage le vels, has resulted in a 
substantial improvement in real income, contributin g to the reduction of the still high indicators of 
poverty and destitution.  The revival of economic ac tivity, the favourable reaction of exports and the 
restored confidence of the economic operators ha ve enabled the economy to move towards a "long-
term" equilibrium involving restoration of basic m acroeconomic balances in the external and fiscal 
fields.  At the same time, despite the impact of the crisis on the financial sector, the latter has recorded 
substantial improvement.  After dealing with their critical liquidity situation, the banking institutions 
began gradually to restore their balance sheets, helped  by the genuine reversal of losses thanks to the 
rapid recovery of deposits and loans. 
12. In the initial phase, simultaneously with the st abilization of the financial and exchange rate 
situation, the recovery of economic activity took  advantage of the abundant availability of idle 
resources (capital and labour) generated by the pr olonged recession and the channelling into domestic 
activities of the dollar liquidity generated by th e high external surplus (a consequence of the 
depreciation of the peso and its effect on th e improved competitiveness of exports and domestic 
production in relation to imports, on the one hand, and of the reversal of the process of capital flight, 
on the other).  Subsequently, while the process of cy clical recovery was beginning to spread to all 
sectors of activity, the investment rate started to react positively and gross fixed internal investment 
gradually rose above replenishment level, so that  the capital stock began expanding again, paving the 
way for a process of sustained growth. WT/TPR/G/176 Trade Policy Review 
Page 8 
 
 
 13. The determinants of the recovery and th e improved macroeconomic situation were 
predominantly internal factors associated with th e consistency of economic policy decisions.  The 
commitment to fiscal discipline and a monetary po licy which, in that first stage, supported the 
recovery of public demand for real balances, creat ed suitable conditions for the reduced impact or 
"pass through" of exchange rate depreciation to domestic prices, in contrast with previous 
experiences, when local currency devaluations had gi ven rise to an inflationary spiral.  The other 
noteworthy feature which distinguished the post-cris is scenario from previous experiences and which 
may have also contributed to reducing price rise pre ssures is the fact that there was no change in the 
policy of trade liberalization pursued by MERCOSUR, of which Argentina is a member State.  Thus, 
the low inflation environment that characterized the end of the crisis served to maximize the 
effectiveness of the incentives offere d by the new relative price struct ure with respect to the increase 
in economic activity and employment. 
14. It should not be overlooked that the international economic climate, though not the 
determinant factor, helped to explain the speed and intensity of the recovery and growth of economic 
activity and the improvement in the external accounts.  For one thing, the recovery of internal activity 
coincided with the upturn in the global economic  cycle, under a scenario characterized by high 
international prices for raw materials and by-products, as well as low interest rates and the return of 
capital flows to the emerging economies.  This latte r aspect (the application of favourable conditions 
of external financing) had a relatively small dir ect impact, inasmuch as throughout the first phase the 
Argentine economy was relatively disconnected from th e international capital markets.  Moreover, the 
local economic recovery developed side by side w ith recessive trends in the Brazilian economy up to 
the end of 2003. 
(3) THE PROCESS OF RESTRUCTURING THE PUBLIC DEBT 
15. At the end of February 2005, with the closur e of the six-week window for acceptance of the 
swap offer by holders of defaulted securities, the process of restructuring the public debt was 
successfully completed.  Of the holders of tota l eligible debt (US$81.2 billion), 76.15 per cent 
(US$62.318 billion) accepted the Government's proposal, enabling Argentina officially to emerge 
from default after an arduous process of negotiation wh ich, due to its scale and complexity, ultimately 
took more than three years.  The high rate of acce ptance was the result of a high rate of participation 
in all the jurisdictions, currencies and instru ments involved.  By way of compensation, 
US$35.261 billion in new debt instruments were issued  (par, quasi-par and discount bonds).  In this 
way, adding the securities exchanged to the unrest ructured debt, Argentina had at that point 
normalized 86 per cent of its stock of public debt. 
16. The great success of the exchange operation can  be seen even more clearly if the various 
features of the restructuring process undertaken are considered.  First of all, it involved an unprecedented restructuring on the international fina ncial markets in terms of both its scale and the 
number of actors, jurisdictions, currencies and inst ruments concerned, which required the negotiating 
team to engage in a consultati on process demanding more than 70 meetings with the different groups 
of creditors.  This consultation process made it possi ble to draw up a comprehensive, sustainable and 
viable offer. 
17. A second aspect has to do with the strategy adop ted by the authorities.  Instead of repeating 
the pattern observed during much of the 1990s, which consisted in seeking a rapid "solution" to the 
problem, giving priority to the acceptability  of the proposal to the market, but ignoring the 
restrictions imposed by the country's payment capaci ty, the approach adopted was to seek to align the 
restructured commitments with Argentina's real pa yment capacity.  It was thus possible to reconcile Argentina WT/TPR/G/176 
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 the notion of market acceptability  with a viable proposal .  The approach adopted by the authorities 
entailed a cautious and realistic appraisal of the Argentine economy's growth potential and the 
capacity to generate fiscal surpluses over the peri od of approximately three decades required for the 
new issues to mature, thereby avoiding non-feasible pr oposals.  In this connection, and with the aim 
of sharing with the holders of the new restructured  debt the benefits of any economic growth above 
the level provided for in the proposal, a financial instrument linked to trends in GDP was devised, 
under which payments are triggered only in the ev ent that the country actually has the resources to 
cover them. 
18. It should also be pointed out that the pro cess of restructuring the Argentine public debt 
coincided with verification of a substantial reducti on in the country's net exposure to its multilateral 
creditors, without the benefit of fresh injections  of resources from those bodies.  As is well known, 
from 2002 until the date for completion of the swap, th e country had made net payments (capital plus 
interest) to the international financing ins titutions (IMF, World Bank and Inter-American 
Development Bank) of approximately US$11.5 billion. 
19. Taking all these factors into consideration, the process of restructuring and emergence from 
default marks a fundamental shift in the way in which the Argentine economy functions.  Looking to 
the future, it can be affirmed that Argentina faces a very heavy debt burden but, unlike in the past, has 
the capacity to meet it.  This can be clearly ob served from Table 1, which shows the considerable 
improvement in a number of the common indicators of fragility and solvency after the debt swap.  Compared with December 2001 levels , interest payments fell from 8 per cent to 2 per cent of GDP 
and from 70 per cent to 15 per cent of international reserves.  The debt stock, meanwhile, fell from a 
level of 540 per cent of annual exports in Decemb er 2001 to 360 per cent;  at the same time, the 
debt/GDP ratio fell to 72 per cent, compared with 113 per cent before the restructuring.  One of the 
clearest indicators of systemic vulnerability, the currency squeeze caused by the gap between public 
sector liabilities and income, has reduced significantly  as a result of the increase in the share of debt 
denominated in pesos from 3 per cent to the present 37 per cent. 
Table 1:  Public Debt Before and After Restructuring 
Ratios December 2001 April 2005 
Interest servicing / Exports 38% 9% 
Public Debt Stock / Exports 544% 364% 
Debt Stock in Foreign Currency / Exports 527% 204% 
Interest Servicing / International Cash Reserves 70% 15% 
Interest Servicing / Tax Revenues 22% 10% 
Interest Servicing / GDP 8% 2% 
Debt /GDP 113% 72% 
Debt in Pesos / Total Debt 3% 37% 
Source :  Ministry of the Economy 
20. When it was decided to restructure the debt, the Ministry of the Economy and Production 
concluded that, although debt servici ng would require a sustained fiscal effort over a very long period, 
it would cease to be a factor generating systemic  fragility and permanent uncertainty and thus 
inhibiting economic growth in the medium and long te rms.  This should result in the strengthening of 
the macroeconomic framework and an improvement in the outlook for sustainable, balanced and 
socially inclusive growth.  More than two and a half years after that assertion was made, all the 
economic and social indicators confirm a trend swing in the direction indicated. WT/TPR/G/176 Trade Policy Review 
Page 10 
 
 
 (4) SPECIFIC ISSUES  
(a) Economic activity 
21. Seventeen consecutive quarters of economic growth and a 40.2 per cent increase in GDP 
since the low point of the depression constitute an unparalleled event in the last 100 years of 
Argentina's economic history.  Economic activity for 2006 will mark a fourth consecutive year of 
growth, at an estimated rate of close to 9 per cent fo r the private sector, one of the highest rates in the 
world.  GDP has therefore already exceeded by near ly 12 per cent the maximum levels recorded in the 
pre-crisis period.  In per capita terms, following a contraction of more than 23.2 per cent from the 
beginning of the recession, the overhaul of the econo mic policy regime has already made it possible to 
achieve earlier levels within a short period of time, with an average per capita increase in output of 
nearly 7.8 per cent.  Once again, one has to go back  to the early decades of the last century to find a 
similar performance. 
22. The vigorous growth of recent years was character ized by a marked recovery in activities that 
generate or conserve foreign currency, which are of  crucial importance to an indebted country.  Thus, 
the share of these sectors in GDP (at current prices) rose from 23.5 per cent in 2001 to 36 per cent in 
2005.  Within this group of activities, the industrial se ctor clearly led the recovery with growth of over 
60 per cent and nearly a quarter of the total increase in GDP since the end of the crisis, exemplifying 
the emphasis placed by current policies on reconstruc tion of the industrial fabric.  The agricultural 
sector also showed considerable improvement, in response to favourable conditions of profitability 
generated by the combination of competitive parity and a favourable international price context.  The 
strong performance in this sector resulted in a subs tantial improvement of the situation in various 
regional economies, which were one of the engines of  the recovery, so that today economic growth is 
much more evenly spread over the country's vast geographical territory. 
23. Unlike what happened during the previous decad e, the growth process has tended to benefit 
the whole range of economic activities in a bala nced manner, and has even spread to sectors 
producing goods and services that are not internationa lly tradeable.  The best performing among them 
were those more closely related to the sector  producing tradeable goods.  Thus, there was an 
outstandingly strong recovery in construction activ ity, especially for reproductive purposes, which has 
doubled its output since the crisis, and in the ar eas of transport and communications and commercial 
activity, which grew by more than 45 per cent.  More over, and despite the scale of the financial crisis 
which led to the collapse of convertibility, th e banking system rebounded strongly, with an 
accelerated recovery of liquidity.  Private sector credit began recovering from early 2004, and loans in 
this sector are now growing steadily at an annual rate of close to 30 per cent. Argentina WT/TPR/G/176 
 Page 11 
 
 
 Gross Domestic Product.  Relative Contribution to Growth 
Constant prices, seasonally adjusted  
2002:I-2006:II 
4.60%
0.20%24.90%
2.30%15.4 0 % 15 . 5 0 %
2.50%14 .3 0 %
0. 7 0%2. 1 0% 2. 00% 2. 1 0%5.10%
0. 40%7.9 %
0%5%10%15%20%25%30%
Agriculture and Fisheries
Mining
Industry
Energy, Gas and Water
Construction 
Trade
Hotels and Restaurants
Transport and Communications
Financial Intermediation
Real Estate
Public Sector
Education 
Health
Other Services
Domestic Services
 
Source :  Ministry of the Economy 
24. The strong growth of employment, the recove ry of real wages, increased consumer 
confidence and the reappearance of credit contribute d to a significant rise in consumption, which has 
grown by 37 per cent since the end of the crisis.  The contribution of consumption to growth was 
nevertheless accompanied by that of other compone nts of aggregate demand which are crucial to 
guaranteeing the process of sustainable growth under way.  In particular, a substantial improvement 
was observed in the rate of investment, following the 60 per cent fall of this variable, in real terms, 
during the crisis.  As a result of the subsequent recovery of roughly 173 per cent, capital formation 
has already equalled the highs of 1998.  The serio usness of the crisis and the subsequent strong 
recovery are put into perspective by the fact that the rate of investment in  GDP terms rose from 11 per 
cent in 2002 (a rate not even high enough to replen ish annual capital amortization) to somewhat more 
than 21.5 per cent during the second quarter of 2006. 
(b) Fiscal front 
25. One of the main contributing factors to economic consolidation was the substantial 
improvement in the public accounts.  Thanks to  a cautious expenditure policy, appropriate tax 
administration and the benefits of the economic rec overy itself, the consolidated primary surplus for 
2004 and 2005 reached a record high of an averag e 4.8 per cent of GDP.  Positive results of above 
3 per cent of GDP for the national public sector are expected for the current year.  Taxpayer 
compliance was crucial to the improvement in th e consolidated fiscal result:  VAT collection has 
tripled since the crisis, while current consumption has doubled.  The success achieved in restructuring WT/TPR/G/176 Trade Policy Review 
Page 12 
 
 
 the defaulted sovereign debt made it possible to begin re-establishing the long term solvency of public 
finances.  Additionally, action was taken on the decision for the early and complete write-off of 
around US$10 billion in liabilities with the IMF, lead ing to an additional reduction of roughly 5 GDP 
points in the consolidated gross debt.  The IMF pa yment resulted in a substantial reduction in short-
term financing requirements, while at the same ti me enabling substantial savings to be made on 
interest payments. 
(c) External front 
26. In the external sector, the current account surplus of over 3.5 per cent of GDP in 2006 has 
been achieved as a result of the stro ng growth in exports of goods and services, which will close the 
year at levels of more than US$46 billion and US$7. 5 billion respectively.  Moreover, the profile of 
sales abroad has begun to change.  Argentina is se lling more and more high va lue-added products and 
services:  the volume of manufactures exported today stands at double the average for the past decade.  For 2006, the year-on-year increase in exports of manufactures of agricultural and industrial origin 
was 10 per cent.  Export destinations are also be ing diversified.  Compared with an average of 
160 export destination countries ten years ago, Argen tina today exports to nearly 200 markets.  As 
regards industrial exports, the number of destinati ons has risen from 120 to 140.  Professional services 
account for a growing share of services exports. 
27. The increase in exports has helped to sustain th e necessary import revival.  Here again, there 
is a qualitative change, inasmuch as the share of  purchases of capital goods and inputs for production 
has grown by 140 per cent and 100 per cent, respectiv ely, since the end of the crisis.  Imports of 
consumer goods, which accounted for almost 20 per cent of the total during the past decade, today 
represent 11 per cent of purchases from abroad.  Even  with the sharp rise and dynamism of imports, 
Argentina has maintained a high trade surplus, averaging some US $13.5 billion over the last three 
years. 
28. The flight of capital, as mentioned earlier, has been reversed, and since 2004 there have been 
net inflows of funds from abroad.  However, the Government has introduced a set of policies to 
regulate capital flows, with the aim of maintaini ng external saving at a level compatible with its 
positive contribution to long-term growth, thereby di scouraging the flow of speculative investment to 
Argentina. 
(d) Social situation 
29. The economic recovery has been accompanie d by a marked improvement in the social 
indicators.  The new macroeconomic environment,  by promoting labour-intensive activities, has 
facilitated a considerable increase in employment.  The rate of unemployment (urban total) fell from 
23.3 per cent in May 2002 to 11 per cent in the second quarter of 2005.  According to recent data, the 
unemployment rate stood at slightly over 10 per cent  in the third quarter of 2006 and is expected to 
reach single digits, for the first time in 13 years, by the end of 2006. 
30. The sharp decline in unemployment is even more  marked when it is considered that it is 
occurring in a climate of increased economic activi ty, namely, the inclusion in the ranks of job 
seekers of large numbers of people who were not re gistered as unemployed.  Thus, the economy has 
created 3.6 million genuine jobs since the beginning of the recovery, enabling more than 1.8 million 
persons to cease being unemployed and 1.3 million add itional workers to enter the labour market.  As 
regards trends in government employment or social  welfare schemes, the continuous creation of 
genuine employment since early 2003 has resulted in a reduction of 600,000 in the number of Argentina WT/TPR/G/176 
 Page 13 
 
 
 beneficiaries, reflecting the substantial improve ment in employment opportunities, especially for 
those most in need.  In addition, for 2006, some  500,000 genuine jobs have been created.  Nine of 
every ten new wage earners are registered workers covered by pension and social welfare schemes. 
31. The minimum wage rose from Arg$250 during the crisis to Arg$800 in November 2006, 
representing a real increase, with adjustment for accu mulated inflation, of 70 per cent.  The minimum 
pension has risen from Arg$150 to Arg$470 currently, a real increase of more than 60 per cent.  
Meanwhile, the purchasing power of registered wage earners rose by 55.2 per cent from the low point 
of June 2002, and by 9.1 per cent in the first nine  months of 2006.  The situation of non-registered 
workers and employees has also tended to improve.  Over the last year, accord ing to available data 
(April 2006 versus April 2005), these wage earners have  seen an improvement in their real wages of 
the order of 7.6 per cent.  The Government consid ers it essential to continue pursuing policies that 
stimulate formal employment, as a genuine way of reducing the continued high level of segmentation 
of the labour market. 
32. The increase in employment, the recovery of real wages in a context of accelerating labour 
productivity, and the Government's in come policies have contributed to a significant decline in the 
levels of poverty and destitution, which had r eached unprecedented highs for Argentina during the 
crisis.  Thus, from a poverty peak of 57.5 per cen t and a destitution peak of 27.5 per cent of the 
population, the incidence rates have fallen to 31.4 per cent and 11.2 per cent respectively, which means that roughly 8.3 milli on people have succeeded in c limbing out of poverty and 
5,350,000 Argentines have ceased to be destitute .  These factors have been reflected in an 
improvement in the income distribution indicators.  The Gini coefficient, a standard measure of 
income distribution, has shown steady improveme nt, especially since the end of 2003, and the 
5.4 percentage point decrease since that date repres ents a substantial shift for an indicator which 
measures structural characteristics of the economy and thus, by extension, measures minor movements over long periods of time. 
(5) S
ECTORAL TRENDS  
(a) Industrial sector 
33. The industrial sector has been one of the ma in engines of the Argentine economy's sure-
footed expansion in recent years, recording more th an three years of sustained growth.  This is the 
result of the application of policies to improve the competitiveness of the tradeable sectors, which 
leads to a better distribution of income in societ y and recognizes industrial activity as a key factor in 
achieving that objective.  The construction of a co mpetitive and integrated economic fabric and the 
development of small and medium-sized enterp rises are key to advancing a model based on 
productive development and social inclusion. 
34. As mentioned before, the Argentine economy has be en growing at an annual rate of 9 per cent 
over the past three years, and has achieved a record  level of GDP.  Industry accounts for a substantial 
share of this growth, given high output and expo rt levels, and the overall buoyancy of activity and 
employment in all industrial sectors. WT/TPR/G/176 Trade Policy Review 
Page 14 
 
 
 Overall Economic Activity and Industrial Production 
EMAE and EMI.  Seasonally adjusted series.  Base year 1997=100 
Historical production peaks 
 
 
 
  Monthly Industrial Activity Estimator (EMI) 
  Monthly Economic Activity Estimator (EMAE) 
Source :   Own compilation based on INDEC (National Statistics and Census Institute) data. 
 
Overall Buoyancy of Production  and Industrial Employment  
Monthly Industrial Activity Estimator (EMI) 
By subsector.  Change 2005 v. 2003 
94.20%
34.10%
31.40%
22.00%
21.50%
19.30%
19.30%
17.00%
16.40%
13.40%
5.60%
2.20%Motor vehicles
Non-metallic minerals
Publishing and printing
Rubber and plastics
Metallurgy excluding motor vehicles
OVERALL LEVEL
Chemicals
Textiles
Paper and paperboard
Food and beverages
Base metal industry
Oil refining
 7076828894100106112118
E 97
A
M
O
M
D
J
F
S
A
N
J
E 04
A
M
O
MEMI EMAEArgentina WT/TPR/G/176 
 Page 15 
 
 
 Index of Employed Workers 
By subsector.  Change 2005 v. 2003 
36.20%
27.60%
26.10%
25.20%
17.20%
17.00%
15.40%
13.40%
13.00%
13.00%
11.50%
8.20%
4.80%Motor vehicles
 Metallurgy
Non-metallic minerals
Tobacco
OVERALL LEVEL
Textiles
Paper and paperboard
Base metals
Food and beverages
Chemicals
Rubber and plastics
Publishing and printing
Oil refining
 
Source : Own compilation based on INDEC data. 
35. This strong expansion is the result of the appli cation of economic policies consistent with an 
active role for the State and the establishment of  basic macroeconomic rules designed to foster 
corporate profitability and to generate high valu e-added growth.  The macroeconomic rules are 
supplemented by specific policies to promote se ctoral, regional and small and medium business 
development, as well as the promotion of internati onal negotiating strategies which pursue the same 
objectives. 
36. The aim is thus to build a long-term vision by sending clear signals that build investor 
confidence and promote a high level of grow th in an integrated economic fabric. 
37. During the past decade, industrial activity was h eavily concentrated in a few sectors and this 
was accompanied by the dismantling of the production framework of labour-intensive industries.  On 
the other hand, an analysis of industrial trends since 2003 reveals sustained growth with substantial 
job creation. WT/TPR/G/176 Trade Policy Review 
Page 16 
 
 
 Comparative Trends in Produc tion and Industrial Employment 
Physical Volume of Production (IVF) and Employed Workers (IOO) 
Year-on-Year Variation.  Period I 1993 / I 2006. 
-25%-15%-5%5%15%25%
I 93
III
I 94
III
I 95
III
I 96
III
I 97
III
I 98
III
I 99
III
I 00
III
I 01
III
I 02
III
I 03
III
I 04
III
I 05
III
I 06IOO IVF
Crecimiento con des-
trucción de empleoCrecimiento con des-
trucción de empleoGrowth with job losses RecessionGrowth with job 
creation
-25%-15%-5%5%15%25%
I 93
III
I 94
III
I 95
III
I 96
III
I 97
III
I 98
III
I 99
III
I 00
III
I 01
III
I 02
III
I 03
III
I 04
III
I 05
III
I 06IOO IVF
Crecimiento con des-
trucción de empleoCrecimiento con des-
trucción de empleoGrowth with job losses RecessionGrowth with job 
creation
 
 
Source : Own compilation based on INDEC data. 
38. With a wider spread among all subsectors, this  new qualitative growth profile is essential to 
achieving a more equitable distribution of income. Argentina WT/TPR/G/176 
 Page 17 
 
 
 Comparative Trends in Industrial Employment 
Employment by Industrial Sector.  Thousands of Jobs. 
 
Absolute variation 2001/1994
2021192326354246
Other industriesTransport equipmentTimber and paperMachinery and 
equipmentOil and chemicals
1-5-14-20-26-27
73Base metalsTextiles and leatherFood and beverages
Other industriesTimber and paperOil and chemicalsFood and beveragesMachinery and 
equipmentBase metalsTransport equipmentTextiles and leatherAbsolute variation 2005/2002 
Between 2002 and 2005, 231,000 jobs were 
created in industryBetween 1994 and 2001, 83,000 jobs were 
lostin industryAbsolute variation 2001/1994
2021192326354246
Other industriesTransport equipmentTimber and paperMachinery and 
equipmentOil and chemicalsAbsolute variation 2001/1994
2021192326354246
Other industriesTransport equipmentTimber and paperMachinery and 
equipmentOil and chemicals
1-5-14-20-26-27
73Base metalsTextiles and leatherFood and beverages
Other industriesTimber and paperOil and chemicalsFood and beveragesMachinery and 
equipmentBase metalsTransport equipmentTextiles and leather
Base metalsTextiles and leatherFood and beverages
Base metalsTextiles and leatherFood and beverages
Other industriesTimber and paperOil and chemicalsFood and beveragesMachinery and 
equipmentBase metalsTransport equipmentTextiles and leatherAbsolute variation 2005/2002 
Between 2002 and 2005, 231,000 jobs were 
created in industryBetween 1994 and 2001, 83,000 jobs were 
lostin industry
 
Source : Own compilation based on INDEC data. 
 
39. Small and medium-sized enterprises play a central role in the process, with differentiated high 
value-added production and strong jo b creation capacity.  In the context of a country that has 
recovered its fiscal health and a predictable ma croeconomic environment, the State and private 
entities allocate institutional and capitalization resour ces for the improvement of infrastructure so as 
to guarantee the continuity of industrial development. 
40. Alongside the expansion and dive rsification of national industry, 2005 saw increased rates of 
activity which consolidated the commitment to gr owth.  Within this framework, various production 
sectors are making substantial investments with th e aim of expanding their installed capacity, both by 
increasing existing capital and by creating new producti on units.  This becomes clear from an analysis 
of the behaviour of "capital formation" investments in  a historical perspective.  Such investments have 
grown more dynamically over the past four years than the resources earmarked for "mergers and 
acquisitions", the comparative rates of increase for the period 2002-22005 being 666 per cent and 
163 per cent, respectively. WT/TPR/G/176 Trade Policy Review 
Page 18 
 
 
 Trends in Investment by National and Foreign Enterprises in Argentina 
1.7873.0145.194
2.7994.702
1.5918.2209.403
3.603
1.22711.02014.105
02.0004.0006.0008.00010.00012.00014.00016.000
2002 2003 2004 2005Mergers and Acquisitions 
Capital formation
Total
+30% +368%
1.7873.0145.194
2.7994.702
1.5918.2209.403
3.603
1.22711.02014.105
02.0004.0006.0008.00010.00012.00014.00016.000
2002 2003 2004 2005Mergers and Acquisitions 
Capital formation
Total
+30% +368%
 
 
Sourc e: Compiled on the basis of data from the Ministry of the Economy 
(b) Agricultural sector 
41. The agricultural sector played a decisive role during the crisis and in the economic recovery, 
boosting and strengthening the return to a path of  sustainable growth through foreign exchange 
earnings generated by the substantial increase in ag ricultural exports in recent years.  However, 
increased exports alone are no guarantee of growth.  Government action was crucial to enable the 
agricultural bonanza to translate into economic gr owth that is in turn socially sustainable. 
42. Active State involvement focuses on various objectiv es.  First, there is the establishment of 
clear macroeconomic rules to facilitate planning by producers.  Secondly, there ar e incentives for the 
technological development of the agri-food sector, including technical support, genetic improvement 
and health.  A further important aspect is the promotion of internati onal negotiations and the 
establishment of quality standards to make possible th e flow of more products to more destinations 
with higher value added.  Lastly, measures are being implemented to ensure that the sector's growth 
produces benefits for the entire economy and societ y, avoiding macroeconom ic destabilization and 
facilitating long-term sustainable growth. 
43. The chart below shows the considerable incr ease in the share of agricultural activity in 
Argentina's production process.  Agricultural GDP grew by 12 per cent in 2005 compared with 2004. Argentina WT/TPR/G/176 
 Page 19 
 
 
 Gross Value Added of Agriculture, Stockbreeding, Hunting and Forestry 
Millions of 1993 pesos at producer prices 
14.00014.50015.00015.50016.00016.50017.000
1998 1999 2000 2001 2002 (*) 2003 (*) 2004 (*) 2005 (*)
14.00014.50015.00015.50016.00016.50017.000
1998 1999 2000 2001 2002 (*) 2003 (*) 2004 (*) 2005 (*) 
(*) Preliminary estimates. 
Source : Compiled on the basis of DNCN (Nati onal Accounts Dire ctorate) data. 
44. Below is a chart showing trends in the producti on of the three principal grains:  soyabeans, 
maize and wheat.  Particularly noteworthy is th e marked upturn in soyabean production, which 
increased by 58 per cent between the 1998/99 and 2004/05 seasons. 
Maize, Soyabean and Wheat Production (1998-2004) 
051015202530354045
1998/99 1999/00 2000/01 2001/02 2002/03 2003/04 2004/05 Millions of tonnesMaize
Soyabeans
Wheat
051015202530354045
1998/99 1999/00 2000/01 2001/02 2002/03 2003/04 2004/05 Millions of tonnesMaize
Soyabeans
Wheat
 
 
Source : Compiled on the basis of SAGPyA (Secretariat for Ag riculture, Livestock, Fi sheries and Food) data. WT/TPR/G/176 Trade Policy Review 
Page 20 
 
 
 45. The growth of the sector is reflected not only in primary products, as shown by the preceding 
chart, but also in manufactures of agricultural origin (MAOs). 
Principal MAOs-Percentage Change in Production  
 
Percentage change in production 
1998-2001 Percentage change in production 
2002-2005 
3%
3%
3%
-2%
8%
-2%
-5%Milk                                 
Poultry                                 
Beef                                  
Biscuits and cakes                                  
Oilseed by-products                                   
Vegetable oils                                   
Wheat flour                                           17%
51%
24%
50%
33%
32%
9%Mi l k
Poultry
Beef
Biscuits and cakes
Oilseed by-products
Vegetable oils
Wheat flour
 
Source :  Compiled on the basis of SAGPyA data. 
 
46. The recent agricultural upswing is correlated to  the growth of investment in capital goods, 
which has driven the rise in productivity.  There has been strong growth in domestic production of 
agricultural machinery and equipment for the agricu ltural sector and subsidiary industries.  Related 
imports have also increased considerably. 
Imports of Capital Goods for the Agricultural Sector (1995-2005) 
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005050000100000150000200000250000300000350000400000450000Millions US$
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005050000100000150000200000250000300000350000400000450000Millions US$
 
Source :  Compiled on the basis of data from the Ministry of the Economy. 
47. Under the heading of the production and import of agricultural machinery, combine 
harvesters and tractors for agricultural use showed st rong growth, especially in view of the fact that 
the devaluation pushed up the price of imports.  These data therefore demonstrate the sector's strong 
orientation towards exports and its capac ity to sustain the growth of output. Argentina WT/TPR/G/176 
 Page 21 
 
 
 Imports of Capital Goods for the Agricultural Sector 
1998 1999 2000 2001 2002 2003 2004 20050 25 50 75 100 125 150 175 200 225 
Combine harvesters 
Other harvesting and 
threshing machines, mowers (except for l awnmowers , s tr aw and fodder balers) 
Wheeled tractors Millions  U S$ 
 
Source : Compiled on the basis of data from the Ministry of the Economy . 
48. In the area of foreign trade, agro-industrial exports have shown str ong and sustained growth 
since 2003, with rates of 22.5 per cent in 2003, 13.4 per cent in 2004 and 11.6 per cent in 2005.  
According to the most recent data, a growth rate of  14 per cent was recorded in the first nine months 
of 2006, compared with the same period the previ ous year, which is evidence of sustained growth. 
Trends in Argentine Agro-I ndustrial Exports (1998-2006) 
1998 1999 2000 2001 2002 2003 2004 2005 2006 Jan-
Jul 0 2000 4000 6000 8000 10000 12000 14000 16000 18000 20000 Mi l l io ns  U S$ 
 
Source :  Compiled on the basis of INDEC data. 
49. Three of the most important agro-industrial e xports are wheat, maize and soyabean complex, 
the latter having recorded the highest growth in recen t years.  They thus constitute a policy benchmark 
from the standpoint of both the overall ec onomy and the development of rural areas. WT/TPR/G/176 Trade Policy Review 
Page 22 
 
 
 Trends in Agro-Industrial Exports – Main Products (1998-2006) 
 
1998 1999 2000 2001 2002 2003 2004 2005 0 250 500 750 1000 1250 1500 1750 2000 2250 2500 2750 3000 3250 3500 3750 4000 
Wheat 
Maize 
Soyabeans 
Soyabean oi l 
Soyabean flour and pelletsMillions U S$ 
 
Source :  Compiled on the basis of INDEC data. 
50. The economic crisis resulted in a continuous fall in agricultural imports between 1998 and 
2002, followed by a recovery as from 2003, but without  attaining pre-crisis levels.  These imports are 
highly diversified, although one of the most important is soyabeans from the main trading partners of 
Argentina, which accounted for 14 per cent of ag ro-industrial imports in 2005.  This product is 
imported mainly for the purpose of pressing, highlighting the importance of the production of 
soyabean oil and pellets in agro-i ndustrial manufacturing in general. 
(6) TRADE AND EMPLOYMENT  
51. The Marrakesh Agreement begins with the rec ognition that trade should be conducted with a 
view to "raising standards of living, ensuring full employment and a large and steadily growing 
volume of real income and effective demand, and expanding the production of and trade in goods and 
services" ... "in a manner consistent with their respec tive needs and concerns at different levels of 
economic development". 
52. It is therefore true to say that a fundamental WTO principle involves the affirmation that trade 
must be linked to full employment and a consta nt improvement in the living conditions of the 
population.  That principle is complemented by the id ea that there is no single way of formalizing this 
relationship and that its implemen tation depends on each Member's level of economic development. 
53. This section will analyse the links concerned in  the light of Argentina's recent experiences, 
contrasting the policies of the previous decade wi th those that have been implemented since the 
country emerged from the crisis of 2001-2002. 
(a) The experience of the previous decade 
54. In the 1990s, Argentina relied on the expectation that the opening up of trade and the 
liberalization of the labour market, alone and wit hout appropriate economic policies, would lead to 
growing employment and economic growth through th e exploitation of static comparative advantages. Argentina WT/TPR/G/176 
 Page 23 
 
 
 55. The opening up of the Argentine economy between 1991 and 1998, furthered inter alia  by the 
Uruguay Round Agreements, was an important devel opment that served to improve the country's 
integration into the global economy.  The increase in imports, given the lacklustre performance of 
exports in the second half of the 1990s, was financed  basically by means of greater external debt.  
This structural fragility made it foreseeable that the degree of liberalization and integration was 
unsustainable within that economic policy framewo rk.  As of 1998, the economic recession halted 
those processes and led to a dramatic declin e in Argentina's share of world trade. 
56. At the same time, labour market flexibility led to a progressive worsening of working 
conditions, falling employment and a consequent dec line in effective demand.   The latte r phenomenon 
in turn caused a drop in output. 
57. The policy of trade liberalization in a context of  exchange rate appreciation imposed a growth 
rate on the Argentine economy that was based on capita l-intensive but labour-extensive production, as 
well as specialization in sectors making intensive u se of natural resources and with low job-creating 
potential.  The shift in production towards the te rtiary sector, and investment in capital goods which 
placed emphasis on labour-saving technologies, resulted in a significant decline in employment in the 
manufacturing sector.  During the crisis, that decline led to a 28 per cent reducti on in jobs in industry. 
Trends in Sectoral Employment 
Period 1991-2003 (Base Year 1997=100) 
80.0085.0090.0095.00100.00105.00110.00115.00120.00125.00130.00
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003Manufacturing industry
Trade, restaurants and hotels
Communal, social and personal services
. 80.0085.0090.0095.00100.00105.00110.00115.00120.00125.00130.00
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003Manufacturing industry
Trade, restaurants and hotels
Communal, social and personal services
.  
Source: Ministry of Labour, Employment and Social Security (MTEySS)  Undersecretariat for Technical Planning and 
Labour Studies (SSPTyEL),  Directorat e-General of Labour Studies and Sta tistics (DGEyEL).  On the basis of 
INDEC data and the user bases of the Perman ent Household Survey (EPH), data for May. 
58. On top of this reduction in industrial employment , the low level of job creation in the rest of 
the economy was well below the increase in the av ailable labour supply, and this resulted in 
unprecedentedly high unemployment rates.  Moreover, employment was more heavily concentrated in WT/TPR/G/176 Trade Policy Review 
Page 24 
 
 
 services sectors, especially those with higher levels  of job insecurity and a multiplicity of atypical 
forms of labour contract. 
Undeclared Employment Rate by Branch of Economic Activity 
Total Urban Areas Surveyed 
  1st Qtr 03 1st Qtr 04 1st Qtr 05 1st Qtr 06 
Total 47.0 47.9 46.8 43.6 
Branch of activity         
Primary activities 69.1 54.5 53.3 46.5 
Manufacturing industry 37.6 37.7 38.8 37.0 
Construction 68.8 76.4 79.9 74.7 
Trade 53.7 49.5 49.7 45.7 
Hotels and restaurants 56.6 55.0 54.9 55.8 
Transport, storage and communications 48.3 50.5 48.0 43.1 
Financial, real estate, rental a nd business services 29.1 36.8 35.5 29.1 
Public administration and defence 34.4 34.6 24.1 22.1 
Education 19.8 18.8 14.2 12.6 
Social and health services 47.0 52.5 43.8 40.9 
Domestic service 91.6 93.9 95.2 93.4 
Other community, social and personal services 55.5 45.7 51.7 44.9 
Source : Ministry of Labour, Employment and Social Security  (MTEySS), Undersecretariat for Technical Planning and 
Labour Studies (SSPTyEL), Directorat e-General of Labour Studies and Statistics (DGEyEL), based on the 
INDEC 's Permanent Household Survey (EPH). 
59. This situation of economic depression, persiste ntly high unemployment rates and consequent 
deterioration in the social situation was compounded by a political crisis unprecedented in Argentine 
history (2001-2002).  It is not surprising, therefore, that one of the basic objectives of the current administration is to ensure that economic growth is equitable and includes all the different sectors of society.  Only this type of growth can promot e greater social cohesion and the strengthening of 
democratic institutions.  Accordingly, the labour ma rket and, in particular, the objective of decent 
work, constitute the central plank of public policy. 
(b) New growth model:  economic liberalization and job creation 
60. The new growth model that has been in evidence since the crisis is based on the principle of 
creating quality employment and decent work.  Thus , in keeping with the founding principles of the 
WTO, the introduction of active labour market polic ies based on a renewed social dialogue has made 
possible a rapid economic recovery, a substantial re duction in unemployment, a higher rate of quality 
job creation, a fall in the levels of poverty and destitution, and a gradual improvement in income 
distribution. 
61. It should be emphasized that the domestic pr oduction of goods previously imported did not 
entail a decline in imports.  On the contrary, im port volumes have been growing in tandem with 
economic growth. 
62. At the same time, the change in the growth m odel generated a substan tial improvement in the 
employment/output ratio, and this helped speed up recovery from the 2001-2002 crisis. 
63. In this area also, firms in the industrial sector have played an outstanding role.  They have not 
only succeeded in restoring output to pre-crisis levels , but they have exceeded by 10 per cent the level 
of output recorded in the year of highest economic growth in the 1990s (1998).  This in turn has 
translated into a significant increase in indus trial job creation as well as productivity levels. Argentina WT/TPR/G/176 
 Page 25 
 
 
 Index of Employment in Industry 
Year-on-Year Variation 
0.00%3.10%
2.20%3.20%5.70%
3.90%
-3.30%
-6.20%
-9.60%-2.20%
-7.80%
-12.50%-5.30%3.30%2.80%
-3.70%
-4.00%-1.10%1.80%
-7.90%-5.40%-4.80%-0.70%
-3.00%-2.90%
-5.90%-3.60%0.70%
-3.00%
-8.70%-7.20%-6.60%
-9.10%5.00%10.30%
6,7%
5.7%*
5.2%*
-0.13-0.08-0.030.020.070.12
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
19811982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
20032004
2005
I-06
II-060.00%3.10%
2.20%3.20%5.70%
3.90%
-3.30%
-6.20%
-9.60%-2.20%
-7.80%
-12.50%-5.30%3.30%2.80%
-3.70%
-4.00%-1.10%1.80%
-7.90%-5.40%-4.80%-0.70%
-3.00%-2.90%
-5.90%-3.60%0.70%
-3.00%
-8.70%-7.20%-6.60%
-9.10%5.00%10.30%
6,7%
5.7%*
5.2%*
-0.13-0.08-0.030.020.070.12
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
19811982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
20032004
2005
I-06
II-060.00%3.10%
2.20%3.20%5.70%
3.90%
-3.30%
-6.20%
-9.60%-2.20%
-7.80%
-12.50%-5.30%3.30%2.80%
-3.70%
-4.00%-1.10%1.80%
-7.90%-5.40%-4.80%-0.70%0.00%3.10%
2.20%3.20%5.70%
3.90%
-3.30%
-6.20%
-9.60%-2.20%
-7.80%
-12.50%-5.30%3.30%2.80%
-3.70%
-4.00%-1.10%1.80%
-7.90%-5.40%-4.80%-0.70%
-3.00%-2.90%
-5.90%-3.60%0.70%
-3.00%
-8.70%-7.20%-6.60%
-9.10%5.00%10.30%
6,7%
5.7%*
5.2%*
-0.13-0.08-0.030.020.070.12
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
19811982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
20032004
2005
I-06
II-06-3.00%-2.90%
-5.90%-3.60%0.70%
-3.00%
-8.70%-7.20%-6.60%
-9.10%5.00%10.30%
6,7%
5.7%*
5.2%*
-0.13-0.08-0.030.020.070.12
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
19811982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
20032004
2005
I-06
II-06
 
* Most recent quarterly data available.  
Source : Monthly Industrial Survey, base  years 1970, 1990, 1993 and 1997. 
64. The recovery in industrial employment has also been accompanied by a rise in employment in 
the other areas of economic activity and has done much  to change the pattern of job creation from one 
based on undeclared labour to one in which the great majo rity of the jobs created are formal jobs.  It is 
very revealing, therefore, that between 1991 and 2001 undeclared employment grew by 52 per cent 
and declared employment by only 1 per cent, whereas between 2003 and 2005 the growth of declared 
employment was higher (32 per cent) and that of undeclared employment much lower (8 per cent).  WT/TPR/G/176 Trade Policy Review 
Page 26 
 
 
 Trends in the Level of Sectoral Employment 
1st Quarter 2003 – 1st Quarter 2006 (Base year 2003=100) 
9095100105110115120
Industria manufacturera
Comercio, restaurantes y hoteles
Servicios comunales, sociales y personales
9095100105110115120
I quart 03Manufacturing Industry
Trade, restaurants and hotels 
Communal, social and personal services , 
II quart 03 III quart 03 IV quart 03 I quart 04 II quart 04 III  quart 04 IV quart 04 I quart 03 I quart 05 III quart 05 IV quart 05 I quart 069095100105110115120
Industria manufacturera
Comercio, restaurantes y hoteles
Servicios comunales, sociales y personales
9095100105110115120
I quart 03Manufacturing Industry
Trade, restaurants and hotels 
Communal, social and personal services , 
II quart 03 III quart 03 IV quart 03 I quart 04 II quart 04 III  quart 04 IV quart 04 I quart 03 I quart 05 III quart 05 IV quart 05 I quart 06
 
Source : MTEySS –  Undersecretariat for Te chnical Planning and Labour Studi es – DGEyEL, based on the ongoing 
household survey (EPH) (INDEC). 
 
(c) The need to strengthen the growth model 
65. The continued buoyancy of job creation may be jeopardized if it is based exclusively on 
extensive economic growth.  The need to strengthen the current growth model, in accordance with the 
same principle of creation of quality employment and decent work, requires specific sectoral policies, 
including policies aimed at the industrial sector, as  the increase in indust rial activity favours the 
creation of highly productive jobs with higher inco mes and the growth of effective demand which has 
beneficial effects on the rest of society. 
66. Argentina's experience during the previous d ecade shows that greater trade liberalization 
alone is no guarantee of either full employment or  sustained growth.  On the other hand, post-crisis 
developments bear witness to the fact that appropr iate economic policies and timely interventions in 
the labour market based on social dialogue may si multaneously generate steady improvements in the 
social indicators and a greater opening up of th e economy.  Although the results achieved on both 
fronts are encouraging, the need for continued impr ovement in employment levels and other social 
indicators calls for the new growth model to be st rengthened by means of specific policies, including 
policies targeting the industrial sector, which boost Ar gentina's participation in an increasingly open, 
transparent system of world trade that is sensitive to the specific needs of developing countries with 
respect to quality job creation and decent work. Argentina WT/TPR/G/176 
 Page 27 
 
 
 III. TRADE POLICY 
(1) TRENDS IN FOREIGN TRADE 2002-2005 
67. The change in economic policy introduced after the 2002 crisis had a significant impact on 
Argentina's foreign trade.  In the short term, the ch ange administered a sharp correction to Argentina's 
external trade imbalance, which had persisted for some years, initially  through a substantial decline in 
local imports (-57 per cent between 2001 and 20 02).  In the medium term, and following the 
establishment of a stable and sustainable macroeco nomy, the change in policy is having a specific 
impact on both agricultural and industrial export pe rformance, maintaining the trade surplus in a 
context of strong recovery and import growth. 
68. Exports have almost doubled in less than four years, growing at an average annual rate of 
16 per cent.  The uninterrupted growth during the period 2002-2006 is explained by the continuous expansion of agricultural trade flows (favoured by the recovery in international prices) and of 
agricultural and industrial manufactures (which  recorded strong increases in sales volumes). 
69. The liberalization coefficient has grown substan tially since the crisis (25 per cent since 2002), 
exceeding the high point of 5 per cent achieved in 1998.  Not only is the degree of liberalization 
higher than the peak figure recorded in the 1990s, but it is gathering momentum because it is self-
sustainable and not dependent on external financing. 
Degree of Liberalization in Argentina 
20.4%
12.7%25.4%
12.8%24.2%
7.8%10.7%14.1%
0.0%5.0%10.0%15.0%20.0%25.0%30.0%
1970
1971
1972
1973
19741975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
19861987
1988
19891990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
20012002
2003
2004
2005Liberalization coefficient (X+M)/GDP
Liberalization coefficient X/GDP
20.4%
12.7%25.4%
12.8%24.2%
7.8%10.7%14.1%
0.0%5.0%10.0%15.0%20.0%25.0%30.0%
1970
1971
1972
1973
19741975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
19861987
1988
19891990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
20012002
2003
2004
2005Liberalization coefficient (X+M)/GDP
Liberalization coefficient X/GDP
20.4%
12.7%25.4%
12.8%24.2%
7.8%10.7%14.1%
0.0%5.0%10.0%15.0%20.0%25.0%30.0%
1970
1971
1972
1973
19741975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
19861987
1988
19891990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
20012002
2003
2004
2005Liberalization coefficient (X+M)/GDP
Liberalization coefficient X/GDP
 
Source : National Accounts Directorate (DNCN), X= Exports, M=Imports and GDP at 1993 prices. 
70. The important feature of the situation outlined is  that its context is one in which the local 
economy is growing by 9 per cent a year, which mean s that Argentina is well placed competitively for 
integration into the global economy.  Foreign sales ha ve ceased to be an exportable balance or surplus 
left over from local demand and have become a com ponent of productive growth.  In this connection, 
it should be pointed out that Argentina's forei gn sales grew by 16 per cent in 2005, while world WT/TPR/G/176 Trade Policy Review 
Page 28 
 
 
 exports grew by 13 per cent.  This growth rate, wh ich is combined with an increase in export volumes 
(+15 per cent) more than twice as high as that record ed by the rest of the world (+6 per cent), shows 
that the local economy has enhanced its internati onal competitiveness and, as a result, its external 
integration.  The same pattern of behaviour is be ing repeated in 2006, with strong export and import 
growth and the maintenance of a substantial trade surplus. 
71. An analysis of export destinations shows that MERCOSUR remains an important buyer, 
while other countries, Chile and China, regions  such as the Andean Community and NAFTA, and 
other non-traditional markets such as the Middle East and Africa, to which Argentina has no 
preferential access, have become increasingly impor tant trading partners.  MERCOSUR, and Brazil in 
particular, is the main recipient of Argentine exports of industrial manufactures, owing to integration 
of the production chain in the automotive, chemical a nd other sectors, and because it is one of the first 
export destinations chosen by small and medium-siz ed enterprises.  The regional bloc has frequently 
served businesses as a springboard to other markets by enabling them to achieve economies of scale 
and specialization, to promote the learning pr ocess and to increase the proportion of high-end 
technological products involved in trade. 
72. Another noteworthy development is the diversif ication of exports to include new products 
with higher value added, involving greater particip ation by small and medium-sized enterprises and 
an impact on regional economies.  In overall terms,  among the sectors that have driven export growth, 
particular mention may be made of the performance  of motor vehicles, metal products, chemicals and 
plastics, rubber and by-products thereof. 
73. The most noteworthy agricultural products and agricultural manufactures include soyabeans, 
dairy products and by-products, al coholic beverages and liquids, fruit juices and sweets.  At the same 
time, industrial manufactures were driven by produc ts with a medium to high technological content, 
including in particular motor vehicles, machinery and apparatus and chemical  and related products.  
Over the past year, industrial exports with a high technological content have increased their 
contribution to growth, particularly air, river a nd maritime navigation vehicles and certain chemical 
products. 
74. Manufactures of industrial origin (MIOs) are ga ining export market share, as is evidenced by 
growth rates higher than those for primary produc ts and manufactures of agri cultural origin (MAOs), 
and this ensures their diversification and stabilization. 
Exports by product line 
(millions of dollars) 
Export variation  Contribution 
to variation  Type of product 1998 2001 2002 2003 2004 2005 
2005/1998 2005/2002 2005/2002 
Primary products 6,604 n/a 5,273 6,224 7,215 7,916 19.9 50.1 18.4 
MAOs 8,761 n/a 8,138 9,815 11,377 13,172 50.3 61.9 35.0 
MIOs 8,624 8,298 7,601 8,821 10,225 11,935 38.4 57.0 30.2 
Fuel and Energy 2,451 n/a 4,639 4,720 5,471 6,991 185.2 50.7 16.4 
Total 26,440 n/a 25,651 29,580 34,288 40,014 51.3 56.0 100.0 
MAOs: Manufactures of agricultural origin. 
MIOs: Manufactures of industrial origin. 
Source : Own compilation based on information from the Centre for Pub lic Studies (CEP). 
75. A salient feature of Argentine foreign trade, esp ecially over the past two years, has been the 
dynamic performance of services exports.  Followi ng the stagnation of services exports, culminating Argentina WT/TPR/G/176 
 Page 29 
 
 
 in a substantial decline during the 2001-2002 crisis, th e sector returned to the path of growth.  Unlike 
before, the change in relative prices from 2002, as a result of the floating exchange rate, once again 
enabled exports from the sector to meet growing wo rld demand, and its growth rate was even higher 
than the world rate. 
76. Up to 2000, the trade balance in services showed a deficit of around US$4 billion.  This figure 
was reduced to roughly US$1.5 billion in 2005, export s being the main engine of this change.  The 
boom in services exports from Argentina is due mainly to the areas of travel and tourism, combined 
with sales of non-traditional services, such as bus iness, professional and technical services and 
communications and information technology services. 
77. The increase in travel and tourism exports account ed for rather more than 50 per cent of total 
export growth for the sector in 2005.  As a result,  tourism has become one of the main export items, 
ahead of cereals, oils and fats, chemical produc ts and land transport equipment, and outperformed 
only by exports of animal feed meals. 
78. After the sharp decline in 2002, imports rebounded strongly, keeping pace with the rate of 
expansion of the local economy.  They amounted to US$28.692 billion in 2005, a 28 per cent increase 
over 2004, owing to the strong growth in demand fo r inputs related to production activities as well as 
the importation of machinery and equipment and pa rts and components thereof.  Import levels of 
close to US$35 billion are expected for 2006, a 20 per cent increase over 2005. 
79. As far as countries of origin are concerned, Brazil within the region and China as an extra-
regional supplier increased their exports to Argentin a.  The growing importance of Brazil is explained 
by the strong increase in Argentine imports of autom obiles and machinery and a pparatus.  At the same 
time, China has become a major supplier of capita l goods, industrial inputs and durable consumer 
goods. 
(2) TRADE POLICY  
80. In this connection, it is important to refer br iefly to the Argentine legal system.  Under the 
Constitution, as a result of the constitutional reform of 1994, international law is assigned a dominant 
position in the Argentine legal system.  As a resu lt of the above-mentioned reform, the supremacy of 
international treaties over domestic legislation is expressly recognized, as is the constitutional 
supremacy of treaties relating to human rights an d the possibility of ceding sovereign powers, in 
specific circumstances, under certain integration agreements.  The constitutional provisions outlined 
demonstrate the value attached by Argentina to multilateral cooperati on and an outward-looking 
approach to the international community. 
81. Argentina is increasingly committed to the r esponsible and balanced liberalization of 
international trade, especially in the negotiations under way within the WTO, without abandoning its 
strategy of closer trade ties to the MERCOSUR c ountries and the rest of Latin America, as well as to 
other countries around the world that are interested in becoming trading partners. 
82. It is for this reason that, as from 2003, Argentina adopted a pragmatic trade policy which 
combines the priority accorded to the internationa l trading system with regional integration and 
bilateral treaties consistent with WTO obligations.  In this way, it is seeking to take maximum 
advantage of market access opportunities for its exports  of goods and services.  It pays particular 
attention to the overall strategy of promoting and developing exports w ith a view to properly 
administering and integrating those elements that are crucial to strengthening business 
competitiveness. WT/TPR/G/176 Trade Policy Review 
Page 30 
 
 
 83. It should be emphasized that, despite the fall in GDP recorded between 1998 and 2002, 
Argentina did not raise its applied tariffs.  On the contrary, tariffs were lowered even further in the 
period under review, falling from an average app lied most-favoured-nation (MFN) tariff level of 
12.7 per cent in 2001 to 10.5 per cent in 2005.  At the same time, tariff dispersion has recently been 
reduced.  This reaffirms Argentina's desire to main tain its trade ties with the world and to progress 
towards freer trade. 
(a) Argentina and the WTO 
84. Argentina is a founding Member of the World Trade Organization (WTO).  It upholds the 
principles, agreements and disciplines of the WTO as the basis for its international trade relations.  
This is reflected in the supremacy of the ag reements entered into under the Uruguay Round over 
domestic legislation and highlights Argentina's unwavering commitment to guaranteeing legal 
certainty to all the Members of the system.  In this connection, Argentina applies its commitments 
under the Uruguay Round fully and consistently in all the areas that were negotiated, and it has 
systematically brought its existing laws, rules and re gulations into full conformity with its multilateral 
obligations. 
85. It participates actively in the regular activiti es at the WTO through the various committees.  It 
regularly submits the necessary notifications to the Committee on Subsidies and Countervailing 
Measures, the Committee on Anti-Dumping Practi ces and the Committee on Import Licensing, and 
has taken an active part in meetings of the Committee on Sanitary and Phytosanitary Measures, 
submitting several communications containing concrete proposals and making more than 
80 notifications during the period under review. 
86. Argentina is a party to the Agreement on the Application of Sanitary and Phytosanitary 
Measures (SPS Agreement), having signed various b ilateral agreements based on its principles and 
disciplines.  It complies with its obligations un der the SPS Agreement, which are mainly concerned 
with identifying common rules, simplifying import controls, harmonizing certification requirements 
and facilitating bilateral trade and the entry of ag ricultural products into the markets of Member 
countries. 
87. Argentina actively participates in  the Trade Policy Review Mech anism, being convinced that 
the review exercises undertaken contribute to the tr ansparency of the multilateral trading system.  
Argentina assigns great importance to the universal nature of the WTO, and supports the entry of new 
Members, on the understanding that this contribut es to the strengthening of the multilateral trading 
system and boosts opportunities for the expansion of trade. 
88. Argentina recognizes the significance of th e protection of intellectual property for 
development, the role such protection plays in stim ulating innovation, and the need to protect these 
intangible values.  At the same time, it promotes respect for competition, protection of health, traditional knowledge and diversity through multilateral rules.  It supports the system of rights and 
obligations under the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). 
89. Argentina considers the dispute settlement mechan ism to be one of the fundamental pillars of 
the multilateral trading system, inasmuch as it guara ntees the transparency and predictability of 
compliance with multilateral rules by its Members.  This is clearly evidenced by the fact that 
Argentina is one of the ten countries that have made the greatest use of the system since the 
establishment of the WTO in 1995, having acted as complainant in 11 cases, respondent in 16 cases 
and third party in a further 16 cases, and has faithfu lly complied with the resolutions of the Dispute Argentina WT/TPR/G/176 
 Page 31 
 
 
 Settlement Body and the Appellate Body.  However,  it considers that the raison d'être of the WTO 
does not lie in the dispute settlement mechanism, as it is not possible to build the future on the basis of 
disputes but essentially on areas of agreement to expa nd the multilateral system on the basis of greater 
benefits for all its Members. 
(b) Argentina and the Doha Round 
90. Argentina has actively participated in the mu ltilateral trade negotiating rounds since acceding 
to the GATT in 1967.  It considers that, as provided in the preamble to the Marrakesh Agreement, the 
growth of international trade and the corresponding rules should contribute to raising standards of 
living and ensuring full employment.  These objectives have been central to the proposals it has put 
forward individually or in conjunction with other countries in the Doha Round. 
91. Argentina submits that the Doha Round should gi ve priority to an ambitious agreement in 
respect of agriculture, a sector which continues to bear the burden of discriminatory trade-distorting and protectionist policies, to the detriment of the effective use of competitive advantage by efficient 
agricultural producers and domestic production in de veloping countries, preventing the latter from 
securing all the benefits that would be offered by an open trading system. 
92. Thus, Argentina is an active participant in two strong agricultural negotiating groups, of 
which it is a co-founder:  the G-20 and the Cairns  Group.  In the Uruguay Round, the latter Group, 
and in the present Round, the two together, have help ed to change the geometry of the agricultural 
negotiations.  The G-20 in particular has now made  it possible for developing countries to form an 
alliance capable of counter-balancing the interests of  the major trading powers, in order to guarantee 
significant outcomes in keeping with the ambitious goals of the Doha Mandate. 
93. The basic tenets of both Groups, which Argentina fully supports, are the following: 
 (i) Elimination of export subsidies (incl uding the practice of disposing of commodity 
surpluses instead of providing genuine food aid); 
  (ii) the substantial reduction of domestic support that distorts international trade; 
 
 (iii) the substantial expansion of market a ccess, especially for the products of developing 
countries, reducing and simplifying tariffs, re ducing tariff peaks and eliminating tariff 
escalation. 
94. The negotiations on market access for non-agricult ural products (NAMA) are also of vital 
importance to Argentina, which considers that they  should be aligned with those relating to other 
areas, particularly the area of agriculture.  In th is connection, Argentina, together with Brazil and 
India (ABI formula), have submitted a proposal for tariff reduction that provides for the principle of 
"less than full reciprocity".  The proposed formula,  in accordance with the provisions of paragraph 
16 of the Doha Ministerial Declaration, seeks to reduce or eliminate tariff peaks and tariff escalation.  
With regard to non-tariff barriers, Argentina h as submitted documents on the barriers faced by its 
exports in different markets.  It is also an active participant in the NAMA-11 group of developing 
countries, whose fundamental aim is to achieve an equitable outcome which, while providing for 
substantive liberalization with proportional cuts fo r developed and developing countries, at the same 
time does not hamper implementation of the indust rial development policies of the developing 
countries. WT/TPR/G/176 Trade Policy Review 
Page 32 
 
 
 95. Argentina supports the wording of paragraph 24 of the Hong Kong Ministerial Declaration, 
which provides for a balanced level of ambiti on in both agricultural and NAMA negotiations.  
Accordingly, and as a result of its active participa tion in the negotiations, in  2006 it submitted a Doha 
Round document (TN/MA/W/67 and TN/AG/GEN/14), which addresses the question of how the 
provisions of the above-mentioned pa ragraph 24 can effectively be gauged so as to ensure that the 
level of ambition in market access is balanced a nd proportionate, in keeping with the principle of 
special and differential treatment.  The analysis c onducted shows that, in order to maintain the same 
level of ambition in the two sets of negotiations, th e developed countries should make greater cuts in 
their agricultural tariffs and reduce their demands  in NAMA.  The document presented by Argentina 
became a reference paper for the proposals submitt ed by various countries and for validating the 
offers and requests of the developed countries in rela tion to agriculture and NAMA.  Argentina is thus 
cooperating in the search for a balanced outcome th at respects the interests of all the parties. 
96. At the same time, with a view to achieving gr eater security and stability for the expansion of 
world trade in services, as well as to ensure that the overall resu lts of the Doha Round negotiations 
equitably benefit all countries, Argentina is co mmitted to making progress in the negotiations on 
specific commitments in all the delivery modalities, including those of particular interest to the 
developing countries.  Similarly, it is working to wards strengthening the disciplines of the General 
Agreement on Trade in Services (GATS). 
97. Both bilaterally and plurilaterally, Argen tina has submitted request s for market access to 
various WTO Members with respect to agriculture -related services sectors, distribution services, 
information technology services and services provided under mode 4 (movement of natural persons).  
Reciprocal requests have been received on virtuall y the entire spectrum of trade services, although not 
all of them contain the same level of demand.  Ar gentina has granted concessions in all areas relating 
to requests on information technology services, telecommunications, banking services, professional 
services, construction and distribution services;  and it provides adequate coverage in services relating 
to energy, insurance, postal services and logistics.  It also participates actively in the various GATS 
negotiating groups in order to draw up disciplin es under Article VI, paragraph 4, on domestic 
regulation, Article X on emergenc y safeguard measures, Article XIII on government procurement, 
and Article XV on subsidies. 
98. With respect to trade in environmental goods, Argentina has submitted an integrated proposal 
for development.  The aim is that the releva nt negotiating approach should ensure equitable 
environmental, trade and development benefits. 
99. Regarding the negotiations on rules, Argentin a has submitted proposals relating to specific 
amendments to the Anti-Dumping Agreement.  In th is connection, it has attempted to highlight those 
amendments that would benefit developing countries.   Similarly, Argentina has submitted a proposal 
in the "Friends of Fish" Group and another individua l proposal for the negotiations on fisheries aimed 
at eliminating trade-distorting subsidies and ensuri ng special and differential treatment for developing 
countries. 
100. Argentina takes an active part in the debat es on the Agreement on Trade-Related Aspects of 
Intellectual Property Rights (TRIPS) and public health , geographical indications, protection of genetic 
resources, traditional knowledge and folklore, an d electronic commerce, both within the TRIPS 
Council and in the World Intellectual Property Organization (WIPO).  In connection with 
geographical indications, the mandate under Article 23, paragraph 4, of the TRIPS Agreement states 
that negotiations shall be undertaken concerni ng the establishment of a multilateral system of 
notification and registration of ge ographical indications for wines a nd spirits.  Argentina, together Argentina WT/TPR/G/176 
 Page 33 
 
 
 with other Members (Australia, Ne w Zealand and the United States, among others), has stated that 
such a system of notification and registration s hould not give rise to new obligations but should 
"facilitate" the protection of geographical indications .  Similarly, Argentina has repeatedly opposed 
the extension of the negotiating mandate, that is the extension of the ne gotiations on geographical 
indications to include products other than wines and spirits. 
101. Argentina plays an active role in the Working Group on Trade, Debt and Finance, based on 
the mandate given in paragraph 36 of the Doha D eclaration.  In this connection, it submitted a 
Communication (WTO document WT/WGTDF/W/20) in April 2003 and made a statement (WTO document WT/WGTDF/W/33) in July 2005 as it holds  the view that the relationship between a 
country's trade, its financial situation and its inde btedness needs to be examined.  Argentina therefore 
considers that the Working Group should be institu tionalized so that, from a systemic perspective, 
through its analyses and proposals it can help to ensu re that the multilateral trading system can offer 
developing and least-developed countries with extern al financial difficulties and a high external debt 
instruments that they can use to overcome such situations. 
102. In short, a central feature of Argentina' s policy continues to be the assurance of 
implementation of their WTO commitments by all Me mbers.  At the same time, in the negotiations 
under the present Round, Argentina continues to seek ac tively to ensure that the outcomes lead to a 
fair and balanced agreement which does not defer c onsideration of its national interest and those of 
the developing countries as a whole. 
(c) Argentina and regional integration 
103. Argentina regards economic integration agreemen ts as an appropriate tool for reducing and 
gradually eliminating trade barriers, expandi ng markets and simultaneously strengthening the 
multilateral trading system as they pave the way for the ultimate goal set by the founders of the GATT, namely elimination of discrimination in intern ational trade.  Accordingly, it participates in and 
champions integration both with the countries of  the region and with those of other regions. 
104. Argentina is a member of the Latin American Integration Association (LAIA) and is a party 
to a number of the regional agreements adopted w ithin its framework.  In particular, the Southern 
Common Market (MERCOSUR) has been incorporat ed in the above-mentioned Association under 
Partial Scope Economic Compleme ntarity Agreement No. 18 (ECA 18).  Following establishment of 
MERCOSUR, preferential trade negotiations were c onducted by the block with non-member States, 
leading in particular to the signing of Economic Complementarity Agreements with Chile (ECA 35) 
and Bolivia (ECA 36) and agreements with Colomb ia, Ecuador and Venezuela (ECA 59), Peru (ECA 
58) and Mexico. 
105. Outside the LAIA, Argentina, as a State party to MERCOSUR, has signed a fixed preferences 
trade agreement with the Republic of India and an other with the Southern  African Customs Union 
(SACU).  It has also conclude d framework agreements with Egypt, Morocco, Israel, the Gulf 
Cooperation Council and Pakistan. 
106. As regards other negotiations, MERCOSUR is holding talks with the European Union on the 
establishment of a political, economic and inter-region al cooperation association, and is involved in 
the negotiations for the establishment of the Free Trade Area of the Americas (FTAA).  As regards 
trade among developing countries, Argentina a ttaches great importance to the UNCTAD global 
system of trade preferences among developing coun tries (GSTP), having promoted the third round of 
negotiations launched in Sao Paulo, Br azil, which is currently ongoing. WT/TPR/G/176 Trade Policy Review 
Page 34 
 
 
 (i) Argentina and MERCOSUR 
107. Argentina regards the Southern Common Market  (MERCOSUR) as a central strategic project 
in its foreign policy and an important platform for promoting its further international integration.  
Since the signing of the Treaty establishing MERCOSUR (1991 Treaty of Asunción), this regional 
integration agreement has become the priority regi onal integration objective of Argentina's foreign 
trade policy.  At the same time, MERCOSUR cons titutes a key instrument for improving conditions 
of access for Argentine exports to other ma rkets within and outside the region.  
108. Argentina took the decision to join the MERC OSUR regional integration project because 
regional and bilateral trade agreements between neighbouring countries, and more particularly, 
between developing countries, are an important and appropriate complement to worldwide trade 
liberalization based on the multilateral system. 
109. Argentina's membership of MERCOSUR, which is a customs union, means that some of its 
trade policy decisions are defined at MERCOSUR le vel.  Specifically, trade issues concerned with 
Argentina's relations with other non-MERCOSUR c ountries are covered by commitments undertaken 
at regional level.  In this connection, it is worthy of note that, as a result of the adoption of the 
Protocol of Ouro Preto (1994) and the establishment of the common external tariff (CET), the 
MERCOSUR partners agreed that they would negoti ate free-trade agreements and trade preferences 
with third countries as a block.  In the year 2000, th e partners ratified the decision to negotiate jointly 
and approved that commitment by means of Decision CMC32/00. 
110. Argentina takes an active part in the internal negotiations w ithin MERCOSUR which, fifteen 
years after its formal establishmen t and with the end of the macroe conomic instability which plagued 
Member countries between the end of the past deca de and the beginning of this one, has in recent 
years made important progress towards achieving its primary objective, that of establishing a common market based on the necessary consolidation of the customs union.  The advances made include 
effective application of the CET in most areas of trad e with the rest of the world, with a reduction in 
the number of products included in the list of excepti ons and the establishment of a timetable for their 
phasing out by the year 2008. 
111. At the same time, MERCOSUR is engaged in harmonizing the special import regimes 
currently applied unilaterally by the States parties,  by which total or partial exemption from the CET 
is granted for specific imports of parts and components and inputs. 
112. As regards the free movement of goods within  the customs union, substantial progress has 
been made on the drafting of the MERCOSUR cu stoms code, computer interconnection between 
customs authorities, elimination of double chargi ng of the CET and distribution of customs revenue. 
113. Progress has also been made in integrating production, through pr omotion of balanced 
industrialization among the partners.  To that end,  meetings are encouraged  between entrepreneurs 
from the four countries to define alternatives in r espect of regional production complementarity and to 
cooperate with governments in identifying the cha nges in public policy necessary to intensify this 
process.  In that connection, work is proceedi ng on the programme of competitiveness forums, with 
the aim of identifying areas in which regional indus trial complementarity favours a greater degree of 
specialization to improve efficiency and, thr ough concrete measures, to make MERCOSUR products 
more competitive in the international market. 
114. Similarly, studies and projects are being conducted on investment in infrastructure in the 
MERCOSUR countries and their partners, as well as highw ay and energy integration, development of Argentina WT/TPR/G/176 
 Page 35 
 
 
 port facilities and a renewed impetus to shipbuilding.  In view of the differences in levels of 
development within MERCOSUR, the question of structural asymmetries has become increasingly 
relevant to the further integration agenda, especially  since 2003.  Within this context, it is worth 
noting the creation of the MERCOSUR Structural Convergence Fund – FOCEM ( Fondo para la 
Convergencia Extructural ) which started to function in 2006.  Th is is the first community mechanism 
to permit a net transfer of resources from the larger to the smaller MERCOSUR economies.  The Fund is intended to finance programmes to promot e structural convergence, develop competitiveness 
and foster social cohesion, particularly in the smaller economies and less-developed regions, and to 
support the functioning of the institutional stru cture and strengthen the integration process.  
115. The MERCOSUR Protocol on Government Procurem ent was also adopted during this period.  
The Protocol improves the transparency of governme nt procurement on the basis of the MFN clause 
and the granting of "national treatment" for most  tendering procedures in respect of goods, services 
and public works. 
116. In December 2003, MERCOSUR approved two important instruments designed to deepen 
integration in the services sector:  (i) the ME RCOSUR Visa, which eliminates restrictions on 
movement and work affecting natural pers ons supplying services within MERCOSUR, by 
establishing a harmonized and uniform procedure in respect of migration and work permits;  and 
(ii) the "mechanism for the temporary exercise of professional services", which eases the conditions 
for professional employment of persons who enter temporarily to provide a service.  Moreover, continued progress was made in negotiating the liberalization of the services sectors under the 
Montevideo Protocol on Trade in Services, which entered into force in December 2005.  
117. Further and deeper institutionalization of th e integration process is an ongoing objective and 
recent advances in this area include the new disput e settlement system established under the Olivos 
Protocol approved in 2002.  The most important aspect of that Protocol is undoubtedly the introduction of a system of review of decisions , similar to the one provided for in the WTO 
Understanding on Rules and Procedures Governing the Settlement of Disputes.  The planned 
establishment of the permanent review court is aime d at fostering the uniform interpretation of the 
entire body of MERCOSUR legislation and establishing a common jurisprudence, so as to strengthen the institutional framework of MERCOSUR and give it greater legal stability.  The court will also be 
responsible for monitoring compliance with decisions  and regulating the implem entation of retaliatory 
measures. 
118. Another important feature of the institutiona lization of MERCOSUR is the adoption of the 
Protocol establishing the MERCOSUR Parliament, whic h will be set up in 2006.  The Parliament, as a 
body representing the peoples of MERCOSUR, will become a common forum reflecting the pluralism and diversity of the region and contributing to de mocracy, participation, transparency and social 
legitimacy in the development of the integration process and its regulations. 
119. It is also important to note the role played  by the Committee of Permanent Representatives of 
MERCOSUR in consolidating the integration process.   This body proposes concrete measures with a 
community focus to enhance social, political and pa rliamentary relations within MERCOSUR.  Rules 
were also enacted, inter alia , to transform the MERCOSUR Secretaria t into a body with technical and 
not just administrative functions, and the basis was laid for the establishment of a regional parliament. 
120. The MERCOSUR Regional Employment Conferen ce was held in April 2004 with the 
participation of the political sectors and social actors in the region.  Its aim was to place employment 
at the forefront of regional and national public polic y.  In this connection, work is progressing on the WT/TPR/G/176 Trade Policy Review 
Page 36 
 
 
 MERCOSUR employment growth strategy, on the b asis of the joint efforts of the Ministries of 
Labour, Economy, Education and Exte rnal Relations of the States parties and the contribution of the 
trade unions and employers' organizations in the re gion.  The aim is to generate decent work and 
quality employment through the coordination of MERCOSUR's economic, trade, labour and social 
policies. 
121. Lastly, it is worthy of note, that the firs t enlargement of MERCOSUR was effected through 
the accession of Venezuela.  The terms and conditions  of accession were set out in the Protocol of 
Accession of the Bolivarian Republic of Venezuela to MERCOSUR, signed at presidential level by 
the five countries on 4 July 2006. 
122. By fostering and following up all these acti ons, Argentina is promoting progress in the 
development and intensification of regional integration and the achievement of the main goal of the 
Treaty of Asunción, which is the establishment of the common market. 
(ii) MERCOSUR and the LAIA 
123. Recent years have seen the deepening of agreements to liberalize trade among Latin 
American countries in the framework of the Lati n American Integration Association (LAIA).  
MERCOSUR has played a dynamic role in this process. 
124. Specifically, MERCOSUR was incorporated in  the above-mentioned Association through 
Partial Scope Economic Complementarity Agreemen t No. 18 (ECA 18).  On that basis, common 
preferential trade negotiations we re conducted between the States parties to MERCOSUR and third 
States, leading in particular to the signing of Economic Complementarity Agreements with Chile 
(1996) and Bolivia (1997), whereby they became as sociate members and have been granted regular 
increases in margins of preference for the achievement of an expanded free-trade area. 
125. In addition, through MERCOSUR, Argentin a negotiated Economic Complementarity 
Agreements during the period covere d by this review, which provide for the establishment of free- 
trade areas, to be concatenated by 2008, with Colombia, Ecuador and Venezuela (ECA 59, signed in 
2004) and by 2019 with Peru (ECA 58, signed in 2005). 
126. Economic Complementarity Agreement No. 54 (ECA 54) between MERCOSUR and Mexico 
was signed in 2002.  This is a framework agreemen t for the establishment of a free-trade area, whose 
coverage extends, inter alia , to the agreements concluded or to  be concluded by the United Mexican 
States with each of the States parties to ME RCOSUR in the framework of the 1980 Treaty of 
Montevideo.  Moreover, MERCOSUR and Mexi co have signed Economic Complementarity 
Agreement No. 55 with the aim of promoting the in tegration and complementarity of production and 
laying the groundwork for the achievement of fr ee trade in the automotive and auto-parts sector. 
127. On the basis of ECA 54, Argentina and Mexico ha ve promoted the expansion of their bilateral 
relationship, signing a supplement to Economic Co mplementarity Agreement No. 6 in 2006, which 
provides for reciprocal liberalization within a period of ten years for a large range of products in their 
reciprocal trade. 
128. Agreement was reached in 2006 on the Second A dditional Protocol to Appendix I on trade in 
the automotive sector between Argentina and Mexico, under Economic Complementarity Agreement No. 55 between MERCOSUR and Mexico .  The Protocol provides for th e liberalization of trade (zero 
tariff) for roughly 100 tariff items  in the auto-parts sector. Argentina WT/TPR/G/176 
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 129. Also in 2006, an Economic Complementarity  Agreement was signed between MERCOSUR 
and Cuba, which provided for the extension of the existing bilateral agreements between the 
MERCOSUR States parties and that country. 
(iii) MERCOSUR and the FTAA 
130. Argentina is participating in the negotiations to establish a Free Trade Area of the Americas 
(FTAA), whose objective is the gradual eliminati on of tariff barriers among the countries of the 
western hemisphere.  The negotiating format was m odified at the Eighth Ministerial Meeting (Miami, 
2003), as it was not possible to overcome the substan tial differences regarding definition of the level 
of ambition in various areas of negotiation, particularly agriculture. 
(iv) Extra-regional agreements in MERCOSUR 
131. Argentina, through MERCOSUR, has signed vari ous framework agreements.  The first was 
the one between MERCOSUR and the Re public of South Africa, signed in  2000.  This is a framework 
agreement for the negotiation of a free-trade area, wh ich was subsequently extended to the remaining 
members of the Southern African Customs Union (SACU).  In December 2004, both parties signed a 
fixed preference agreement whose schedules of con cessions are currently being finalized.  Protocols 
were also signed on customs cooperation, the MERCOSUR-SACU Sanitary and Phytosanitary 
Agreement, Trade in the Automotive Sector, and Fish eries.  This agreement represents a first step 
towards the negotiation of a free-trade area. 
132. Negotiations with India on a fixed preference ag reement were initiated in 2003 and concluded 
in December 2004, making this the first agreemen t signed by MERCOSUR with a country outside the 
Americas.  The agreement contains lists of elig ible products as well as annexes on rules of origin, 
safeguards and dispute settlement.  This agreement is  currently under consideration in the respective 
Parliaments and is expected to be ratified in th e near future.  The agreement itself provides for a 
second round of negotiations, for the establishment of a free-trade area. 
133. In 2004, MERCOSUR signed two fu rther framework agreements with Morocco and with the 
Arab Republic of Egypt, both geared to the gran ting of fixed preference concessions between the two 
parties, as a first step towards a free-trade area.  Furthermore, in 2005, a framework agreement was 
signed with the Gulf Cooperation Council (Saudi Ar abia, Bahrain, the United Arab Emirates, Kuwait, 
Oman and Qatar) under which the establishment of a free-trade area is being negotiated. 
134. In 2006, MERCOSUR made progress in the negotiation of a free-trade agreement with Israel, 
and a framework agreement on trade was signed with  Pakistan, which establishes a basis for trade 
negotiations leading to the adoption of a fixed preference agreement. 
135. In addition, a MERCOSUR-China liaison gr oup has been established to follow up and 
implement cooperation projects between the two par ties and to establish coordination for resolving 
any situations or problems that may arise.  Contact s are also maintained with the Republic of Korea, 
the Dominican Republic, Panama, CARICOM, Sao To mé and Principe, Guinea-Bissau, the Central 
American Integration System (SICA) and Japan. 
(v) MERCOSUR and the European Union 
136. In 2000, MERCOSUR and the European Union entered into negotiations on the establishment 
of an inter-regional association agreement, whic h includes chapters concerning political dialogue, WT/TPR/G/176 Trade Policy Review 
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 cooperation and trade liberalization.  As in th e case of multilateral negotiations, Argentina is 
proposing ambitious targets which ta ke account of mutual interests and the overall balance of offers. 
137. During the negotiating rounds and technical m eetings, both parties have worked toward 
achieving an ambitious agreement.  Thus far, it h as not been possible to conclude the work given the 
absence of equivalent offers in the different areas. 
(vi) Global system of trade preferences 
138. In the multilateral sphere, MERCOSUR also att aches importance to accelerating the pace of 
negotiations under the global system of trade pr eferences among developing countries (GSTP), with 
the aim of achieving a comprehens ive agreement in the course of 2007.  In the context of Round III of 
the GSTP and under the presidency of Argentin a, MERCOSUR drew up a proposal on negotiating 
techniques and modalities for market access, based on two guiding principles:  a high level of 
ambition and the simplicity of the instruments selected. 
139. The effective organization of the GSTP will make  it possible to expand markets for Argentine 
products, make better use of the capacities of the count ries that are parties to the agreement, diversify 
production structures, increase efficiency and contribu te to the growth of the international economy.  
At the same time, the agreement will represent a qu alitative step forward in the role of developing 
countries in international trade and will confirm th e developing countries' firm commitment to the 
multilateral system and the liberalization of trade flows. 
(3) TRADE PROMOTION  
140. The management of external trade promotion at  national level is a task conducted by more 
than one entity in Argentina.  Ministerial Law No. 22.520 (text harmonized by Decree No. 498/92) 
stipulates that, in the area of trade promotion policy, the Secretariat of Industry, Trade and Small and Medium-sized Enterprises of the Ministry of the Economy and Production is involved in setting the policy, while the Secretariat of Trade and Intern ational Economic Relations of the Ministry of 
External Relations, International Trade and Worship, through the U ndersecretariat for International 
Trade, bears prime responsibility for implementation.   
141. Thus, multisectoral trade missions to foreign countries are organized , headed by senior 
national and/or provincial government officials, ta rgeting markets where opportunities for the growth 
of Argentine exports have been identified, as we ll as various campaigns to publicize trade and 
investment offers and opportunities, the participa tion of businesses in international trade fairs and 
other measures, including the organization of special  promotion activities.  Another noteworthy aspect 
is the active participation of provinces and muni cipalities in trade missions by businesses.  The 
programmes in force are implemented in conjunctio n with the federal institutions, in accordance with 
Argentina's political structure and the management of trade promotion.  
142. One important feature of the function of trade promotion carried out by the Ministry of 
External Relations is the design of the "Arg entina Trade Net" business portal, which began 
functioning in October 2004.  The basic aim of th is programme is to promote foreign trade through 
the centralization and standardization of inform ation generated by embassies, consulates and 
promotion centres, so that Argentine enterprises  can have direct access to updated data on 
international demand free of charge. 
143. Mention should also be made of the Fundación Export.Ar , a major trade promotion agency 
set up in 1993 as a non-profit-making organization with public and private sector funding (the private Argentina WT/TPR/G/176 
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 sector being represented by various business chambers).  Its activities are supported by the 
120 embassies, consulates and economic and trade units  of the various Argentine missions throughout 
the world.  Some of the main services provided by this entity to expo rting enterprises are the 
following:  trade promotion programme, exporters group programme, international trade fairs, trade 
missions, business agendas ( Agenda de Negocios ) and reverse business agendas ( Agenda de Negocios 
Inversas ) etc. 
144. The Undersecretariat for Small and Medium-s ized Enterprises and Regional Development of 
the Ministry of the Economy and Production also generates trade promotion instruments and mechanisms with a view to securing greater participation by small and medium-sized enterprises in 
export activity.  The most noteworthy mechanisms  used by this entity include the following, inter 
alia:  support programme for exporter groups and consortia;  first expor t support programme;  
information system on foreign trade;  and register of exporting SMEs. 
145. This agency has also developed the pro-Argen tina.gov.ar portal, devised to promote exports 
by roughly 9,000 exporting SMEs.  Essentially, ente rprises can use this portal to make their export 
potential known to the rest of the world and to gain  access to market surveys.   The portal includes a 
directory of exporting SMEs with data on thei r products and services, information on exportable 
products, events, missions and trade fairs in Argentin a and abroad, together with a special database 
for foreign users, commercial opportunities and market profiles. WT/TPR/G/176 Trade Policy Review 
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 IV. SUSTAINABILITY OF TRADE POLICY 
146. Despite having suffered the worst crisis in its history in 2001-2002, Argentina recovered 
rapidly thanks to the strenuous efforts of its Govern ment and people.  The persistence of the current 
conditions of macroeconomic stability, based on th e floating exchange rate, the fiscal surplus, 
monetary prudence and the active role of the State in promoting economic activity and foreign trade, 
make it likely that the economy will sustain its rec overy and enter into a prolonged cycle of more 
equitable growth. 
147. Argentina considers that its economic devel opment potential hinges crucially on avoiding 
crises in the external sector, such as those th at occurred in the past as a result of violent 
macroeconomic upheavals that had an impact on fi nance, production and society, entailing serious 
losses of human and material capital.  Thus, the Government has placed strong emphasis on plotting a 
course of sound external sector management for th e sake of harmonious long-term development, by 
creating the necessary conditions to expand exports of goods and services and attract investment and 
technology. 
148. In this new phase for Argentina, government po licy is aimed at maintaining a healthy trade 
surplus, a novelty in the country's economic growth cycles, by stepping up its efforts to achieve 
greater diversification of products and markets, increase the proportion of non-traditional goods that 
are exported, and increase the number of exporters, especially exporters of manufactures.  However, 
the possibility of a significant enhancement of Arge ntina's presence in world trade depends not only 
on continued gains in output and competitiveness, but  also on the country achieving greater market 
access, especially in sectors where it is more competitive, such as agriculture. 
149. With those aims in view, Argentina has estab lished a trade policy devised as a system of 
instruments and measures which determine its extern al integration along with the achievement of 
economic development.  To that end, priority has been assigned to the successful establishment of 
stable and predictable conditions of market access in all areas (multilateral, regi onal and bilateral).  At 
the same time, through various instruments of public  policy, Argentina is promoting export potential 
appropriate to the characteristics and requireme nts of external demand, while improving the 
competitiveness of production sectors and expanding the export base. 
150. The prospect of stable and predictable market  access is essential for the purpose of attracting 
investment to the export sectors.  This should be  complemented by compe tition policies that ensure 
improved integration into the inte rnational production chains so as to produce goods with higher value 
added.  In this connection, technological developmen t and better training of the work force, with State 
backing, play a fundamental role. 
151. At the same time, the participation of small and medium-sized enterprises in external sales 
has an important role to play in diversifying expor t potential, bearing in mind that a high proportion of 
such enterprises export industrial manufactures.  Given that enterprises of this kind are more labour 
intensive, greater international integration is dir ectly dependent on job creation.  In view of the 
sporadic pattern of foreign sales by such firms in the past, the Argentine State is building the 
institutional foundations needed to ensure their sustainable participation in the export trade. 
152. In the area of trade policy, Argentina assigns a role to multilateral negotiations, which is 
reflected in its active participation in the World Trade Organization (WTO).  Argentina reaffirms its 
commitment to the multilateral system and is doing its utmost to achieve the objective of open and 
fair world trade, facilitating the expansion of mark et access and thereby making a clear contribution to Argentina WT/TPR/G/176 
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 the sustainable development of Member countries, es pecially the developing countries.  In the present 
Doha Round, Argentina is seeking to achieve c oncrete outcomes which improve its potential for 
international integration, by placing strong emphasis on the liberalization of agricultural trade and the 
achievement of equitable outcomes in respect of indus trial products and services, so as to facilitate the 
implementation of its industrial and economic divers ification policy.  This will help to create the 
necessary conditions for ensuring an  improvement in the quality of employment and its sustained 
growth. 
153. Regional integration is another basic instru ment for increasing and improving the quality of 
Argentina's integration into the trading system.  In this connection, the development of MERCOSUR, 
and the consequent consolidation of the trade li nks among the countries of the region, boosts their 
intra-industry trade, a fundamental step towa rds MERCOSUR's integration into world production 
chains and towards the diversification of its production and export structure. 
154. MERCOSUR is an essential element of Argentin a's trade policy and its unshakeable objective 
is to establish a common market among the memb er countries through the consolidation of the 
customs union.  At the same time, through MERCOSUR,  Argentina plays an active role in integration 
with Latin America and with the other countries and regions of the world seeking the development of 
fair and equitable trade. 
155. In short, Argentina's further integration in to the world economy is based both on an active 
trade policy which seeks to expand opportunities fo r access to external markets by Argentine 
companies, and on an economic policy that permits sustainable growth and encourages investment in 
the export sectors. 
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