Mercedes Botto Andrea Carla Bianculli - Flacso

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allowing for the recovery of the trade flows that existed before the debt crisis, the PICE was intended to reduce the trade disequilibria through, among other means, trade liberalization, greater economic complementation, and technological cooperation [INTAL, 1998]. The idea of sectoral integration addressed thus two fundamental questions. On the one hand, it reflected a concern with planning and consolidating the industrial process, and, on the other, the emphasis on achieving balanced trade through sectoral agreements was intended to attenuate the fears of Argentine and Brazilian businesses regarding possible losses and diffuse political opposition to deeper integration [Valls Pereira, 1999]. In terms of the motivations underlying business sectors’ interest in participating within this process, it is clear that those sectors that feared possible losses, assumed their participation as a way of ensuring their own exclusion from the final lists of products. The decision-making process on regional integration remained largely top-down, state-led, and highly dependent on presidential initiatives: the PICE was the result of the deliberations carried out mainly within the Ministry of Economy, with limited or no input from the Ministry of Foreign Affairs. Certainly, this change in the liberalization process, which would be now carried out on a regional integration basis, entailed a new challenge for the government. What role, if any, was ascribed to research and academia? Technical expertise was provided by certain research centres, but these would only become involved once the PICE was already negotiated and settled: given that their participation would be circumscribed to the implementation phase, technicians and experts did not play an influencing role on the design and negotiation of this founding agreement. This same pattern could be applied to the participation of business sectors. Even if the text of the PICE contained interesting provisions on the role of the private sector in the integration process, this was mainly circumscribed to the implementation phase as well [Gardini, 2006]. The negotiation of the sectoral agreements between Brazil and Argentina was structured as a process of negotiated liberalization, while clearly avoiding a divergence in the terms of interchange. Government officials decided which sectors would be included in the PICE, and then, asked business associations in these sectors to work out agreements with their counterparts in Brazil [Schneider, 2004]. Overall, however, the PICE remained reminiscent of old regionalism, mainly in terms of the participation scheme, which assumed the same pattern as that of the LAIA: interchange of concessions on products with limited domestic production, and the emergence of difficulties or conflicts when advancing on sensitive products [Bouzas and Soltz, 2005]. This integration pattern presents thus two main characteristics. First, it was a cautious approach to liberalization by means of regional integration, which responded to an ideology of industrial promotion and protection, and to a state-led trade liberalization process. Secondly, it clearly reflected the prevailing rhetoric of democracy, which claimed that civil society participation was 12
fundamental to energize and legitimize democratic institutions [Gardini, 2006]. This means that, in principle, political leaders perceived the need to involve business sectors in their integration plans if these were to succeed and promote an effectively democratized society. However, in practice, governments made it clear that strategic decisions would still rely on the executives, who were to design the integration scheme and only, later, during the implementation phase would business actors be called in. This first phase of integration (1986-1989) was marked by sectoral negotiations in which trade instruments predominated8. These were intended to establish tariff reduction mechanisms, the timetable and scope of liberalization, and norms on unfair practices and undesired triangulations. Macroeconomic policy harmonization was not necessary since the deals were only partial and limited, and their aims flexible or undefined. Moreover, the high level of protection that both Argentina and Brazil had in terms of third countries also favoured this lack of “detailed” cooperation in their respective trade policies [Chudnovsky and Erber, 1999]. However, after an initial period of intra-regional liberalization and rapid trade growth9 – that restored trade flows to the levels recorded prior to the external debt crisis – the exchange of concessions slowed down and trade flows reached a plateau. In other words, this sector-by-sector integration moved slowly and finally stalled by the end of the 1980s, precisely because it was so dependent on presidential initiatives [Schneider, 2004]. The sectoral approach guiding the PICE would then be replaced by a universal approach to regional trade liberalization with the Acta de Buenos Aires (1990). 2.2. ACCELERATION OF THE LIBERALIZATION PROGRAM: MENEM AND THE CET (1991- 1995) The new administration, headed by Carlos Menem, continued with the trade liberalization process. At first, the government’s attitude towards trade liberalization reflected continuity in the agenda imposed during 1987-198810: even if there was a rapid move toward market reform, trade liberalization would be kept in a secondary and discreet place. The economic team established a policy aimed at reducing tariffs, which moved forward progressively, but which mainly stemmed, as in the case of the previous administration, from the requirements and demands of both the IMF and 8 In addition, it is noteworthy that in terms of the domestic context, important transformations would be put in place following Argentina’s worst episode of hyperinflation in 1989. Both extended recession and hyperinflation eroded confidence in Alfonsín’s government, who had to face a major political crisis as well. Elections, originally scheduled for December, were moved forward and in July 1989 the new government of President Menem assumed office, with the announcement of a new economic program and a broad reform agenda, which included privatization, inflation-reduction measures and fiscal reform – all of which would be later on packaged as the “Convertibility Plan”. 9 In general terms, the outcome of this phase shows a positive result for bilateral trade. During most of the 1980s, bilateral trade averaged around US$ 1.3 billion, and by 1989 it reached almost US$ 2 billion. Bilateral trade also showed certain balance given that it mainly consisted of Brazilian exports of industrial manufactures and Argentine exports of unprocessed or semi-processed foodstuffs. The PICE led to important transformations in the relationship between the two economies, even if certain domestic macroeconomic factors also account for these results [Chudnovsky et al., 2000]. 10 During this first stage, the Ministry of Economy would be in the hands of three different policymakers: Miguel Ángel Roig, Néstor Rapanelli, and Erman González. 13
Page 1 and 2: THE IMPACT OF RESEARCH IN TRADE POL
Page 3 and 4: INTRODUCTION By the mid-1980s, the
Page 5 and 6: and instruments for the rationaliza
Page 7 and 8: In sum, we assume a vast idea of ac
Page 9 and 10: The process of reform and liberaliz
Page 11: the discussions with the World Bank
Page 15 and 16: services, customs, transport and co
Page 17 and 18: insertion within the multilateral t
Page 19 and 20: from the long process of sustained
Page 21 and 22: objectives. First, he had to advice
Page 23 and 24: The list elaborated by the SICE was
Page 25 and 26: hindered all pressure or lobby acti
Page 27 and 28: The Ministry of Foreign Affairs dev
Page 29 and 30: work had to face referred to the la
Page 31 and 32: around the lowest tariffs - from 5
Page 33 and 34: In terms of the factors that either
Page 35 and 36: In both episodes of policy change,
Page 37 and 38: When analyzing the second dimension
Page 39 and 40: During the negotiation of the PICE,
Page 41 and 42: International Organization, 46(1):

Mercedes Botto Andrea Carla Bianculli - Flacso

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