Mercedes Botto Andrea Carla Bianculli - Flacso

the World Bank11. Thus, between 1989 and the beginning of 1991, nominal tariffs were lowered
reaching a level of 10% at the latter date, and the remaining import licenses were eliminated.
Certainly, the arrival of Domingo Cavallo12 at the Ministry of Economy implied the deepening of
the reform process started in 1989, and since then, trade liberalization was pushed even further. By
mid-1991, the average tariff fell to an unprecedented level of 12.2%, an impulse that was partially
reversed in October 1992, when the government established an extraordinary and temporary nontariff
duty of 10% to almost all tariff items. Two years later, this extraordinary levy was reduced to
3%. In addition, the government adopted a series of measures intended to promote exports and
reduce the manufacturing costs: the reduction and elimination of different taxes and the
establishment of credit facilities and measures aimed at stimulating exports.
However, this reduction was not homogeneous across sectors. In fact, it was structured around
groups of tariffs in order to give greater protection to goods locally produced and those used in the
production process vis-à-vis those that were not produced at home together with consumption
goods. Therefore, for instance, in 1992 the tariff structure established 20% for consumption goods,
10% for intermediate products, and 0% for capital and intermediate goods not locally produced,
while the automobile sector and electronic products remained as the two big exceptions to this
scheme with a tariff of 35% [Viguera, 1998: 14].
In terms of the regional integration process that had already been initiated with Brazil, in 1990 the
Act of Buenos Aires implied a key transformation by establishing an approach to trade
liberalization based on an automatic, linear and universal mechanism of tariff elimination. A year
later, the Treaty of Asunción extended these commitments to Paraguay and Uruguay, and created
the Mercosur13. The final aim was to achieve “the free circulation of goods, services and productive factors
among the member countries, through the elimination of the tariff and non tariff restrictions to the circulation of
merchandises and of any other equivalent measure”.
Four mechanisms were included in the founding treaty in order to move towards a common
market: 1. a trade liberalization program, being the final aim the establishment of a zero-tariff state
by December 31st, 1994; 2. the adoption of a CET and a common commercial policy with third
countries or groupings of countries as of January 1st, 1995; 3. the coordination of macroeconomic
and sector policies: foreign trade, agriculture, industry, fiscal, monetary, foreign exchange, capitals,
11 Unilateral trade liberalization was one of the requirements and conditionalities imposed by the IMF and the
World Bank, especially in terms of the elimination of administrative restrictions and especial regimes.
Nevertheless, the tariff reduction would be even larger than that proposed by these institutions; for example,
the World Bank only suggested an average tariff of 25% and a maximum tariff of 40%.
12 Based on the Fundación Mediterránea think-tank, Domingo Cavallo was Minister of Foreign Affairs
between 1989 and 1991, and was then instrumental in the realignment of Argentina with the United States.
13 During the 1990s, Argentina became increasingly interested in regional agreements, which include not only
Mercosur, but other initiatives such as the trade negotiations under the Free Trade Area of the Americas
(FTAA), and those aimed at establishing an agreement between Mercosur and the European Union (UE), on
one hand, and with the Andean Community, on the other. Nevertheless, the most important initiative was the
formation of the Mercosur together with Brazil, Paraguay and Uruguay.
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