Export promotion policies and countervailing custom duties

Abstract

In Argentina, non-traditional exports benefit from a wide range of export promotion (EP) policies. In general terms, non-traditional exports are produced by industries whose sales in the domestic market are protected by the import regime. Consequently, the role of EP policies is to reduce the differential between the effective exchange rates obtained from sales in the domestic market and exports. Likewise, exports from efficient industries–such as those carried out by the primary sector– are taxed and therefore the effect of export promotion consists of widening the differential between the prices received by local producers and the prevailing ones in international markets. One of the major objectives of the EP policy has been to diversify exports by increasing those corresponding to industrial products. In this sense, in recent years and looking at a global picture, the EP policy has been a failure. This failure should be attributed not only to its industrialization strategy based on import substitution but also to its macroeconomic instability. This does not only result in poor trade performance, but also in an increasing threat of countervailing duties against Argentina. In this article I will review the main characteristics of the United States' countervailing duties against Argentina and argue in favor of the progressive elimination of the current system of discriminatory and ad hoc export promotion policies, and the introduction of a free temporary admission system for exporters.

JEL classification: F13 ; O24