2005年-世界发展银行全球_WTO_Safeguards_and_Trade_Liberalization___Lessons_from_the_Argentine_Footwear_Case_37页_360kb

Summary of the Argentine Footwear Case and WTO Safeguards

Core Content

The Argentine footwear case provides a critical example of the challenges and complexities faced by developing countries when implementing trade liberalization policies under WTO rules. The case highlights the interaction between multilateral and regional trade agreements, particularly within Mercosur, and the implications of currency overvaluation and the lack of clear safeguard mechanisms.

Main Points

• Trade Liberalization and Exchange Rate Policies:
  Argentina initiated a significant trade liberalization program in the late 1980s, which led to a sharp decline in import tariffs and an increase in trade flows. The Convertibility regime, which pegged the peso to the dollar, caused an overvaluation of the currency, increasing the adjustment costs for domestic industries, including footwear. This overvaluation was a major factor in the industry's decline in competitiveness.

• Footwear Industry Overview:
  The footwear industry in Argentina had a long history, but it was not competitive internationally due to high labor costs and limited access to low-cost inputs. The industry was divided into two segments: sports footwear and non-sports footwear. The latter, which was more affected by trade liberalization, was the focus of the safeguard measures.

• Impact of Trade Liberalization:
  The reduction of trade barriers led to a dramatic increase in imports, which negatively impacted domestic producers. By 1993, imports accounted for about one-third of domestic production. The industry's competitiveness was further undermined by the overvalued peso and the decline in export tax support for raw leather.

• Import Relief Measures:
  Argentina initially used "minimum specific import duties" (DIEMs) as a de facto safeguard measure. These were later replaced by formal WTO safeguard measures. However, the application of these measures was challenged by the European Commission (EC) and found to be inconsistent with WTO rules.

• WTO Dispute and Appellate Body Determination:
  The EC argued that Argentina's safeguard measures did not meet the WTO's criteria for "unforeseen developments" and that they were not based on a valid injury caused by imports. The Appellate Body ruled in favor of the EC, finding the measures illegal. This decision created uncertainty about the use of safeguards, particularly for developing countries.

• Key Lessons from the Case:

  • The WTO Appellate Body's jurisprudence on safeguards creates significant uncertainty for developing countries implementing trade liberalization.
  • Ambiguous multilateral agreements should not be relied upon to clarify the use of safeguard measures.
  • Currency overvaluation increases the adjustment costs of trade liberalization.
  • Regional agreements must include adequate transition mechanisms to support industries during the shift to free trade.

Key Information

• Trade Liberalization Timeline:

  • Late 1980s: Unilateral liberalization led to a significant reduction in import tariffs.
  • 1991: Argentina, Brazil, Paraguay, and Uruguay signed the Tratado de Asunción, creating Mercosur.
  • 1994–1995: Mercosur liberalization completed, leading to a sharp increase in imports.
  • 2002: Convertibility regime abandoned, leading to a major devaluation of the peso.

• Import and Export Trends:

  • Imports of footwear increased from less than $5 billion in the late 1980s to over $30 billion in the late 1990s.
  • Exports grew from around $6 billion to over $26 billion in the late 1990s, but declined later due to the end of export promotion programs and overvaluation of the peso.

• Safeguard Measures:

  • DIEMs were used as a temporary measure to protect the industry from import competition.
  • The EC challenged these measures, arguing that they were not based on unforeseen developments and that they violated WTO rules.
  • The Appellate Body ruled against Argentina, leading to the dismantling of most of the safeguard measures.

• Political Economy Considerations:

  • The use of safeguards was seen as a necessary political and social compromise to mitigate unemployment and industry collapse.
  • The lack of regional safeguard mechanisms within Mercosur made it difficult for Argentina to adjust its trade policies without facing WTO challenges.

Conclusion

The Argentine footwear case underscores the limitations of WTO safeguard rules and the need for clearer legal frameworks that support developing countries during trade liberalization. It also highlights the importance of regional integration agreements in including transition mechanisms to ease the adjustment process and maintain support for liberalization policies.