– There is more and more talk of economic openness. Even in an agenda dominated by inflation, the dollar and uncertainty. What is going on?
– The initial definition is interesting. What do we call openness? First of all, to talk about opening up in Argentina we need to talk about non-automatic licenses, something very much ours. In everything related to tariffs and trade agreements, what the world calls openness, we are governed by Mercosur, that is, it is not something we can define unilaterally. But non-automatic licensing is something that is used in other countries very differently than we do here. They are applied in specific cases of, for example, health problems. But it’s not used as much as in Argentina, what is done here is a very rustic kind of import protection. And if there is increasing talk of openness or protectionism, it is because today we have more than 4,000 LNAs in place, which have a double function: to take care of foreign exchange and local producers. There are so many distortions and arbitrariness that it ends up becoming a corrupt system.
– So we have two levels. On the one hand, the limits of Mercosur and on the other, Argentina’s own management of non-automatic licenses. But what is being raised is how Argentina’s economy will open up in 2024. What do you see?
– It is difficult to speak of indiscriminate opening, because of course the opening will be gradual in the context of Mercosur. What can be done? If we assume that we will not leave Mercosur, there are several paths. First, the normalization of foreign trade, which must necessarily be accompanied by a single and reasonable exchange rate. Then, a reasonably priced dollar saves you from having to use non-automatic licenses to curb the outflow of currency. But the change will be more profound to go towards that smooth transition are trade agreements with other countries or blocs.
– Why are trade agreements decisive?
– By definition they are slow agreements but they give you a framework, like the Mercosur-European Union agreement, of 20 years to reconvert sectors. It is there that production policy and the lobby take control. It is one thing for a sector to come after 4 years to say it hasn’t arrived, it is quite another for it to arrive in 20. If we proceed with a systemic change of the rules, the production policy will be ordered internally and gradually, to avoid the shock in the most exposed sectors. And finally, you can use what I call specific interventions, a kind of acupuncture for certain areas. Any degree of discretion?
– Mercosur has a common external tariff which all partners respect. But there are lists that can be handled and on them to define a differentiated tariff. During the government of Mauricio Macri, for example, computers and information technology were taken over, for which lower tariffs were set. Another thing that can be done is trade facilitation to streamline and reduce procedures . Reactivate the one stop shop for foreign trade, which this government has done away with. This would help make foreign trade transparent and streamline it, especially for SMEs, which would save the expense of maintaining a foreign trade area within the company.
– I’ll go back to the beginning. Public opinion is divided between those in favor of a broad opening and those who fear the effects on employment and local production, evoking what happened during the dictatorship or during the Menem government.
– It is that I think we have a look between nostalgic and old of what economic openness means today. – We are talking about companies that do not directly adapt to the 21st century. Today what rules are the services. Young people don’t aspire to work in a factory or typical 20th century production line. Today they want the single tax to be enabled to sell services abroad. There are still many preconceptions rooted in the past.
– But not all workers, young or old, have the tools to think about selling their work abroad.
– Well. But today, employment generation comes from services, not from textiles or another sector. Today the protected sectors function as work exchanges, social support. What to take care of. Let’s consider it a space of transition and not a development model for Argentina. There is a process of automating manufacturing processes which will lead to fewer jobs. You have to think about a transition so that companies can convert and people can migrate to other sectors.
– Would it be what is defined as defense of the worker and not of work?
– It is a plan designed for the person and not for the sector. In the short term, if the problem is that we don’t want people out of work, we need to look at how to give them the skills they need in the 21st century. But in fact, the worker must be protected much more than the business sector.
– But there is resistance, this is evident, from trade unions and companies. How do you negotiate with these sectors?
– It is true that there is a discourse in favor of protection which is very difficult to subdue. There is a loss aversion and that is why what you have is valued more than what you could earn. But it must be explained that by lowering protection there will be more and better jobs, and this naturally compensates for the loss of the job. Of course, for incentive reasons, sectors invest in lobbying and maintaining the status quo. And the media sometimes lines up, giving a lot of coverage to, say, factory closures and layoffs. But when Falabella, who gave black jobs, left, there wasn’t much noise. My impression is that sectors that want protectionism invest in generating a protectionist narrative, which is easier to install.
– There are protected sectors who say that this is why import substitution produces savings in foreign currency.
– We need to stop thinking in these terms and think big. You have to think about the economy as a whole.
– Get out of the mercantilist gaze and the trap of external restriction?
– It’s a very seventies look. The external constraint is largely self-imposed. If the problem is currencies, it is solved with a reasonable exchange rate. With a logical dollar we will not have an avalanche of imports.
– You usually say that opening up the economy and importing more is a decision that favors the most backward sectors. Is that so?
– Imports are social justice because they benefit consumers of all social levels. And because economic openness is the opposite of protected entrepreneurs and unprotected consumers, where the majority is poor. Because the rich get better cell phones and cheaper clothes abroad. In short, to export more, you need to import more first.
Source: Clarin
