Dr Juan Carluccio’s import-tariff reform reduces costs for industry in Argentina and across MERCOSUR
Import tariffs in Argentina are amongst the highest in the world and have remained barely unchanged since 1995. Following an extensive period of research, Surrey Business School’s Dr Juan Carluccio has developed a proposal for import-tariff reform that has significantly impacted policy-making in Argentina and MERCOSUR, the South American customs union which also includes Brazil, Paraguay and Uruguay.
Dr Carluccio’s underpinning research into understanding how imports affect firms, workers and consumers, enabled him to work with the authorities in Argentina to change policy. Achieving “intelligent insertion into the world” was one of the main objectives of Argentina’s government during the Presidency of Mauricio Macri.
The proposal for import-tariff reform influenced policy-making through three channels:
- Negotiations to revise the Common External Tariff (CET) of MERCOSUR, a 270 million inhabitant trading bloc, which has already resulted in savings of £100m per year for firms
- Unilateral tariff reductions, producing savings of over £50m per year
- Negotiations of trade agreements between the EU and MERCOSUR leading to the world’s biggest free trade area.
The direct effect of a reduction of trade barriers is to make imported goods cheaper. Firms have incentives to join global value chains and replace locally made inputs with foreign ones (offshoring), and consumers benefit from accessing cheaper goods. Reducing tariffs increases competitive pressure on local producers to lower their prices, leading to export competitiveness, higher production and employment.
“The research highlighted that a reform of the tariff structure was essential to succeed in our main objective of achieving the “intelligent” integration of the Argentine economy into the world, a pillar of which is the signing of free trade agreements.”
The Economic Policy Secretary of Argentina during 2018-2019