Explaining Argentinas Regional Trade Policy-making in 1999

Abstract

This article examines Argentine regional trade policy behavior in 1999. It seeks to account for the decision to defect from regional commitments by establishing non-tariff barrier restrictions on footwear products from its main regional trade partner Brazil. These unilateral measures triggered one of the most serious bilateral disputes between the two countries in recent years. The article challenges conventional interpretations of the origins of the crisis. It argues that defection reflected a convergence of interests between the private sector, which feared the competitiveness effects of the Brazilian devaluation, and Argentine macroeconomic policy-makers. The tension between the latter, supporting the unilateral measures and the foreign policy elite, in turn, was crucial in shaping Argentinas final position in the crisis. Argentinas decision to press the private sector for the negotiation of a voluntary export agreement and to eventually withdraw the measures reflected a balance or compromised between the hardliners at the Ministry of Economy and the MERCOSUR-committed foreign policy makers and diplomats.