Suchergebnisse

In May 2004 ten new members are incorporated to the European Union (EU) which, considered on the whole, represent a GDP which is four times greater than the Argentine GDP. With this expansion, the EU population will increase by 24%, its surface will increase by 28%, and the GDP will increase by only 5%. From the trade viewpoint, the expansion of the EU means a potential opportunity for the Argentine Republic as well as a tangible threat: having tariff preferences in a wider market once the Mercosur - European Union free trade agreement is entered into, and the possibility that the Argentine Republic is replaced as a supplier of the current EU (15 countries) by the new partners. In this analysis, it must be taken into account that the potential impact on trade will not be abrupt, since the expansion process of the EU took place gradually, and the new partners have had tariff preferences in the EU-15 for a long time. In fact, the European Agreements, signed at the beginning of the nineties, provided an institutional framework for the bilateral relationships between the countries of Central and Western Europe, and the EU which resulted in the free trade of industrial products, while, for the agricultural products, instead, the parties agreed upon a gradual liberalization.

Trade relations with the European Union are of critical importance to our country. Historically, and aside from economic cycles and trade agreements that may have geographically redirected trade flows, the Old World is one of Argentina's main trade partners, both in terms of the origin of our imports as well as in terms of the destination of our sales, which points to the high degree of complementarity existing between the production structures of both regions. To this should be added other political factors -such as the importance of the European bloc in the international scenario- and economic factors -such as the possible effect on other negotiation forum, such as FTAA or WTO- , which enhance even more the importance of a free trade agreement between Mercosur and the European Union. The concessions granted in a free trade agreement between two blocs may modify exchanges between the partners. On the one hand, obtaining tariff preferences tends to lead to an increase in exports towards the new partner; on the other hand, this may involve the loss of preferential access exclusivity for the older partners (in this case Mercosur partners), which means that sales to that destination face new competition which may partially or totally displace exports. This is what creates opportunities and threats for foreign trade, through changes in exports and imports, which in theoretical terms causes trade creation and trade diversion effects.

Argentina has an ambitious trade negotiations agenda for the coming years, both at the multilateral level (WTO) and the regional level (FTAA, MERCOSUR-EU, etc.). In this paper an initial assessment is made of the economic impact of the concessions (on the part of Argentina and of the future partners) involved in such agreements. For this purpose, a Computable General Equilibrium (CGE) model is used, which reflects the interrelations between all economic sectors and identifies the winners and losers after trade liberalization. The model used was developed at the Foreign Ministry's International Economy Centre (CEI), based on the Global Trade Analysis Project (GTAP) model. In the CEI version, the model adds nonstandard features, such as growing returns to scale in the manufacturing sectors, capital accumulation in the medium term and a positive relationship between trade openness and the productivity of the factors involved. In order to make the model operational (calibration), the latest GTAP database version is used. With a deliberate focus on the negotiations agenda of Argentina, five trade integration scenarios were simulated: (i) Free Trade Area of the Americas (FTAA), (ii) A free trade agreement between the countries of MERCOSUR and the European Union, iii) A combination of (i) and (ii) above, (iv) A free trade agreement between the countries of MERCOSUR and the United States (4 + 1) and v) Free world trade. In general terms, these agreements are simulated by setting bilateral tariff rates at zero. Accordingly, the simulated scenarios are the upper limit of the results that could be obtained from the simulated trade liberalization agreements. The simulations use a GTAP data base aggregation of sixteen sectors and ten regions. This enables the detection of the main aggregate, sectorial effects and the trade patterns of the trade integration scenarios.