Trade and Development: The rising importance of sustainable development in the trade agenda of Argentina

This report constitutes a first approach to the examination of the link between the international trade and direct foreign investment agenda of Argentina and emergent issues of sustainable development. The study consists of four sections. In the first section, recent trends in trade and investment flows in Argentina, as well as the evolution of the public policies pertaining to those fields, are reviewed briefly. In the second section, we study the impact of international agreements and practices (public and private) in the matter of environmental standards, labor and climate change on the trade and investment agenda. The third section discuses five questions about the management of natural resources that are crucial for the sustainability of development ("agriculturalization", the impact of mining, forest degradation, fishing over-exploitation and the energy matrix and the role of biofuels). A brief section of conclusions ends the work.

This country report is part of a joint TKN-CINDES research project comprising of four national case studies - in addition to Argentina, Brazil, Chile and Peru were also studied - undertaken to identify, within the thematic areas of environmental and labor regulation, the most important issues for each country in terms of opportunity and/or vulnerability, as well as the forces that prompted the introduction of sustainable development topics into the country's trade and investment agendas. The other individual country studies, as well as a synthesis report summarizing the main findings for the region as a whole, are also available through the Trade Knowledge Network website.

Key points:

• The forces that prompted the introduction of sustainable trade issues into the political debate in Argentina, as well as the relevance of international pressures, vary according to the issue considered.

• In the area of environmental standards and food safety and quality, external pressures have played an important role in prompting domestic debate and the adoption of standards. The principal vector has been the multilateral agreements, and the adoption, by private and public agents, of practices in key developed country markets. A paradigmatic example is the discussion on genetically modified organisms (GMOs).

• In the case of labor issues, the characteristics of the labor market in Argentina, with a relatively high participation of unions and the little presence of externally competitive sectors intensive in unqualified labor means that external pressures have had little relevance to the discussion on labor standards. At most, international norms have functioned as 'resonance boxes' to particular demands of domestic actors. However, recent transformations in the Argentinean labor market suggest that external pressures may have more significance in the future.

• In the matter of climate change the influence of the external vectors was limited, although Argentina has had an active participation in the multilateral negotiations (in particular in the Kyoto Protocol) with a position generally coincident with the developing countries (the Group of 77 and China). A reason for this has been the little conflict that this field presents for Argentina, since the structure of the Argentine economy is characterized by a low polluting power (in terms of greenhouse-effect gases).

• An important difference between Argentina and the rest of the Latin American countries is the relative lack of importance of multilateral trade and investment agreements as vectors for introducing sustainable trade issues into the domestic political agenda, since Argentina does not participate in any north-south agreements, and the regional agreements signed, such as Mercosul, do not incorporate any commitments related to these issues.

Key recommendations:

• It is necessary to ensure a complete understanding of the implications of the international commitments that Argentina may eventually subscribe to. The density of the agenda of sustainable development that the international community has ahead will have consequences that can only be suitably appreciated if a holistic perspective is adopted and if the technical resources necessary to do it area available. The practical implications of this challenge are the need for coordination between experts and agencies, besides a suitable provision of information and intelligence about the issue.

• Given the foreseeable obstacles to cooperative multilateral solutions for sustainable development issues and the high probability that public or private unilateral measures will be adopted, the capacity to respond in a quick and suitable way as to the preservation of rights and adaptation of practices constitutes a fundamental social capital that must be built upon.

• The agenda of sustainable development raises endogenous challenges that would have to be administered regardless of the evolution of the international surroundings. Therefore, a suitable understanding of the cost-benefit of different policy options is needed for a satisfactory management of the development process.