Argentina in world forums: Opportunity and challenge

June 2, 2017
by Eugenio Diaz-Bonilla

Argentina is currently quite popular. In Dec. 2017, for the first time, that country will host the Ministerial Conference of the World Trade Organization (WTO), which convenes every two years to make central decisions for this crucial player in world commerce. Starting in Jan. 2018, Argentina will also hold the presidency of the G20, a group of countries established in 1999 to coordinate policies related to international financial stability among ministers of the economy and finance. Since the global crisis of 2008-2009, it has become a presidential-level meeting, addressing a wider range of responsibilities related to international cooperation. Finally, in late March 2018, Argentina will host the annual meeting of the Inter-American Development Bank for the third time, something that has not happened since 1996.

The tasks and responsibilities of the host country in each case are different. With respect to the IDB, the issues have usually been addressed previously by the Board of Executive Directors and the Bank’s management, so there is no separate role for the host country regarding the topics to be discussed beyond direct participation as a shareholder on the Board. The host does take on significant responsibility with respect to logistics, security, and country image. On occasions when a particularly controversial topic is to be discussed, the host country must serve as an impartial negotiator between both parties. However, this does not appear to be the case for the 2018 IDB meeting.

In the case of the WTO, many of the issues are discussed in Geneva beforehand, but the final negotiations take place at the Ministerial Conference. It should be noted that since the WTO, formerly a GATT Secretariat, became an institution in 1995, there are no longer rounds of negotiations. Instead, these take place in Geneva and are then finalized at the Ministerial meetings. This implies a more direct involvement of the host country, which must work with the Director General and the other member countries to try to reach concrete agreements on the issues under negotiation—usually against the clock, given the brief duration of the Ministerial meetings.

In agricultural trade issues, an area of significant interest for Argentina, progress was made at the last two Ministerial Conferences in areas such as the administration of agricultural import quotas (Bali) and the prohibition (phase-out) of export subsidies (Nairobi). An interim solution was also found for the management of public stocks of food-security-related products, a subject which India has strongly emphasized but which has not yet been resolved. For this year’s conference, there has been talk of reducing domestic support (subsidies) to agriculture and improving aspects of market access. These issues are more complex than those resolved at the past two meetings.

The traditional idea that “rich” countries are harming “poor” countries by subsidizing them does not reflect the complexity of current interests and situations. Developing countries like China and India have significantly increased domestic support for their agricultural sectors (through various measures for which opinions differ on whether they may or may not comply with WTO criteria). These, and other developing countries, are important agricultural exporters and compete with Argentina in a variety of products. At the same time, many of them have an agricultural structure based on small producers (2 hectares or less). In short, the technical and legal aspects and the political geometry of the negotiations in Buenos Aires will be more complicated. This will represent a challenge for Argentina’s officials who are expected to help forge the necessary commitments to achieve concrete results by the end of this conference.

On the other hand, the G20, as an ad hoc group without its own headquarters or officials, is significantly different from the IDB and the WTO in its decision-making processes and negotiations. One of the host country’s responsibilities is to ensure that the various working groups (and there is a wide variety of them, including agriculture, financial services, digitization, climate change, etc.) continue to generate analysis and policy recommendations, which may or may not be adopted by the participating countries. For the host country, this is a technical, personnel, and budgetary challenge since it involves assisting in the continuity of tasks and organizing a series of meetings. Additionally, within individual countries, each group is in charge of a specific ministry or organization. This means that there are always issues related to inter-agency coordination within each country and among the G20 working groups, which represents another equally important responsibility for the host country.

A central aspect of the country holding the G20 Presidency is to define the central topic of its mandate—an issue of global impact on which the host country would like to focus and that will become the “trademark” of its presidency. My understanding is that Argentina is considering topics such as employment, youth, technology, and “robotization.” These are all very suitable issues. My suggestion would be to consider the notion of a “basic,” “universal,” or “citizen” income (BI). Several well-known technological innovators, such as Bill Gates and Elon Musk, have suggested this as a way to respond to the challenge of increased “robotization.” I think that the instrument could also apply beyond the significant labor challenges produced by rapid technological change. Without being exhaustive, the concept of BI can be used as a) a tool to combat poverty (consolidating programs); b) unemployment insurance; and c) a safety net to protect against a variety of negative shocks to households, including those due to technological changes, but potentially spreading to income, healthcare, and other issues as well.

From this perspective, a well-designed BI could help unblock some of the WTO negotiations in which products are subsidized with the expectation that it will help the poor. Targeting subsidies on the people who need them and letting products operate under market-like conditions is much more appropriate.

Obviously, there are various operational models to consider for BI. Additionally, the fiscal implications (which can be favorable if distinct programs are consolidated) and the impact on labor incentives should be discussed. The analyses both in favor of and against the general idea of a BI have grown exponentially over the past several years. If Argentina manages to open a more systematic and neutral discussion on the topic, that would represent a significant contribution to the global policy dialogue.

Eugenio Diaz-Bonilla is Head of IFPRI's Latin American and Caribbean Program. This article was originally published in Spanish in the Buenos Aires newspaper Clarín. It has been translated here into English and slightly edited to reflect a more general context.