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Argentina Implements “Meat Nationalism” for 30 Days


Argentina Implements “Meat Nationalism” for 30 Days

The government announced an export ban on meat to stop the increase in prices and to prevent further declines in domestic consumption. What would Adam Smith say about such a policy?

In an attempt to tame price increases and promote the consumption of a product greatly ingrained in the Argentinian culture, the government of Argentina decided to establish a 30-day ban on the exportation of meat. The measure was implemented after the upsurge in the price of beef by nearly 70% in a year caused a significant reduction in domestic consumption. Allegedly, the president considers that people from Argentina should not pay the same price for meat as in “France, China, or any latitude in the world.” Even though other factors like inflation and the devaluation of the country’s currency play a role in both the increase in prices and the reduction of consumption, the government recurred to a policy already employed several times with disastrous consequences.

Will it work this time? 

Adam Smith, the founder of economics and champion of international free trade, made specific comments almost 250 years ago on the effect that exportation has on the domestic commercialization of agricultural products. According to Smith, when there is a surplus of a particular commodity in the home market, it will usually be exported. However, he warned that if people cannot export that commodity, they will reduce their production to serve only the domestic market. When that is the case, such a “market will very seldom be overstocked; but it will generally be understocked.” Hence, if ranchers in Argentina do not have the ability to export part of their production, they will end up reducing it. In the beginning, the supply of meat will be greater than the domestic demand. Thus, prices will decline in the short run. However, ranchers will adapt and produce less in the long run, which will increase prices yet again.

Smith asserted that free trade was always the best method to promote production. He argued that “[t]he prohibition of exportation limits the improvement and cultivation of the country to what the supply of its own inhabitants requires. The freedom of exportation enables it to extend cultivation for the supply of foreign nations.” In this sense, the meat export ban in Argentina will reduce the incentive for ranchers to increase productivity or produce in surrounding areas. On the other hand, allowing the free exportation of meat will lead ranchers to produce as much as possible to capture the greater demand from abroad. This will make them figure out ways to increase productivity or breed cattle in areas that before were neglected. Therefore, the free exportation of meat will increase the market’s overall supply and make prices fall.

Who benefits from the export ban?

Restricting the exportation of particular commodities is not a 21st-century trade policy only implemented in Argentina. In fact, even Adam Smith’s Great Britain of the 18th century applied export restrictions for certain products like wool. At that time, prohibitions of exportation were much more burdensome and oppressive, going so far as to imprisoning or cutting off the hands of those who attempted to export banned products. Nonetheless, the intention was always the same: to depress the price of the commodity to that which otherwise would be.

More importantly, the policy was (and still is) a clear privilege for some people at the expense of others. Smith commented that “the prohibition certainly hurts, in some degree, the interest of the growers of wool, for no other purpose but to promote that of the manufacturers.” In the case of the meat export ban in Argentina, reducing the price of meat damages ranchers while simultaneously benefits slaughter factories that only sell in the domestic market. This is because these slaughter factories will suddenly have more supply available than otherwise. At the same time, they will face less competition from those slaughter factories dedicated to exporting meat. Although this benefit may be transitory, it will allow these companies to produce and invest more than in normal circumstances. In that regard, the export ban is no other thing than a blatant privilege for domestic manufacturers to the detriment of other participants in the supply chain.

What should Argentina do?

It is not easy to understand that a country that was always praised for its good conditions to breed cattle is today in the middle of a crossroad in which it must restrict the exportation of meat. Incredibly, even Adam Smith related in his book almost 250 years ago how low was the price of meat in Argentina. He observed that at Buenos Aires, an ox costed “little more than the labour of catching him.” However, after several decades of failed trade policies, meat exports have decreased constantly in Argentina, making the country abandon the ranking of the largest meat exporters in the world.

The recently implemented export ban will undoubtedly fail as well. It will not bring meat prices down in the long run and will likely make things worse. If the government truly wants to reduce the price of meat in Argentina, it should allow exportation so that supply increases. There is no need for prohibitions and regulations. Ranchers will make sure to produce as much as they can. As Adam Smith said about his home country, “[t]hat security which the laws in Great Britain give to every man that he shall enjoy the fruits of his own labor, is alone sufficient to make any country flourish, notwithstanding these and twenty other absurd regulations of commerce.” Following the same logic, the government of Argentina should establish clear rules of the game and get rid of the meat export ban. That will incentivize ranchers to produce more, meat supply will increase, prices will go down, and everybody will benefit down the road.


Mr. Forzani is an MA in economics from George Mason University.

Vaccines Make the case for International Free Trade

Countries are planning to ban exports of vaccines to supply their own citizens first. That trade policy could have several unintended consequences.

With the pandemic already propagated worldwide and several countries experiencing a new rise in infections, governments are starting to focus on real solutions beyond lockdowns and masks. The most prominent of these solutions appears to be the development of a vaccine to treat the virus. However, such a cure brings with it what is called “vaccine nationalism,” which might end backfiring governments’ efforts to control the pandemic.

Vaccine nationalism refers to the action that some countries that are already producing the firsts trials of the potential vaccine could take if they decide to provide it to their own citizens first and prevent other nations from buying the antibody—the WHO has already requested countries to avoid this measure. The organization considers that no one will be safe if there are still outbreaks in other countries. Therefore, vaccination of a sole community without taking into account other countries will be a short-run solution.

Setting aside the public health implications of vaccine nationalism, the implementation of this strategy might have several trade policy consequences, similar to those affecting any other good subject to an export ban. Politicians could have the best intentions of trying to take care of people in their country with this policy. However, they are just considering the immediate effects of closing their borders to the exportation of vaccines and neglecting to consider the potential long-run impact on the whole community.

The total prohibition against exporting a specific good has the direct effect of reducing the final price of the product itself. In economic terms, holding the supply of the product constant, if the demand goes down due to the impossibility of exporting, the price will go down.

No one could be against lowering the price of a vaccine, because that way, more people will be able to buy it. However, this political intervention of the price does not come at no cost. Prices play a crucial role in incentivizing companies to produce whatever they consider profitable. They will be more willing to invest and hurry up the vaccine development if they know that the investments and efforts they put on it will be paid off in the future. If the price of the vaccine goes down because of the export ban, they might decide to reduce those investments and efforts. A 7.5 billion people market is much more incentive than a 300 million market.

There is also an issue with the efficiency of the economy as a whole when the government decides to intervene in foreign trade. As noted earlier, the prohibition against exporting a specific good decreases the incentive to produce that good. Resources and people will be diverted to the production of other goods and services that are more valuable, given the price reduction of the product that has its exports prohibited. The economy probably had a comparative advantage in manufacturing that product, but that will not be exploited fully anymore. Less efficient industries will increase in size at the expense of the most efficient ones. Therefore, the net effect is a change in the structure of the economy and a reduction of its efficiency.

Likewise, this distortion of the economy will probably happen with vaccine nationalism. A country might be relatively more efficient than another in producing a vaccine, maybe manufacturing it cheaply or with higher quality. However, resources will not flow quickly to its manufacturing if its price is held down artificially. Resources and people will be employed in the production of less valuable products, losing the opportunity to produce more efficiently a vaccine.

Restricting exports also presents an indirect consequence of decreasing a country’s imports through the reduction of its purchasing power. Exports pay for imports, and vice versa. The more a country exports, the more it should import. Conversely, reducing exports undercuts imports. Without exports, a nation cannot import. As any other family must sell some goods or services in order to get the purchasing power to buy something else, a country must export to be able to import. There resides the real gain of foreign trade. Through imports, consumers can get from abroad products at lower prices than domestically or goods that they are not capable of finding at home.

If vaccines are banned from being exported, that will mean that the country will see its imports decrease. No vaccines exported will reduce the possibility of importing, say, more ventilators, or masks. Given the novelty of this virus, countries are almost walking in the darkness. There is no certainty of what works and what does not. What happens if the vaccine ends up not working as expected? The government will see itself in a crossroads, with fewer funds to import from abroad products that it might require with urgency.

Finally, vaccine nationalism could have geopolitical consequences as well. The strategy could increase future retaliation from other countries. If the country that decides to prohibit exports of its vaccine then happens to have problems with its implementation, it will not be able to go to another country to ask for help. Again, there is no absolute solution for a global pandemic. Isolating from the rest of the world is undoubtedly the worst idea. 7.5 billion people looking for solutions is better than just 300 million people.

Banning the exportation of vaccines will bring many unintended consequences and end up being a bad strategy in the long run. Given the public attention that a potential cure for the virus possesses, hopefully, governments will understand that international free trade is the solution.


Mr. Forzani is an MA student in economics at George Mason University.



Argentina is no stranger to economic crisis. Nearly 600 different export taxes aren’t helping.

Argentina is no stranger to economic crisis. Before the spread of the COVID-19 pandemic, Argentina was experiencing more than 50 percent annual inflation, among the highest in the world. The IMF recorded a 2.5 percent drop in Argentina’s GDP in 2018, which shrank another 2.2 percent in 2019, throwing some 40 percent of the population into poverty. With a debt-to-GDP ratio of almost 90 percent and facing economic contraction of as much as 5.7 percent this year, Argentina’s government stands at the brink of its ninth default on international loans.

How could it get worse?

Trade restrictions can reinforce poor economic outcomes. As reported to the OECD, Argentina introduced, increased or expanded 585 different export taxes between 2000 and 2012. Hitting its farmers hard, Argentina’s new government recently increased export taxes on agricultural commodities. Export taxes on soybeans, soy oil and soy meal increased from 25 to 33 percent, while the taxes on exporting corn and wheat were raised to 12 percent from around 7 percent.

Export taxes distort decisions about what and how much to produce, affecting the cost to produce and the price of the export. Whether the measure significantly affects the world supply and price of that commodity depends on the global market power of the exporting country. For example, Argentina is the world’s third largest supplier of corn and soybeans. To the extent that Argentina’s exports are deterred by the tax, supply in the domestic market could increase, driving prices for the commodity producer down but also creating an input subsidy for domestic producers that use that commodity. As a result of the distortive effect of export taxes on the price of traded goods, it is unsurprising that trade as a percentage of Argentina’s GDP is significantly lower than countries in its peer group of middle income countries.

Argentina 585 export taxes

So why have them?

It is more common for governments to restrict imports to try to protect domestic producers of goods that compete with imports. For example, restricting imports of bread might favor local bakers who could then sell their products at higher prices without fear of competition from foreign producers. Yet we know the cost of suppressing competition means consumers (companies and individuals) will pay higher prices.

In contrast, export duties are less common than import restrictions and have a different justification. Smaller, resource-limited countries sometimes apply export restrictions to a small number of products to ensure adequate domestic supplies or to lower domestic prices. As a major world exporter of agricultural products, Argentina’s export taxes are a way for the government to raise revenue and address its fiscal gap.

How’s it working?

Argentina requires export registrations and permits, while fully banning the export of certain commodities including scrap iron, steel, copper and aluminum. Export taxes vary but Decree 37/2019 issued in December 2019 sets a general rate at 12 percent, with exceptions. The incoming government has already adjusted the rates, increasing soybeans and soy products to 33 percent while reducing others such as rice from 12 to six percent, dry beans from nine to five percent. Others remained the same. Wheat, corn, sorghum, wine, fruits and vegetables are taxed at 12 percent, while beef and chicken at nine percent.

Heavy trade taxation has distorted and decreased the productivity of Argentina’s economy. Moreover, the duties create incentives for rent-seeking as businesses seek special exemptions or reductions in taxes. Special exemptions prop up businesses that may have otherwise failed, preventing workers and resources from moving to their highest-valued uses in the economy. Such outcomes follow the tenets of Adam Smith’s basic economic treatise, The Wealth of Nations: the result of price and trade intervention “can only be to force the trade of a country into a channel much less advantageous than that in which it would naturally run of its own accord.”

Argentina counter to WTO norms on export taxes

Argentina isn’t exempt from economic laws

Trade, Adam Smith went on to observe, is driven by “a propensity in human nature … to truck, barter, and exchange one thing for another.” Certainly, in Argentina this propensity is curtailed today by these restrictions that make it almost impossible for people to exchange goods and services abroad.

Economic laws are universal. Individuals in Argentina have the same creativity and entrepreneurial capacity as do people in other countries. An important way of helping to unleash that capacity would be for Argentina to remove all export and import duties without pitting sectors against one another.

In Argentina, policymakers believe that they can manage the economy better than the forces of market competition. But Argentina has spent more than a third of the last 70 years in recession. Global trade rules explicitly prohibit quantitative restrictions but permit export taxes under limited circumstances. Instead, Argentina uses them liberally and broadly. Eliminating them would enable free trade to spur economic growth.


Agustin Forzani

Agustin Forzani is an MA student in the George Mason University economics department and MA fellow with GMU’s Mercatus Center. He received a BA in economics from the National University of Rosario in Argentina and a BA in Agribusiness from the National Technological University in Argentina.

This article originally appeared on Republished with permission.