A Free Trade Measure Facing Opposition in Tierra del Fuego
In a bold move towards free trade, President Javier Milei has announced a significant reduction in import tariffs in Argentina, aiming to benefit consumers and promote competition. However, this decision has sparked controversy, especially in the province of Tierra del Fuego, where the industrial sector has voiced its opposition.
The measure, which seeks to lower the cost of technological products, appliances, and other consumer goods for Argentine citizens, has been welcomed by much of the population, who will now have access to higher-quality products at more competitive prices.
“Free trade is a fundamental tool to improve the quality of life of Argentines, allowing them to access international quality products without the barriers imposed by the state,” President Milei stated when announcing the measure.
Details of Tariff and Tax Reductions
- Cell Phones: Tariffs reduced from 16% to 0% in two stages (initially 8%, and 0% in January 2026).
- Game Consoles: Tariffs reduced from 35% to 20%.
- Internal Taxes: For cell phones, monitors, TVs, and air conditioners, reduced from 19% to 9.5% for imports and from 9.5% to 0% for Tierra del Fuego.
In addition, customs codes will be deregulated and simplified, enabling a courier system between the mainland and the special customs area, allowing any Argentine to access competitive prices from the island.
The Captive Business in Tierra del Fuego
The scheme of privileges in Tierra del Fuego benefits a small group of companies at the expense of all Argentines, with an estimated annual cost of USD 2.5 billion.
- Aspect 1: Law exempting payment of all national taxes. The annual cost is USD 1.5 billion, according to the National Budget (0.3% of GDP). This benefit is mainly distributed among no more than 20 companies.
- Aspect 2: Tariffs and non-tariff measures preventing the entry of imported competition, forcing 50 million Argentines to rely on these 20 companies. In cell phones alone, this protection translates to an additional USD 1 billion annually paid by consumers.
This week’s measure, which reduces tariffs, directly affects one of the aspects of this scheme, returning around USD 1 billion to 50 million Argentines. However, the other aspect, which exempts these companies from national taxes, remains intact as it is established by law and cannot be changed by decree.
A Model Defended by Peronists and Radicals
In conclusion, this scheme is a captive business that not only enjoys tariff protection but is also exempt from paying national taxes, at a social cost of USD 2.5 billion annually. Over the past two decades, this scheme has amounted to around USD 50 billion.
“The difference between an entrepreneur and an “empresaurio” (business predator) is that the former thrives on good ideas, while the latter thrives on laws that grant privileges. This is caste at its finest,” critics of the current model conclude.