The Mercosur-EU agreement is an opportunity to put an end to the decline

Trade promotes the exchange of ideas and thrives on cultures and technologies. Montesquieu argued that "Trade corrects destructive concerns, being an almost general rule that when customs are friendly, there is trade and where there are, customs are good." Federico Bastiat added that, by this means, conflicts are reduced: "SIf the goods do not cross the borders, the soldiers will do it. " And in fact Free trade puts an end to European wars.

Our country has been particularly successful with free trade; In 1895 we reached the first place in the world and until 1945, we remained in the top ten places in the world in terms of wages, production and consumption per capita. And it was not that the agro. According to the industrial census of 1932, the Argentine industry exceeded the sum of those of Mexico and Brazil.

Unfortunately, for eight decades, we are moving away from this road, the same eighty years that coincide with the decline of Argentina. The recession of '30 and the World War have awakened the protectionist businessmen who found in Raúl Prebisch an intellectual excuse to go against evidence from all over history. Your "Theory of the deterioration of the terms of the exchange" He argued that rich countries were exploiting peripherals through trade, exporting expensive manufactured goods and importing cheaper raw materials. This theory was proven wrong, Prebisch did not know how to evolve the technologies nor did he understand that the important thing in trade was precisely the imports of manufactured goods that improved year after year, increasing productivity. Each new harvester accounted for more acres per hour and less waste than the previous one. Nothing falls faster in the price than manufactured products. Computers double their computing capacity per dollar invested every 18 months. Corrected by technological change, it is clear that it is the poor countries that "exploit" the rich through free trade. Emerging countries are therefore growing by 5.3% a year, compared to only 1.8% for rich countries.

The myth of the need to protect the fledgling industry, leaked by List, Hamilton and more recently by Chang, among others, is buried under historical data from Argentina that show that between 1810 and 1910 , free trade allowed us to reach England from a GDP per capita three times lower. This has been repeated tirelessly with every country opening up to international markets. In addition, when Argentina decided to close our country, it stagnated and many countries have abandoned us: Japan in the 70s; in the 80s, Ireland (today three times richer), in the 90s in Hong Kong, Taiwan, Singapore, South Korea; in 2000 in Estonia; and soon, Botswana.

We must therefore celebrate the prognosis to move forward with the Free Trade Agreement between Mercosur and Europe. A free trade agreement implies a gradual opening. The Liberals would prefer a quick and equal opening for all, and the protectionists would choose never to open. This is not ideal, it is an intermediate way. But The important thing is to take advantage of this new opportunity to coordinate the efforts of the Argentines and to make a jump in the productivity of our country. Specialization based on comparative advantages will be inevitable, but the treaty gives companies enough time to adapt. It is crucial that the establishment politicians, businessmen and trade unionists work together to remove structural barriers to competitiveness, moving forward with the necessary reforms:

To succeed in the competition, a labor reform is essential, as did Germany in the 90s and Brazil more recently. We will have to mega-deregulate and eliminate at least 153 of the 163 taxes to relieve businesses and citizens. A currency reform that eliminates inflation and lowers interest rates, replacing a weak currency with a strong currency, like all countries that have joined the euro, will also be crucial. State reform and social security are an essential complement. This set of reforms will increase the competitiveness of the economy without the need to devalue, and the result will be palpable with the sharp rise in real wages. Over the next two decades, Argentina will be able to experience annual growth of 7% and triple real wages.

* General Director of the Libertad y Progreso Foundation