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WTO ArgentinaA few days back the WTO found Argentina to be guilty of messing around with imports. To be precise, it is guilty of using an import control mechanism that is “not transparent, is applied arbitrarily and which illegally restricts commerce”.

If you bother going to the WTO website and search for the dispute DS444, you will find all the grizzly details spelled out in there. But you don’t have to bother; the basics are as follows. The USA claimed that:

  • the requirement to present for approval of a non-automatic import licence: Declaración Jurada Anticipada de Importación (DJAI);
  • non-automatic licences required in the form of Certificados de Importación (CIs) for the importation of certain goods;
  • requirements imposed on importers to undertake certain trade-restrictive commitments; and
  • the alleged systematic delay in granting import approval or refusal to grant such approval, or the grant of import approval subject to importers undertaking to comply with certain allegedly trade-restrictive commitments.

The WTO agreed.


This story is not really important because such claims are fairly common in the WTO. Countries routinely want to have some sort of economic advantage (for political reasons) and they unilaterally break WTO rules which they previously agreed to. A dime a dozen.


This development is important because we can draw three lessons as to what that the future holds.

In our own best interest

Countries’ behaviour is nothing but a direct reflection of the best interest of their respective politicians. This much is clear. Also, we fully expect that powerful countries would behave as asses when it comes to this subject. A few ones have even made this principle national policy, such as the USA beginning with the Monroe doctrine dictating that Latin America is their own private playground.

However, what most people do not realize is that all countries behave in the same manner. If an uber-banana-republic such as Argentine is using the WTO treaty to wipe it’s… behind… when it suit it, it is patently clear that any country can and as a matter of fact does the same. This much is clear. The lesson to be drawn from here is that all politicians cheat all the time. This is just one tiny iceberg that surfaced and was made public simply because two bullies disagreed. The future will look increasingly like this. Desperate countries will break rules more often than not until a point at which rules won’t matter any longer. This is somewhat akin to what will be happening inside of those very same countries, When Countries Dissolve.

Free trade is not really free

This much must be obvious by now. The WTO is supposedly there to somehow “protect” and “expand” free trade… which is in and by itself a ludicrous proposition and a contradiction in terms. Free trade is simply trade that it is conducted freely. In order to do so, what we don’t need are rules and regulations limiting trade… which is exactly what the WTO imposes. And so WTO’s purpose in life is to impose rules on trade to make it free. Does this make any sense. At any level whatsoever? No? Thought so. We said the following many times and we will say it again:

Free trade is…well… free!

If countries would really want free trade, all they would need to do is to drop all import and export rules and regulations and let trade… well… be free. Yet, they don’t do so. It is precisely because WTO’s rules and regulations are not designed to foster free trade, that the US can allege that Argentina undertook “illegal” trade-restrictive activities. Nothing can be illegal if there isn’t a law against it. Precisely because there is a WTO law (or more precisely a WTO agreement converted into local laws by signatory countries) that this declaration can be made.

The ultimate purpose of the WTO is for certain countries (typically the stronger ones) to gain economic advantages over weak ones. WTO is not about free trade but about conditioned trade. It is true, of course, that some trade was liberalized under WTO rules. But such events are mostly irrelevant or they are propaganda or they are side effects. WTO rules are there to protect large vested interests located in what we could call “the usual suspect countries”, typically the G8.

This is, of course, one of the main arguments of the political left.

See… they say… corporations always subjugate people. We need “strong governments” to oppose them.

Which is, of course, manure.

These vested interests that are protected by the WTO are protected by the WTO because there is a strong government to force their privileges over weaker countries. Remove the government and even the strongest vested interest is at the mercy of free market forces. Presto! An automatic leveled playing field.

And who wields the most power in a free market?

The consumer. This means you.

Check mate and game over.

However, we are not there yet. When Countries Dissolve the power of such countries will be increasingly weakened and hence their power to enforce inter-national rules and regulations will also weaken. Trade will become freer and freer simply because of lack of effective enforcement. As usual, if one or two countries get out of line, it is their problem because they will suffer the consequences. However, if most countries misbehave, it is WTO’s problem and people’s relief.

The fight for “reserves”

Now, Argentine politicians are not stupid when it comes to political survival skills. Why would they choose to act against the WTO, knowing that sooner or later it will backfire?

Excellent question grasshopper!

The story goes more or less like this. Banana countries such as Argentina are up to their eyebrows in debt just like any other country (for numeric values see our Special Projects section, particularly the Default indices). However, their fiat currency is worth less than the paper it is printed on (this is literally true for lower denomination bills). Strong countries, on the other hand, have the privilege of its currency being widely accepted elsewhere. The king of such scamsters is, of course, the USA. The USD is the king of all “reserve” currencies. Banana countries must print to keep politicians in their jobs because they have run out of real wealth; can’t increase taxation and nobody is loaning them fresh cash.

Because of these reasons, every time a bank makes a loan to countries such as Argentina, they demand payment in hard-er currency (i.e. currency that cannot be counterfeited by such countries). These currencies are typically the USD, EUR, JPY and a few minor others. Banks are not that stupid.

This means that banana countries such as Argentina must pay back those loans in currencies they don’t have. The Argentine Central Bank cannot print USD, EUR or JPYs. Only the Central Banks of USA, EU and Japan can do so. The only way to obtain such hard-er currencies is through foreign exchanges. The process is more or less like this:

  1. An Argentine citizen exports product to USA
  2. A USA citizen pays with USDs
  3. These USDs enter Argentina through its Central Bank where they are exchanged for Pesos
  4. Pesos are given to the Argentine citizen for its product

In normal conditions and in working countries, this is not a problem because typically local currency reigns supreme. For example, why would you want to have Swiss Francs in USA if you can’t purchase anything with them and you can’t even deposit them in any bank?

However, in banana countries the situation is vastly different. Local currency is typically garbage, as we explained above. Inflation rates are ludicrously high which means that there is an ongoing depreciation of your purchasing power. In such conditions, you actually want to keep hard-er currency and get rid of the local one. Why would you do so? Because everybody else will be doing it and you will be able to purchase goods and services directly with such currencies. For example in Argentina, this phenomenon is referred to as the “dollarization” of the economy.

So, banana country politicians are desperate for “reserve” currencies (typically USD’s). But if exports bring in USD’s (which can be hijacked by their Central Banks), imports on the other hand, reverse the process. The Central Bank must take Argentine Pesos and from its reserves release USD so that an Argentine importer can purchase goods and services in USA or EU. This is a problem and so their solution is not to allow this to happen, which in practice means to block or break WTO rules.

This is the true reason why WTO rules are broken by banana republics. Because their politicians desperately need hard-er currencies to stay in power just a little bit longer. Hence, they look after their own interests by so doing.

This is what will happen more and more often in the future. As countries become more and more desperate, the fight to keep “reserves” will only intensify and as such there will be a rash of WTO (and other) rule breaking.


But the story does not end here, it goes full circle. If we consider that the fight for “reserves” is in reality the fight for “fiat currencies” such as the EUR, the USD and the JPY, it becomes patently clear that it is a fight for nothing on a permanent and perpetual losing ground. Why is that banana countries must exchange real wealth for fiat currency which is created out of thin air and costs exactly ZERO wealth to produce? Because certain countries say so. In the end, banana countries break WTO rules because they are desperate for hard-er currencies which are imposed upon them and cost exactly nothing to produce. The process is clear: wealth leaves poorer countries and it is re-directed into powerful ones through this mechanism.

This means that the countries which are struggling the most, provide the most wealth to rich countries. All of this thanks to the “magic” of fiat currency and the economic and military might to impose somebody’s will over everybody else’s.

Is then a mystery then than indebted countries can never get from under their crushing debts? Of course not. The only solution is to default. But even this is only a temporary reprieve. Eventually politicians begin to spend again, new loans are taken and the cycle re-commences again.


Now compare this situation with a free-market, government-free world whose currency is based on something that cannot be counterfeited by anybody; let’s say gold or bitcoins.

In this world, there are no governments to take on debt and so people are protected. Also, as there are no governments and the currency is stable, there is deflation instead of inflation. As the currency is universal, there is no wealth transfer. Presto! Flat playing field. Everybody operates under the same rules, there are no restrictions to freedom and the WTO is gone! Wouldn’t this be nice for a change?


This little WTO judgement is nothing in the big (or even mid) scale of things. It provides, however, the starting point to elucidate and understand current affairs. It becomes clear that government as a concept is obsolete and that democracy should be deprecated. However, we are not all on the same evolutionary page of the political book. It may be obvious but most people are not yet ready. Not by a long shot.

And then we have you, dear reader. You and your choices which are yours and yours alone to make. Make sure you know what you are choosing because there are no second chances.

Note: please see the Glossary if you are unfamiliar with certain words.

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