Bill of Principles and Grounds for the Freedom of the Argentines

On December 26, 2023, Decree No. 76/2023 was published in the Official Bulletin by which the National Congress was summoned to hold extraordinary sessions from December 26, 2023 until January 31, 2024. Among the subjects included in the call is the Bill for the reform of the functions of the State.

By note dated Wednesday, December 27, 2023, the “Bill of Principles and Grounds for the Freedom of the Argentineans” was submitted to the National Congress.

From the message of submission of the bill, the considerations of the National Executive Branch to justify the set of laws proposed to be repealed, amended and supplemented are included.

Crisis: It argues that Argentina is immersed in a serious and deep economic, financial, fiscal, social security public safety, defense, tariff, energy, health and social crisis without precedents.

Causes of the crisis: This crisis is the result of having abandoned the model of Liberal Democracy and Market Economy embodied in our Constitution of 1853 and having advanced, for decades, towards a model of Social Democracy and Planned Economy that has failed not only in our country but in all the countries where it has been implemented throughout History.

Among the causes are:

chronic fiscal deficit, which derives in monetary emission or debt or tax increase;
generating distortions in the price system that impede the economic calculation and hinder the accumulation of capital, the generation of wealth, causing poverty and indigence ;
the current inflationary process resulting from rampant monetary emission, with devastating economic and social consequences;
large sectors of the population operate in the unregulated economy, exposed to abuses and unprotected in the absence of social support networks ;
the introduction of a countless number of restrictions to the exercise of constitutional rights, especially the right to trade, work and engage in legitimate industries ;
artificially distorting the relative prices between the set of goods and services traded both in the domestic and foreign markets, unjustifiably taxing the real income of citizens and affecting the international competitiveness of the Argentine economy, while perpetuating its structural imbalances, limiting its growth possibilities and affecting the principles of justice and equity;

Overcoming the crisis: In order to provide an effective solution to the current crisis, the National Congress must adopt a set of emergency measures to restore Liberal Democracy and Market Economy and move forward in the State Reform in order to consolidate economic stability, guarantee the right to life, freedom and property of the Argentine people and improve the allocation of resources in the national economy to, as stated in our National Constitution, ensure the benefits of freedom for all the inhabitants of the Argentine territory.

Without an immediate, comprehensive and forceful response from the National Excecutive Power and the National Congress, the country runs a serious risk of economic collapse and total disintegration of the social network, for what it is necessary to act urgently and eliminate, by means of a single sanction rule and simultaneous application, the regulations that restrict the freedom of the Argentine people, hinder the free circulation of goods and services and distort the normal operation of the markets.

National and international experience fully demonstrates that the effectiveness of any economic stabilization and reactivation plan must be implemented by means of a set of measures that simultaneously promote the liberalization, transparency and recovery of markets in their different aspects, including free access by producers and consumers, the availability and free circulation of information, the formation of prices as a consequence of the free interaction of supply and demand, and the absence of distorting interventions.

Our Constitution safeguards the freedom of industry and commerce as a guiding principle in the social and economic structure of the Republic, so that any regulation that restricts this freedom must be the exception, not the rule.

That is why the bill is structured on the definition of its objective of promoting economic freedom, under a series of principles that guide the interpretation of its articles in that sense, including especially the protection of the right to property, the basis of production and development.

Then, it is proposed that the Congress makes effective the legislative delegation provided for in Article 76 of the Constitution, declaring a public emergency in economic, financial, fiscal, social security, public safety, defense, tariff, energy, health, administrative and social matters until December 31, 2025, with the pertinent term and bases, so that the Executive Branch, with its administrative structure and technical expertise -and with the necessary speed- may dictate and apply the regulations required by the emergency. Such term may be extended by the Executive Branch for a maximum two-year term.

Proposed measures:

Administrative organization: the enactment of a rule that fully regulates the administrative organization is enabled;
Regulatory quality: a public policy of regulatory quality is implemented following international best practices, which promotes the debureaucratization, digitalization and simplification of administrative regulations;
Verification of the need to regulate: it is made sure that any new regulation is really necessary, benefits from citizen participation and is based on a prior regulatory impact analysis;
Unification of the contracting system: the national Executive Branch is empowered to concentrate in a single regime the national public contracting system, currently dispersed in various rules regulating general aspects, incorporating for all of them rapid and effective systems for the prevention and resolution of disputes;
Privatization of companies related to non-essential activities: in view of the need to concentrate the activity of the State on its essential functions, the privatization of certain public companies is provided for, within the framework of the regulations to that effect in force of Law No. 23,696 on State Reform, in order to generate greater competition and economic efficiency, reduce the tax burden, improve the quality of services, promote private investment and professionalize the management of the companies;
Requires mediation in private conflicts with the State: the State is included in the Mandatory Mediation Law, only when it acts in the sphere of private law, with the due prior controls for the execution of agreements;
Authorizes the transaction of conflicts with the State: the possibility of entering into transactional agreements in controversies and administrative, judicial and/or arbitration claims of co-contractors of the Administration is incorporated, provided that they may be appropriate and that the agreement is clearly convenient for the interests of the State, prior intervention of the National Treasury Procurator’s Office and the National General Attorney’s Office (Sindicatura General de la Nación);
It updates the administrative procedures: Law No. 19,549 on administrative procedures is updated, capitalizing on the experience of its more than fifty years of effectiveness;
Updates the Antitrust Law: it is updated by simplifying and making the selection process of the members of the Antitrust Court more transparent, and the new Markets and Competition Agency is empowered to investigate anti-competitive behavior of public agencies, better typifying antitrust violations;
Authorizes insurance companies to define new products: insurance companies are given the freedom to define their products without prior authorization from the supervisory agency, generating dynamism in the sector;
Freeing the discount of credits on salaries: the restriction for the discount code where mutual companies had a monopolic advantage is freed, giving back to the individuals the freedom to establish credit restrictions with whomever they wish;
Regularization of debts with the State: a new regime is created for the exceptional regularization of tax, customs and social security obligations in order to promote a sincere economy and encourage private investment;
Personal property and internal taxes: regularization programs and modifications in personal property and internal taxes are implemented;
Expediting public credit operations: a more agile mechanism is established for credit operations and the elimination of intra-public sector debts is enabled, where the government has both assets and liabilities that can be cancelled without affecting its equity;
Animal slaughtering: the system for the authorization and operation of slaughter establishments is strengthened, as well as that of the Servicio Nacional de Sanidad y Calidad Agroalimentaria (National Agri-Food Health and Quality Service);
Fishing: the growth of the fishing market is promoted through greater openness and a bidding system is established for quota-certified species, while ensuring compliance with technical, environmental and safety standards;
Agricultural development: the country is promoting adherence to the International Convention on the Protection of New Varieties of Plants (1991) to incorporate international best practices that stimulate large investments for the modernization of the agricultural sector, generate incentives for innovation, promote international trade and increase protection against the unauthorized use of protected varieties;
Energy: reforms to current legislation are encouraged:
General vectors:

an integrated and international vision of the energy sector, according to the existing and to be developed natural resources of Argentina;
the application of the subsidiarity principle, favoring the participation of the private sector in the industry;
the free international trade of natural gas, liquefied natural gas, liquefied propane and butane gas, oil and its derivatives;
incorporates the possibility for non-producing third parties to develop gas processing, extraction of natural gas liquids, liquefaction of natural gas, transportation of gas, oil, its derivatives and liquid fuels in general; storage of gas, liquefied natural gas, oil, its derivatives and liquid fuels in general;
the deepening of free commercialization, competition and expansion of the markets of electric energy, hydrocarbons (gas and oil) and biofuels in all their forms (present and future);
a legal framework for the development of infrastructure by the private sector in the areas of hydrocarbons and electricity transmission;
revision of the administrative structures of the energy sector, modernizing and professionalizing them, for an effective and efficient fulfillment of the assigned functions;
changes to the energy trust funds in order to make them more efficient, effective and transparent;
Uniformity in environmental legislation: with respect to energy and the environment, the aim is to implement jointly with local jurisdictions a uniform environmental legislation, in order to achieve the development of the activity with an environmental care;
Energy Transition: a comprehensive agenda is foreseen within the framework of the Paris Agreement for the purpose of complying with the objectives of absolute net emissions of Greenhouse Gases (GHG), with the creation of a market of GHG emission allowances, with broad and decisive participation of private companies, the public sector and other organizations for the effective achievement of the goals set and in the access to climate financing; it empowers the National Executive Power to establish a market of GHG emission allowances, in which those who have over met their goals, can sell the services to others so that they can meet them:

Other aspects:

restructure the tariffs of the energy system with criteria of distributive equity and productive sustainability and reorder the operation of the system’s regulatory entities to ensure their efficient and effective management;
merging the regulatory entities ENRE and ENARGAS.

Security: a regime for the organization of protests is established in order to guarantee the free circulation and normal development of the economic and work activities of all the inhabitants of the Nation, increasing the penalties for the crimes of attack and resistance to authority and regulating the right to lawful self-defense, providing greater legal certainty to the citizens and the enforcement forces;
Intellectual property: a regime of collective management of intellectual property rights is established to gain efficiency in licensing, reduce monitoring and compliance costs, improve revenue streams for right holders, simplify administration and promote cultural diversity;
Justice: a series of changes are introduced to modernize justice by digitizing processes, as well as modifying the law on judicial deposits;
Divorce: a new institute for our country, commonly used in many other parts of the world, is incorporated, which is the possibility for the spouses to request the dissolution of the marriage bond with the sole presentation before the same administrative body that celebrated the civil marriage, without the need for judicial intervention;
Reduction by judges of agreed interest: the power of judges to reduce the interest to be paid, freely agreed upon by the parties to a contract, is limited, avoiding the distortion that implies that a debtor, after years of not complying with its obligations, obtains in court a reduction of the agreed interest; the debtor will continue to have the possibility of requesting the judicial reduction, but before defaulting;
Liquidated damages: judges are empowered to impose them in relation to the economic capacity of the defaulting party, in order to prevent large companies from preferring to pay fines, due to their low relative value in relation to their assets;
Suppletory nature of the rules: in the understanding that economic and commercial activities are permanently evolving, and that a strict legal body only manages to prevent entrepreneurs from finding new ways to generate business, throughout all the prescriptions referring to contracts, the suppletory nature of the legal rules is introduced, thus prevailing the will of the parties;
Compensation for civil damages: the scope of the so-called ” non-material damages” is clarified and the joint and severable liability of the State for the acts of public officials is incorporated, in order to provide predictability to the outcome of the claims, to which the rules of the Civil Code will be applied, and not special laws, such as Administrative Law;
The Corporate Law No. 19,550: since its enactment in 1972, it has become a solid legal framework for the development of business, although it needs to be updated to include new technological tools and to solve the problems that have arisen during the time it has been in effect. On this basis, it is modified as follows:
Sole proprietorships: Article 1 to include modern corporate theories and Limited Liability Companies are included as sole proprietorships, in order to facilitate the establishment of foreign companies and the articles of the law are adapted to this incorporation;
Stock options: incorporating the participation of personnel and suppliers in the capital stock as an incentive to their commitment to the company, through the “stock options;
Cancellation of shareholding: in order to solve the problem that closed companies usually have when some minority shareholders disengage from corporate affairs, the possibility of canceling their shareholding is incorporated, by paying them the portion of the capital that corresponds to them;
Prohibition of bearer bonds: the possibility of issuing bearer bonds is eliminated throughout the law, since for tax related matters they have not been allowed for decades;
Integration of directors: the possibility that the directors of corporations may be appointed for an indefinite period of time is included;
Special corporations with state participation: all special corporate forms with state participation are repealed, since they are transformed into private law corporations;
Other legislative proposals:
Inheritance: a new regime is established for non-contentious inheritance proceedings, empowering citizens to transmit inheritance through an extrajudicial process;
Tourism: some regulations regarding Tourism are updated in light of the DNU 70-2023, and the functions of the Tourism Secretary are adjusted;
Law on grassland burning: changes are suggested allowing producers to carry out firebreaks and preventive actions that are currently prohibited by law;
Native Forest Fund: it will be financed directly from the Budget, and the procedures for the exploitation of forests in areas commercially authorized for such purpose are simplified;
Glaciers Law: in order to enable (with the environmental reports required by law) the economic activity in the periglacial zone, reversing the subjugation of federal power over the provinces;
Political system reform: to strengthen democracy and the institutions of the Republic, establishing a system of election of national deputies based on single-member constituencies, eliminating the Open Simultaneous and Mandatory Primary Elections, making transparent the financing and strengthening the democratic institutions of the political parties and improving the operation of the electoral system;
Incentive Regime for Large Investments: for new projects or expansions of existing ones with incentives, certainty, legal clarity and efficient protection; for the sectors of agribusiness, infrastructure, forests, mining, oil and gas, energy and technology, have for large investments -that is, above certain minimum amounts- intrinsic difficulties for their development, among which stand out the large and intensive capital and the long times of recovery of the investment, which in the current state of the country and without an adequate incentive framework that provides certainty and returns to Argentina competitiveness as an investment destination, would seriously affect their chances of becoming a reality; The aim is to provide those who commit themselves to make large investments within a certain period of time, and while they fulfill such commitment, with the certainty, predictability, stability, legal security and protection of acquired rights in tax, customs and exchange regulations that are necessary for the occurrence of such investments;
Educational system: an integrative exam is promoted at the end of high school education, and the possibility for parents to know their children’s grades, and how these and those of their school compare with those of the rest of the country; non-teaching professionals are allowed to participate in the educational process and the admission of persons without completed high school is prohibited in higher education; faithfully respecting the principle of free university education for Argentines and foreign residents, universities that so wish are authorized to charge fees for the education of non-resident foreigners;
Freight and multimodal transportation: changes are proposed in order to streamline and digitalize the processes; the owner’s burden is released from the requirements of freight transportation, the points of entry for the VTV are expanded, the need to eliminate physical tolls is indicated and the mode of autonomous driving is enabled, changes are implemented in the regime of concessions and public works in order to improve its operation;
Promotion of registered employment: Employers may regularize labor relations in the private sector initiated prior to the date of enactment of this law. The regularization may include unregistered labor relations or labor relations that are deficiently registered;
Proposes the ratification of Decree of Necessity and Urgency No. 70/2023.

This publication does not constitute a legal opinion on specific issues. If necessary, specialized legal advice should be sought.

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