Argentina has once more restructured its debt. In May 2020, Argentina became unable to pay bondholders the interest on their bonds— this due in part to unsustainable growth of its debt-to-GDP ratio over the past few years, along with the acute economic downturn during the COVID-19 pandemic. The restructured bonds are now worth only 55 cents on the dollar, compared to their original value, which is still higher than they are trading on the open market.

Argentina's economic woes are only Act Two of a much longer saga that began almost 20 years ago. And though Argentina has been through the ringer when it comes to sovereign debt, the country is not alone in its sovereign debt difficulties. Many experts believe this is just the tip of the iceberg—that, in the wake of the COVID-19 pandemic, we will experience a large-scale sovereign debt crisis on par with the Latin American debt crisis of the 1980s.

This looming sovereign debt crisis is happening at a time when trade and investment liberalization is at its zenith. As repeatedly emphasized, despite the United States’ apparent skepticism toward trade agreements and Britain's withdrawal from the European Union, the overall trend of the global economy is toward greater, broader and deeper integration. The push toward lower barriers for trade in goods has been accompanied by a parallel trend toward fewer barriers to cross-border trade in services and foreign investment. Moreover, to facilitate all this trade, treaties increasing demand capital flow liberalization as well.

Trade and investment liberalization has the potential to provide greater access to capital at a time when countries are in need of external financing for development projects and policies. However, recent research on trade liberalization and government revenue shows that increased trade liberalization is correlated with decreases in government revenue. This applies both to the lost revenue from lower tariffs, as well as a failure to replace that income with other taxation income. At the same time, other policy constraints imposed by the WTO, FTAs and BITs all restrict the ability of country parties to recoup those losses of tariff revenue through other forms of taxation.