> There was no unicode encode error generated! Is it because the problem 
> is fixed?

No, it's not fixed.
First, it seems you are testing with Python 2 (otherwise you would get "b'bytes'", not "bytes"). Python 2 won't have a problem here, since it treats everything as bytestrings.
Second, to evidence the issue you must pass a non-ASCII string. For example:

$ ./python a.py `echo éléphant|iconv -t latin1`
Traceback (most recent call last):
  File "a.py", line 4, in <module>
    print(sys.argv[1])
UnicodeEncodeError: 'utf-8' codec can't encode character '\udce9' in position 0: surrogates not allowed