Argentina and Brazil close ranks and downplay trade differences

At the regional summit and a few days away from the crucial G-20 global summit in London, both leaders did their utmost to transmit a coordinated image.

Following a meeting at the all powerful Sao Paulo Industries Federation, FIESP the two leaders downplayed recent trade differences and emphasized the need to strengthen close links to help boost South American economies.

“We’ve designed a strategy for the finance protocol agreements to become active”, said Mrs. Kirchner during the press conference that followed the closing of a trade seminar of Argentine and Brazilian businessmen.

“We’ve agreed that given current global conditions we must act with great intelligence so as to help finance infrastructure projects”, added the Argentine president.

Bilateral trade between Mercosur senior members has plummeted in the last few months as the world recession advances worldwide.

Trade last year totalled a record 30.8 billion US dollars but in the first two months of this year has fallen over 40% and is below half the value of the same period a year ago.

Although Argentina and Brazil consider their relation as “strategic”, Buenos Aires has complained bitterly about its neighbour’s growing trade surplus, and different Argentine business sectors have requested government support and protection measures.

FIESP complained to the Brazilian government in February that the Argentine decision to demand non automatic import licences on 200 products was hindering Brazilian exports of foot wear, textiles, while line home equipment, among other items.

Brazil proposed limiting some exports to Argentina, as long as those “spaces were not filled by Asian products”.

However Brazilian president Lula da Silva minimized the disputes and called on business leaders from both countries to explore the “political and economic potential” of the strategic Argentine-Brazilian alliance in the framework of Mercosur.

Junior members of the South American trade block, Uruguay and Paraguay also claim they have been left aside by the strategic alliance, which limits their trade and conditions (politically) access to a special infrastructure development fund created to help the weaker economies.

“Brazil and Argentina will grow less fast this year but they will continue to expand”, emphasized Lula da Silva. “Our economies must be the industrial locomotives for Mercosur and the rest of the continent”, added the Brazilian president.

Argentina and Brazil will be participating next month in the G-20 summit at London representing Latinamerica together with Mexico.

Mrs. Kirchner criticized developed countries “for not detecting the crisis or not communicating the crisis they had detected”, adding this is evidence of the need for deep reforms to the global financial system.