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Montevideo, November 20th 2018 - 21:54 UTC

Tierra del Fuego PC assembly industry at risk if import tariffs (35%) are lowered

Thursday, October 27th 2016 - 01:23 UTC
Full article 10 comments
The head of the Argentine chamber of Electronic, Electro-mechanic and Lumino-technical industries , Jose Luis Cavanna warned that there are 12.000 jobs at risk The head of the Argentine chamber of Electronic, Electro-mechanic and Lumino-technical industries , Jose Luis Cavanna warned that there are 12.000 jobs at risk
The zero tariff will put at risk the continuity of assembling plants in Tierra del Fuego where they enjoy a special regime to create jobs and attract population The zero tariff will put at risk the continuity of assembling plants in Tierra del Fuego where they enjoy a special regime to create jobs and attract population
Ministry sources confirmed it is planning to eliminate the 35% tariff on computers in the framework of Mercosur common external tariff agreed with Brazil. Ministry sources confirmed it is planning to eliminate the 35% tariff on computers in the framework of Mercosur common external tariff agreed with Brazil.

A new challenge for Tierra del Fuego province and its industrial promotion scheme: the Argentina government is planning to eliminate all tariffs on the import of computers and components beginning 2017, which is estimated could cost anywhere from 4.000 to 12.000 jobs.

 Although not official yet, it was announced during a recent business forum held in Mar del Plata: zero tariff for PCs, notebooks and tablets to enhance Argentine competitiveness.

The head of the Argentine chamber of Electronic, Electro-mechanic and Lumino-technical industries , Jose Luis Cavanna warned that there are 12.000 jobs at risk, but ”we have met with Production minister (Francisco) Cabrera, companies involved and unions and we agreed to further advance in joint proposals that will help the sector's productivity“.

Production ministry sources confirmed that the government is planning to eliminate the 35% tariff on computers in the framework of Mercosur common external tariff agreed with Brazil. This would become effective as of next January, but it's not clear if it will take place in an only cut or phased out during the year.

However the tariff-elimination will put at risk the continuity of assembling plants in Tierra del Fuego where they enjoy a special regime to create jobs and attract population to the extreme south province.

Cavanna said there was a strange contradiction in the announced tariff reduction since many of the finished technological products are manufactured taking advantage of ”slave labor or at dumping prices”, while apparently tariffs on components will remain at their current level.

Furthermore while 35% to zero tariff is impressive, the actual retail price of computers will only drop 12%, given all the intermediate costs, added Cavanna.

From the ministry it was argued that the measure targets lowering the retail price of computers which is too high and is a negative competitive factor since all businesses now have significant costs linked to technology.

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  • Marti Llazo

    This Tierra del Fuego “industry” is an expensive but typically Argentine joke, the sort of thing Peronistas like reekie of course wildly support: it gives the unskilled and otherwise unemployable something to do, whilst creating a drain on the national treasury and adding to higher costs for consumers in the country. But it's also a way to keep Argentina backward, non-competitive, and in the darker ages of technology, since the products being assembled tend to be other than the latest models available to the civilised nations, and simpler and easier to assemble (they like to call it manufacturing but in fact it's mostly just assembly of imported parts). Phillips seems to do some actual “manufacturing” but it's mostly limited to outdated, Third World models. And production of some components can be 8 to 10 times higher than those sourced in Asia. The government regulations on importing “unfinished components” can be downright weird: if it looks too “finished” then the importer sometimes has to disassemble the item so that it can be re-assembled in Argentina under this counterproductive local-content regimen. Add to all of this a cost of about US$13 billion in “incentives” paid by the national government... out of tax monies, of course.

    In some cases the TDF “workers” are just opening an imported box, inserting a piece of paper, and taking credit for a product as the result of “Industria Argentina.”

    Oh, and the transport cost from Tierra del Fuego assembly plants to population/market centres such as Bs As province is typically higher than the transport cost for the same products coming all the way from Asia.

    As noted earlier, Chile is now flooded with Argentines on shopping trips, and electronics are high on the list, because this sheltered-workshop domestic assembly ruse fails to supply the Argentine market with modern, high-quality, reliable electronic products at decent prices.

    Oct 27th, 2016 - 02:22 pm +3
  • Marti Llazo

    Not so much a “commie doctrine” as Peronism's process for keeping hands busy and pretending to have domestic industry. But almost all of this false industry is in some fashion just paying foreign corporations to set up plants in this countries so that the locals can touch some of the components going into foreign-branded products. There is a certain irony that Peronist Argentina initially tried to copy the Stalinist self-sufficiency model, but failed in ways that Stalin would not have permitted. In the initial Russian practice, many technologies that were not simply stolen were actually developed (though eventually there were examples of cooperation with Western industry, as with FIAT/LADA). The crudeness of Argentine copies of products from the 1950s onwards certainly reminds us of similarly crude Russian items.

    One local shop here offered me an insight into the impacts of “Industria Argentina” on consumers. He gets engine and transmission seals from three sources: Brazilian, Argentine, and original-equipment parts from Asia. The latter are the best and generally reliable but expensive and hard to get. Brazilian, not quite as good. Argentine, well, here is the deal: Argentine-made parts have a comparatively high failure rate, and due to very high cost of labour here, having to rebuild something more than once removes any price advantage of using the Industria Argentina parts. Using junk pieces for initial assembly or repairs just doesn't pay off. Look at the commercial-carrier airlines in Argentina. There are only a handful of “technical” pieces made in Argentina that can be certified. Almost everything used in repairs for commercial aircraft in Argentina comes from outside the country. I don't know anyone who would care to travel on a plane that was repaired with Industria Argentina parts.

    Oct 27th, 2016 - 06:41 pm +3
  • Marti Llazo

    Reekie, ever the Peronist, safely enjoying the fruits of Canada's modern and competitive industries, continues to support the antithesis for Argentina: the maintenance of low-productivity sheltered buggy-whip workshops of dubious utility that absorb enormous amounts of public tax monies in subsidies while importing foreign components to assemble in outdated products which cannot be profitably sold in competitive markets, all to the ultimate detriment of the larger Argentine public, many of whom vote with their feet by going outside of Argentina to obtain items of decent [non-Argentine] quality and modern [non-Argentine] products to which their neighbours have access.

    Oct 28th, 2016 - 03:14 pm +3
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