MercoPress. South Atlantic News Agency

Trade disputes

Trade disputes over agricultural commodities are souring relations between Mercosur members. Brazil has warned the Argentine and Uruguayan milk industry that it will impose additional duties unless an agreement is reached concerning powder milk.

Argentina is also demanding Chile before the World Trade Organization alleging that safeguard measures supposedly implemented to protect Chilean wheat, flour and cooking oil production violate international rules.

Argentina, Uruguay and Brazil have been at odds over dairy products for several years, but depressed international prices have encouraged Brazilian farmers to claim that their Mercosur, --and more efficient producers--, counterparts are dumping mainly powder milk. Brazil is threatening to impose levies ranging between 4 and 46%, or take the issue to a Mercosur arbitration court, which could take months before a decision is reached and does not ban unilateral measures during the proceedings.

Dairy products trade with Brazil involves several hundred million US dollars.

In late '99 Chile imposed what it described as "provisional" flexible safeguard measures to protect local cereal and oil seed farmers, but these became permanent in early 2000.

Since then Argentina has been talking to Chile but finally decided to take the case to WTO arbitration.