MercoPress. South Atlantic News Agency

Mercosur concerned with growing surge of Chinese imports

Argentina and Brazil have established a standing consultation round to monitor the strong increase in Chinese imports which is causing concern in both countries manufacturing sectors, according to Brazilian sources.

"We're concerned because the increase in imports from China and other Asian countries could impact on specific sectors or our economies", said Brazilian Development Minister Ivan Ramalho whose office is in permanent contact with his Argentine counterpart Industry Secretary Fernando Fraguío. The announcement was made following the regular bilateral meetings to address trade issues, exchange information and solving differences that could emerge from the almost 30 billion US dollars annual commerce between Argentina and Brazil. The purpose of the consultation round is "to identify problems that could lead to an increase of Asian imports and try to find a joint approach to the particular issue and correct it". In 2007 Argentina and Brazil sales to China increased 49% and 28%, while imports from the Asian giant soared 63% and 58%. Brazil has become Argentina's main trade partner absorbing 19% of exports, followed by China with 9%. While Brazil has become Argentina's main provider (32%) followed by US (12%) and China (11%). One of the issues on which both countries agreed at the last meeting was to normalize wheat trade, which has been hampered because Argentina since 2007 is restricting exports so that soaring world prices do not impact in the domestic market. Brazil is Argentina's main purchaser of wheat. According to the understanding Argentina made an immediate export release of 902.000 tons of wheat, to which must be added another 500.000 tons in the coming months. Brazil because of the recent Argentine restrictions was forced to lower wheat tariffs for third countries. In the last months Brazil has been buying Canadian grain. Ramalho said the decision will enable Brazil to have no further wheat supply problems for the rest of 2008 and the operation will also help to balance the Brazilian surplus in bilateral trade. "Brazilian importers will go for the Argentine wheat because of its premium quality and lesser transport and logistic costs", added Ramalho. In the first half of this year trade between Argentina and Brazil reached 14.8 billion US dollars with a 2 billion US dollars surplus for Brazil, "which means we should be close to 30 billion by the end of 2008, a 35% increase", pointed out Ramalho. The Brazilian official also underlined the growing number of Brazilian companies which are choosing Argentina to invest.