MercoPress. South Atlantic News Agency

Protectionism debate heats up among Argentine manufacturers

Argentine manufacturers are openly divided over “protectionist practices” to face the current global slowdown. While a member of the board of the powerful Argentine Industrial Union, UIA argued that Argentina is ignoring the lessons of the 1929 crisis, other organizations claim ensuring domestic industry and employment must be priorities.

The CEO from the Argentine affiliate of Italian car manufacturer Fiat Cristiano Ratazzi insisted in public statements that “Argentina is the only country that has not learnt the lessons from the 1929 crisis, which are non implementation of restrictions on imports in the framework of a global trade retraction” as the world in undergoing.

But Osvaldo Cornide from the Argentine Confederation of Medium size companies, CAME said Mr. Ratazzi “was completely wrong” and that “what he’s preaching, and was implemented in the nineties, only led to the destruction of Argentine industry and loss of jobs”.

“I imagine those are personal statements and in no why represent the thinking of the UIA”, added Cornide in direct reference to Mr. Ratazzi who earlier this month became one of organization’s nine-member board.

As happens with all common sense countries, to address the crisis “you must defend your domestic market and national industry at all costs”, added Cornide.

But Argentina’s Deputy Secretary for Business Policies and Performance, Eduardo Bianchi said the country was not adopting protectionist policies but rather “measures to ensure the defence of production and employment, given the increase of disloyal commercial practices” globally.

“As a consequence of the international crisis which has surplus production in world markets, most countries are subsidizing exports to ensure a minimum level of domestic activity. We’ve seen this in Europe which is investing billions of Euros to prop its industries and in China that has also increased subsidies to industrial exports”, pointed out Bianchi.

Another organization, the Argentine Business General Confederation, CGERA, also criticized the position of Fiat Argentina CEO describing his statements as “unfortunate”.

UIA president Hector Mendez who took office earlier this month, avoided the discussion but recalled that the private sector “can’t make miracles”, and was very much conditioned to domestic and global conditions regarding jobs and employment.

Argentina has been repeatedly accused by Mercosur trade partners of imposing restrictions or temporary barriers to trade, thus slowing down the influx of imports. Furthermore a significant percentage of UIA members have been pressing for a more flexible exchange rate in line with what has happened with the Brazilian Real since last October.

Brazil is Argentina’s main trade partner and since last October the Brazilian currency has depreciated an estimate 30/35% against the US dollar. The Argentine peso on the other hand has remained relatively stable thus making imports more attractive.

Argentina and Brazil are now working on financial mechanisms to have bilateral trade ruled by local currencies instead of the US dollar.