MercoPress. South Atlantic News Agency

Argentina ignores Mercosur; rallies domestic support for protectionist policies

President Cristina Fernandez de Kirchner confirmed in Paraguay current policies

Argentina’s main trade unions confederation, CGT, and the chamber of small and medium enterprises, CAEM, energetically supported trade protection measures imposed by the government and which triggered complaints and irritation among Mercosur country members.

A joint statement from the unions and the small and medium enterprises describes pressure against Argentina as coming from a “strong lobby” linked to import interests and foreign governments with the purpose of making Argentina “modify its current policy of industrial protection”.

“We express our full support to government policies which defend national industry, employment and creation of new jobs” said the joint statement from GCT and CAEM, Argentine Chamber of small and medium companies.

During the recent Mercosur presidential summit in Asunción, junior members Uruguay and Paraguay openly complained about the barriers imposed by Argentina on the imports of goods and services which are contrary to the group’s charter and are hindering the two smaller economies’ trade.

The Argentine delegation headed by President Cristina Fernandez de Kirchner argued that import restrictions are necessary to promote economic activity which has fallen because of the global crisis that also threatens employment.

Brazil also expressed deep concern over the fact that exports to Argentina during the first half of 2009 had plummeted 42%. In 2008 Brazil’s trade surplus with Argentina reached 4.35 billion US dollars according to official statistics.

Cut out from international money markets because of the hold-out bonds and distanced from multilateral organizations (such as the IMF), which the Kirchner couple administrations blame for Argentina’s 2001/02 melting of the economy, the country desperately needs trade surpluses.

With this objective Argentina has imposed import licences with the only purpose of slowing purchases of goods and services, thus managing scarce international reserves.

Brazil which considers Argentina a “strategic partner” has partly accepted the argument, or rather the situation confronted by Argentina, but has made it quite clear that it will not accept that the “Brazilian imports vacuum” is covered by other suppliers (mainly China).-