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Trade disputes cast doubts on the “Argentine-Brazilian” strategic alliance

Wednesday, October 28th 2009 - 06:07 UTC
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Trucks delayed in border crossings because of reciprocal trade obstacles Trucks delayed in border crossings because of reciprocal trade obstacles

Trade obstacles imposed by Brazil against Argentine exporters in reprisal for similar measures by the Argentine government of President Cristina Fernandez de Kirchner escalated Tuesday when the Brazilian ambassador was summoned to the Argentine Foreign Affairs ministry.

According to a brief release from the Ministry, Foreign Secretary Jorge Taiana expressed to Brazilian ambassador Mauro Viera “he was deeply concerned with the interruption of the trade flow with Brazil”.

“Several trucks with Argentine perishable goods are being retained at different border crossings with no previous notice”, said the release from the Argentine government. Apparently Brazil imposed a system of automatic licensing for imported goods.

The administration of President Lula da Silva interrupted Argentine imports of wheat flour, oil, garlic, fresh fruit, animal food and trucks manufactured in Argentina, among a long list of produce.

The measure was slapped as a reprisal to the so called non automatic import licences Argentina imposed with the argument it needs to protect jobs, industry and overall production from the global crisis.

Argentina’s Chamber of Fruit Growers, CAFI reported that an estimated 400 trucks with perishable goods have been delayed at the Brazilian border waiting for their delivery in Sao Paulo.

Similarly the Argentine Milling Industry Federation claimed that 20.000 tons of wheat flour remain blocked in ports and border crossings. “We made the shipments not knowing about the latest Brazilian licensing decisions”, said Romeo Sachhi from the federation.

Mrs. Kirchner in early October had called for the lifting of restrictions to the import of Argentine trucks to Brazil, during a visit to a Fiat-Iveco plant in Cordoba.

Brazil on the other hand feels frustrated with import obstacles for textiles, footwear, kitchens, washing machines and refrigerators, with which Argentina pretends to discourage demand and the threat to employment given the impact of the global crisis.

According to the Brazilian press Argentina has blocked the entry of seven million pairs of summer sandals, which are very common and traditional in the Southern Cone.

Complaints against Argentina’s trade policies were also exposed during the last Mercosur summit in July, with junior members Paraguay and Uruguay the most vocal

Brazil has expressed “great concern” given the 42% drop in exports to Argentina during the first half of this year following a bilateral trade surplus of 4.34 billion US dollars in 2008.

Brazilian exporters also complained that the loss of market in Argentina is rapidly taken over by China, and even called on President Lula da Silva to make a case before the World Trade Organization, which was discouraged by his administration.

Argentina and Brazil have agreed to a standing monitoring of bilateral trade with the purpose of adjusting any misbalances. The committee also has representatives from different business organizations from both countries.

Since the Kirchners and Lula da Silva took office at the beginning of the century, both countries agreed on a “strategic political and trade” relation.

However Argentina cut off from international voluntary money markets since the 2002 default has based its economic policy of the two surpluses, budget and trade. The first has been seriously eroded during recent political campaigning and mid term elections, and international trade, at the beginning not much affected because a fall in imports, now is suffering the full impact of slower exports and leaner global demand.

Argentina is currently holding talks with the IMF and holdouts from the restructuring of its 2002 defaulted bonds. If talks are successful Argentina could again have access to money markets and the pressure on trade, to ensure a surplus could ease considerably.

Categories: Economy, Argentina, Brazil.

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