MercoPress. South Atlantic News Agency

Argentina’s delay in dispatching imports is irritating trade partners

Guillermo Moreno, a controversial figure loathed by businessmen but who has the full support from the Kirchner couple

Since the controversial Argentine Interior Commerce Secretary Guillermo Moreno announced in an April 23 letter that he will examine overseas purchases to consider the competitiveness of the national market, products worth millions of dollars have been delayed at Argentina’s borders and ports.

Cargoes of cheeses from France, beer from Holland, pasta from Italy, canned pineapple from Indonesia, bell peppers from Peru, and candies from Brazil are among products being delayed, according to the Chamber of Importers, which represents about 300 companies, including local units of Chile’s SACI Falabella and France’s Carrefour SA.

Argentine import restrictions and an exchange rate policy that favored local industry enabled Argentina to build up a record trade surplus of 17 billion USD in 2009 on an overall trade of approximately 100 billion US dollars.

However reprisals could hurt Argentina’s 56 billion of annual exports, mostly food products, equivalent to 17% of GDP. Brazil and the European Union with 45% of Argentina’s exports have warned that such kind of limits are in violation of international treaties and liable to reprisals.

Cut off from voluntary money markets because of the legal conflict over the still pending 20 billion US dollars in defaulted sovereign bonds, a trade surplus is crucial for Argentina to pay debts and advance government programs.

Argentina is the world’s biggest shipper of soybean oil and third-biggest exporter of soybeans, following the U.S. and Brazil. About half of its exports are farm-based.

Brazil exports about 500 million US dollars of food products annually to its partner in the Mercosur trade bloc, compared with 2.2 billion it imports from Argentina. Welber Barral head of the Brazilian Foreign Trade Office said that the ratio favors Argentina four to one and it would be “senseless to try and impose restrictions”.

The EU diplomatic delegation in Argentina said in an early May statement that, if confirmed, the restrictions “would be incompatible with the rules of the World Trade Organization and with Argentine commitments at the G-20.”

Argentine president Cristina Kirchner during her recent visit to Spain for the EU/Latam-Caribbean leaders’ summit made a public statement denying the existence of trade restrictions.

The possibility that Moreno, who previously has negotiated price controls with supermarkets and manufacturers, may take action was enough for some businesses to apply “self-imposed restrictions,” said Diego Perez Santisteban, head of the Chamber of Importers.

“There’s a lot of uncertainty because we still don’t know the details of the plan and there’s no written rule on this possible ban” added Santisteban. Previous Argentine moves to block imports have damaged its sales to other countries.

China in April blocked imports of soybean oil from Argentina in response to anti-dumping investigations by the South American country on Chinese goods ranging from steel pipes to textiles, according to a state-backed trade group.

Last November, Mrs. Kirchner and Brazilian President Lula da Silva, agreed to speed up the issuance of import permits for perishable products after Brazil refused entry to 500 trucks from Argentina in retaliation against restrictions on imports of textiles, tires and wood furniture.

As well as jeopardizing sales abroad, import restrictions may lead to food shortages and less competition on supermarket shelves, said Javier Paz, an economist at Ecolatina research company in Buenos Aires. That may encourage local producers to increase prices, fueling inflation that is already running at an annual pace of 25%, according to Paz, whose company tracks prices on 500 goods and services.