MercoPress. South Atlantic News Agency
Argentina’s boost-industry import restrictions estimated in one billion US dollars
Imports restrictions imposed this week by the Argentine government with the purpose of “preserving the re-industrialization process” cover approximately 200 products totalling annual imports of a billion US dollars, according to preliminary reports. Read full article
Comments
Disclaimer & comment rulesShould help Mercosur/EU talks along nicely :-)
Feb 17th, 2011 - 01:32 am - Link - Report abuse 0Yes, because Argentina is a member of Mercosur :)
Feb 17th, 2011 - 01:58 am - Link - Report abuse 0Looks like a trade war has just started. Let's bet, who's going to win, Argentina or the rest of the gang (Brazil, China, USA and EU).
Feb 17th, 2011 - 03:59 am - Link - Report abuse 0Argentina's current (and previous) government despises trade. Trade makes poor people wealthy, ask the BRICS EU and the US, and the last thing the Argentine government wants is a sudden mass of wealthy individuals trying to wrest control of the country from the president's and political class' grip. Mercosul is completely pointless, it just costs Brazil billions of dollars, it should be done away with. Brazil should sign a free trade agreement with the only countries in the regions that understand the value of trade: Uruguay, Chile, Peru, and Colombia. The rest of the ChavezRepublics can go sink in a quagmire of socialism.
Feb 17th, 2011 - 06:10 am - Link - Report abuse 0This guy said it all in another thread..........
Feb 17th, 2011 - 06:11 am - Link - Report abuse 0I concord completely with his opinion................
And, as far as I know, Argentina has the tacit accept from Brazil and China for these“import restrictions”.
“3 Dorian Feb 16th, 2011 - 09:21 am
In reality, there is very little “free trade”, especially with China, and in any case China needs Argentina's food a lot more than Argentina needs China's plastic junk. So, why not play hard ball? As for Brazil, why should Argentina transfer $3B each year into its coffers when Argentine workers could make the same products? It is necessary to reverse some of the extremes of Menemism. It is shameful to see abandoned factories in Argentina. One can be pro-business AND pro-people, while realizing that EXTREME “FREE TRADE” MOSTLY HELPS THE RICH. BRAVA, CFK.”
supporting your domestic industry is all very well but only up to a point, trading partners do not like import restrictions whatever they've tacitly accepted, if you really want to cut yourself off from the world then fine, go ahead, but given that Argentina ALSO wants to have a thriving export market I reckon this is a mistake.
Feb 17th, 2011 - 09:45 am - Link - Report abuse 0@riomarcos
Feb 17th, 2011 - 09:55 am - Link - Report abuse 0It's not trade that makes people wealthy. It's trade SURPLUSES, something a country obtains by - obviously - avoid running deficits. Ask China. China succesfully precludes imports from entering en masse into its market by deflating the currency and engaging in an import substitution model that outrageously violates foreigners' intellectual properties. Kirchner is a haykian vis-à-vis Hu.
@Think
I agree with you on China. As for Brazil, you need to remember that Argentina has a trade agreement with it. Whether the Brazilian products Argentina is shunning are covered by Mercosur, I don't know. But if they are, then Argentina is guilty of derailing the integration process in the name of short-term gains. Even if it is running a deficit with Brazil, Argentina still manages to have trade surpluses with other trade partners. Brazil, on the other hand, doesn't: it has a current account deficit, and not a small one. And if the situation doesn't change, it'll suffer a currency crisis. Under this scenario, the real will be quickly devalued - something that I know not to be in Argentina's interests. Trade with Argentina is important for Brazil in part because it alleviates its deficits with other partners and makes the prospect of such a crisis more distant.
@riomarcos
Feb 17th, 2011 - 11:57 am - Link - Report abuse 0“Brazil should sign a free trade agreement with the only countries in the regions that understand the value of trade: Uruguay, Chile, Peru, and Colombia”
Wow really?
@ Forgetit87
Brazil doesn’t have any trade deficit with Argentina on the contrary is Brazil who has surplus with Argentina.
And bigger gets Argentina bigger becomes Brazil.
Last year we import from Brazil U$s 17bn what represents the 8.5% of the total exports of Brazil.
And the 32% of Argentina’s total imports.
While China 12.49% and US 10.5%.
To import more Argentina needs to export and grow more if our economy would have similar size of Brazil we will be importing 190bn as Brazil does at the moment and the U$s 17bn that now Argentina is importing from Brazil will turn into U$s 60,8bn.
Brazil represents 32% of the total Argentina’s imports while Brazil only imports 18.78% from Argentina.
So in the long run not only Argentina would be hurt by the asymmetric trade also Brazil.
Comparing the sizes of the economies of China and USA with Argentina and with what they import from Brazil we are still the best partners in proportion.
Lets say that if Argentina would have the size of USA we will be importing from Brazil U$S 608,96 while USA is only importing from Brazil U$s 19bn at the moment just 2bn more than Argentina now.
So who is really harming Brazil's trade and running deficits is US and China while harming Argentina trade balance.
Brazil needs to cut imports from US and China to import and export more to Mercosur.
(7) Forgetit87
Feb 17th, 2011 - 05:00 pm - Link - Report abuse 0As I understand it there are ”rules and provisions” in the Mercosur Trade agreement for ”special sensitive cases”.
That is, and must continue to be the force of Mercosul…………..
One typical example from last year……:
Compressors for air conditioners, fridges and freezers imported extremely cheap from Danfoss/Brazil.
That “dumping” import nearly caused the closure of the Argentinean compressor industry with all the long term socio-economical effects that that implies.
Those compressors were not even made in Brazil but re-labeled European products that the matrix house in Denmark could not sell to their other markets because of the ongoing crisis iun the north.
It is NOT in Brazil or Argentina’s interest to let our industries die or our people go unemployed so some smartass company director in Copenhagen can get a million dollar bonus because he knows how to bend the international trade rules. (If they are any?)
I “Think” you’ll agree :-)
@Nico
Feb 18th, 2011 - 12:01 am - Link - Report abuse 0I noted that Argentina does run current account surpluses in spite of its trade deficits with Brazil. Brazil's situation is the reverse: it extracts surpluses from Argentina, but not from most of its partners. For that reason, Brazil has a CC deficit of 2.5% of GDP. Considering Argentina's overall surplus, I can't understand the urgency it feels to act defensively against imports, specially those of Brazil, a country in which Argentina's exports don't face restriction problems, as it happens in the US and Europe.
@Think
I agree with you on cases such as the one you just pointed out, that of products developed and exported from a place other than a Mercosur country which are passing as having been produced in the region (something China does a lot). How often that happens, I don't know: in fact, I didn't even know about the Danoss affair. But I'm pretty sure that accounts for only a very small portion of trade within the region and of the goods Brazil and Argentina exchange (trade between the two of them has already reached huge numbers).
@Forgetit87
Feb 18th, 2011 - 03:15 am - Link - Report abuse 0Yes Argentina runs a surplus, but you have to take into account that Argentina has not access to international loans since 2011.
So Argentina cannot afford to have any deficit at the moment because there is no way to finance it by borrowing. And also Argentina has to pay its debt and obligation with her own money.
So its not a matter of lack of solidarity of Argentina toward Brazil else the problem is the asymmetric of both economies.
Brazil alone has with USA -7%, Japan -4.5%, Germany -3% trade deficit (to name some), so they represent a combined trade deficit of -14.5%.
Can you see how easy is to cut the 2% trade deficit from those countries (1% USA, 0,80% Japan, 0.20% Germany) that’s it you are in balance again.
Another point is that Brazil is receiving too much fly speculative capital what produce an artificial appreciation of its currency what makes its exports more expensive and favour US, Europe, Asia, etc Imports.
If Brazil devaluates its currency, Argentina will have to devaluate at least in the same proportion. Nothing will change in the Front of exports for Argentina on the contrary will make export cheaper and imports more expensive what will favour the rise or more trade surplus. But internally we will have more inflation.
All of this your govt is aware of and for that have imposed some restrictions on flying speculative foreign capitals.
: )
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