MercoPress. South Atlantic News Agency

Argentina imports’ hurdles create ‘uncertainty’ to EU/Mercosur trade negotiations

Alfonso Diez Torres, head of the European Union delegation in Buenos Aires

Argentina’s hurdles to imports don’t help European Union /Mercosur trade negotiations and generate “uncertainty” warned the EU head of delegation in Argentina Alfonso Diez Torres. He also criticized the “one to one” Argentine policy that forces the local assembly plants to match every import-dollar with export dollars.

“It is the market that must regulate the trade flows” and not government because even when such measures could represent a short term advantage on the long run “they only create structural problems”, said Diez Torres.

“An EU/Mercosur trade agreement would eliminate uncertainty situations created by those measures which, to say the least are questionable or controversial”, added the EU representative.

Argentina last February increased by 50% from 400 to 600, the number of products subject to the non automatic licences system which severely delays or limits trade with the purpose of ensuring a hefty surplus. Argentina is concerned because the surplus has been falling sustainedly from 16.98 billion US dollars in 2009 to 12 billion in 2010 and is forecasted to further slide to 9.8 billion this year.

The government of President Cristina Fernandez de Kirchner argues that the system has enabled to save a million jobs in manufacturing and create another 100.000 from 2008 to 2010.

However most of Argentina’s trade partners have openly or quietly protested the situation. An understanding to monitor the non automatic licences has been reached with Mercosur member countries although it also has its limitations. Two weeks ago the EU, US, Peru, Mexico, Canada, Japan, Turkey and Switzerland filed a complaint before the World Trade Organization, against Argentina precisely because of the non automatic licensing system.

“These measures from Argentina obviously don’t help, but EU/Mercosur negotiations continue and looking ahead we could even think that a future agreement would eliminate such uncertainty situations”, said Diez Torres who added that “turning necessity into a virtue they are an additional element that makes us think that the agreement is really essential for both sides”.

The EU delegate described the recent round of negotiations in Brussels as “productive” since advances were made in eleven different areas from rules of origin and investments to intellectual property, “which are really as, or more important than discussions on market access and dismantling the tariffs system”.

Diez Torres said this could have given the impression that “we are delayed in the talks, but there was no timetable established for presenting the lower tariffs proposals”.

The next round of negotiations is scheduled for May 2/6 in Asuncion, capital of Paraguay that currently holds the Mercosur rotating chair. “We must understand that more important than tariff barriers are the other technical barriers. There’s much work ahead, it’s a difficult negotiation because of all the opportunities at stake, and there’s a close link between difficulties and potential benefits”.

According to Argentine sources, the EU should increase access to its market from 75% (as proposed in 2004) to 90% plus reducing the basket of sensitive items, most of them agriculture and equivalent to 10% of the EU market.