MercoPress. South Atlantic News Agency

Argentina/Brazil agree to attempt dialogue to overcome latest trade dispute

With an overvalued Real, Brazil has been flooded by car imports

Argentine Minister for Industry, Debora Giorgi will meet in coming hours with Brazilian Ambassador, Enio Cordeiro, to schedule a series of meetings to address trade disputes between the two neighbouring countries and main Mercosur associates.

Among points to be addressed is the Brazilian decision to impose non automatic import licences on Argentine goods but particularly manufactured automobiles.

Argentine government sources said the outcome of the meeting will be the arrangement for a summit of industry secretaries from both countries which should take place in the next few days. Then, another gathering of Giorgi and her Brazilian counterpart, Fernando Pimentel, should take place.

Giorgi had several telephone conversations with Pimentel but negotiations to re-open the market to Argentine automobiles and auto parts have not advanced. Pimentel reiterated Brazilian openness to a “constructive dialogue”, but would not yield to Argentina’s demand that before formal talks begin, the non automatic licences system for Argentine cars and auto parts must be lifted.

The Argentine minister reminded the significance of dropping the restrictions in order to overcome the commercial misunderstanding. According to sources, after communicating to her counterpart in Brazil, Giorgi left for Government’s House to inform President Cristina Fernandez of the advances made and to design the next steps for the reestablishment of normal bilateral trade.

During a press conference in Brazil, Pimentel said that there are no reasons “to engage in a commercial war or to break relations with Argentina over trade disagreements”. According to Pimentel the restrictions are a “general frame” that was adopted to protect the Brazilian automobile industry since the balance of trade is deeply unbalanced and harmful for Brazil”, he said.

Pimentel also emphasized that restrictions are not aimed towards Argentina exclusively and it has also affected countries such as Mexico, UN, EU, China and South Korea. Questioned over whether he will lift or not the restrictions, he said that no pre conditioning will be accepted. He also stated that a meeting at Foz De Iguacu was “possible”, but didn’t go over details.

Faced with a strong currency that makes imports cheap and Brazilian costs dearer, the automobile industry has been loosing the domestic market to imports, particularly from South Korea and China, according to reports in the Sao Paulo press. The automobile sector deficit almost doubled for Brazil in the last twelve months.