MercoPress. South Atlantic News Agency

Argentina/Brazil meet next week to address trade differences

Industry ministry Debora Giorgi with Brazilian ambassador Enio Cordeiro

Argentina and Brazil agreed Tuesday to resume ‘constructive’ trade negotiations to overcome the current bilateral dispute which surfaced following the latest protectionist measures that threaten exports from the two main Mercosur partners.

“Both countries are moving towards a consensus and to coordinate issues of the bilateral agenda”, said Argentine Ministry of Industry Debora Giorgi following a two hour meeting at her office with Brazilian ambassador in Buenos Aires Enio Cordeiro.

Next week Argentina’s Industry Secretary Eduardo Bianchi will be joining his Brazilian counterpart Alessandro Texeira for a two day working meeting with the location, Foz de Iguazú or Buenos Aires, still to be agreed. Both officials were also present at Tuesday’s meeting.

“We had a very positive meeting with Ambassador Cordeiro and both countries will privilege their relation as strategic partners”, said Ms Girogi who advanced that the agenda of the scheduled meeting will cover all pending issues related to trade and structure.

The latest spat was triggered when the administration of Brazilian president Dilma Rousseff decided to impose non automatic licences on car and auto part imports, including those from Argentina, which is estimated, has an annual turnover of 7 billion US dollars.

The Brazilian measure was interpreted by business sectors as a reprisal against Argentine obstructions and delays on dispatching Brazilian exports of food, agriculture machinery and footwear among other items.

“It will be two days full work meeting (in Foz or Buenos Aires)” said the official communiqué.

The announcement should come as a relief since manufacturers from both Mercosur countries feared a further escalation.

The Argentine Chamber of Importers warned Tuesday that the bilateral relation was going through “its moment of greatest commercial tension” because of the reciprocal obstacles imposed to the free movement of imports.

The impact for Argentina could be monumental since 80% of the country’ total auto production, 450.000 units was absorbed by Brazil in 2010, as well as 65% of auto parts, with a turnover of more than seven billion US dollars.

Brazilian assembly plants also fear Argentine auto-parts delivery delay could impact production when the country also faces a fierce competition from car imports from South Korea and China.

Argentina is Brazil’s third trade partner behind China and the US with a bilateral exchange of over 33 billion US dollars last year and a negative balance of 4 billion USD for Buenos Aires.

Since founded in 1991 Mercosur which also includes Uruguay and Paraguay has been exposed to recurrent trade conflicts among its members which end up being addressed at the highest political level because there are no institutional instruments to overcome differences.

Solving disputes is helped by the fact that both Argentina and Brazil have repeatedly stated that the bilateral relation is strategic, and a priority of the respective foreign policies.

The auto industry has become the dynamo of Argentina’s manufacturing sector and represents over 50% of industrial GDP growth.