MercoPress. South Atlantic News Agency

Brazil/Argentine dispute abating as trade begins to normalize

Eduardo Bianchi and Alessandro Texeira are at the heart of negotiations

The trade dispute among Mercosur main partners seems to be abating from the moment Brazil authorized on Friday the introduction of 1.000 cars manufactured in Argentina that had been retained in Customs since the implementation of non automatic import licences.

According to Argentine diplomatic sources the administration of Brazilian President Dilma Rousseff instructed that a first batch of a thousand cars be liberated and given access to the country.

In response to the Brazilian move, Argentina adopted a similar action with Brazilian batteries, foot wear and tyres that had been retained at the Argentine customs appealing to the same non automatic licences scheme.

The Friday exchange follows on Thursday’s intense bilateral negotiations to reach an understanding through a ‘constructive dialogue’. Argentina Industry Secretary Eduardo Bianchi and his Brazilian peer Alessandro Texeira talked extensively about the respective obstacles to the normal flow of trade ahead of the meeting scheduled for next week in Buenos Aires.

The round of talks next week was agreed following last Monday’s meeting between Argentine Minister of Industry Debora Giorgi and Enio Cordeiro, Brazilian ambassador in Argentina.

On Wednesday the Brazilian government marked the first steps to ease the conflict with a Customs census identifying licences in the process of validation so as to give them the definitive liberation.

Argentine car manufacturers were expecting Brazilian authorities to lift, even partially, restrictions imposed on Argentine cars while a round of discussions was put in place to begin negotiations, as apparently is happening.

Brazil is Argentina’s main trade partner and absorbs over 50% of the country’s car exports. Argentina is behind China, US and EU but is Latin America’s main trade partner and a ‘strategic’ associate for Brazil.

Bilateral trade was over 32 billion US dollars in 2010 and this year is further expanding.
Nevertheless Argentina complains that the bilateral trade is positive for Brazil and repeatedly has appealed to the non automatic licence scheme.

Brazil has demanded that the 60 day timetable for the licences be strictly contemplated and that the country’s share of the Argentine domestic market is not replaced by an Asian competitor.

Brazilian industry competitiveness debilitated with a too strong currency has been facing a flood of car imports from Asia, the US and the EU, and the Brazilian government on May 10 decided to apply the non automatic licence scheme to the auto and auto parts imports.

The decision was totally unexpected by Argentina and had a tremendous impact on the country’s automobile industry.