MercoPress. South Atlantic News Agency

US/Argentina spat “comes as no surprise” and is a “serious bump in the road”

President Obama told Congress that “Argentina has not acted in good faith”

The US government said on Tuesday that their recent decision to suspend Argentina from the Generalized System of Preferences, GSP, program, which waives import duties on thousands of goods from developing countries “is a serious bump in the road”, but “should not come as much of a surprise.”

“They’ve got to come forward and pay the subject awards if they want to work through it,” said Victoria Nuland, a spokesperson for the State Department.

“These are not new issues. They’ve been going on for a long time. So the White House’s decision to suspend Argentina particularly from GSP should not have come as much of a surprise. It was based on a finding that they were not in compliance with the GSP eligibility criteria set by the Congress,” she added.

Nuland explained that US president Barack Obama “didn’t have a lot of choice in this case” adding it was “a serious bump in the road and we had no choice but to take action”.

Despite Monday’s announcement, which was criticized by President Cristina Fernández and on the same day by the Foreign Affairs ministry, Nuland assured that both countries maintain a strong bilateral relationship, have “a lot of interests in common and a huge amount of business together.

However the bilateral relation is again at one of its lowest points since in his presentation to Congress for the suspension of the GSP benefits President Obama says Argentina “has failed to act in good faith” in enforcing arbitral awards in favour of US owned companies.

“I have determined that it is appropriate to suspend Argentina's designation as a beneficiary country under the GSP program because it has not acted in good faith in enforcing arbitral awards in favor of U.S. owned companies”, wrote President Obama. At stake are two rulings favoring US companies for over 300 million dollars and pending for almost a decade.

This is the most serious sanction imposed on Argentina since the democrats returned to the White House, and has by far a more political impact than economic.

However Argentina’s reaction was an escalade of rhetoric with Timerman saying the “unilateral decision” was regrettable and accused the US of trying to force Argentina into a ruling that goes “against our legal system” and further on said “our nation strongly repudiates the lobbying practices put in place by vulture funds to push the US government into making this decision”.

According to Argentine analysts this quite distant from the moderation and “new opportunity” to strengthen relations announced last December and comes just a few days before the two leaders are scheduled to meet at the Americas summit in Colombia on 9 April.

The sanction comes on top of the US policy of denying its vote in the World Bank and the Inter American Development bank for loans to Argentina and the situation is expected to worsen before it improves. Only a few weeks ago Argentina was also listed by the State Department 2012 International Narcotics Control Strategy Report among those countries currently experimenting “money transactions that involve significant amounts of money coming from drug trafficking”.

Argentina went from being a “country of concern” to one of “primary concern” largely due to the use of extensive cash payments, an increase in the smuggling of goods with neighbouring countries and a lack of transparency in imports and exports.

Besides the Obama announcement comes two days after the Argentine embassy organized a seminar to establish a new policy to promote trade and attract investments from the US to Argentina.

The last time Obama and Cristina Fernandez met was during the G20 summit in Cannes, France last November and the State Department described the meeting as “warm and productive”, which in diplomatic terminology is not encouraging.