MercoPress. South Atlantic News Agency

Brazilian discomfort: ends automatic import licences for Argentine perishables

Inspectors have up to 60 days to consider license applications raising the risk cargoes will rot at the border.

Brazil this week escalated a growing trade fight with Argentina by increasing the bureaucratic obstacles for importing about 10 perishable products including apples, raisins, and potatoes, a senior Brazilian government official was quoted by the media.

While trade disputes between the two main members of the Mercosur trade block are relatively frequent, the latest confrontation will further raise fears of growing protectionism. The countries traded 39.6 billion dollars of goods in 2011 with Brazil racking up a 5.8 billion surplus.

Brazil will end automatic import licensing for about 10 perishable products, which also include wheat flour and some cheeses and wines, the official said on condition of anonymity.

While the licensing change applies to all countries, the source said, neighbouring Argentina is a major source of the targeted imports. Inspectors have up to 60 days to consider license applications, raising the risk cargoes will rot at the border before winning permission to enter.

Argentina has increased import licensing requirements on imports from Brazil and other countries, hoping to protect local manufacturers, keep its currency from weakening against the dollar, and maintain stocks of foreign exchange.

Average Brazilian daily exports to Argentina, Brazil's main partner in Mercosur, fell 27% in April compared with a year earlier.

The licensing decision was made jointly by Brazil's development and trading ministries and foreign office, the source said.

“We have been heading towards this confrontation” said Pedro de Camargo Neto, head of Brazil's Association of Pork Exporters in Sao Paulo. “Exports were practically blocked, there was no negotiation”.

“I don't know what Argentina will do” Camargo Neto said. “I believe Brazil will have to reconsider Mercosur.”

Brazil is not alone in its concerns. Argentina's measures led to attacks on its policies at the World Trade Organization (WTO) by the United States, the European Union and Japan in April. The EU plans to file a formal WTO complaint, Reuters reported on Monday, citing Spanish government officials.