MercoPress. South Atlantic News Agency

Brazil and Argentina working to find a long-standing agreement on trade, says Marco Aurelio

Garcia has been the trouble-shooter for Lula da Silva and Dilma Rousseff administrations

Brazil and Argentina are trying to address their economic and trade differences so that they can reach a long-standing, long term solution, said Marco Aurelio García, the Brazilian Executive advisor on foreign issues and trouble shooter for this kind of conflicts.

“What we are doing is trying to reach a long standing, deep solution to these differences in our economic relations, because we need to preserve the bilateral relation which is strategic for Brazil”, said Garcia in an interview with the Argentine pro-government daily Pagina 12.

Garcia admitted that “the implementation of certain barriers to Brazilian produce is not good. But it’s also something we have to resolve jointly. It’s hard to visualize Argentina and Brazil each running on their own, we are strategic both ways”.

Discrepancies between the two major South American economies were addressed by President Dilma Rousseff and her peer Cristina Fernandez during her scheduled two-day visit to Buenos Aires last April 25, but which ended in frustration and the Brazilian leader cutting her visit short to one day.

The Brazilian manufacturing sector is extremely disappointed with Argentina’s restrictions which have seen sales drop 20% in the last twelve months, while China’s exports have increased 8%.

Argentina on its side can’t swallow the fact that the Brazilian minerals’ giant Vale has decided to drop their massive 6 billion dollars project to develop potassium deposits in Mendoza, Argentina’s largest investment in recent years. But the Brazilian company complains that costs have doubled to 12 billion dollars because of inflation (24%) and the foreign money exchange policy which has a 90% gap between the official and parallel markets.

Besides, according to Vale, nor the federal or the provincial governments kept their promises relative to fiscal and credit incentives, and their top officials (and families) have received death threats since the company decided to review the whole project last December.

But despite the differences the two countries are closely linked. Argentina is Brazil’s third trading partner behind China and the US while for Argentina, Brazil is its main market for exports (particularly manufactured goods) following by China, Chile and the US. The two countries also have close complementation and integration agreements in the automobile and auto-parts industries.

However during the April 25 frustrated bilateral summit, political issues were added to the discrepancies, according to the Sao Paulo media, Brazil (and the US) are concerned with the ‘Chavez path’ which the government of Cristina Fernandez seems to have adopted lately particularly with its insistence on the judicial reform and advances on the independent media.