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Argentina, Brazil trade row eases for now

Oct. 12, 2012 at 7:24 AM   |   Comments

BUENOS AIRES, Oct. 12 (UPI) -- Argentina's trade row with Brazil has been averted for now but its deep impact on Brazilian exporters meant losses running into several million dollars. Argentine traders also suffered in the protectionist wrangle.

Argentina slapped tough trade curbs, banning most imports, earlier this year in a bid to reduce its import bill and build reserves of foreign exchange earned through its own exports. Brazilian exporters faced new bureaucratic procedures they said contravened the free trade laws of Mercosur, the trade pact to which both countries belong.

Argentina's strategy worked for some time to its advantage but at some cost to Argentine productivity, good neighborly ties with Brazil and international relations outside Latin America. Brazilian manufacturers found they could no longer import components, goods and ingredients they need to finish their products.

Analysts say Argentina is accumulating ill will and likely retaliatory measures from countries shut out of the Argentina market.

In Brazil's case the trade curbs soured relations between the neighbors and led to calls in Brazil for tit-for-tat measures against Argentine merchandise and commodities.

Bilateral trade has suffered as diplomatic statements gloss over angry exchanges between businesses and trade representatives.

This week Brazil announced agricultural commerce with Argentina was fully restored and Argentine fruit and Brazilian pork, two major categories affected by the curbs, could be traded freely.

Traders remain skeptical. Brazilian Agriculture, Livestock and Supply Minister Mendes Ribeiro Filho said a restrictive requirement for Argentine fruit exporters to obtain prior authorization would no longer be applied.

Argentine officials said import barriers on various Brazilian pork cuts likewise wouldn't be enforced. Both sides expressed commitment to "dialogue" and more interaction to preserve their strategic relations.

Critics say the trouble is far from over. Bilateral trade reached $39.6 billion in 2011, a record. Argentine officials voiced unhappiness with Brazil's $5.8 billion surplus but were persuaded to swallow their pride, compromise on the unequal trade balance and were told to try harder to sell more to Brazil.

The dispute has hit Brazilian exporters hard. Preliminary data for the first eight months of this year indicated a 20 percent drop in Brazilian exports to Argentina, the country's No. 3 major partner after China and the United States.

Argentine exports to Brazil dropped 7 percent but Argentine trade with the European Union and other countries in the Americas and Asia is suffering more because of reciprocal restrictive measures taken by the country's trade partners.

The European Union has taken its complaint to the World Trade Organization.

© 2012 United Press International, Inc. All Rights Reserved. Any reproduction, republication, redistribution and/or modification of any UPI content is expressly prohibited without UPI's prior written consent.
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