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Brazil threatens Argentina with trade war

May 27, 2010 at 2:58 PM

RIO DE JANEIRO, May 27 (UPI) -- Brazil warned Argentina it could have a little trade war on its hands if it contemplated blocking or curtailing entry of Brazilian food exports into the country.

Brazil's threat of retaliation followed reports that Argentine authorities, chronically unhappy with what they see as "imbalance" in foodstuffs trade with Brazil, would be blocking shipments at the border rather than announcing an official cut in imports.

Brazil earns about $500 million from food exports to Argentina but imports more than $2 billion worth of Argentine food products. Brazilians argue they produce enough of everything and don't need to import more but Argentine authorities cite lack of neighborly courtesies, fairness and balance and want Brazil to buy more regardless.

Resentful of Brazilian food exports, Argentine officials have hinted for long at some restrictions on Brazil's unstoppable export machine, even though not quite against Buenos Aires' interests, but are constrained by agreed terms of trade.

Brazilian Foreign Trade head Welber Barral told reporters the government of President Luiz Inacio Lula da Silva believed in reciprocity and warned it could "act in retaliation" if Argentina chose to ban Brazilian food imports.

Lula da Silva and Argentine President Cristina Fernandez de Kirchner are on good terms and neither has spoken recently on the issue, which figures in their senior aides' comments in response to media reports of imminent Argentine curbs.

Barral said Brazilian officials would continue to keep checking trade flows on the frontier to make sure they were no irregularities in the trade. It's a situation that hasn't yet happened, he said.

"Brazil exports a quarter of what it imports in foodstuffs to Argentina, it's very hard to think that a rational human being would want to place obstacles in this situation," Barral said.

He warned Brazil could respond rapidly if it chose to retaliate. "Brazil has an electronic imports monitoring mechanism which, in fact, is a button ready to be pushed," MercoPress reported.

Brazil isn't the first country to protest Argentine import cuts. The European Union sent representatives to Argentine parliament to voice protest against restrictions and Uruguay and Paraguay also made diplomatic approaches to seek end of reported restrictions.

A Global Enabling Trade report cited Argentina among the top 30 protectionist countries in the world. Argentina also figured in a list of countries with the most customs barriers.

In a 125-nation Index Ratings for Trade, in which the lowest value represents the best country with which to establish trade relations, Argentina took the 95th spot.

But, in Latin American trade barriers league, Argentina is only ahead of Bolivia (98), Paraguay (103), and Venezuela (121). It is behind Colombia (91), Ecuador (89), Brazil (87), Peru (63) and Uruguay, (50). Chile ranks 18th, ahead of the United States (19) and behind the United Kingdom (17).

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