Brazil and Argentina Set on Getting Higher Mercosur Import Taxes

Wine from Argentina Brazil and Argentina, Mercosur senior members, agreed to sponsor an increase in the common external tariff (AEC) on several products from third countries, during a meeting this Monday, November 17, of the Bilateral Trade Monitoring Committee held in Buenos Aires.

Some of the products included are wines, peaches, dairy produce, textiles, leather goods, wood furniture, according to a release from the Argentine Industry Secretary.

The proposal will be considered during the group's coming summit next December in Brazil. At the meeting Argentina was represented by the Industry Secretary Fernando Fraguio and Brazil by the Deputy minister Walter Barrar.

According to Buenos Aires press reports, Argentina was most concerned about the increase in imports from Brazil particularly in such sectors as metal-mechanics, auto parts and other manufactured goods.

Brazil on the other hand expressed dismay at the Argentine government extended implementation of the non automatic licenses regime for textiles and television sets.

This was the first meeting of the bilateral trade monitoring committee since the global crisis broke out a couple of months ago which has Argentine manufacturers particularly sensitive to any loss of market or and jobs.

Earlier this year Argentina and Brazil agreed on a car manufacturing deal which manages bilateral trade for the sector until 2013, when theoretically the market will begin to be gradually opened.

Bilateral trade has been negative for Argentina for the last 65 months running and so far this year is above US$ 4 billion, 14.6% higher than in the same period a year ago.

However it is believed the trade figures still don't indicate the impact of the brusque devaluation of the Brazilian currency Real against the US dollar in the range of 35 to 40%, compared to a more modest evolution of the Argentine peso.

"So far in October the strong depreciation of the real has not reflected on imports; on the contrary trade that month tends to level because of a general decline in imports particularly from Argentina," according to economic consultants Abece in Buenos Aires.

Even when the different size of the two economies is significant, and Brazil has a more pro-business policy, trade interdependence between the two neighbors is increasing.

Argentina sells to Brazil mostly cars, auto parts, fuel, wheat, plastic goods and is the third supplier, behind the United States and China. Argentina imports from Brazil, its main trade partner, cars, auto parts, cellular phones, cargo transport, aluminum oxide, tractors, lubricants, iron plating, shoe wear and tires.

Apparently during the meeting in spite the fact the automobile industry in both countries is going through difficult times, the Brazilian delegation said that the recent decision from the federal government and the state of São Paulo to inject billions of US dollars to promote sales, "will have a positive impact for Argentine exports".

The Argentine Industry Secretary release makes no mention of junior Mercosur members Paraguay and Uruguay that routinely complain because they are left aside of all major decisions from the block plus being exposed to arbitrary trade practices by the two senior members.

Mercopress

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