Brazil Backpedals and Denies Reprisal Against Argentina

Argentina president Cristina Kirchner The Brazilian government denied it was thinking on reprisals against Argentina because of the restrictive measures imposed to the access of Brazilian goods and also rejected it had threatened to take the case to the World Trade Organization.

"Brazil is not after reprisals; of course any measure that can be interpreted as protectionist is not ideal," said Brazilian Foreign minister Celso Amorim during a meeting with the leaders of the powerful Federation of Industries from the State of São Paulo, FIESP.

Amorim said that Brazilian businessmen should consider self imposed limits to exports to Argentina, which is Brazil's third trade partner (behind the US and China), although pointing out that as counterpart that reduction should not be replaced by products from other countries, but rather domestic production.

"The exit to this situation should be creative, maybe self imposed limits on Brazilian exports, but as long as that space is covered with Argentine production and not from other countries," said Amorim in direct reference to China, which has become almost an obsession for Brazil.

"The way to solve trade controversies between Brazil and Argentina is the dialogue enacted at the meetings to monitor bilateral trade," said Welber Barral, the Brazilian Foreign Trade secretary, in a release published in the Brazilian press.

The Foreign Trade office from the Ministry of Development, Industry and Foreign Trade argues that import barriers imposed by Argentina (import licenses and reference values) cover almost 2.000 Brazilian products.

Earlier in the week Barral publicly stated that Brazil was considering taking the trade dispute with Argentina to the WTO and did not discard the possibility of retaliatory measures on such products as powder milk and wheat flour.

FIESP president Paulo Skaf two weeks ago called for restrictions on Argentine imports to reciprocate measures imposed by the administration of President Cristina Fernandez de Kirchner such as the suspension of automatic import licenses.

The deputy Foreign Affairs minister Samuel Pinheiro Guimarães said that his team was working with the purpose of activating the Competition Adaptation Mechanism which entitles either side to adopt temporary safeguards to try and balance bilateral trade.

The issue will be addressed in Buenos Aires with delegates from both sides that are involved in the preparations for President Cristina Fernandez de Kirchner official visit to São Paulo next March 20 when she will be meeting her counterpart Lula da Silva.

José Augusto de Castro, Deputy Head of the Brazilian Foreign Trade Association said he understood the Argentine government decision to impose restrictions on trade: "they have no other option."

At the beginning of the week it was announced that Argentine/Brazilian bilateral trade had fallen 40%.

From Montevideo, Uruguay also criticized the Argentine government decision to impose restrictions which "if fully implemented" will have a critical impact for the country's exports, specifically on textiles, furniture and hides.

"We are asking for the elimination of those measures because "whether Argentina decides to apply them or not, they only generate inconveniences and make trade relations slower, more cumbersome," said Teresita Aishemberg, president of Uruguay's Exporters Union.

Uruguayan government sources said that the issue was being analyzed by a team of foreign trade experts while at the same time diplomatic contacts had been established with the Administration of Mrs. Kirchner to try and find an amicable and practical solution to the situation.

However Uruguayan sources also admitted that the measures applied by Argentina, although protectionist, do not violate WTO regulations but are contrary to the principle of regional free trade in the framework of Mercosur.

Mercopress

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