Manufacturers from Brazil and Argentina have reached a tentative agreement that will privilege the two countries markets and exports and should eventually help overcome the ongoing trade dispute among those main partners in the Mercosur.
Accordingly Argentina will favor Brazil as industrial supplier, over other competitors, and will not "invade" those domestic market areas which can be supplied by Argentine manufacturers.
The understanding was reached this week in São Paulo during a meeting of the head of the all powerful FIESP (Industries Federation of the State of São Paulo), Paulo Skaf, and his Argentine counterpart, Hector Mendez, from the Argentine Industrial Union, UIA.
Apparently the meeting was closely monitored by Argentine ambassador in Brazil Pablo Lohlé one of the architects of the understanding to placate the growing trade confrontation between the two countries as Brazil's more aggressive and efficient manufacturers were "invading" Argentine market areas normally supplied by local industry.
"Argentina must give priority to Brazil, respecting Mercosur and avoiding trade "deflection" in its imports," said FIESP sources.
Brazilian manufacturers taking advantage of the presence of ambassador Lohlé also requested a greater effort from Argentina in approving import licenses which are punishing "several Brazilian sectors."
"We understand that Argentina is going through difficult moments, made worse by the international crisis and we are willing to help them retain jobs and prop development," said Skaf, "but what we can't accept is a fall in Brazilian exports to Argentina and an increase of imports to Argentina from third countries, be it China or any other country."
The understanding also includes a mutual commitment to identify those sectors with problems plus a statistical survey wherever there's a "deflection" of imports, particularly when the main supplier seems to be China.
Skaf said that working with an open mind spirit, "we can address those conflicting areas such as furniture, textiles, footwear, tires, tools, auto-parts, farm equipment, home equipment, milk, wheat and aerosols.
UIA Mendez defended the right of each country to keep jobs and help those sectors and help those sectors in crisis, but also acknowledged that "looking for understandings also means yielding."
Skaf closed the meeting with an optimistic comment, "these are moments of union and understanding. We can't empower the problems."
Brazil is Argentina's main trade partner, and although the same is not valid the other way round, for the Brazilian long term policy, Argentina is a "strategic partner" in its direct area of influence.