With Exports to Argentina Cut in Half Brazil Threatens Retaliation

Auto parts The Brazilian government is thinking about filing a complaint at the World Trade Organization against Argentina. Brazil charges Argentineans with delaying in issuing import licenses for Brazilian goods. This is what Brazil's Foreign Trade Chamber Secretary Lyntha Spindola says.

Brazil is concerned by a 43% annual drop in exports of textiles, shoes, home appliances, furniture and some car parts to Argentina in the first half of 2009, Spindola said in a Bloomberg Television interview on Friday.

Brazilian officials claim their Argentine counterparts are taking too long to issue permits to import goods, trimming demand for Brazilian products. Brazilian exports to Argentina totaled US$ 17.6 billion last year. Brazil is Argentina's main trading partner.

"The government is studying reciprocity measures and may even go to the WTO if talks fail," Spindola said in Brasí­lia.

The countries are scheduled to meet July 14, Spindola said. Failure to reach an agreement may prompt Brazil to similarly delay the issuance of permits for the purchase of Argentine goods indicated Spindola. Such a move wouldn't be done unless authorized by an international arbiter, such as the WTO, she said.

Argentina was Brazil's second-biggest trading partner from the 1980s until April last year, when China overtook Argentina. Brazil and Argentina, the biggest and second-biggest South American economies, created the Mercosur trade block in 1991 along with Paraguay and Uruguay to boost trade.

Argentina started to require non-automatic licenses for Brazilian products in October last year as the economic crisis reduced Argentine exports. Paraguayan and Uruguayan exporters have aired similar protests.

World Trade Organization rules require that such licenses be issued in less than 60 days and Argentina isn't complying, Spindola said.

Brazil's total exports to Argentina fell to US$ 4.9 billion in the first six months of 2009 from 8.6 billion in same period a year ago, the Brazilian Trade Ministry said in a report earlier this month. Argentine exports to Brazil fell 19.5% to US$ 5 billion from 6.2 billion.

The Argentine Production Ministry is seeking a quick solution to the licensing delays for textiles, furniture and tires, said a spokesman at the ministry. Licenses for shoes, toys and home appliances are being reviewed by the Secretary of Interior Commerce. Once approved, they will be sent to the Production Ministry, the spokesman said.

Exporters from Brazil, Paraguay and Uruguay insist Argentine authorities are "deliberately delaying" approval of those products which may have an impact on "sensitive" sectors.

Argentina and Brazil have repeatedly clashed over trade issues and the two governments' policies have been to hold regular technical meetings and have both business communities directly involved in the talks.

Brazilian negotiators have said they understand the "reaction" of Argentina in certain areas where imports can or have taken a considerable share of their domestic market, but also demand that any "Brazilian understanding" of the situation is not covered by imports from other Asian suppliers (mainly China).

Uruguay and Paraguay also have similar claims against Brazil particularly regarding powder milk, rebuilt tires and other manufactured goods.

Mercopress

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