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TRADE WARS
Argentine import tariffs hitting exports
by Staff Writers
Buenos Aires (UPI) Sep 14, 2012


disclaimer: image is for illustration purposes only

Argentina's increasingly tougher import tariff regime is beginning to hit the country's export potential as manufacturers find they cannot meet production targets because of emerging shortages of goods.

Earlier this year Argentine traders launched a low-key appeal against the tariffs, backing President Cristina Fernandez de Kirchner's drive to reduce the country's import bill but calling for a more balanced approach to tariff hikes.

Fernandez has said high import tariffs are helping balance the country's budget and reduce the burden of foreign exchange expenditure on imports. Traders say the effect has been lopsided as draconian tariff curbs have eliminated essential imports, disrupting production of export goods.

There has been no government comment on the traders' pleas and their call for a more balanced approach to tariffs.

Critics say the tariffs haven't been thought through, generating diplomatic problems with the United States and European Union as well as Argentina's neighbors and partner countries of the Mercosur trade bloc.

Argentina's neighbors Brazil, Uruguay have said the tariff curbs have hit their exports to the country, prompting business and trade leaders on those countries to call for tit-for-tat retaliation against Buenos Aires.

Analysts said a government rethink on the tariffs seemed unlikely. Meanwhile, a stronger peso against the U.S. dollar has further dismayed business leaders who see the currency spiral affecting their export drivers.

As with Brazil last year, when a stronger real affected Brazilian exporters, Argentine traders see their competitive edge slide as international prices turn off buyers.

Fernandez lashed out at critics of import controls and the peso's rising parity against the dollar, arguing both were vital to Argentina's industrial regeneration.

She lamented Argentine industry's continued dependence on imports but ruled out a policy change.

"The administered exchange rate has enabled us to grow," Fernandez declared. "We must look after the exchange rate and continue along this path to ensure the substitution of imports helped with an accessible exchange rate."

She said Argentina's industrial revival was part of the government's aim to promote growth, substitute imports and create more jobs.

Critics say fighting crime and corruption and cutting inflation should be the president's priorities. However, Fernandez has steadily increased the numbers of articles and goods affected by the Non-Automatic License program. Both U.S. and EU officials have said the barriers contravene World Trade Organization rules.

The European Union has launched a WTO challenge against Argentine import restrictions, escalating a trade war that escaped when Buenos Aires nationalized Spanish energy giant Repsol's Argentine unit YPF.

EU Trade Commissioner Karel De Gucht argues, "Argentina's import restrictions violate international trade rules and must be removed."

He said Argentina's protectionist import regime" was "getting worse."

The Argentine restrictions were there simply "to try and prop up the Argentine economy at the expense of Europe and other economies in the global trade family," he said.

Fernandez denies she's pushing protectionism, saying the tariffs applied by Argentina were lower than those imposed by developed nations.

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