Minister of Industry Débora Giorgi and Transportation Secretary Alejandro Ramos pitched a plan for a railroad industry development plan yesterday to a room full of business executives, making the case for domestic investment.

“The Argentina Industrial Development Plan for Railroad Network Providers and Import Substitution aims to put the railroad industry on its feet, substituting imports and affording security and comfort as it applies to transportation politics,” summarised Giorgi.

The plan includes “a renovation of 1,500 kilometres of track in 2-3 years as a minimal objective and a greater objective of 6,400 kilometres, renovation of the rolling stock for the metropolitan area, the Buenos Aires-Rosario and Buenos Aires-Mar del Plata stretches, and fundamentally of freight services,” as well as improved signalling systems.

“One will have to invest,” Giorgi contended, “we are going to put at your [the business executives] disposition all the tools to facilitate that investment, but you will have to take a risk; we will have to drop the discourse to take hold of the hammer, metal, and the blowtorch, and that means gambling in a good sense of the word as a businessperson has to do.” She continued on to list the exact materials are needed and corresponding quality standards and prices.

Executives have been invited to participate in a series of meetings, which will analyse the issue and plan the next steps for three key development areas: tracks, rolling stock such as passenger coaches and cargo cars, and signalling systems. The first will take place on 30^th January.

The meeting comes after last week’s announcement that the Sarmiento and Mitre lines will be receiving 409 coaches from a Chinese company. It also follows the advancement of the Once train crash case from investigation to public trial and the opening of platform 2, the site of the accident. Lastly, it also follows the announcement of the closure of the “Old Patagonian Express” in Chubut due to “technical problems”. A strike on the 22nd January was announced yesterday but cancelled after negotiations today.

In Recoleta – the upmarket neighbourhood that most embodies Buenos Aires’ reputation as the ‘Paris of South America’ – things are becoming just a little less French.

By the end of October, luxury fashion label Louis Vuitton and renowned jeweller Cartier will join the likes of Yves Saint Laurent and Ralph Lauren in vacating their stores and pulling the shutters down on their Argentine operations.

The exodus of top-end clothing brands is blamed – in part at least – on the increasingly burdensome restrictions the government has placed on imports. The policy shift began in earnest last year, when the list of goods that do not qualify for automatic import licensing began to grow; some 600 products, including textiles and fabrics used by fashion retailers, are now held up at customs while the non-automatic licence is processed.

In addition, since 1st February, all importing firms have been required to prepare in advance a sworn declaration detailing their commercial transactions, including evidence of how they will meet another state-imposed requirement to exports goods to the same value as those imported.

The additional customs procedures have caused serious bottlenecks: in the port of Zárate, local press report an estimated backlog of 30,000 imported cars held for up to six months pending licences. Meanwhile, specialist goods not commonly found or produced within Argentina, ranging from salmon to silk and iPhones, have become increasingly scarce in the domestic market.

The government says the measures are necessary to defend local industry and employment, while gradually reducing the country’s dependence on foreign products. Critics, however, say they will ultimately be counterproductive, isolating Argentina from the world economy and leaving it vulnerable to retaliatory policies from its key trading partners.

Trading Criticism

Protectionism, shielding local businesses from cheaper or better-quality imports via tariffs or administrative restrictions, is considered taboo in orthodox economic wisdom. In its glossary, The Economist describes the practice as one that “usually makes the protected country worse off than if it allowed international trade to proceed without hindrance.”

In Argentina, the concept of “import substitution”, replacing imported goods with locally-made alternatives, was embraced by President Juan Domingo Perón in the 1940s. Despite growing momentum in the global free trade movement, it remained a key component of domestic economic policy until the military coup of 1976 ushered in several decades of neo-liberal, free-trade thinking. In 1995, under Carlos Menem, Argentina joined the World Trade Organisation (WTO), which exists to promote and regulate international trade among its 157 member countries.

It is in the WTO that today’s Argentina faces sharp criticism for its increasingly protectionist stance. In a report compiled by Global Trade Alert, released in July, Argentina was ranked second in a list of the world’s most restrictive countries for trade, having introduced 141 “discriminatory” measures since November 2008.

Angered by these measures, the EU, US, Japan, and Mexico have all filed complaints at the WTO in recent months against Argentina for implementing measures that “restrict the import of goods and discriminate between imported and domestic goods”. The EU claims that the non-automatic licences affected €500m of its exports in 2011, while new restrictions this year could impact €8.3bn, the sum of its trade with Argentina.

The Argentine government has responded by highlighting the protectionist measures adopted by its accusers, lodging its own complaints at the WTO against the EU for blocking biofuel imports, and the US for restricting the importation of Argentine beef on sanitary grounds without “scientific justification”. Argentina’s ambassador in Washington, Jorge Argüello, also pointed out that it is the US that has received the most complaints in the WTO since 1995, with 113 disputes compared to Argentina’s 17.

Argentina’s defiant stance was echoed by Brazilian leader Dilma Rousseff at the recent UN General Assembly. “We cannot accept that legitimate defence initiatives by developing countries be unfairly classified as protectionism,” declared Rousseff, after Brazil had been criticised for its plans to raise import tariffs on 100 products by 25% to protect local businesses.

Fine-Tuning

At home, the government has also rigorously defended its trade policy, dismissing the idea that the departure of foreign fashion brands is a problem, and pointing out instead the growing international presence of national brands such as Cardon (clothing) and Freddo (ice cream). And though Apple’s iPhone 5 will not be on sale in Argentina, the government points to the decision by Blackberry to begin fabricating two new models in Tierra del Fuego – the home of Argentina’s electronics industry and one of the biggest beneficiaries of protectionist measures – from December.

However, the argument for defending national industry and promoting the ‘Made in Argentina’ label is undermined by a heavy reliance on imported materials. In a monthly survey published by INDEC, 99.6% of industrial firms reported that their factories use imported parts or raw materials in the production process.

Last month, the head of the Argentine Industrial Union (UIA), José Ignacio de Mendiguren, highlighted the problem in an interview with El Cronista: “The restrictions have cut links in the production chain and today, the sector uses a high proportion of imported goods. We have to advance the substitution of them [for locally-produced parts], but we can’t while the chain is broken.” De Mendiguren had previously criticised the haphazard implementation of the new measures, arguing that “the virtue of legitimate tools is lost if they are used poorly”.

The benefits of protectionism can also come under threat if Argentine exporters face reciprocal discrimination in foreign markets. For example, exports to Brazil, Argentina’s most important commercial partner, have frequently been subjected to similar administrative checks, delaying sales and creating potential cash flow problems for small companies.

Though some of the early administrative teething problems of the new import restrictions have eased, the challenge for the government now is to manage the long-term transition to an import-substitution model without crippling local production in the meantime. A broader policy mix involving training skilled labour, encouraging innovation, and boosting technological capacity will also make the trade policies more effective.

Those that support the logic of protectionism will be hoping for some of the “fine tuning” that President Cristina Fernández de Kirchner has used to describe her administration’s approach to economic decision-making.

The Ministry of Foreign Affairs announced today on a press release that Argentina will file a report against the United States before the World Trade Organisation (WTO), for “blocking, breaking WTO’s rules, the import of Argentine meats and citruses.”

After the report is filed, a consultation period of 60 days will begin, to give the US the chance to reply to the Argentine claim. If the response is not satisfactory, Argentina will then demand a panel of experts be formed to analyse the US’s protectionist policies.

According to the press release, the US uses foot-and-mouth disease as an excuse to block imports of Argentine beef, despite Patagonia, the region where the beef is produced, being officially free of foot-and-mouth disease.

As well as beef, Argentine lemons have been subject to an import ban by a US judge since 2001. The situation affecting beef and lemons has, according to the Ministry, caused losses of “a few hundred million [US] dollars.”

Argentina has previously complained to the US and the WTO regarding the former’s protectionist policies, but did not receive a satisfactory answer. The government will now “double its efforts in defence of our producers and as a way to denounce the double standard of the most powerful countries within the WTO, which demand from developing countries rules that they themselves do not comply with.”

The governments of the US and Japan have, in turn, filed their own claims before the WTO regarding Argentina’s protectionist measures affecting their products. The European Union had filed a similar claim against Argentina in May.

The measures come shortly after Argentina was named “the most protectionist country in the world” by Global Trade Alert, an initiative co-ordinated by the Centre for Economic Policy Research which monitors policies affecting world trade.

At the Summit of the Americas in April, US president Barack Obama announced that a free trade agreement with the host country, Colombia, would go into effect on the 15th May 2012, months earlier than expected. The agreement, originally signed in 2006, has stretched over two US administrations, reputedly due to Colombia’s notoriously poor record on workers rights, with the highest level of trade union deaths worldwide.

During his 2008 presidential campaign, Obama publicly opposed a bilateral agreement in a televised debate against John McCain, vowing that he would not push the deal forward until he was “certain they are not killing union leaders.” Four years later, in the face of mounting economic pressure, the Democrats have dismissed previous qualms, seizing the opportunity to intensify trade and investment, on the grounds that Colombia has made “historic progress in workers protections and human rights.”

For Angela María Orozco, a former Colombian minister of trade, the postponement of the Free Trade Agreement (FTA) is due largely to the “extreme polarity of party politics” in the US; as well as to “Colombia’s delay in negotiating the deal.”

Figures reveal that violence against unionists is slowly being curbed in what is considered to be South America’s most pro-US nation. But, with 40 trade unionists killed in the last year alone, 60% of the total global figure according to the International Trade Union Confederation (ITUC), exercising labour rights in Colombia is still a highly precarious act.

Agricultural Exports 

Over the past decade, improved security and foreign investment have bolstered the Colombian economy, which has an expected growth rate of 4.7% in the next year, according to IMF figures. The US has, however, lost US$1bn in agricultural exports to Colombia over a two-year period due to regional accords and international competition.

Total US agricultural exports to Colombia plummeted from US$1.8bn in 2008 to US$827m in 2010, while Argentina’s agricultural exports to Colombia rose from US$457m in 2008 to $1bn in 2010, according to a report by the US Senate foreign relations committee. Colombia currently applies tariff protections on all agricultural produce, including some of over 100%. The FTA will provide duty-free access on 77% of all agricultural products, accounting for 52% of US exports to Colombia.

In the short term, Orozco predicts, “displaced employment” is probable. But, she argues, “in the medium and long term, this will mean greater competitiveness for the country and will bring in foreign investment, both from the US and from other countries which have trade agreements with Colombia.”

In October, Obama stated that the implementation of the agreement “will significantly boost exports that bear the proud label ‘Made in America’, support tens of thousands of good-paying American jobs and protect labour rights, environmental and intellectual property.”

The ratification of the FTA is a victory for Obama, and for advocates of the belief that foreign trade can prop up the US economy in the face of rising protectionism across party lines. But the economic benefits of the removal of trade tariffs are reported to be “negligible” for the country, according to a federal agency estimate in 2007, with an increase in gross domestic product of US$14.4bn, or approximately 0.1%.

Moreover, the Andean Trade Promotion and Drug Eradication Act (ATPDEA), a trade preference system designed to promote alternatives to illegal drug production, already boasts Colombian exports.

Many US exports to Colombia, on the other hand, are subject to duties as high as 35%, which has caused the US business community to argue that the FTA would put US producers on a level playing field, granting them equal access to Colombian markets.

At a time when Latin America is deepening regional integration, cultivating strong ties with Colombia is seen as a strategic move on the part of the US government. One which, undoubtedly, bears domestic political currency in the lead up to the 2012 presidential elections.

Colombia might also thank China for the ratification of the agreement. Evidence from the US Senate foreign relations committee forecasts that China, already Colombia’s second largest trading partner, will oust the US if an agreement is not implemented.

Obama’s support for the measures has provoked outrage among his political base, including labour groups who fear that foreign competition will lead to unemployment back home. According to US union leader Richard Trumka, the signing of the agreement is “deeply disappointing and troubling” since it “perpetuates a destructive economic model that expands the rights and privileges of big businesses and multinational corporations at the expense of workers, consumers, and the environment.”

Violence and Impunity

Since 1991, Colombia’s National Trade Union School (ENS) estimates there have been 2,245 killings, 3,400 threats and 138 enforced disappearances of trade unionists in the country. Impunity in these cases is over 90%. The Attorney General’s Office, which oversees the prosecution of such crimes, has opened investigations into more than 1,300 cases of anti-union violence. However, of the 298 cases of trade unionist murders between 2002 and 2004 under investigation, only four have resulted in a sentence, that is to say, just over 1.3%.

According to Luis Celis, the political coordinator of NGO Nuevo Arco Iris, the high level of violence is attributed to the “affiliation of local governments, armed forces and police with the paramilitaries.” Moreover, the persistence of the armed conflict and territorial struggles are also contributive factors.

In response to increasing pressure from the US, the Colombian government has launched a new Labour Ministry to oversee the Action Plan Related to Labour Rights, initiated in April 2011.

For Orozco, the trade agreement has prompted measures which will ensure a “greater transparency and flexibility in administrative procedures.”

But, Celis argues, institutional impunity is still entrenched in the system and continues to “generate a logic of violence. The government needs to send out a message that trade unionists’ crimes will not go unpunished, strengthening the physical, political and judicial protection of trade unionists,” if this is to change.

“The aim is to reduce the death toll to zero,” says Celis. Such was the case in Guatemala, leading up to the ratification of the Central American Free Trade Agreement (CAFTA) in 2006. But since its implementation, trade union violence has skyrocketed and corporate rights remain prioritised above labour concerns.

Human rights activists have argued that while the Action Plan requires Colombia to create new programmes nominally dedicated to protecting unionists, it sets no benchmarks for reducing the homicide rate. They have petitioned accordingly for a number of guarantees built into the agreement, including a mechanism which would void the agreement in the event that violence escalates again.

The US government has refused to meet with the request. But, in an attempt to fend off opposition, the Obama administration has established various programmes by which workers, displaced by foreign competition, are offered retraining schemes and financial aid.

Harmonising Intellectual Property

Besides the controversial lack of union safeguards, the FTA also demands that Colombia abide by US intellectual property legislation.

The copyright bill Lleras 2.0 was pushed through Congress in just 18 days, the shortest period of time on record for a piece of legislation to be passed in Colombia. Critics have challenged the legislation on the grounds that it concentrates on importing homogenised US-style cyber enforcement procedures, while failing to provide protections and limitations for producers and consumers.

In response, a group of international academics have sent a letter to the Colombian legislature, asking them to recalibrate the balance between rights holders and other citizens by introducing flexible limitations and exceptions into the national law. Sean Flynn, a US expert in intellectual property, considers Colombia to be a “starting point in the global ramping up of intellectual property protections through trade agreements” which will lead to a “harmonisation of US norms.”

Encoded in FTAs are regulations which concentrate solely on obligations with regard to proprietor rights, while failing to safeguard other interests that include free expression, access to educational materials and technological innovation, as enshrined in the US Fair Use system.

Intellectual property governs creativity, free expression and innovation, that is to say, domestic policies. According to Flynn, a “one-size-fits-all intellectual property protection law” is likely to harm recipient countries developmentally and hamper economic growth, as well as market opportunities for US pharmaceutical companies and internet service providers.

Regional Alternatives

The revival of support for free trade, initiated by the Bush administration in 2006, comes at a time when both Democrats and right-wing Republicans have adopted anti-trade positions, albeit on different grounds.

Such agreements, which eliminate tariffs and other policies protecting domestic produce, are generally considered to benefit developing nations by creating a common market which jumpstarts industry and reduces poverty. But it is equally clear from recent studies that such deals are also liable to create “enclave economies,” the benefits of which are confined to the international sector and do not translate into growth and prosperity, as is the case with NAFTA in Mexico.

While FTAs continue to require developing countries to eliminate or reduce protection on agricultural and manufacturing exports, they perpetuate an economic model that plays straight into the hand of multinational corporations at the expense of local workers, thus reinforcing US dependency.

Latin America’s internal trade accounts for only 22% of its total commerce. But the increasing presence of Mercosur and the Community of Latin American States and the Caribbean (CELAC), recently created in response to the global economic crisis, is gradually shifting the regional economic landscape. Such blocs offer less rigid, regional alternatives in the face of deepening trade imbalance with the US, carving out a space for burgeoning economies to compete on a level playing field.

“The current commercial networks in Latin America offer enormous opportunities for increasing manufactured exports and added value, since they are the primary consumers of Colombian products,” says Orozco. “Creating a cohesive value chain within the hemisphere” is a priority for the immediate future.

Click here to find out what Argentines think about free trade agreements between Latin American countries and the US.

Arguably one of the most important announcements to come out of the recent Summit of the Americas, next week on 15^th May the United States and Colombia will officially enter into a free trade agreement.

Colombian politicians have named the move a “win-win situation” and a “unique opportunity” for the country. The new agreement aims to bring economic prosperity to Colombia, getting national products into the international market and increasing foreign investment, as well as producing an estimated 500,000 new jobs.

The agreement between the countries has generated controversy, however. At the centre of the debate lies the complaint that union violence, which is rife in Colombia and which was supposed to be eradicated before the agreement came into place, has not yet been dealt with.

How do Argentines feel about free trade with countries like the US? What are the pros and cons of free trade in the Latin American region? Should Argentina relax its own import restrictions and follow Colombia’s footsteps? The Argentina Independent hit the streets of Buenos Aires to find out.

Photos by Natasha Ali

Marcelo Cerdi, 44, Teacher, San Isidro

Simply put, I’m in favour of the economic policy that we have in place currently here in Argentina. I think it’s good that we have more restrictions on goods that we import, and with a bigger emphasis on national products. I pretty much agree with what they’re doing in that respect. I think that the methods they are using suit the country that we’re living in. This is a country that has a lot of pending issues. More than anything, I believe in politics that integrate the whole of Latin America; by that I mean that certain countries should complement each other economically. I think this is the direction we should be going in. The development of this country has been stunted because of economic and political policies that weren’t necessarily the most favourable option for growth and I think that’s the direction in which our policies should be heading.

Maria del Carmen Diambrosis, 52, Teacher, Vicente Lopez

It seems to me that every country in the whole of Latin America needs to be more unified economically; there should be one Latin American economy and trade. We need to now be more careful about what enters the country in terms of imports, because after the Menem years in the 90s, we saw that the economic policies essentially closed up industries. Nowadays, we have been left with normal jobs, teaching, driving taxis, and we can’t compete with big economies like China and what comes in to our country from those countries. There needs to be a common Latin American market, with all the Latin American countries working together, and not with the US. If there was a common market, it would generate competition. It seems to me that it would mean that we could compete economically with the big players, the imperialists.

Jose Bengler, 37, Artisan Worker, Palermo

I’m not an expert on this, but there are some things that I can see anyway. I know that, for example, Argentina and the Argentine state have produced certain restrictions on products that are imported. For me, it seems like a good idea that governments are regulating the economy, that not everything is free or open in the market. It seems like a good idea, a good decision, to have some amount of restriction. In terms of something like Colombia agreeing to free trade, it seems to me, while they can open their doors to trade without restrictions with other countries, there should still be some measures to protect the country’s own products, to protect the work that is done by the people. To me that’s very important.

Vincent Nilesi, 42, Engineer, Palermo

I don’t know a whole load about the issue of free trade but I’m aware that certain agreements like this one between the US and Colombia exist. I work in [the production] industry, so I’m aware of difficulties caused by the economic policies this country has adopted. I am faced with certain problems that exist because of tighter restrictions in terms of trade, with material that we import, and use to make products for example. These tougher import restrictions generate a lot of problems. Because of this, I think we should be much more open in terms of trade between countries. Being more open to the idea of free trade is a good idea: these harsh restrictions are nationalist, not in the way we may know it, but it’s a nationalism that affects local companies through its taxes.

Yanet Capalbo, 19, Cadet, Villa Lugano

I don’t know much about the subject specifically in terms of the trade agreement between Colombia and the US. Free trade is almost like neo-liberalism, it’s a really liberal economic idea. But apart from what it could do economically for any country, for me the concept of free trade doesn’t seem like a good idea because of what it can do to the people, how it could affect them. I feel that free trade is especially bad for workers. In the context of big companies and free trade, workers are always left with less.

People in Argentina buying books online from foreign companies will be substantially affected by the new set of rules intended to toughen controls over imports, the opposition newspaper La Nación wrote today.

According to the newspaper, courier companies will be no longer able to deliver books bought online to the doorstep, given the restriction on the entry of foreigner goods also applying to books, magazines and all printed materials, including brochures.

Libraries and publishing companies will have to declare the amount of goods brought in the country by swearing in and signing an official declaration beforehand, and eventually picking it up from the custom office.

This means that they would be required to go personally to the Ezeiza cargo area and ask for the specific book, which would be labeled as “Particulares”.

Officially, the measure has been taken to protect the “people’s health and safety”: the government, in fact, claims that tougher controls are intended to eliminate the dangers arising from the use of inks with high levels of lead in some of the printing material.

The resolution 453/2010, in fact, sets the limit of lead used in the printing inks to 0,06%. De facto, the norm started to be applied on the last 12th of March.

“The result is that all the printed material is also subject to special treatment at customs [like any other good], in this case to check on the amount of lead used in the inks. Until late 12th of March, there were no restrictions, for example, for books delivered with courier services. Now, a publishing company must have through the same process than any other good,” said a lawyer specialised in foreign trade and customs law to La Nación.

Courier services are used for shipping goods weighing up to 50kg and worth less than US$1000.

According to the new set of trade regulation laws introduced on the 1^st of February, anyone seeking to import products in Argentina is required to fill in the Anticipated Sworn Declaration of Imports (DJAI).

On the sidelines of this weekend’s summit of the Community of Latin American and Caribbean States (CELAC), Argentine president Cristina Fernández de Kirchner will meet with her Brazilian counterpart Dilma Rousseff to discuss a series of bilateral trade disputes between the two countries.

Trade between the two countries has soared in the last decade. However, earlier this year, Brazil slowed the entrance of Argentine cars, one of its most important exports. The move was reportedly a retaliation for Argentina’s decision to add around 600 products to the list of those that did not receive automatic import licenses, many of which come from its neighbour.

Even more recently, Brazil imposed limits on the import of Argentine sweets and apricots, while Argentina blocked the entry of Brazilian shoes, leaving an estimated 3.1million pairs stuck at customs. The association of shoe sales in Brazil (Abicalçados) estimated a loss of US$100 million and accused the Argentine government of barring entries at customs to please national companies in order to win the elections.

These restrictions have come despite both countries belonging to regional trading bloc, the Common Market of the South (Mercosur), which was established in 1994 with the primary objective of integrating the four countries involved (Argentina, Brazil, Paraguay and Uruguay) through the free movement of goods, services and means of production.

However, the recent trade disputes between Brazil and Argentina suggest that “free” does not come without “ifs”. If its two most powerful members are imposing separate limitations, what is Mercosur today? And what role does it really play in promoting commercial relations between its members?

The Evolution of Mercosur

“Academic literatures call it (Mercosur) an imperfect mode of integration or customs union” says Demian Dalle, economics expert and professor of macroeconomics and economics politics at the University of Buenos Aires. “I would say that, far from being imperfect, it is simply a new mode of integration with its own characteristics.”

These characteristics, says Dalle, have changed significantly since the four countries signed the Treaty of Asunción in 1991, paving the way for the creation of Mercosur three years later. In the early 1990s, when the common market was being developed, it was based on neo-liberal and free trade policies, with Mercosur following in the footsteps of the North American Free Trade agreement (NAFTA) and largely inspired by the increasingly integrated European Union.

However, Brazil’s currency devaluation in 1999 sent shockwaves through the region, triggering an economic crisis that climaxed with Argentina’s debt default in late 2001. These events changed both the political landscape and economic policy of the region.

“When people ask me about Mercosur, I like to ask them ‘which Mercosur?’“ explains Dalle. “To me, there are two Mercosurs. The first goes until 2001 and the second one goes from that year on. The first one is set on a liberal basis, in which Mercosur tends to free commerce and in which Brazil sits as its biggest power. Then in 2001 it all changed.”

After the crash, as each country had to look inward to rebuild their economies, there was a re-structuring of international commercial relations, with a renewed emphasis on protecting domestic industry and employment. In other words, creating a “perfect” union of free trade was no longer the primary objective.

Protectionist Argentina

According to Global Trade Alert, a database of restrictions on international commerce, Argentina now imposes more “protectionist measures” than any other country except for Russia.

This has angered those promoting free trade. Top trade negotiator in the EU, Karel de Gucht, said earlier in the year that Argentina would be the greatest “obstacle” to a formal trade partnership between Europe and Mercosur. “Argentina’s protectionism is creating problems and they are making our exporters nervous, especially in the automotive industry. If the Argentine people do not change their attitude, we may take this case to the World Trade Organisation,” he threatened.

Argentine policy has also drawn criticism from other Mercosur members, especially Uruguay and Paraguay, who feel increasingly marginalised by the trade policies of the group’s most powerful members.

In September, Uruguayan president José Mujica released a statement on the government’s official website, expressing his frustration. “The protectionist measures from our biggest neighbouring countries are partly acts which reflect, direct or indirectly, the international situation. However, the non-differentiation of their politics towards their smaller partners tends to distort the role of integration” he said.

Meanwhile, Brazilian business groups affected by these measures are also voicing their concerns. “The barriers imposed by Argentina are too harmful to the companies,” Elizabeth Renz, a representative of Abicalçados, told The Argentina Independent.

“Shops don’t receive the season’s collections in time, for specific dates, as was the case on Mother’s Day. (…) This fact also generates big loss in terms of the image of Brazilian shoe suppliers, which start being considered negatively by consumers, who do not have access to information as to the real motives causing the delay in deliveries.”

However, Dalle rejects that what he describes as “sector conflicts” seen this year amount to protectionism. “I don’t like the word protectionism,” says Dalle. “It has a pejorative, negative meaning to it. These are means of administrating commerce.”

“There are exports of sweets from Argentina to Brazil. There are exports of shoes from Brazil to here. I imagine protectionism as something like the Wall of China, where nothing goes through it, and that’s not the case. What is happening is administration. One month some quantities come in, the other month a little less, but in no way there is a barrier which stops the influx.”

What Next?

This week, Brazil will be hosting a seminar called Econmex Mercosur, which Argentine minister of industry Débora Adriana Giorgi is due to attend, that intends to discuss ideas for the planning of the next 20 years of the union, especially in terms of the commercial relationship between members.

There is no doubt that commerce in the region is flourishing: official statistics show that Argentina’s trade with other Mercosur members—especially Brazil—rose by 52% between 2006 and 2010. However, commercial asymmetries between the two largest countries remain, largely favouring Brazil, which ended 2010 with a trade surplus of US$3.5bn with its neighbour.

For Argentina, this deficit with its most important trade partner is a concern, especially as its overall trade surplus fell from US$16.89 billion in 2009 to US$12.06 billion in 2010 and is expected to fall further this year.

This will be one of the key issues dealt with as Argentina prepares to take over the rotating presidency of Mercosur in the first half of 2012, with the formal handover to take place at the summit on the 20th of December in Montevideo. The importance of the commercial relationship between the two countries is reflected in the recent surprise appointment of Luis Maria Kreckler, former Foreign Ministry’s Trade and Economic Affairs secretary, as Argentina’s Ambassador to Brazil.

Other major pending issues for the union is the proposed accession of Venezuela, which currently only requires ratification by Paraguay, and a decision on an EU-Mercosur trade deal, something backed by Brazilian president Rousseff.

During her speech at the Mercosur summit last year, President Fernández said: “We need to integrate ourselves actively, but we want to actively integrate from our own region, from our own projects, from our own vision of what the world’s problems are and how to solve them.”

In the coming weeks, businesses and traders, especially in Brazil, will be anxious to find out more about what this vision entails. But whatever its supposed “imperfections” as the free trade union it originally set out to be, Mercosur looks set to continue playing an important role in regional integration in the coming years.

Lead image by Daniel Mitsuo

Earlier this month, interior trade secretary Guillermo Moreno announced that there would be a ban on imports that compete with products readily available in Argentina. In the two weeks that followed, many companies did not receive sanitations certificates and some trucks coming from Brazil were stopped at the border. These trucks were later allowed to pass.

As yet, there is no official law and there is doubt as to whether such a ban would be allowed under World Trade Organisation rules. Supermarkets have been in meetings with Moreno and asked him to draw up a list of specific products. There have been complaints from businesses that depend on imports and from Brazilian businessmen. The government is believed to be worried about the prospect of a trade deficit.

At the recent  EU-Latin America and Caribbean Summit, the president denied that there would be restrictions on imported foods. She also attended a meeting with the Brazilian president in Rio De Janeiro on 28th May, at which she said that there would be no restrictions on imports and that there will be a meeting in two weeks to discuss expanding trade between the two countries.

There has been no mention of trade with any other specific countries and it remains to be seen whether an official ban will be implemented.

The Argentina Independent went to find out what the public thinks of banning imported products.

Lucas Daniel, 26, Cleaner, Florencio Varela, Province of Buenos Aires

I don’t think the law will pass. They get a lot of money from imports, so it doesn’t help to have low prices. I think we should support national products. Argentina already has a ton of things. I don’t agree with it imports. For me, it is not a good idea. We have food here, we’re not missing anything.  Yes, the government will not have the money, but the law seems like a good idea.

Federico López, 26, English Teacher, Almagro, Buenos Aires

You have internal quarrels in the government and there are companies with huge political power. They are bosses of communication companies who intend to manipulate information. I’m not saying these are lies, I’m saying I haven’t seen any arguments with regards to this topic. They’re only opinions. This is what I think. I don’t know if, at the moment, anyone has actually discussed the banning of imports. What you say about the certificates, there must be some companies that don’t comply with the law. These companies didn’t get their certificates because they didn’t comply with the law. If they comply with the rules, they can open up production. If they don’t sort themselves out, they cannot open.

Carmen Aparicio, 40, Greengrocer, Cusco, Peru

As a middle level trader, I think it’s a good idea to have imports, but the politics of the business makes everything worse. For us it helps to have imports because it means more money. There is more movement of money. It’s contradictory. If there’s no control over the markets, you can sell. When you have a kiwi or grapefruit from abroad, it’s worth more. When it’s a local product, it’s less. That’s the difference. The people are contradictory, they will still buy it if it is more expensive because they like it. It’s better to have more finance in the market. What isn’t good is the distribution when products arrive in this country. There is a monopoly on this.

Victor Galeano, 25, Unemployed, Asunción, Paraguay

If people want to buy things from abroad, fine. If they don’t, they don’t. It’s for the people to say yes or no. It seems very bad that the government obliges the people to buy products made in the country. It’s like if I couldn’t buy products made in Argentina in another country because the government has closed its doors to exports from here.

Antay Alvarez, 22, Artisan, Villa Lynch, Buenos Aires

What the government is doing encourages internal commerce. It encourages industry and develops the economy. It’s a type of protectionism. It’s good. They are returning to what happened in the 40s, the 50s, when you had a lot of industry, many workers: we competed on another economic level. I think there is always competition within the country. I think it’s logical to have higher taxes against imports. If you have taxes, it raises the value. It happens in other countries to protect national countries. However, I don’t like the idea of banning products. I think prohibition is too excessive, too much.  These days we lose a lot of trade to China and Brazil in products made of glass, ceramics and plastic. That would be stupid.

Talks are in progress at the bi-annual EU-Latin America and Caribbean Summit and it was announced yesterday that talks to create one of the biggest free trade zones in the world will re-launch next July. EU president Herman Van Rompuy described the project as having “tremendous economic potential”.

The plans were to create a free trade zone between the EU and El Mercado Común del Sur (Mercosur), which includes Argentina, Brazil, Paraguay and Uruguay. The first negotiations were suspended in 2004 due to differences over access to the EU market for Mercosur agriculture and for EU services to the Mercosur market.

These talks have been opposed by France and nine other EU countries because of fears that meat imports will harm European farmers. They believe that Latin American imports would cost European farmers annual losses worth around €5bn.

Argentine president Christina Fernández de Kirchner, criticised protectionism, saying: “We must address the problem of protectionism in all its forms, be they of fees, subsidies, tax developments, tax extensions, export promotion or dumping. We must address the concept of protectionism in its entirety and in all its forms.”

She also accused the EU of “fearing for its subsidies” and called on all the countries to work together in building “a realistic economy that is not based on speculation.”

Spanish prime minister Jose Luis Rodriguez Zapatero supported her, saying: “In an increasingly globalised world, where the answers to prosperity are in the union of efforts, the capacity for economic growth and social policy is in the opening and liberalisation of borders.”

President of the European Commission, Jose Manuel Barroso, stressed that the “concerns of some sectors” had to be taken into account, but argued that the trade deal could generate annual benefits of €4.5bn for both sides of the Atlantic.

The Argentine president has been vocal in her criticisms during these meetings. She warned developed countries not to blame foreign workers for the economic crisis, saying: “We view with great concern the discriminatory treatment of immigrants in developed countries.”

She also took this summit as an opportunity to ask the UK to resume negotiations over the sovereignty of the Falkland/Malvinas islands.

Although agreement on these subjects has yet to be reached, the EU has made the deals it hoped for with Colombia, Peru and the Central American countries (Costa Rica, Honduras, Guatemala, Panama, El Salvador and Nicaragua). The free trade deals will be signed tomorrow.