Brazil/Argentina Spat Over Import Licenses Delaying Mercosur Bilateral Trade

RIO DE JANEIRO, BRAZIL – Brazil expressed its disappointment with the Argentine policy of delaying the approval of the so-called nonautomatic import licenses which has seen millions of dollars in sales held at the border. This situation has been increasing in recent months, in what is considered a breach of bilateral accords in the framework of Mercosur agreements, and the World Trade Organization (WTO) rules.

One of the main groups to complain about the delays is the Brazilian National Association of Automotive Vehicles Manufacturers, Anfavea, which has some US$100 (R$550) million exports delayed in the Argentine border, and has reported the situation to the Brazilian government.

Government sources interviewed by O Globo said this is in violation of WTO rules, which allow 60 days’ delay for such imports, but more seriously, it ignores the terms of the bilateral auto industry trade agreement, which anticipates a total liberalization by 2029, and grants a ten-day delay, but currently some are taking 90 days or more.

“We understand the difficulties in Argentina due to the scarcity of foreign exchange, but agreements are agreements”, said the president of Anfavea, Luis Carlos Moraes, in an interview with O Globo. “We are concerned because this type of restriction affects the sector’s predictability and planning. We have an integrated production system in Mercosur,” Moraes underlined.

The auto sector concerns came to light with the arrival of the new Argentine ambassador to Brasilia, Daniel Scioli, who came with the message of his country’s strong interest in promoting trade. Such was the response of the Brazilian government that Scioli was quickly received by President Jair Bolsonaro, Chancellor Ernesto Araújo, and Agriculture Minister Tereza Cristina, among other meetings with officials. All of them admitted as reasonable Argentina’s desire to correct the bilateral trade imbalance, since in the last 15 years Argentina has accumulated a deficit with Brazil of US$52 billion.

Asked about the delay in delivering import licenses to automakers with operations in Brazil, a source at the Argentine embassy said that so far this year licenses for Brazilian imports totaling US$5 billion were approved, of which US$993 million had gone unused.

“We are taking care of the doubts about possible delays. We have already had meetings with the companies and there will be a new round in October. We are aware of the concern and we are in permanent contact with the Brazilian government,” assured the embassy source. “Some 92% of requests for non-automatic licenses are authorized in less than 72 hours, and with the rest some inconsistency or lack of information is pending.”

On the Brazilian side, arrangements were made with the Argentine Industry Secretariat, but so far there has been no satisfactory response, a source said.

Source: MercoPress