Argentina, Brazil ready to talk on trade impasse

Brazil and Argentina agreed Tuesday to negotiate a way out of a trade
dispute over cars, food and appliances that threatens to cost thousands
of jobs in both countries.

Brazil closed its borders to cars imported from Argentina last
week after executives in Sao Paulo complained that Argentine
restrictions on Brazilian products were harming their companies. The
dispute hurts both sides, since Brazilians buy 80 percent of Argentina’s
new cars, which are made largely with parts from Brazil.

Since Brazil’s economy is much bigger, the dispute threatens more
damage for Argentina, where 137,000 jobs depend on vehicle production.

Brazilian Ambassador Enio Cordeiro and Argentine Minister of
Industry Debora Georgi agreed Tuesday in Buenos Aires to hold two days
of meetings on the problem next week. They haven’t decided yet on the
location of the talks.

The dispute started after Argentina imposed import restrictions
in February to keep its trade deficit with Brazil from growing. The
protectionist rules require individual approval for each license to
import Brazilian products that are also made in Argentina. After the
Brazilians realized the approvals were taking more than two months each,
the government responded last week by closing its borders to Argentine
cars.

Georgi then wrote her Brazilian counterpart complaining that Argentina loses $7 billion a year from Brazil’s bureaucracy.

The dispute shows how far South America’s economies are from the
integrated market envisioned 20 years ago when the Mercosur trade bloc
was created to eliminate import-export barriers.

Meanwhile, China is aggressively expanding trade in Latin
America. On the same day Georgi sent her letter, China’s commerce
minister was in Brasilia announcing a new deal to sell Chinese-made cars
to Brazil and build factories there.