Argentina has come under renewed pressure from the WTO for its import-licensing measures which member states said are restricting trade across a range of goods including vehicles and automotive parts.
At last Friday's Council for Trade in Goods meeting in Geneva, Michael Punke, the deputy US trade representative, complained on behalf of the US and 12 other member states about revised regulations, introduced in January, requiring pre-registration, review and approval of each and every import transaction. The latest revision builds on concerns going back to 2008 when the Argentine government increased the list of products for which a non-automatic licence of import is required. The list of products now exceeds 600.
Along with the US the members states represented include Australia, the European Union, Israel, Japan, Korea, New Zealand, Norway, Panama, Switzerland, Chinese Taipei, Thailand and Turkey.
In addition Mexico said that it was signing the statement because Argentina's measures were having a serious impact on Mexican exporters. Mexico-produced vehicles represent 10% of Argentina's market, while Argentine vehicles represent only 1.5% of Mexico's market. Argentina has announced its intention to negotiate the FTA it has with Mexico.
The joint statement from the 14 states stressed that the regulations were creating long delays and adding huge costs for many exporters. It urged Argentina to remove the restrictions, adding that members reserved their rights to pursue the matter further.
Obtaining pre-approved licenses or registries can take more than six months, according to a statement made by the Mexican Automotive Industry Association (AMIA) and even after that time the licence of import can be refused without justification or explanation.
According to Reuters, Argentina has also been pushing importers to match their purchases abroad with exports, leading to peculiar deals including one whereby BMW exports rice.
Punke said the Industry Ministry's website was full of press releases about such trade balancing arrangements, including automakers exporting wine, olive oil, and soy meal, said the Reuters report.
A spokesman for BMW confirmed that it reached an agreement in October last year with the Argentine government to offset its import of vehicles with the same absolute volume of exports of Argentine products.
"We can confirm that BMW Argentina's export plan includes Argentine leather and automotive parts, as well as agro-industrial products (such as processed rice products)," he told Automotive Logistics News.
"The BMW Group is exporting automotive parts and leather goods used in its production network," he went on. "Operational tasks related to the agro-industrial products will be managed by a partner company."
BMW resumed vehicles imports into Argentina in October 2011 following an eight-month suspension of imports. Following the agreement more than 700 vehicles and 200 motorcycles held by customs were released and delivered to BMW Group Argentina's dealer network.
"We are in continuous discussion with the Argentine government concerning our import volume for 2012," added the spokesman, but said that BMW was unable to provide any information about the agreed import-export volumes.
GM Argenina, which builds Chevrolets at its Rosario facility in Argentina, said it was complying with the regulations introduced in January, including the obligation to get pre-approval for vehicle and parts imports. "At this moment the government is approving all of our requests and we do not see any delay that affect our business," said a spokesman for GM Argenina. "The government does not want to affect any manufacturing process, especially in the automotive industry."
Measures are compatible says Argentina
Argentina rejected the US-led accusation that it was restricting trade as unjustified. It maintained the measures it has taken were compatible with the WTO, adding that it had undertaken new measures to facilitate the processing of imports which had risen by 30% in 2011, the highest increase among G-20 countries, evidence that it was not restricting imports.
The government went further and expressed concern about the threat to the use of legitimate policy tools by developing countries to promote development, especially during the current economic crisis. It said that developed countries were the ones restricting trade through the use of subsidies and tariff peaks.
As reported in the Financial Times, the statement follows the suspension of trade benefits worth $477m by the US on Argentine exports announced on March 26th, an action taken in response to Argentina's failure to pay two US companies $300m in compensation rulings from ICSID, the World's Bank arbitration tribunal, stemming from Argentina's 2011 default on almost $100 billion.
The next meeting of the Council for Trade in Goods will be on June 22nd 2012.