Foreign trade of Argentina

This article is about the foreign trade of Argentina. See economy of Argentina for a more general overview.

Modern history

Agriculturally and thinly populated, Argentina recorded trade surpluses for most of the period between 1900 and 1948, including a cumulative US$1 billion during World War I and US$1.7 billion during World War II. Record taxes on grain exports imposed by the administration of President Juan Perón and an increasing need for costly fuel and machinery helped result in a nearly-unbroken string of trade deficits between 1949 and 1962, however.[1]

Port call on Buenos Aires' southside wharf (La Boca), circa 1888. Financed mostly with British capital, massive dock works touched off a foreign trade boom that reshaped the previously isolated Argentine economy.

Perón and, most notably, the administration of President Arturo Frondizi, encouraged foreign (as well as local) investment in energy and industry as part of a developmentalist policy of import substitution industrialization. Drawn to an economy that provided Latin America's highest standard of living, domestic and foreign investors responded, industrial production more than doubled, and the country's trade position remained modestly positive throughout the 1963–79 era, even as domestic demand grew.[1]

Argentina throughout its history has always depended on foreign trade to achieve a solid economic and social growth. Argentina developed an agro-export model where they were highly dependent on the external sector. The country used to export all their commodities to a growing population of Europe. After this, Argentina started a new period of import substitution where the idea was to reach an industrialized nation. After several military governments, and highly instability periods as hyperinflation and the commercial liberalization of the nineties, Argentina had it worst crisis in 2001.

Policies of "free trade" financial deregulation pursued by Argentina's last dictatorship led to a sudden, record deficit in 1980 and, by 1981, a mountain of bad debts and financial collapse. The climate of slack domestic demand that prevailed in Argentina throughout the 1980s resulted in a cumulative US$38 billion in surpluses from 1982 to 1991; this brought the economy little direct benefit, however, as much of this was deposited abroad during that era of interest payment burdens and financial instability.[1]

Economy Minister Domingo Cavallo enacted the Convertibility Law of 1991, pegging the monetary value of the Argentine peso to the United States dollar. The fixed exchange rate (1 peso to the dollar) allowed for a macroeconomic stabilization. Taking advantage of this low exchange rate, on the lower tariffs on imports and on the reappearance of credit after the free trade liberalization measures taken by President Carlos Menem's administration, Argentine firms and consumers tripled capital goods purchases from 1990 to 1994, while depressed auto sales rose by fivefold. The influx of imported machines and supplies helped the modernization of the country's industrial base; but it negatively impacted its trade balance, which accumulated US$22 billion in deficits from 1992 to 1999; the current account deficit, which would include growing foreign debt interest payments and deficits in trade in services, reached a record deficit of US$14 billion in 1998 alone.

Relying on sizable foreign investment inflows to balance the current account, these did not suffice and the Central Bank was again forced to resort to borrowing to protect the peso's value against such pressure (mostly by floating bonds, then the most sought-after in the developing world). Recession helped lead to a US$1 billion surplus in 2000 and another US$6 billion in 2001; but it was too little, too late. Buffeted by generalized global instability, the international derivatives market massively shorted Argentine bonds in the second half of 2001 and on December 23, following a spate of unpopular crisis measures, the Argentine government declared a default on US$93 billion of its bonds, the largest sovereign debt default in history.

Crisis and recovery

Immediately after the collapse of the Argentine economy at the end of 2001 and the devaluation of the peso in 2002, imports fell over half and Argentina's trade surplus soared to over US$16 billion, providing for the first current account surplus since 1990. As recovery ensued and the exchange rate stabilized around 3 pesos/dollar, exports (mainly soy, cereals and other agricultural products, as well as machinery and fuels) grew steadily.

Imports began recovering sharply in 2003, as both the purchasing power of the peso and domestic demand increased, and, despite this, from 2003 to 2011 the nation's merchandise trade balance recorded a cumulative US$115 billion in surpluses.[2] These surpluses were bolstered as much by growing exports as by a marked recovery in terms of trade for Argentina, which by 2010 had improved 40% over the level prevailing in the 1990s.[2] The nation's perennial trade deficit in manufactures widened during this expansion, however, and exceeded US$30 billion in 2011.[3] Accordingly, the system of non-automatic import licensing was extended in 2011,[4] and regulations were enacted for the auto sector establishing a model by which a company's future imports would be determined by their exports (though not necessarily in the same rubric).[5] Domestic production grew to supply the majority of the Argentine market in a number of important rubrics historically dominated by imports amid these changes, including diverse manufactures such as information technology, major appliances, footwear, and farm machinery.[6][7][8]

Argentina's exports and imports (FOB), in millions of USD, 1992–2004.

Commercial relationships

Mercosur

Mercosur - the customs union that includes Argentina, Brazil, Paraguay, and Uruguay - entered into force January 1, 1995; Bolivia, Chile, and Venezuela joined the pact subsequently as associate members. Cooperation between Brazil and Argentina (historic competitors) is the key to Mercosur's integration process, which includes political and military elements in addition to a customs union; Brazil accounts for 74% of Mercosur GDP and Argentina about 23%. Argentine intra-Mercosur trade rose dramatically from US$4 billion in 1991 to US$23 billion in 1998; it declined to US$9 billion during the 2002 crisis, but recovered quickly and reached US$44 billion in 2011 (28% of the Argentine total).[9] More than 90% of intra-Mercosur trade is duty-free, while the group's common external tariff (CET) applies to more than 85% of imported goods. Remaining goods will be phased into the CET by 2006.

Brazil's higher level of industrialization and production capacity, as well as other economic asymmetries, have been a source of tension with Argentina. Following the 2001-02 crisis, Argentina's recovering industrial sector has pressured the government to obtain restrictions (especially quotas) on Mercosur's free trade regulations, in order to protect their growth from what they see as disloyal competition from their larger partner to the north. Exports to Brazil helped lessen the impact of the crisis on the industrial sector somewhat, though Argentina's intra-Mercosur trade yielded it a cumulative US$15 billion deficit from 2004 to 2008. A renewed devaluation of the peso contributed to a US$700 million surplus with Mercosur in 2009, though deficits of US$1.8 billion were recorded in 2010 and 2011.[9]

China

Trade with China was negligible until 1992; it later grew rapidly and by 2009, China became Argentina's second largest trading partner. Argentine exports to the Asian giant are mainly soy and petroleum products, while imports are mainly industrial and consumer goods. Modest Argentine surpluses with China turned into deficits in 2008, however, and anti-dumping measures enacted subsequently triggered a Chinese boycott of its top Argentine import, soy oil, in 2010. Following trade negotiations, soy oil purchases from China resumed in 2011.[10]

United States

The United States replaced the United Kingdom in the 1920s as both the leading source of manufactures and of imports overall. The U.S. share of imports and exports remained relatively stable at around 20% and 10%, respectively, until 2002; these proportions declined steadily afterward and by 2010, were approximately half the historical percentages.[1] The U.S. has largely maintained a moderate trade surplus with Argentina, however. The record for this figure was logged in 1998, when the U.S. reaped a nearly US$3.7 billion surplus; these later declined significantly, to then recover to US$3.5 billion by 2011.[11] Petrochemicals are the leading Argentine export to the U.S with large parts including bamboo., and wine the leading Argentine consumer good in the U.S. market. Imports are mainly industrial. Fresh Argentine beef was exported to the U.S. market in 1997 for the first time in over 60 years, and in 1999 its export quota of 20,000 tons was filled. Beef exports to the U.S. were suspended in August 2000 when Argentine cattle near the border with Paraguay (whose authorities refuse to vaccinate cattle against highly contagious hoof and mouth disease) were discovered to have anti-bodies for the infection. The quota was reinstated in early 2002 and has since averaged 28,000 tons.[12]

The Obama administration suspended Argentine participation in the Generalized System of Preferences (GSP) in 2012, citing a failure to pay arbitration payments awarded by the World Bank's ICSID to a number of U.S. firms adversely impacted by the 2002 devaluation of the peso.[13] The GSP benefit (US$18 million in 2011) is relatively minimal, equaling 0.4% of Argentine exports to the U.S. of US$4.2 billion.[11]

Intellectual property issues

Argentina adheres to most treaties and international agreements on intellectual property. It is a member of the World Intellectual Property Organization and signed the Uruguay Round agreements in December 1993, including measures related to intellectual property. However, extension of adequate patent protection to pharmaceuticals has been a highly contentious bilateral issue.

In May 1997, the U.S. suspended 50% of Argentina's GSP benefits because of its allegedly unsatisfactory pharmaceutical patent law. In May 1999, The U.S. Government initiated consultations under World Trade Organization procedures to address these inadequacies and expanded the consultations in May 2007.

Merchandise exports and imports

Foreign trade in 2010 by type of product

Argentine foreign trade in 2010 by type of product (million US$).

Product class Exports Imports Balance
Meats and related foods 1796 201 1595
Seafood 1306 39 1267
Dairy 1057 30 1027
Maize, wheat, and other cereals 4621 32 4589
Soy and other oilseeds 5338 83 5255
Other crops 2586 369 2217
Vegetable oils 5192 73 5119
Fruit and vegetable preparations 942 99 843
Wine and spirits 850 88 762
Agricultural fodder 8783 61 8722
Other agricultural goods 1467 574 893
Copper and other minerals 1922 1025 897
Fuel and lubricants 5386 4188 1198
Pharmaceuticals 691 1566 -875
Perfume and cosmetics 657 460 197
Chemicals 3503 6492 -2989
Rubber and plastics 1731 3611 -1880
Leather and hides 1074 142 932
Forestry products 992 1443 -451
Textiles and apparel 698 1868 -1170
Glass, stone, and related materials 192 568 -376
Gold, silver, gems, and geodes 2252 101 2151
Iron and steel 1704 2298 -594
Aluminum 762 294 468
Other metals 181 999 -818
Machinery and parts 2198 15520 -13322
Motor vehicles and parts 7971 10125 -2154
Watercraft and other transport equipment 669 1470 -801
Precision equipment 193 1307 -1114
Other manufactures 1420 1376 44
Argentina Total 68134 56502 11632

[2]

A non-official source, Foreign Trade of Argentina, has compiled a list of principal definitive imported products for 2009, for 2008 and for 2007, as well as for export statistics, among which are the principal definitive exported products for 2009, for 2008, and for 2007.

Foreign trade in 2010 by leading export destinations

Argentine foreign trade in 2010 by leading export destinations, and chief exports and imports with each (million US$).

Partner Export $ Import $ Balance
 Brazil 14421 17945 -3524
Motor vehicles and parts 6255 Motor vehicles and parts 6312
Chemicals 998 Machinery 3290
Refined fuel 989 Chemicals 1577
Cereals 972 Steel and aluminum 1510
Machinery 757 Plastics 871
 China 6117 7678 -1561
Oilseeds 4121 Machinery 4206
Petroleum 665 Chemicals 916
Vegetable oils 353 Textiles 434
Leather and hides 145 Motor vehicles and parts 418
Meats 67 Steel and aluminum 310
 Chile 4490 885 3605
Petroleum 842 Steel and aluminum 186
Natural gas 569 Paper and cardboard 155
Chemicals 428 Chemicals 89
Vegetable oils 269 Plastics 78
Agricultural fodder 256 Machinery 44
 United States 3532 6057 -2525
Petroleum 887 Chemicals 1648
Steel and aluminum 510 Machinery 1517
Wine and spirits 249 Plastics 486
Chemicals 179 Refined fuel 470
Refined fuel 167 Aircraft, watercraft, and parts 452
 Netherlands 2367 394 1973
Agricultural fodder 998 Refined fuel 166
Chemicals 469 Chemicals 115
Fruit and vegetable preparations 176 Machinery 32
 Spain 2241 1024 1217
Agricultural fodder 558 Machinery 225
Chemicals 534 Chemicals 204
Seafood 420 Motor vehicles and parts 154
 Germany 1832 3215 -1383
Copper 443 Machinery 1291
Meats 350 Motor vehicles and parts 650
Motor vehicles and parts 278 Chemicals 576
 Italy 1586 1297 289
Agricultural fodder 653 Machinery 596
Chemicals 207 Chemicals 255
Meats 123 Motor vehicles and parts 102
 Uruguay 1552 587 965
Chemicals 285 Motor vehicles and parts 115
Machinery 178 Electricity 79
Motor vehicles and parts 129 Paper and cardboard 70
 Iran 1453 24 1429
Agricultural fodder 463 Chemicals 15
Vegetable oils 457 Plastics 4
Cereals 393 Tea and spices 4
 Venezuela 1424 21 1403
Motor vehicles and parts 183 Refined fuel 7
Machinery 179 Chemicals 6
Dairy 169 Steel and aluminum 5
 Canada 1402 409 993
Precious metals, gems, and geodes 1067 Machinery 117
Wine and spirits 87 Aircraft, watercraft, and parts 105
Steel and aluminum 64 Chemicals 60
 India 1321 567 754
Vegetable oils 1180 Chemicals 238
Machinery 33 Textiles 80
Leather and hides 32 Motor vehicles and parts 56
 Colombia 1302 150 1152
Cereals 466 Refined fuel 39
Agricultural fodder 252 Chemicals 35
Vegetable oils 102 Plastics 29
 Mexico 1227 1817 -590
Motor vehicles and parts 433 Motor vehicles and parts 792
Watercraft and parts 189 Machinery 509
Chemicals 112 Chemicals 247
Rest of the world 21867 14432 7435
Argentina Total 68134 56502 11632

[2]

Exports in 2010 by province and top two exports from each

Argentine exports in 2010 by province and top two exports from each (million US$).

Province Exports Per capita Leading export Value Second export Value
 Buenos Aires Province 22875 1464 Motor vehicles 5646 Soy 2277
 Santa Fe 14847 4647 Soy 9309 Motor vehicles 1117
 Córdoba 8305 2510 Soy 3648 Motor vehicles 1576
 Chubut 3306 6495 Petroleum and natural gas 2059 Aluminum 661
 San Juan 2104 4870 Gold 1605 Wine and grape juice 117
 Mendoza 1696 975 Wine and grape juice 698 Horticulture 226
 Catamarca 1687 4584 Copper 1505 Gold 55
 Santa Cruz 1617 5901 Petroleum and natural gas 536 Gold 349
 Entre Ríos 1557 1260 Soy 383 Maize 168
 Salta 1013 834 Horticulture 199 Petrochemicals 167
 Tucumán 915 632 Fruits 336 Motor vehicles 124
 San Luis 539 1248 Paper 90 Maize 53
 Misiones 528 479 Paper 186 Lumber 119
 Río Negro 494 773 Fruits 373 Petrochemicals 47
 Santiago del Estero 465 532 Soy 279 Maize 87
 Tierra del Fuego 391 3074 Petrochemicals 168 Seafood 98
 Buenos Aires 375 130 Chemicals 74 Pharmaceuticals 60
 Jujuy 375 557 Minerals 125 Tobacco 80
 Chaco 373 354 Soy 147 Lumber 78
 Neuquén 328 595 Petroleum and natural gas 178 Fruits 65
 La Pampa 287 900 Soy 75 Maize 62
 La Rioja 287 859 Paper 100 Leather 60
 Corrientes 155 156 Rice 75 Fruits 25
 Formosa 36 68 Petroleum and natural gas 12 Lumber 9
Not classified by prov. 3592 n.a. Petroleum and natural gas 1157 Soy 947
Argentina Total 68134 1698

[2][14]

References

  1. 1 2 3 4 Lewis, Paul H. (1990). The Crisis of Argentine Capitalism. University of North Carolina Press.
  2. 1 2 3 4 5 "Comercio exterior argentino 2010" (PDF). INDEC.
  3. ↑ "El 75% del rojo comercial de la industria, en cinco rubros". Clarín.
  4. ↑ "Licencias no Automáticas". Tiempo Argentino.
  5. ↑ "Automotrices deberán exportar un dólar por cada dólar que importen". Tiempo Argentino.
  6. ↑ "Creció un 161% la producción de computadoras en 2011". Tiempo Argentino.
  7. ↑ "En ocho años se duplicó el número de industrias y se crearon 140 mil firmas". Tiempo Argentino.
  8. ↑ "En 2014, la maquinaria agrícola producirá casi el total de la demanda interna". Info News.
  9. 1 2 "Intercambio Comercial Argentino" (PDF). INDEC.
  10. ↑ "China volvió a importar aceite de soja, pero el conflicto está lejos de resolverse". La Política Online.
  11. 1 2 "Ministerio de Industria también rechazó la medida de EE.UU.". Cronista Comercial.
  12. ↑ AAEP
  13. ↑ "Obama says to suspend trade benefits for Argentina". Reuters.
  14. ↑ "Exportación (2010): Origen provincial según complejos exportadores". INDEC.
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