TRADE-ARGENTINA: China as a Major Future Customer

By Marcela Valente Reprint | | Print |

Marcela Valente

BUENOS AIRES, Mar 22 2000 (IPS) - Argentine farmers, worried by the currently tense trade relations with Brazil – their biggest customer – , were relieved to hear Wednesday that the Fernando de la Rúa government reached an agreement with China that is likely to expand agricultural exports.

The trade accord announced by the government establishes reduced Chinese tariffs on its imports of 60 Argentine products, of which 40 belong to the agricultural and agro-industrial sectors.

This tariff reduction is to be implemented over the next five years, during which China will also expand its quota of exports to Argentina.

The agreement is part of a series of treaties China must sign with member-countries of the World Trade Organisation (WTO) in order to become part of this institution, which sets the rules for global commerce.

Argentina, a primarily agro-exporting country and one of the world’s major food producers, is opening the doors to a market of 1.2 billion people, with tariff reductions ranging from five to 100 percent.

The South American nation’s officials say the agreement will mean a one-billion dollar increase in annual exports to China, making it one of the principal buyers of Argentine products, after Brazil and the United States, and running closely behind Chile.

One of the sectors to benefit most from the deal is the edible oil industry. Oil-producing seeds and their derivatives head the list of Argentina’s exports, representing more than 60 percent of the agricultural total. China promised a tariff cut of 10 to 40 percent for sunflower oil imports.

Alberto Rodriguez, from the Argentine chamber representing the edible oil industry, expressed his cautious optimism about the announced accord, underscoring that it is an important step in the process of China’s inclusion in the WTO.

“China is an enormously important buyer and seller of food products and must be subject to regulation,” Rodriguez told IPS. The trade treaty signed with Argentina covers “a process that is headed in the right direction, but will only bear fruit in the medium term.”

Livestock producer Enrique de Léon Belloc said “any accord that improves the potential of Argentina’s exports is good,” but added that for meat exports it does not just mean reduced tariffs or higher import quotas, it also influences health agreements.

Belloc told IPS that Argentine meat will be entering the Chinese market within the year. In May, the International Organisation of Epizootics (a world animal health agency) is to certify Argentina as a country “free of hoof-and-mouth disease without vaccination,” verifying that the nation’s cattle do not carry the disease.

Once this certification is made, the meat-producing country must negotiate animal health agreements with each buyer. Chinese delegations are already planning to visit Argentina to examine the refrigerator ships that will transport meat to the Asian nation.

Belloc and Rodriguez agreed that the treaty with China is positive for the long term, but Argentina is still in a position to request most-favoured trade status of China, according to WTO regulations.

The two referred to the trade advantages the United States obtained with China, which expanded US sales. Under WTO rules, the benefits China granted to the United States can be demanded by each one of the organisation’s member-nations, including Argentina.

Alberto de las Carreras, head of the Chamber of Argentine Exporters, also believes the agreement will be productive in the long term, but stressed that in practice it is still a “pre- agreement,” subject to the approval of China’s entry into the WTO.

“It won’t be generating any immediate foreign trade here, but the government felt it necessary to announce this agreement with a great deal of fanfare in the middle of the trade crisis with Brazil,” De las Carreras commented to IPS.

Another source, who requested anonymity, said the fact that Argentina and Brazil have engaged in separate negotiations with China (Brazil did so just one month ago) demonstrates the distancing of the two Latin American giants who are also members of the Southern Common Market (Mercosur), alongside Uruguay and Paraguay.

But, in general, the agreement with China was received with hushed applause, primarily because it appears to be an indication of the path South American trade will take in the coming years.