Argentina gets slammed for protectionism at WTO, strikes back

Aug 21, 2012, 5:11 PM EDT

 

Argentina targets US rules on lemon, beef, EU on biodiesel

* Country seen as rule-breaker since 2002 default

* State seizure of majority stake in YPF in May hurt ties

By Tom Miles and Hugh Bronstein

GENEVA/BUENOS AIRES, Aug 21 (Reuters) - The United States and Japan blasted Argentina's import rules at the World Trade Organization on Tuesday, putting more pressure on the country to revamp policies that they say violate global norms.

The two complaints mirrored litigation brought by the European Union in May and triggered a swift reaction from Argentina's center-left government, which vowed to challenge U.S. policies on lemon and beef imports.

Argentina is seen by many fellow Group of 20 nations as a chronic rule-breaker ever since it staged the world's biggest sovereign debt default in 2002. President Cristina Fernandez's government has since angered trade partners by moving to reduce imports and riled historic ally Spain with the takeover of energy company YPF.

The disputes at the WTO reflect mounting frustration with the country's unorthodox policies.

"Argentina's protectionist measures adversely affect a broad segment of U.S. industry, which exports billions of dollars in goods each year to Argentina. These exports support jobs and businesses here at home," U.S. Trade Representative Ron Kirk said in an emailed statement.

"The Obama Administration insists that all of our trading partners play by the rules and uphold their WTO obligations so that American workers receive the benefits negotiated in our agreements," the Kirk statement added.

Argentina began requiring government pre-approval for nearly all purchases abroad in February. Imports have since fallen compared with last year's levels, boosting the government's prized trade surplus but causing some shortages of goods and parts and sharply reducing capital goods imports.

EU and U.S. officials say Argentina has effectively restricted all imports since the new system came into place.

Argentina's Foreign Ministry did not comment directly on the U.S. and Japanese complaints but instead advised that the country would file a complaint with the WTO over U.S. beef and lemon import policies.

On Monday, Argentina hit the EU with a separate WTO complaint, alleging discriminatory treatment by Spain against Argentine shipments of biodiesel.

 

RELYING ON TRADE SURPLUS

More than 20 WTO members have criticized Argentina's import rules, contributing to a sharp worsening of its international trade relationships since Fernandez seized control of YPF fromSpain's Repsol in May.

Fernandez won a landslide re-election last year on promises to increase the government's role in the economy, despite complaints from investors that her policies made it difficult to import products necessary to keep local businesses running.

Latin America's No. 3 economy relies heavily on a robust trade surplus, which is used to help fatten central bank foreign reserves tapped to pay government debt. The government has also moved to curb imports to protect local jobs.

The EU said previously the country's import licensing rules were unjustified and "aimed at advancing the Argentinean Government's stated policies of re-industrialization, import substitution and elimination of trade balance deficits."

Argentina is the second nation to be hit by a triple complaint by Japan, the EU and the United States this year. On March 13, the three joined forces to hit China with a trade suit over exports of rare earths and other metals.

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