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 classExportsImportsBalance
Meats and related foods17962011595
Seafood1306391267
Dairy1057301027
Maize, wheat, and other cereals4621324589
Soy and other oilseeds5338835255
Other crops25863692217
Vegetable oils5192735119
Fruit and vegetable preparations94299843
Wine and spirits85088762
Agricultural fodder8783618722
Other agricultural goods1467574893
Copper and other minerals19221025897
Fuel and lubricants538641881198
Pharmaceuticals6911566-875
Perfume and cosmetics657460197
Chemicals35036492-2989
Rubber and plastics17313611-1880
Leather and hides1074142932
Forestry products9921443-451
Textiles and apparel6981868-1170
Glass, stone, and related materials192568-376
Gold, silver, gems, and geodes22521012151
Iron and steel17042298-594
Aluminum762294468
Other metals181999-818
Machinery and parts219815520-13322
Motor vehicles and parts797110125-2154
Watercraft and other transport equipment6691470-801
Precision equipment1931307-1114
Other manufactures1420137644
Argentina Total681345650211632

[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$).

PartnerExport$Import$Balance
 Brazil1442117945-3524
Motor vehicles and parts6255Motor vehicles and parts6312
Chemicals998Machinery3290
Refined fuel989Chemicals1577
Cereals972Steel and aluminum1510
Machinery757Plastics871
 China61177678-1561
Oilseeds4121Machinery4206
Petroleum665Chemicals916
Vegetable oils353Textiles434
Leather and hides145Motor vehicles and parts418
Meats67Steel and aluminum310
 Chile44908853605
Petroleum842Steel and aluminum186
Natural gas569Paper and cardboard155
Chemicals428Chemicals89
Vegetable oils269Plastics78
Agricultural fodder256Machinery44
 United States35326057-2525
Petroleum887Chemicals1648
Steel and aluminum510Machinery1517
Wine and spirits249Plastics486
Chemicals179Refined fuel470
Refined fuel167Aircraft, watercraft, and parts452
 Netherlands23673941973
Agricultural fodder998Refined fuel166
Chemicals469Chemicals115
Fruit and vegetable preparations176Machinery32
 Spain224110241217
Agricultural fodder558Machinery225
Chemicals534Chemicals204
Seafood420Motor vehicles and parts154
 Germany18323215-1383
Copper443Machinery1291
Meats350Motor vehicles and parts650
Motor vehicles and parts278Chemicals576
 Italy15861297289
Agricultural fodder653Machinery596
Chemicals207Chemicals255
Meats123Motor vehicles and parts102
 Uruguay1552587965
Chemicals285Motor vehicles and parts115
Machinery178Electricity79
Motor vehicles and parts129Paper and cardboard70
 Iran1453241429
Agricultural fodder463Chemicals15
Vegetable oils457Plastics4
Cereals393Tea and spices4
 Venezuela1424211403
Motor vehicles and parts183Refined fuel7
Machinery179Chemicals6
Dairy169Steel and aluminum5
 Canada1402409993
Precious metals, gems, and geodes1067Machinery117
Wine and spirits87Aircraft, watercraft, and parts105
Steel and aluminum64Chemicals60
 India1321567754
Vegetable oils1180Chemicals238
Machinery33Textiles80
Leather and hides32Motor vehicles and parts56
 Colombia13021501152
Cereals466Refined fuel39
Agricultural fodder252Chemicals35
Vegetable oils102Plastics29
 Mexico12271817-590
Motor vehicles and parts433Motor vehicles and parts792
Watercraft and parts189Machinery509
Chemicals112Chemicals247
Rest of the world21867144327435
Argentina Total681345650211632

[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$).

ProvinceExportsPer capitaLeading exportValueSecond exportValue
 Buenos Aires Province228751464Motor vehicles5646Soy2277
 Santa Fe148474647Soy9309Motor vehicles1117
 Córdoba83052510Soy3648Motor vehicles1576
 Chubut33066495Petroleum and natural gas2059Aluminum661
 San Juan21044870Gold1605Wine and grape juice117
 Mendoza1696975Wine and grape juice698Horticulture226
 Catamarca16874584Copper1505Gold55
 Santa Cruz16175901Petroleum and natural gas536Gold349
 Entre Ríos15571260Soy383Maize168
 Salta1013834Horticulture199Petrochemicals167
 Tucumán915632Fruits336Motor vehicles124
 San Luis5391248Paper90Maize53
 Misiones528479Paper186Lumber119
 Río Negro494773Fruits373Petrochemicals47
 Santiago del Estero465532Soy279Maize87
 Tierra del Fuego3913074Petrochemicals168Seafood98
 Buenos Aires375130Chemicals74Pharmaceuticals60
 Jujuy375557Minerals125Tobacco80
 Chaco373354Soy147Lumber78
 Neuquén328595Petroleum and natural gas178Fruits65
 La Pampa287900Soy75Maize62
 La Rioja287859Paper100Leather60
 Corrientes155156Rice75Fruits25
 Formosa3668Petroleum and natural gas12Lumber9
Not classified by prov.3592n.a.Petroleum and natural gas1157Soy947
Argentina Total681341698

[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. Archived from the original on June 19, 2011.
  5. ↑ "Automotrices deberán exportar un dólar por cada dólar que importen". Tiempo Argentino. Archived from the original on July 24, 2011.
  6. ↑ "Creció un 161% la producción de computadoras en 2011". Tiempo Argentino. Archived from the original on November 6, 2012.
  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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