A trade spat between Brazil and Argentina that has hit their bilateral trade in vehicles has now been partially resolved.
After three weeks of official meetings and lengthy backroom discussions the two countries have reached a partial agreement to re-open borders for trade.
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Issues between the two Mercosur neighbours began in January, when Argentina started to require licences to import selected Brazilian products, among them agricultural machinery. On May 12 Brazil responded by applying licences to passenger vehicles and light commercial trucks coming in from Argentina. Previously, car shipments were able to move more freely under an automatic protocol.
More than 10,000 vehicles produced in Argentina and destined for Brazil became stranded at the border. The WTO allows 60 days to release licences, but this long would have significantly disrupted vehicle production flow in Argentina and raised market issues.
Brazil receives 80% of all passenger cars and light commercial vehicles exported from Argentina, while Argentina – a smaller market than Brazil – receives 40% of vehicles exported from Brazil.
Brazilian Trade Minister Fernando Pimentel and Argentine counterpart Debora Giorgi reached at least a provisional agreement on June 2 to release whatever exports were being held at the border.
They also agreed that future items awaiting export at the border would not be held for any more than ten days.
However, a joint statement issued by the two representatives still does not return bilateral trade to terms that existed prior to the dispute when exports between Brazil and Argentina travelled without licensing requirements.
There will be a chance for a definitive agreement at upcoming the Mercosur Summit on June 24. Presidents Dilma Rousseff of Brazil and Cristina Kirchner of Argentina will meet in Asuncion, Paraguay for further discussions.
See also: BRIC markets review – Brazil
