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ARGENTINA | 27-01-2018 12:49

Trade imbalance casts shadow over warm relations with US

As Trump administration celebrates one-year anniversary, a new period of relations between Argentina and the United States is beginning.

The one-year anniversary of US President Donald Trump’s inauguration, celebrated just last week, arrives as a new period of relations between Argentina and the United States begins, with both administrations having recently appointed new ambassadors, a move set to recharge relationships.

President Mauricio Macri’s government had initially been caught off guard by the new protectionist mood in Washington that emerged following Trump’s election in 2016. In response, the Cambiemos (Let’s Change) government adopted a ‘wait-and-see’ approach, evaluating whether Trump’s isolationist threats were just campaign rhetoric or real policy changes. A year on, and despite the good personal relations between the two presidents, most experts agree that there has been a shift in the relationship, one which is starting to create severe difficulties for Argentina’s trade balance.

“The Trump administration’s interest in Argentina is now ‘what have you done for me lately,’ whether it is allowing US pork farmers to export more to Argentina or helping with a certain policy. There is a clear sense now that trade patterns need to be diversified because the US is going to get increasingly protectionist,” said Inter-American Dialogue’s Michael Camilleri, a former US national security advisor and director for Andean Affairs.

The latest statistics show that Argentina’s trade deficit with the United States grew to US$4.3 billion in the last 11 months of 2017, according to the US Census Bureau. Trump’s protectionist policies have seen Argentina lose access to the US biodiesel market. Aluminium exports are also under threat, and beef exports – once
believed to be a sealed deal – are now still in the midst of renewed negotiations. “Meanwhile, as Argentina continues to give trade concessions, the United States has become very aggressive in trade negotiations, and if things don’t change, our trade balance with the US will continue to widen,” Cecilia Nahón, a former Argentine
ambassador to the US, told the Times in an interview.

Yet there have been some triumphs. At the beginning of the year, Argentina returned to the GSP (Generalized System of Preferences), a programme that provides trade benefits wth the US. There has also been the authorisation of lemon exports, and a period of robust US economic growth that could support not only the Argentine economy but a healthy global one. Argentina’s newly installed ambassador to the United States, Fernando Oris de Roa, told the Times that they were already starting to evaluate the new export opportunities available. “We are currently working on the GSP product list, refining and evaluating it, so we can begin to inform our producers and exporters. It’s an excellent political message, and we need to take advantage of it,” he said. 

Macri has chosen his new envoy carefully – Oris de Roa, a successful Harvard educated businessman, is known for his influential spell working in the lemon industry. His know-how could prove invaluable in negotiating bilateral trade agreements in a new Washington DC under Trump, which dismisses international trade deals in favour of bilateral trade accords.

In the meantime, high-ranking US officials continue to visit Argentina, opening up the possibility of other opportunities. Those ties will be underlined by a new visitor later this year. Yesterday, it was announced that US Secretary of State Rex Tillerson was scheduled to visit the country, news that comes less than six months after US Vice-President Mike Pence’s visit last August. The US Congress has also witnessed the formation of the “Argentine Congressional Caucus,” a group seeking to boost relations and encourage ties between the nations.

However, some experts warn that the trips taken by high-profile US government figures to Argentine soil do not necessarily mean that both sides will make concessions. Nor does it mean much for the balance sheet. “When Mike Pence visited last August, the Let’s Change administration gave the green-light to opening up Argentina’s market to US pork exports, but didn’t get anything in return ... it’s been a fragile negotiation strategy,” Leandro Morgenfeld, a UBA (Universtiy of Buenos Aires) professor who specialises in US-Argentine relations, told the Times. “Argentina has been accepting all the different points on the US agenda – concerning politics, diplomacy, military, and security – but we haven’t received anything commercially yet [in return].”

It seems that the president may also beginning to take note of that himself. Before heading to the World Economic Forum in Davos this week, President Macri travelled to Russia, where he met with Premier Vladimir Putin and signed several agreements. One is a memorandum of understanding for the exploration of uranium in the country. Argentina is also seeking closer relations with China, which has become its second-largest trading partner, after Brazil. In 2016, trade between Argentina and China reached US$12.3 billion. While Washington continues to drag its feet over a decision to accept beef imports, China has already signed an accord with Argentina to take higher-value beef and lamb meat on the bone exports.

The Let’s Change administration remains confident, however, that maintaining close relations with the US will prove beneficial in the long term. “Maybe, up until now, things haven’t moved as fast as we want,” Ambassador Oris de Roa told the Times, “but sometimes it’s not about pushing our agenda, but seriously studying what the other country’s agenda is. We just have to find a way to satisfy both sides.”

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Santiago del Carril

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