U.S., EU blast Argentina's trade restrictions at WTO

(Reuters) - Argentina came under a barrage of criticism at the World Trade Organization on Friday, where the United States, European Union, Japan and 10 other countries accused it of tying up imports in red tape.

Argentina's center-left government has imposed a raft of sometimes unorthodox import restrictions in recent years as it battles to shield local industry and its trade surplus, which shrank 11 percent in 2011 to $10.4 billion.

On February 1, President Cristina Fernandez's administration imposed a new system to pre-approve, or reject, nearly every purchase from abroad.

"It appears that this new system is operating as a de facto import-restricting scheme on all products," the U.S. ambassador to the WTO, Michael Punke, said, according to a transcript provided to Reuters by one of the participants.

The critics described the policy as "unbefitting any WTO member" and "particularly troubling" because they limit the growth-enhancing prospects for trade.

They demanded Argentina take immediate steps to reverse its policies or risk further action at the WTO.

Argentina has also been pushing importers to match their purchases abroad with exports, leading to quirky deals such as one whereby carmaker BMW exports rice.

Friday's joint statement at the WTO said government officials were apparently using arm-twisting tactics to enforce the agreements - a frequent complaint of local businesses in Latin America's No. 3 economy.

"Many companies have reported receiving telephone calls from Argentine government officials in which they are informed that they must agree to undertake such trade balancing commitments prior to receiving authorization to import goods," Punke said in the joint statement.

According to the agenda of the meeting, the statement was backed by Australia, Canada, Costa Rica, Israel, Japan, Korea, New Zealand, Norway, Panama, Switzerland, Taiwan, Thailand and Turkey, as well as the EU and the United States.

AUTOMAKERS EXPORTING OLIVE OIL

Punke said the Industry Ministry's website was replete with press releases about such trade balancing arrangements, including automakers exporting wine, olive oil, and soy meal.

"Argentina may claim that companies enter into these arrangements voluntarily, but many of the members supporting this statement share concerns that it may be operating otherwise," he said.

Guillermo Moreno, Argentina's domestic commerce secretary and the top enforcer of the government's interventionist policies in recent years, has been given a key role in monitoring the import restrictions.

He is known in the South American country for putting heavy pressure on companies to keep prices in check and threatening economists who put inflation at more than double the official rate with fines and even jail time.

Argentina's Foreign Ministry said in a statement that it ratifies the country's trade policies, which the government says are needed to keep Argentines employed.

It also said Mercosur trade bloc members - Brazil, Uruguay and Paraguay - as well as China, Russia and India, did not back the statement.

The Foreign Ministry added that it was "striking" that none of the statement signers "presented a punctual case in which Argentina did not abide by the WTC rules."

Argentina will continue to "enforce its sovereign decision over its trade policies ... abiding by WTO norms but rejecting any foreign interference," the Foreign Ministry said.

Friday's tough-worded criticism at the WTO comes less than a week after Washington said it was suspending trade benefits for Argentina because it had failed to pay compensation awards in two disputes involving American investors.

That was seen as part of a larger U.S. effort to pressure Argentina to pay debts and other obligations a decade after it staged the largest sovereign debt default in history.

An Argentine diplomat with knowledge of the situation said the complaint to the WTO's Council for Trade in Goods was an unusual step driven by the United States and European Union.

"I don't remember ever seeing anything like this at the WTO. It's a very unusual procedure," the diplomat said, asking not to be named.

April 2, 2012

Source: Reuters