Since February, consumers and businesses in Argentina have found it increasingly hard to find various imported items -- electrical equipment, certain prescription drugs, machinery parts, bananas, and salmon.
The government of President Cristina Fernandez de Kirchner wants to reduce dependence on imports and encourage local industry and agriculture to fill the gap. The country recorded a $356 million current account deficit in the fourth quarter, Bloomberg BusinessWeek reports in its April 23-29 issue.
Since a healthy trade surplus is a pillar of Argentina’s economic model, policy makers want to get back in the black as fast as possible. Trade considerations were behind the government’s move on April 16 to wrest control of YPF SA, a local oil producer, from the hands of Spain’s Repsol YPF SA. (YPF:US) Fernandez figures the Argentines can coax more oil from the fields than the Spanish, thus cutting the bill for imported oil.
This cut-imports-at-all-costs campaign has triggered a backlash. The government announced in late March that all foreign publications entering Argentina would be held at Ezeiza International Airport outside Buenos Aires. The Twitter hashtag #LiberenLosLibros (Spanish for “free the books”) was widely used.
The government said the new policy, which would stop home delivery of all overseas print publications and force subscribers to pick up their periodicals at the airport for a sizable additional fee, was needed because inspectors had to check ink lead levels. The move didn’t go down well in a country that prides itself on its literary tradition and where one of the iconic buildings in the capital, Palacio Barolo, is a physical tribute to Dante’s “Divine Comedy.”
A few days of vehement backlash later, the government reversed the measure.
Stringent rules on many other imports, however, remain in place. Importers are now required to fill out the Anticipated Sworn Declaration of Imports, which must be approved by the government. For foreign manufacturers to bring goods or services into the country, they must enter into partnerships with local manufacturers for production.
The new measures have created a tangle of red tape and brought denunciations from 14 member states of the World Trade Organization, including the U.S. and the European Union. The statement accuses Argentina of restrictive trade measures and a lack of transparency. “It appears that this new system is operating as a de facto import-restricting scheme on all products,” said the document.
The official WTO statement additionally listed laptops, home appliances, cars and car parts, toys, and textiles among the affected products. Argentina rejected the criticism and defended the restrictions as “sovereign trade policies.”
Marcela Cristini, a senior economist at the Foundation for Latin American Economic Investigations, said the import restrictions risk freezing Argentina out of international markets and making it more of an economic outlier than it already is. She said boosting exports is a more effective way to achieve a trade surplus and improve competitiveness.
Walter Molano, a Latin American specialist at BCP Securities, also criticized the crackdown on imports. “The Argentine economy is doing well,” he said. “But they’re missing the big Latin America boom. They should be doing much better.” Instead, President Fernandez has pursued ever-more- insular economic policies, he added.
Vice President Amado Boudou took to Twitter on March 30 to explain the policy. “We are not against imports, we are looking after your jobs, we are looking after Argentine industry,” he wrote. Readers noticed that Twitter had registered the vice president as posting from an iPhone. Yet the government blocks the import of the Apple Inc. smartphone. The screen shot of the ironic tweet went viral. Should Argentines want an iPhone, as Boudou told reporters earlier, they’ll have to buy it in Miami.
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