President Obama last week said, “I don’t want America to be a nation that’s primarily known for financial speculation and racking up debt buying stuff from other nations. I want us to be known for making and selling products all over the world stamped with three proud words: “Made in America.”
Contrast that with President of Argentina Cristina Fernandez de Kirchner, who has been quoted as saying she doesn’t want “a single nail” to be imported into Argentina. She also said “We are doing these things so that those who imported can now produce in Argentina”. Replacing imports “is not only an economic transformation but also cultural. Its embarrassing that 78%% of the books we read in Argentina are imported.” The United States, while promoting exports, remains open to fairly-traded imports because we recognize the value to manufacturers and to consumers who benefit from greater choice and good prices.
However, Argentina, according to The Global Trade Alert in the third quarter of 2011 took 25 protectionist actions, double that of China. In the last three months, it took more than Brazil, India and China combined. This has a profound and negative impact on U.S. exports to Argentina. Now, last week, the Argentine federal tax agency (AFIP) announced it will require from February 1 that all importers file a sworn statement to the AFIP, informing the agency of their future import plans.
Each transaction must be approved by the Interior Commerce Secretariat, the same agency that has been behind most of the protectionist measures taken to date. This requirement is the latest effort by Argentina to improve its trade balance and boost its domestic manufacturing sector at the expense of its trading partners by reducing imports while benefiting from access to open markets like the United States. Brazilian industry has raised concerns about this measure noting its impact on their companies and supply chains and is asking governments of both countries to find common solutions.
The NAM calls on Argentina to reverse this direction which if continued will harm Argentina consumers, producers and exports as much as it harms the ability of U.S. companies to do business with Argentina. We also call on our own government to raise these issues with Argentina before this runaway protectionism becomes contagious. We encourage the international business community and other WTO member governments to raise their objections to this course with Argentina as well.
A country cannot willfully flout its WTO obligations and go unchallenged, especially if we aim to double U.S. exports by 2014.
Stephen Jacobs is senior director of international business policy, National Association of Manufacturers.