Oct 042014
 

http://wikileaks.org/cable/2007/08/07BUENOSAIRES1648.html#
Reference ID Created Released Classification Origin
07BUENOSAIRES1648
2007-08-23 09:48
2011-08-30 01:44
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Buenos Aires

VZCZCXRO7902
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DE RUEHBU #1648/01 2350948
ZNR UUUUU ZZH
O 230948Z AUG 07
FM AMEMBASSY BUENOS AIRES
TO RUEHC/SECSTATE WASHDC IMMEDIATE 8995
INFO RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUCPDOC/USDOC WASHINGTON DC
RUEHRC/DEPT OF AGRICULTURE USD FAS WASHINGTON DC
RUEHC/DEPT OF LABOR WASHINGTON DC
RUEAIIA/CIA WASHINGTON DC
RHEHNSC/NSC WASHINGTON DC
RHMFIUU/HQ USSOUTHCOM MIAMI FL
RUEHAC/AMEMBASSY ASUNCION 6472
RUEHBK/AMEMBASSY BANGKOK 0066
RUEHBJ/AMEMBASSY BEIJING 0160
RUEHBR/AMEMBASSY BRASILIA 6326
RUEHCV/AMEMBASSY CARACAS 1432
RUEHHI/AMEMBASSY HANOI 0028
RUEHIL/AMEMBASSY ISLAMABAD 0037
RUEHJA/AMEMBASSY JAKARTA 0030
RUEHKL/AMEMBASSY KUALA LUMPUR 0056
RUEHLP/AMEMBASSY LA PAZ 4848
RUEHML/AMEMBASSY MANILA 0055
RUEHMN/AMEMBASSY MONTEVIDEO 6680
RUEHNE/AMEMBASSY NEW DELHI 0077
RUEHSG/AMEMBASSY SANTIAGO 0702
RUEHUL/AMEMBASSY SEOUL 0103
RUEHGP/AMEMBASSY SINGAPORE 0047
RUEHCI/AMCONSUL KOLKATA 0004
RUEHCN/AMCONSUL CHENGDU 0004
RUEHCG/AMCONSUL CHENAI
RUEHCHI/AMCONSUL CHIANG MAI 0004
RUEHGZ/AMCONSUL GUANGZHOU 0096
RUEHHK/AMCONSUL HONG KONG 0023
RUEHKP/AMCONSUL KARACHI 0012
RUEHLH/AMCONSUL LAHORE 0006
RUEHBI/AMCONSUL MUMBAI 0019
RUEHRI/AMCONSUL RIO DE JANEIRO 2322
RUEHSO/AMCONSUL SAO PAULO 3489
RUESLE/AMCONSUL SHANGHAI 0020
RUEHSH/AMCONSUL SHENYANG 0008
RUEHIN/AIT TAIPEI 0032
UNCLAS SECTION 01 OF 04 BUENOS AIRES 001648

SIPDIS

SIPDIS
SENSITIVE

PASS NSC FOR MICHAEL SMART
PASS FED BOARD OF GOVERNORS FOR PATRICE ROBITAILLE
PASS USTR FOR KATHERINE DUCKWORTH AND MARY SULLIVAN
TREASURY FOR ROSELLEN ALBANO
USDOC FOR 4322/ITA/MAC/OLAC/PEACHER
US SOUTHCOM FOR POLAD
SEOUL PASS TO PUSAN

E.O. 12958: N/A
TAGS: ETRD EINV ECON AR CH HK IN ID KN KS MY PK RP SN
TW, TH, VM
SUBJECT: ARGENTINA: NON-TARIFF TRADE BARRIERS NOT YET OFFICIAL, BUT BROADLY APPLIED

Ref: (A) Buenos Aires 1644
(B) Buenos Aires 1642
(C) Buenos Aires 1496
(D) Buenos Aires 1445

——-
Summary
——-

¶1. (SBU) President Kirchner’s announcement late last week of
non-tariff measures aimed at curbing Asian imports is affecting U.S.
companies. Argentine customs has held up many Asian import
shipments, including those from U.S. high technology companies Dell
and Honeywell, pending clarification of a yet-to-be-published
customs notice that requires closer examinations of invoice values
against GoA reference prices. The draft customs notice specifically
targets imports from 13 Asian countries, including China, India,
Hong Kong, South Korea, Indonesia, Malaysia, Taiwan, Thailand, and
Singapore. While August 22 media reports say that the GoA plans to
take measures to “normalize” the processing of goods held up in
Customs over the past days, Post will continue to monitor
developments and work to ensure that affected U.S. company imports
are treated fairly. GoA officials defend the trade measures as a
reasonable response to pervasive under-invoicing by Asian exporters
and to the impact on Argentine industry of the dramatic surge in
Asian imports over the past two years. Privately, they admit that
the measures were largely a pre-election sop to Argentine
industrialists whose margins are being eroded by high inflation.
Though these measures will likely attenuate the rapid rate of growth
of imported Asian products, the GoA appears to have given little
thought to potential retaliatory reactions by Asian markets. End
Summary.

——————————————-
A Chronology: Non-Tariff Trade Restrictions
——————————————-

¶2. (SBU) On August 17, President Kirchner and Economy Minister
Miguel Peirano announced a series of forthcoming non-tariff import
restrictions as a defense against “unfair competition” from Asian
exporters and particularly from China (Ref A). A resolution
published that same day in the GoA’s Official Gazette put into force

BUENOS AIR 00001648 002 OF 004

a non-automatic licensing process covering a narrow range of luggage
goods. The resolution referred to a supplementary annex that has
not yet been made available. (In a subsequent August 21 meeting of
Econoffs and new Economy Ministry Undersecretary for Trade Ariel
Schale, he noted that no annex would be forthcoming.) Separately
that evening, Ambassador discussed the GoA’s announcement of
non-tariff trade restrictions with Chinese Ambassador to Argentina
Zhang Tou, who called the GoA’s announcement a surprise (Ref B).

¶3. (SBU) Notwithstanding the extremely narrow scope of this
published resolution, by Saturday August 18 a broad range of Asian
country imports into Argentina were subject to controls, delays, and
the refusal of GoA customs officials to process their paperwork.
Later media and anecdotal reporting from U.S. companies made clear
that, over the long Argentine holiday weekend, customs officials
acting without guidance were holding up the entry of Asian products.
The President of the Chamber of Importers of the Argentine Republic
and the Executive Director of the Argentine-Chinese Chamber of
Commerce were both reported in the press as saying that “all
inspection and processing of Asian products has been paralyzed in
Customs.”

¶4. (SBU) On Tuesday, August 21, Post FCS obtained a draft of a
Customs “External Note” that, as of August 23, has yet to be
officially published. The note states that that merchandise coming
from China, India, Hong Kong, North and South Korea, Indonesia,
Malaysia, Pakistan, the Philippines, Taiwan, Thailand, Singapore and
Vietnam would be detained if their declared value is below reference
prices established by Customs, and would not be released until the
importer presented an invoice, validated by the Customs agency of
the country of origin as well as by the local Argentine diplomatic
mission, and “all original supporting documentation” to Argentine
Customs.

¶5. (SBU) On August 21, Dell Computers reported to WHA/BSC that
shipments of its laptops from Asian manufacturing plants were being
held up by GoA Customs. Post subsequently confirmed that 70 Dell
shipments valued at US$ 1.6 million were being delayed. In an
August 22 emergency meeting of the American Chamber of Commerce
Trade Committee attended by Econoffs and FCS, a representative of
Honeywell confirmed that shipments of “technical equipment” from
Asia were being held at airport customs. The justification given by

BUENOS AIR 00001648 003 OF 004

GoA customs officials, she reported, was what no customs officer
wanted to be responsible for releasing the goods absent clearer
guidance from senior GoA officials.

¶6. (SBU) On August 21, new Economy Ministry Undersecretary for Trade
Ariel Schale told EconCouns that the new measures included
non-automatic licenses on shoe uppers and synthetic textiles, plus a
series of new Customs procedures about documentation and security
inspections, which were designed “to avoid a flood” of Asian goods
into Argentina. He stated that 5,000 Customs reference prices would
be “updated” to deal with pervasive under-invoicing from Asian
markets that was costing Argentina dearly in tariff revenue.
Argentina, he said, would not support “inhumane production methods
in Asia” through purchase of unfairly cheap products. Asian
invoices suspected of being artificially low would have to be
validated by an Argentine diplomatic mission. The GoA was seeking
increased transparency in trade with Asian countries, Schale said,
citing the exchange of Customs information with the USG via the
Trade Transparency Unit as a model and highlighting poor
“information exchange” with China. Separately, on August 21,
Ambassador spoke with Foreign Ministry Trade Secretary Chiaradia,
who assured Ambassador that new trade measures would be imposed in a
non-discriminatory, WTO-consistent manner (Ref B).

¶7. (SBU) On August 22, local business contacts reported to Econoffs
that the new GoA trade measures are being applied by country of
origin, not by product, though the earlier August 17 announcements
(Ref A) and press coverage indicated that the measures would apply
mainly to plastics, textiles, artificial leather, tires, and toys.
At least one representative of an importer was told that products at
Ezeiza airport would begin to be released on August 22, though
products entering at the seaport would continue to be detained.
(Comment: This is plausible, as the goods entering via air are
likely to be high-value, and therefore less likely to be
manufactured locally. End Comment). August 22 television and press
reports highlighted GoA intentions to take measures to “normalize”
the processing of goods held up in Customs over the past days. Post
will continue to monitor developments and work to ensure that
affected U.S. company imports are treated fairly.

—————————————
China Trade with Argentina: Perspective

BUENOS AIR 00001648 004 OF 004

—————————————

¶8. (SBU) Argentina’s problems with Asian and more specifically
Chinese imports began just after he GoA recognized China as a
market economy during the visit of Hu Jintao to Latin American in
December 2004. The first products to suffer retribution were shoes
and toys. Shoe imports quadrupled in the months after Hu Jintao’s
visit and then-Secretary of Industry (and current Economy Minister)
Miguel Peirano imposed import licensing restrictions on footwear,
most of which was Chinese or Brazilian. In 2006, local industry
filed an anti-dumping case against Asian made writable CD-ROMS which
was notified to the WTO. Argentine concerns about rising Chinese
and Asian imports were further exacerbated by recent news reports
about unsafe toothpaste, recalled toys, and unsafe tires exported
from China.

——-
Comment
——-

¶9. (SBU) The announcement by President Kirchner of populist trade
measures targeting Asian imports was made just prior to a long
holiday weekend, with little apparent thought given to
implementation. While initial responses by GoA customs officials
should be corrected in the coming days, the measures will likely
moderate the rapid rate of growth of imported products from Asian
markets. U.S. companies that export from Asian manufacturing bases
will inevitably be affected. Despite their public bromides against
“unfair trade,” GoA officials admit privately that the trade
measures were largely a pre-election sop to an Argentine industrial
base whose margins are being eroded by high domestic inflation and
Asian imports. It appears unlikely that GoA officials have
considered the impact on Argentine agricultural exports of possible
reactions in kind by Asian export markets.

WAYNE

   

 

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