Mexico has become the fourth country to launch a World Trade Organisation (WTO) complaint against Argentina, a move that puts them alongside the United States, Japan, and the European Union.
The complaint, announced Monday, centres around Argentina’s import restrictions with the world trade body. Mexico became the fourth country in three months to complain about the rules which some critics have said amounts to a blanket restriction on imports.
“The government of Mexico reiterates its deep worry over the protectionist measures that Argentina is applying, as well as practices that lack transparency and affect trade between our two nations and generate uncertainty,” Mexico’s Economy Ministry said in a statement according to Reuters.
The measures are among several policies adopted by President Kristina Fernandez de Kirchner to improve the country’s balance of trade, which is crucial for keeping international reserves that are used to pay debt.
However, the Mexican complaint said that the rules “restrict the imports of goods and discriminate between national and imported goods,” and that they, “don’t seem to be related with the implementation of any measure justified under the WTO Agreement.”
The sour trade relations between the two country reached a tipping point when Argentina decided to pull out of an automobile free trade agreement it had with Mexico. The move was made because Mexico refused to apply a quota system to close the trade deficit between the two countries, which is in part caused by inflation and rising costs in Argentina that make Argentine cars uncompetitive price wise.
According to Reuters Mexico exported almost US$2bn to Argentina with only half that amount coming back in. However, because of the new restrictions Mexican exports to Argentina are down to US$111m as of June this year. The drop represents almost 40% since 2011.
Mexico recently got tangled up in a trade argument with Brazil but HSBC’s chief economist Sergio Martin told Reuters there is a big difference between picking a fight with Brazil and picking a fight with Argentina. Mexico chose a more practical route with Latin’s America’s largest economy, Brazil.
Nevertheless, the WTO has suggested Mexico and Argentina hold consultations over the next 30 days to try to find a solution. If no agreement is found in 60 days, the two countries could ask a WTO panel to mediate.
Typically Argentina has argued that its critics are all rich nations that are trying to restrain developing countries, however, Mexico’s involvement could seriously curb that argument.
Defending the country’s policies against widespread criticism at the WTO, Argentina has said it cannot be accused of restricting imports when its imports grew by 31% in 2011.
