Perfection is the enemy of possibility. That adage is likely to apply to all the negotiations the Liberal government has to negotiate in the coming months, including approving the budget, labor and tax reforms, and the trade deal with the United States, which saw fundamental progress this Thursday. “Reforms have to work at all costs, even if we have to remove some things.”the Liberal minister admits. Now is the time when pure results are required. Documents signed with the United States are no exception.
After half a year of negotiations, The Republican and Libertarian governments signed a joint declaration to advance trade and cooperation agreements. In reality, US President Donald Trump does not have the authority to sign the agreement, but he does have the authority to announce his intention to conclude the agreement. The deal ultimately depends on the signature of the U.S. Congress, but opinion is divided within the library, with some trade experts and even officials believing that Congressional approval is not needed. With sharp reflexes, it won’t take long for the business lobby to move into the Capitol.
The Joint Declaration published this Thursday (on the same day the agreement was communicated with El Salvador, Ecuador and Guatemala) contains a series of framework concepts. To fully understand what’s coming, you need to understand the finer points. Only then, as in any negotiation, will it be clear who is the winner and who is the loser.
However, the Millais government took the lead. He accomplished what much of the world is still trying to accomplish: a tariff reduction deal with President Trump. This announcement is an achievement in itself. This reaffirms America’s support for the government, which needs President Trump’s financial oversight to ensure it has the means to meet its financial obligations even after its defeat in the October election. This message is not a small one.
As for the commercial impact, its scope is still unclear. However, the deal does not seem to be easy to digest for industries such as pharmaceuticals, or even for some agricultural sectors, given that some companies will begin to compete directly with North American producers as effectively or more efficiently than local producers.. In fact, Argentina is committed to opening its market to North American livestock and plans to include poultry within a year.
The Millais government is also working to simplify the registration process for meat, meat products, beef offal and pork products, among other concessions. In return, the two countries envisage “improving mutual and bilateral market access conditions for beef trade.”
This last point has been one of the conflicts of the last few hours. We have to see how Congress ultimately defines it. This week, 52 members of the House of Representatives signed a letter to U.S. Trade Representative Jamison Grier and Secretary of Agriculture Brooke Rollins condemning the Trump administration’s proposed Argentine beef bailout. ““From soybeans to meat, the Trump administration continues to prioritize Argentine producers over North American producers,” the Nov. 10 text states, among other things.. Argentina currently has a 20,000 tonne share of the North American market. The idea, revealed in conversations North American officials had with civilian sources, could double that, but mostly by reallocating quotas currently held by other producing countries. Even though President Trump has internal affairs and enjoys control of both chambers in his favor, it will not be easy. It will be a matter of adding votes.
It is clear that the Trump administration will not lose. He was careful to include in this first declaration all the issues that have historically dominated the bilateral trade agenda: intellectual property (patents, especially pharmaceuticals), China, and the current “hit”: access to rare minerals. “There are 12 commitments that Argentina will undertake exclusively. One underwrites the U.S. exclusively and six jointly.Or” details a man who closely observed the country’s trade issues for years and whose writings did not take much time to analyze. Trump’s first book, signed and published in 1987, was called “The Art of Negotiation.” There’s no better chair for negotiation than the one in the Oval Office.
Argentina also agreed to take steps to encourage imports of North American products. For example, the text states that local organizations such as Senasa and Anmat will no longer be required to conduct new evaluations of products such as food and drugs that have already been approved by U.S. regulators. Historically, local assessments and certifications have served as barriers to entry in some industries and have been used to protect domestic industries. This is a concession that has not even been formalized within Mercosur so far.
Although China is not mentioned in the text, it is mentioned in spirit. Argentina pledges to take action against state-owned enterprises that can distort markets (there are no private companies in China that do not partner with the state) and to honor its World Trade Organization (WTO) obligations under the Agreement on Subsidies and Fisheries.. It will also restrict imports of products from countries that do not respect international labor laws. Argentina and the United States similarly pledge to work together to facilitate investment and exchange of critical minerals and to cooperate in “stabilizing global soybean trade.” No one knows what the latter means…
Luis Caputo’s decision to lower soybean withholding in order to capture dollars in the midst of exchange rate competition was heavily criticized at the time by North American producers who feared losing their relative weight in the Chinese market. But Argentina has reason to be excited. In addition to improving access to Argentine meat in the United States, the Trump administration is also working to eliminate reciprocal tariffs on some natural resources and items intended for pharmaceutical use. Does it include steel, aluminum and biodiesel? The issue of aluminum and steel is one of the Foreign Office’s strongest claims, and the Ministry still makes public claims against Northern countries at the WTO. Not specified. However, for now, the United States reserves the possibility of imposing tariffs or restrictions if it determines that they would affect national security. President Trump has a completely unpredictable margin of discretion.
The case of biodiesel, which until 2016 was Argentina’s main export product to the United States, is more complicated. During the Trump presidency, the North American market was effectively closed to Argentine exports after the US imposed exorbitant tariffs on claims that local oil companies were reaping special benefits from withholding taxes on soybeans in the Argentine market. Will the penalty be canceled? Nothing is said in the statement.
The text also states that progress is expected to be made through cooperation in the exchange of customs information. Perhaps it could be an opportunity for the country to finish formalizing one of the most opaque windows that still exist within the public administration.. But like the rest of the points announced, they are all declarations for now. The outcome will depend on the goodwill of North American lawmakers, the weight of private lobbies (there is still time to introduce amendments), and the mood of Donald Trump. As with the US$20 billion swap the US gave Argentina, information remains lacking.
Argentine authorities are relying on President Trump to provide that.
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