Brazil, Argentina move to allay tension over autos

* Brazil and Argentina try to resolve auto trade fight

* Brazil’s new auto import licenses to remain in place

 

BRASILIA (Reuters) – Brazil and Argentina agreed Thursday to take limited steps to ease trade tensions, although barriers in the automotive sector that are at the core of the dispute will remain in place.

The two countries have been at odds since Brazil decided last month to delay import licenses for foreign-made autos. The measure, which has effectively slowed trade in the sector, angered Argentina’s government and raised the specter of a trade war between South America’s biggest economies.

Following a meeting in Brasilia between Trade and Industry Minister Fernando Pimentel and his Argentine counterpart, Debora Giorgi, the two governments agreed to expedite import licenses in all sectors so they can be approved within the 60-day time frame stipulated by the World Trade Organization.

“There’s no trade war whatsoever,” Giorgi told reporters. ”Integration between Brazil and Argentina is a path that is here to stay.”

Pimentel agreed that the countries would try to make the licensing process as “agile” as possible.

The dispute has garnered some attention from international investors worried about greater protectionism among emerging markets at a time when distorted currency values and uneven global economic growth have caused special strains.

Argentina and Brazil had about $32 billion in trade in 2010, with a $4 billion surplus in favor of Brazil.

Argentine car manufacturers send about 80 percent of their exports to Brazil, and the auto industry has been critical to Argentina’s economic growth in recent years. Industry officials have said their business could be severely damaged if the measures cause major delays in shipments to Brazil.

Foreign automakers producing in Argentina include Toyota, General Motors, Fiat, Renault and Ford.

A representative of Argentina’s automakers association, ADEFA, declined comment pending review of the agreement.

Pimentel has denied that the measures were targeted at Argentina, telling Reuters last month they were part of a broader array of initiatives designed to slow a wave of imports as Brazil’s currency trades near decade highs.