Exports to Argentina Drop 25% Amid Strained Bilateral Relations.

The Mercosur bloc commenced its 65th summit on Thursday, Dec. 12. Brazil and Argentina, its two largest economies, are facing strained relations that have led to a significant decline in trade and marked disagreements on multiple issues. Despite these challenges, both nations aligned to advance the long-delayed trade agreement with the European Union (EU), which may soon be finalized.

Data from Brazil’s Ministry of Development, Industry, Trade, and Services (MDIC) reveal that Argentina’s imports of Brazilian goods fell by 24.8% between January and October 2024 compared to the same period in 2023. In contrast, Brazil increased its imports from Argentina by 9.7%.

While Brazil maintains a trade surplus with its neighbor, the surplus dropped dramatically from $4.75 billion to just $69 million during this period. According to Gisela Padovan, Brazil’s Ambassador and Secretary for Latin America and the Caribbean at the Foreign Ministry, this decline stems from fiscal adjustments implemented by Argentine President Javier Milei’s administration to stabilize the country’s economy.

“The only explanation is Argentina’s strong fiscal adjustment. Overnight, you see such a steep drop. What changed this year? A new government came in with a significant adjustment that unfortunately has negative implications for us,” Padovan explained during an interview about the summit held in Montevideo from Thursday through Friday.

In 2023, Brazil recorded a trade surplus of approximately $6 billion with Mercosur nations. The results are more balanced this year, but total trade between Brazil and Argentina fell by $10.8 billion, according to MDIC data.

“The goal is to achieve balance, but with more trade, not less, as we’re currently experiencing,” Padovan emphasized.

No new internal trade barriers have been established, but the challenging relationship between the two nations complicates resolving disputes or pursuing proactive measures to boost trade.

Here’s a chart showing the main trends in exports of containers from Brazil to Argentina in the first ten months of the year from 2021 through 2024. The data is derived from Datamar’s DataLiner.

Container Exports to Argentina | Jan-Oct 2021 through Jan-Oct 2024 | TEUs

Source: DataLiner (click here to request a demo)

Milei’s Stance on Mercosur

The summit marks Javier Milei’s first participation as Argentina’s president. Last year, during Mercosur’s meeting in Asunción, Milei skipped the event to attend the Conservative Political Action Conference (CPAC) in Camboriú, Brazil, alongside former President Jair Bolsonaro. This was the first time a founding member of Mercosur—Argentina, Brazil, Uruguay, or Paraguay—voluntarily missed a summit.

Milei has criticized Mercosur and previously threatened to withdraw Argentina from the bloc. He has expressed interest in pursuing independent trade agreements with other nations. However, the potential progress of the EU-Mercosur trade deal has prompted Milei to stay engaged.

The four founding Mercosur members have reportedly reached a consensus on the terms of the free trade agreement with the EU. According to sources cited by Reuters, they now await the European bloc’s approval following last-minute negotiations.

For further details, visit the original article on G1.

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