- 14 Mar 2013 10:30
#14192748
Brazil-Argentina: it’s a love-hate relationship
From: http://blogs.ft.com/beyond-brics/2013/03/12/brazil-argentina-its-a-love-hate-relationship/
If Latin America was a gated community, Brazil and Argentina would be the neighbours that just cannot get along. Argentina would moan that Brazil keeps parking in its driveway and Brazil would complain that Argentina is building too big a fence around its backyard.
But in the real world of the region’s Mercosur trading bloc, things are a tad more complicated than that.
An agreement governing the automotive trade between the neighbours is supposed to result in free trade in the industry from July 1. Instead, Argentina is trying to go into reverse. Most controversially, it wants to force Brazilian carmakers to buy at least some of their parts from Argentina. (Now where could Argentina have learned that trick?)
One could almost forgive Argentina for wanting to escape the tough outcomes of the agreement. Its economy is expected to have grown just 1.4 per cent last year as investment declined and its outlook is certainly much less bright than it was in 2008 when the auto deal was signed. But sympathy for Argentina’s plight fades in the light of its track record of reneging on free trade deals even when times are good.
Bilateral tension over cars will only worsen an already fraught trading relationship, as shown by Brazilian miner Vale’s decision to suspend an $6bn investment in Argentina. Argentina responded by threatening to expropriate what investments Vale has already made at its Río Colorado potash mine.
Matias Franchine of the University of Brasília, says of the Brazil-Argentina relationship: “It’s a progressive deterioration.”
In public, Brazil will probably continue to humour its neighbour. While Argentina’s economy is much smaller than Brazil’s, it is an important market for Brazilian manufactured exports, many of which are less competitive outside the region. Argentina, meanwhile, needs Brazil for its market and because it literally has few other “friends”.
In our hypothetical gated community, neighbours like Brazil and Argentina would eventually get sick of one another. One of them would end up moving out. Just as children can’t choose their parents, countries can’t choose their neighbours.
___________________
I try my best to like Argentina, but they make it impossible.
Expropriate Vale? Really? Sad news.
From: http://blogs.ft.com/beyond-brics/2013/03/12/brazil-argentina-its-a-love-hate-relationship/
If Latin America was a gated community, Brazil and Argentina would be the neighbours that just cannot get along. Argentina would moan that Brazil keeps parking in its driveway and Brazil would complain that Argentina is building too big a fence around its backyard.
But in the real world of the region’s Mercosur trading bloc, things are a tad more complicated than that.
An agreement governing the automotive trade between the neighbours is supposed to result in free trade in the industry from July 1. Instead, Argentina is trying to go into reverse. Most controversially, it wants to force Brazilian carmakers to buy at least some of their parts from Argentina. (Now where could Argentina have learned that trick?)
One could almost forgive Argentina for wanting to escape the tough outcomes of the agreement. Its economy is expected to have grown just 1.4 per cent last year as investment declined and its outlook is certainly much less bright than it was in 2008 when the auto deal was signed. But sympathy for Argentina’s plight fades in the light of its track record of reneging on free trade deals even when times are good.
Bilateral tension over cars will only worsen an already fraught trading relationship, as shown by Brazilian miner Vale’s decision to suspend an $6bn investment in Argentina. Argentina responded by threatening to expropriate what investments Vale has already made at its Río Colorado potash mine.
Matias Franchine of the University of Brasília, says of the Brazil-Argentina relationship: “It’s a progressive deterioration.”
In public, Brazil will probably continue to humour its neighbour. While Argentina’s economy is much smaller than Brazil’s, it is an important market for Brazilian manufactured exports, many of which are less competitive outside the region. Argentina, meanwhile, needs Brazil for its market and because it literally has few other “friends”.
In our hypothetical gated community, neighbours like Brazil and Argentina would eventually get sick of one another. One of them would end up moving out. Just as children can’t choose their parents, countries can’t choose their neighbours.
___________________
I try my best to like Argentina, but they make it impossible.
Expropriate Vale? Really? Sad news.
stat crux dum volvitur orbis
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