Obama Suspends Trade Benefits For Argentina
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President Barack Obama has suspended duty-free Argentine imports into America amid a trade dispute involving U.S. investors, saying that Argentina has failed to pay more than $300 million in compensation awards to US companies.
Until Argentina pays the court-ordered damages, it would no longer qualify for duty-free trade with the United States.
President Barack Obama has suspended duty-free Argentine imports into America amid a trade dispute involving U.S. investors, saying that Argentina has failed to pay more than $300 million in compensation awards to US companies.
Until Argentina pays the court-ordered damages, it would no longer qualify for duty-free trade with the United States.
Last year, Argentina exported $477 million of goods to their North American neighbours under the Generalised System of Preferences programme, which waives import duties for developing countries. Under this programme, Argentina saved $17 million in duty fees last year.
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The United States is the fourth-largest export market for Argentina, whose exports include wine, sugar confections and olive oils.
This is the first time a country has been suspended from the GSP programme for failing to pay an arbitration award.
Accusing Argentina of ‘not acting in good faith’, Obama said yesterday the suspensions will take effect in 60 days. This announcement comes two days after the Argentine Embassy in Washington sponsored a mission to promote U.S. trade and investment.
In response, Argentina condemned the ‘unilateral’ decision by the United States.
Buenos Aires defended its position, saying the country had to battle intense capital flight after it lost $10 billion from its reserves last year.
Argentina had sought to conduct the compensation payouts within Argentina, where the American companies involved would have to comply with strict currency control measures.
While the duty savings are not large, Argentina is hoping to maintain its abundant trade surplus this year, as well as pay down its international debt.
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According to Reuters, the preferential tariff suspension is just part of a greater scheme by the United States to force Argentina to repay her debts.
Following the country’s debt crisis and spectacular default in 2002, Argentina still owes $6.7 billion to its Paris Club creditors, including the United States.
In late 2001, Argentina defaulted on $95 billion in bonds – the largest sovereign debt default in history.
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