VZCZCXRO7902
OO RUEHBI RUEHCHI RUEHCI RUEHCN RUEHLH RUESLE
DE RUEHBU #1648/01 2350948
ZNR UUUUU ZZH
O 230948Z AUG 07
FM AMEMBASSY BUENOS AIRES
TO RUEHC/SECSTATE WASHDC IMMEDIATE 8995
INFO RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUCPDOC/USDOC WASHINGTON DC
RUEHRC/DEPT OF AGRICULTURE USD FAS WASHINGTON DC
RUEHC/DEPT OF LABOR WASHINGTON DC
RUEAIIA/CIA WASHINGTON DC
RHEHNSC/NSC WASHINGTON DC
RHMFIUU/HQ USSOUTHCOM MIAMI FL
RUEHAC/AMEMBASSY ASUNCION 6472
RUEHBK/AMEMBASSY BANGKOK 0066
RUEHBJ/AMEMBASSY BEIJING 0160
RUEHBR/AMEMBASSY BRASILIA 6326
RUEHCV/AMEMBASSY CARACAS 1432
RUEHHI/AMEMBASSY HANOI 0028
RUEHIL/AMEMBASSY ISLAMABAD 0037
RUEHJA/AMEMBASSY JAKARTA 0030
RUEHKL/AMEMBASSY KUALA LUMPUR 0056
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RUEHGP/AMEMBASSY SINGAPORE 0047
RUEHCI/AMCONSUL KOLKATA 0004
RUEHCN/AMCONSUL CHENGDU 0004
RUEHCG/AMCONSUL CHENAI
RUEHCHI/AMCONSUL CHIANG MAI 0004
RUEHGZ/AMCONSUL GUANGZHOU 0096
RUEHHK/AMCONSUL HONG KONG 0023
RUEHKP/AMCONSUL KARACHI 0012
RUEHLH/AMCONSUL LAHORE 0006
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RUESLE/AMCONSUL SHANGHAI 0020
RUEHSH/AMCONSUL SHENYANG 0008
RUEHIN/AIT TAIPEI 0032

UNCLAS SECTION 01 OF 04 BUENOS AIRES 001648 
 
SIPDIS 
 
SIPDIS 
SENSITIVE 
 
PASS NSC FOR MICHAEL SMART 
PASS FED BOARD OF GOVERNORS FOR PATRICE ROBITAILLE 
PASS USTR FOR KATHERINE DUCKWORTH AND MARY SULLIVAN 
TREASURY FOR ROSELLEN ALBANO 
USDOC FOR 4322/ITA/MAC/OLAC/PEACHER 
US SOUTHCOM FOR POLAD 
SEOUL PASS TO PUSAN 
 
E.O. 12958: N/A 
TAGS: ETRD EINV ECON AR CH HK IN ID KN KS MY PK RP SN
TW, TH, VM 
SUBJECT: ARGENTINA: NON-TARIFF TRADE BARRIERS NOT YET OFFICIAL, BUT 
BROADLY APPLIED 
 
Ref:  (A) Buenos Aires 1644 
  (B) Buenos Aires 1642 
       (C) Buenos Aires 1496 
      (D) Buenos Aires 1445 
 
------- 
Summary 
------- 
 
¶1. (SBU) President Kirchner's announcement late last week of 
non-tariff measures aimed at curbing Asian imports is affecting U.S. 
companies.  Argentine customs has held up many Asian import 
shipments, including those from U.S. high technology companies Dell 
and Honeywell, pending clarification of a yet-to-be-published 
customs notice that requires closer examinations of invoice values 
against GoA reference prices.  The draft customs notice specifically 
targets imports from 13 Asian countries, including China, India, 
Hong Kong, South Korea, Indonesia, Malaysia, Taiwan, Thailand, and 
Singapore.  While August 22 media reports say that the GoA plans to 
take measures to "normalize" the processing of goods held up in 
Customs over the past days, Post will continue to monitor 
developments and work to ensure that affected U.S. company imports 
are treated fairly. GoA officials defend the trade measures as a 
reasonable response to pervasive under-invoicing by Asian exporters 
and to the impact on Argentine industry of the dramatic surge in 
Asian imports over the past two years.  Privately, they admit that 
the measures were largely a pre-election sop to Argentine 
industrialists whose margins are being eroded by high inflation. 
Though these measures will likely attenuate the rapid rate of growth 
of imported Asian products, the GoA appears to have given little 
thought to potential retaliatory reactions by Asian markets.  End 
Summary. 
 
------------------------------------------- 
A Chronology: Non-Tariff Trade Restrictions 
------------------------------------------- 
 
¶2. (SBU) On August 17, President Kirchner and Economy Minister 
Miguel Peirano announced a series of forthcoming non-tariff import 
restrictions as a defense against "unfair competition" from Asian 
exporters and particularly from China (Ref A).  A resolution 
published that same day in the GoA's Official Gazette put into force 
 
BUENOS AIR 00001648  002 OF 004 
 
 
a non-automatic licensing process covering a narrow range of luggage 
goods.  The resolution referred to a supplementary annex that has 
not yet been made available.  (In a subsequent August 21 meeting of 
Econoffs and new Economy Ministry Undersecretary for Trade Ariel 
Schale, he noted that no annex would be forthcoming.)  Separately 
that evening, Ambassador discussed the GoA's announcement of 
non-tariff trade restrictions with Chinese Ambassador to Argentina 
Zhang Tou, who called the GoA's announcement a surprise (Ref B). 
 
¶3. (SBU) Notwithstanding the extremely narrow scope of this 
published resolution, by Saturday August 18 a broad range of Asian 
country imports into Argentina were subject to controls, delays, and 
the refusal of GoA customs officials to process their paperwork. 
Later media and anecdotal reporting from U.S. companies made clear 
that, over the long Argentine holiday weekend, customs officials 
acting without guidance were holding up the entry of Asian products. 
 The President of the Chamber of Importers of the Argentine Republic 
and the Executive Director of the Argentine-Chinese Chamber of 
Commerce were both reported in the press as saying that "all 
inspection and processing of Asian products has been paralyzed in 
Customs." 
 
¶4. (SBU) On Tuesday, August 21, Post FCS obtained a draft of a 
Customs "External Note" that, as of August 23, has yet to be 
officially published.  The note states that that merchandise coming 
from China, India, Hong Kong, North and South Korea, Indonesia, 
Malaysia, Pakistan, the Philippines, Taiwan, Thailand, Singapore and 
Vietnam would be detained if their declared value is below reference 
prices established by Customs, and would not be released until the 
importer presented an invoice, validated by the Customs agency of 
the country of origin as well as by the local Argentine diplomatic 
mission, and "all original supporting documentation" to Argentine 
Customs. 
 
¶5. (SBU) On August 21, Dell Computers reported to WHA/BSC that 
shipments of its laptops from Asian manufacturing plants were being 
held up by GoA Customs.  Post subsequently confirmed that 70 Dell 
shipments valued at US$ 1.6 million were being delayed.  In an 
August 22 emergency meeting of the American Chamber of Commerce 
Trade Committee attended by Econoffs and FCS, a representative of 
Honeywell confirmed that shipments of "technical equipment" from 
Asia were being held at airport customs.  The justification given by 
 
BUENOS AIR 00001648  003 OF 004 
 
 
GoA customs officials, she reported, was what no customs officer 
wanted to be responsible for releasing the goods absent clearer 
guidance from senior GoA officials. 
 
¶6. (SBU) On August 21, new Economy Ministry Undersecretary for Trade 
Ariel Schale told EconCouns that the new measures included 
non-automatic licenses on shoe uppers and synthetic textiles, plus a 
series of new Customs procedures about documentation and security 
inspections, which were designed "to avoid a flood" of Asian goods 
into Argentina.  He stated that 5,000 Customs reference prices would 
be "updated" to deal with pervasive under-invoicing from Asian 
markets that was costing Argentina dearly in tariff revenue. 
Argentina, he said, would not support "inhumane production methods 
in Asia" through purchase of unfairly cheap products.  Asian 
invoices suspected of being artificially low would have to be 
validated by an Argentine diplomatic mission.  The GoA was seeking 
increased transparency in trade with Asian countries, Schale said, 
citing the exchange of Customs information with the USG via the 
Trade Transparency Unit as a model and highlighting poor 
"information exchange" with China.  Separately, on August 21, 
Ambassador spoke with Foreign Ministry Trade Secretary Chiaradia, 
who assured Ambassador that new trade measures would be imposed in a 
non-discriminatory, WTO-consistent manner (Ref B). 
 
¶7. (SBU) On August 22, local business contacts reported to Econoffs 
that the new GoA trade measures are being applied by country of 
origin, not by product, though the earlier August 17 announcements 
(Ref A) and press coverage indicated that the measures would apply 
mainly to plastics, textiles, artificial leather, tires, and toys. 
At least one representative of an importer was told that products at 
Ezeiza airport would begin to be released on August 22, though 
products entering at the seaport would continue to be detained. 
(Comment: This is plausible, as the goods entering via air are 
likely to be high-value, and therefore less likely to be 
manufactured locally.  End Comment).  August 22 television and press 
reports highlighted GoA intentions to take measures to "normalize" 
the processing of goods held up in Customs over the past days.  Post 
will continue to monitor developments and work to ensure that 
affected U.S. company imports are treated fairly. 
 
--------------------------------------- 
China Trade with Argentina: Perspective 
 
BUENOS AIR 00001648  004 OF 004 
 
 
--------------------------------------- 
 
¶8. (SBU) Argentina's problems with Asian and more specifically 
Chinese imports began just after he GoA recognized China as a 
market economy during the visit of Hu Jintao to Latin American in 
December 2004.  The first products to suffer retribution were shoes 
and toys.  Shoe imports quadrupled in the months after Hu Jintao's 
visit and then-Secretary of Industry (and current Economy Minister) 
Miguel Peirano imposed import licensing restrictions on footwear, 
most of which was Chinese or Brazilian.  In 2006, local industry 
filed an anti-dumping case against Asian made writable CD-ROMS which 
was notified to the WTO.  Argentine concerns about rising Chinese 
and Asian imports were further exacerbated by recent news reports 
about unsafe toothpaste, recalled toys, and unsafe tires exported 
from China. 
 
------- 
Comment 
------- 
 
¶9. (SBU) The announcement by President Kirchner of populist trade 
measures targeting Asian imports was made just prior to a long 
holiday weekend, with little apparent thought given to 
implementation.  While initial responses by GoA customs officials 
should be corrected in the coming days, the measures will likely 
moderate the rapid rate of growth of imported products from Asian 
markets.  U.S. companies that export from Asian manufacturing bases 
will inevitably be affected.  Despite their public bromides against 
"unfair trade," GoA officials admit privately that the trade 
measures were largely a pre-election sop to an Argentine industrial 
base whose margins are being eroded by high domestic inflation and 
Asian imports.  It appears unlikely that GoA officials have 
considered the impact on Argentine agricultural exports of possible 
reactions in kind by Asian export markets. 
 
WAYNE