As in every year, Mendoza's garlic is ready to land in Brazil under conditions that never seem to be ideal, because of price issues or other factors.
This time it faces a couple of headaches because of the unfair competition from China, which is trying to avoid an anti-dumping duty in the neighboring country by triangulating its merchandise through Uruguay without declaring it, and by sending the garlic without stating its origin or without a brand.
In the last week, the regional chamber that groups the exporters from Mendoza, Asocamen, collected complaints from its most active garlic marketers in the neighboring country and transferred it to the provincial government.
The Executive, in turn, opened two channels to process actions that allow quick action with the main Mercosur partner, both through the embassy of that country and at the Chancellery and Ministry of Agribusiness.
Currently, the Chinese garlic must pay U.S. $ 7.80 per box of 10 kilos to enter Brazil, so the final price for said box would reach U.S. $21.30 including the AEC (Common External Tariff) agreed by the countries of the Mercosur for products that aren't produced by them.
This shrinks the price difference with the product exported by Mendoza. However, the maneuvers made by Chinese exporters to avoid paying the tax widen that difference again.
Another way of competing
Currently, Brazil imports some 16 million boxes per year. Of that amount, Argentina and China contribute 45% each, and Spain contributes the remaining 10%.
The difference are the prices: until July, according to data from Brazil, China placed its garlic at US $ 19.45 per box and the Spanish at US $19.32, while the Argentine did not manage to sell it at less than US $ 25.74.
According to the manager of Asocam, Guillermo San Martin, "30% of the total Chinese imports enter without paying the anti-dumping fee. Of that volume, 8 out of 10 boxes do not pay duty thanks to the injunctions and because they can't be identified, and the remaining 20% are smuggled through Uruguay."
While Mendoza packers adjust to norms set by the Brazilian importers of the Association of Garlic Producers of Brazil (Anapa), Asocam has identified at least 3 anti-dumping modalities promoted by China in recent weeks, which could even be reported to the WTO.
Since this week, the Federal Revenue of Brazil, equivalent to Argentina's AFIP, is already in the know.
In addition to the injunctions that the Brazilian Justice accepted from two Rio de Janeiro companies to enter eastern garlic without anti-dumping, the main concern is focused on the other channels.
The importers assume that the unlabeled boxes that arrive by boat are of Chinese origin, but the lack of identity allows them to enter without paying tax.
In addition, China exports garlic to Uruguay, and the neighboring country sells garlic to Brazil, even though the movement is not registered by the neighboring Customs.
Exporters became aware of the situation when the first truckloads of red garlic began to emerge from the sheds in Mendoza, and are worried about what will happen when production peaks in mid-January.
That is why they are concerned and also expect the measures be adjusted to control unfair competition.
Argentina wants to renew the tariff
For now, importers are showing signs of not wanting to pay more than US $16 per box, which is the price at which the Spanish product, another rival of Argentina's garlic, arrives to Brazil. In addition, there is still an oversupply of local garlic - some 2 million boxes -, which will complicate things a bit more.
With the look already set in 2018, both countries are starting to, little by little, discuss once again the conditions to extend the anti-dumping tariff to China. The validity of this tariff expires at the end of next year.
As such, the Government and the sector set a deadline: during the first quarter they will advance the request and the technical reports to justify their application. One argument even points out how far away China is in export costs, compared to Argentina and also Spain.