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Consequences of Argentina's exit from the Mercosur negotiations

"We would condemn ourselves to compete against very marked tax asymmetries"

Argentina's Government decision to stop participating in the negotiations of the Mercosur trade agreements, with the exception of the pact already made with the European Union and with the European Free Trade Association (EFTA), to prioritize the internal economy damaged by the coronavirus, has left Mendoza in an uncomfortable position; especially now that they intended to promote the entry of their products to the markets of Canada and India.

The Chamber of Foreign Trade of Cuyo and Promendoza has stated that the decision of the national government could have a notable economic impact in this region's productive sector, as the region currently ships out 5% of its exports to the Canadian market.

Canada is one of the four countries with which Mercosur (Brazil, Uruguay, and Paraguay) intends to close a free trade agreement; the remaining countries are South Korea, Lebanon, and India.

Competitions and limits
Mario Lazaro, managing director of the ProMendoza Foundation, spoke about the effects that Argentina's withdrawal from the trade negotiations led by Mercosur would have. "It would be significantly prejudicial for the country, as we would be condemned to compete - in the future - against very marked tax asymmetries. Chile, for example, has free trade agreements with 65 countries and in some cases managed to remove tariffs for its products; meanwhile, we have to pay US $0.70 per liter to be able to enter Canada.”

"We are working on an expansion plan for our agro-industrial exports based on what the future will demand in 20 years. We have to be prepared, understanding that India will be a very demanding market for food as China is today. By 2030, the northern hemisphere will concentrate 70% of world food consumption," added Lazaro.

Mario Bustos Carra, the manager of the Chamber of Foreign Trade of Cuyo, said: “Argentina is not completely leaving the Mercosur negotiations. It just currently does not want to participate in the negotiations with some countries. Completely leaving would be a mistake in an economic situation like the one the world is facing due to the pandemic. What we need is the help and support of our neighbors and main business partners. Moreover, the importance of Brazil for the economy of Argentina and Mendoza can't be overstated."


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