What is the commercial and economic importance of the Argentina-Brazil relationship?

“The Lula’s return to the Brazilian presidency and the new regional composition of more progressive governments, although with degrees of heterogeneity between them, will be key to politically pluralizing and materially diversifying the region’s foreign relations”. This was mentioned in a CEPA report, which celebrates the renewed momentum in the bilateral integration agenda that through “the economic dimensions and aims to be able to consolidate a sustainable productive scheme”.

The document stated that “in terms of trade relationship and economic growth, there is a positive correlation: in the last 20 years, when Brazil grew, so did Argentina in 71 percent of cases, being the vector that connects them the bilateral trade between both countries”. This is not surprising if one takes into account that Brazil is Argentina’s main trade partner.

According to the numbers in the report, in 2022 it concentrated 17 percent of external trade flows and became the main destination for Argentine exports with 14 percent of the total for almost 12,000 million dollars. Purchases from that country represented 20 percent of Argentine imports for 15,000 million, ranking second after China. For Brazil, Argentina constitutes 7 percent of its foreign trade, being the third most important market, after China and the United States.

“This relaunch could mean reversing the deterioration of the commercial relationship that began with the management of Cambiemos: between 2016 and 2019 a model of greater openness, commercial deregulation and reprimarization of the economy was implemented, which highlighted a regressive impact on the exporter profile”, stated the report.

The document states that by the end of Bolsonaro’s term in 2022 there was a reprimarization of exports, highlighting a decrease of 6 percentage points in manufactures of industrial origin, and in contrast, an increase in those of agricultural origin (3 percentage points) and primary products (5 points). “However, this change in the composition of exports is not a new phenomenon, but has already been verified since 2019, with the consolidation of the paradigm of the “world supermarket” carried out by the management of Together for Change” .

The report states that “in terms of agenda, and due to its economic and geopolitical centrality, energy integration stands out, a set of measures with a high degree of progress that make it possible not only to export gas from Vaca Muerta to Brazil, but also LPG, and to import hydroelectric energy at very competitive prices”. Besides, the possibility of extending the Local Currency System to 180 days will make imports viable significantly that today cannot be channeled into the stressed exchange market, thus avoiding the brake on industrial production for this reason, ergo, the slowdown in economic activity.

It was also detailed that “it adds the possibility of Swap of the Brazilian Central Bank with the Argentine Central Bank, the agreements between Public Banks such as the National Bank for Economic and Social Development (BNDES – in Portuguese Banco Nacional de Desenvolvimento Econômico e Social), the Bank of the Argentine Nation (BNA) and the Investment and Foreign Trade Bank, to deepen trade , infrastructure for commercial exchange and investment and the discussion about a possible common currency”, it was detailed.

In it industrial front, meanwhile, a better complementarity is sought between the industries of both countries, in such a way that economic integration results in a more balanced balance of trade, production and the generation of jobs in both countries. “The most concrete advances so far are concentrated in the auto parts category, a highly deficient segment for Argentina,” the document considered.

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Varun Kumar

Varun Kumar is a freelance writer working on news website. He contributes to Our Blog and more. Wise also works in higher ed sustainability and previously in stream restoration. He loves running, trees and hanging out with her family.

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