BUENOS AIRES (Dow Jones)–Argentina plans to vet all imports as President Cristina Kirchner tries to protect international reserves that are a key source of funding for her government.
Starting in February, importers will have to file an online affidavit with the tax agency Afip before importing goods, according to a resolution in the country’s official bulletin. The affidavit will be made available to other government agencies that authorize foreign-trade operations.
Esteban Ropolo, a partner at law firm Baker & McKenzie, said this could give the authorities full control over imports.
«The resolution is sufficiently broad and vague so that the government can use it to delay imports or decide at its discretion what enters and doesn’t enter the country,» he said in an interview.
A spokesman for Afip declined to comment.
The new rule comes less than three months after Afip started vetting all foreign-currency purchases by individuals and businesses. That had a chilling effect on the formal currency market and led to a surge in underground transactions.
Foreign trade is a key contributor to international reserves held at the central bank. The 2012 budget calls for using $5.67 billion in reserves to pay creditors after using about $9.7 billion for the same purpose last year.
But the trade surplus, though still hefty, has shrunk as a booming economy has led to a torrent of imports. The central bank has forecast a $8.9 billion surplus this year, down from nearly $17 billion in 2009.
«By insisting that Argentina maintain a certain trade surplus you are tying the fate of imports to exports. Exports are something the government doesn’t totally control. So imports end up becoming the adjustment mechanism,» Diego Perez Santisteban, president of importers association Cira, said in an interview with Radio 10.
Kirchner, who was sworn in last month for a second term, has erected a host of protectionist measures to stabilize the trade surplus and help local manufacturers.
Those barriers include an expansion of the number of products subject to lengthy nonautomatic import licensing, a requirement for companies to match imports with exports of equal value, and informal bans on products as diverse as Barbie dolls and French cheese.
The measures haven’t gone unnoticed by Argentina’s top trading partners, Brazil and China, which in the past have retaliated by slapping restrictions on Argentine goods.
Argentina’s exporters association, Cera, called on the government to suspend the measure and seek public comment. Cera said the resolution «doesn’t conform» to Argentina’s international and regional treaty obligations, including those of the South American customs union Mercosur.
Argentina also risks shooting itself in the foot if, in its zeal to trim its import bill, it starves local industry of foreign-made capital goods and parts.
«As we have always said, more than 80% of what is imported goes to production,» Perez Santisteban said Wednesday.
Kirchner has turned to increasingly drastic measures to limit demand for dollars and stem capital flight that forced the central bank to sell billions of U.S. dollars to defend the peso last year.
Doubts about Kirchner’s high-growth, high-inflation policies led to capital flight totaling just over $18 billion in the first nine months of 2011, according to the Central Bank of Argentina.
Investors are pulling money out of the country as they bet the government will be forced to weaken the peso at a much swifter pace in the near future to help exporters hurt by inflation that most private-sector economists say is between 20% to 25%.
Meanwhile, with access to dollars curtailed and the proceeds from Argentina’s massive grain exports starting to trickle into the country, the central bank has become a net purchaser of dollars.
Reserves closed at $46.35 billion Tuesday, up from a multi-year low of $44.70 billion Dec. 14.
Barclays Capital economist Sebastian Vargas thinks the recent flurry of foreign exchange and trade restrictions are the precursor to a dual foreign-exchange system.
«In our view, the administration is gradually introducing the elements of what will end up being a full-fledged dual foreign exchange regime when the time comes. For the moment, they are just scattered regulation changes that we see popping up in the headlines,» he said in a note.
-By Ken Parks, Dow Jones Newswires; 54-11-4103-6740; ken.parks@dowjones.com
Source: online.wsj.com