The benefits and losses that the agreement could generate in the sector will be see gradually.
Caution in the fisheries sector over Mercosur-EU free trade agreement
Monday, July 01, 2019, 23:00 (GMT + 9)
Caution in the fisheries sector after the announcement of an agreement between Mercosur and the European Union. The first document published indicates that among products that will have a zero tariff with the entry into force of the agreement are some fishery products, such as hake, while other fishery products such as shrimp and fish preserves will enjoy tariff reduction within four to ten years.
The fisheries industry has received with caution the official announcement about what was called the "historic" free trade agreement between Mercosur and the European Union, since, after two decades of negotiations, back and forth, the administration of Mauricio Macri celebrated the announcement.
The initial caution in the evaluation of the agreement responds to the fact that all the readings are now contaminated with political positions, and the dimension of what has been agreed can be measured in the medium and long term, since the implementation will be gradual, as a next step it requires parliamentary ratification.This procedure does not seem very agile, more in the midst of the presidential election process and with a Congress in which the ruling party lacks a majority of its own.
On the eft, one of the best jigger vessels in the Argentine fleet, the CHOKYU MARU 18, whose production is processed on board or ashore and exported to various markets worldwide. (Photo: Bahia Grande)
Within the fisheries sector they agree that certain details must still be defined, which is called the fine print of the agreement, although clearly the intention is to eliminate most of the trade tariffs between both blocks.
However, in all experiences of free trade agreements there are winners and losers. Nobody escapes that this is not an agreement between equal parts. They are two blocks with deep asymmetries. It is a pact between a cutting-edge technological and industrial block and another formed by developing countries, and there are doubts and fears about what are the balances achieved, and located in that context, on how the different sectors of economic activity in Argentina will be benefited or affected.
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The first document issued by the Argentine Foreign Ministry mentiones fiheries matters in two sections. One in the referred to "Products that fall into a tariff reduction basket of four to ten years", and among the items appears: "Fisheries Products (for example, shrimp) and canned fish".
While in the section that stipulates the "Products that will have 0% tariff with the entry into force of the agreement", it is indicated: "Some fishery products, such as hake", without further details, which will be defined in future documents that deepen the agreement and include specific detail of products.
The fact that the reduction of tariffs is gradual and with a transition period offers an important time window that will be key for Argentine companies to prepare and adapt to greater external competition. This will necessarily require a package of state measures that encourage, stimulate and promote the incorporation of added value to the products, since the fisheries sector continues to export commodities because production costs and heavy fiscal pressure end up reducing its competitiveness.
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Argentina exported fish and shellfish worth USD 2,130 million last year, and almost 40% of the products went to EU countries. A quick review of the official data of the last year shows that the undisputed markets of Argentine fishery products are Spain and China. The Iberian country imported 89,765 tons worth USD 483,595,000 while the Asian giant imported 102,299 tons, which represented revenues of USD 475,645,000. The difference is given by the type of product of greater value and quality required by the Spanish market, mainly shrimp. Italy is far behind with 28,928 tons worth USD 181,103,000.
It took twenty years to reach a free trade agreement between Mercosur and the EU, but the instrumentation is not seen as immediate, it rather seems a long-term process.
Author: Nelson Saldivia /Revista Puerto