This is an exciting week for people who like trade disputes, as the United States and Japan file separate complaints against Argentina over import restrictions just days after Argentina slapped Spain with complaints about biodiesel import restrictions, and they say similar action will be coming at America and Japan.
Fortunately, this is one of those scenarios in which everyone is right. Argentina’s problem is that lack of investment in its energy sector turned from a net exporter of fossil fuels into a net importer. That’s inspired the government to try to take a variety of steps to turn its trade balance around. It also led the government to nationalize the main oil company, which the previous political regime had sold to a Spanish firm. Obviously the Spanish government wasn’t happy about Argentina, so they’ve been taking anti-Argentine measures in basically every available forum. Luckily for them, one thing Argentina’s been doing to improve its balance of trade is trying to curtail imports with a licensing system. Thus, Spain has grounds for complaint at the WTO.
So Argentina needs a counter-complaint. And lucky for Argentina, Argentina is an exporter of biofuels. Biofuel protectionism is rampant all around the world as part of larger systems of agricultural subsidization. So this works against Spain. And now that the United States and Japan have joined the complaining party, we can get dinged for the same thing.
And, really, the world would be better off if Argentina backed off these important restrictions and if the developed world ended restrictions on South American biofuels.
