Economy

Argentina’s new import system shakes Brazilian exports

Jun, 07, 2023 Posted by Gabriel Malheiros

Week 202323

Recent measures implemented by Argentina in import operations have had a significant impact on Brazilian sales to the country. In an attempt to establish a system for greater control over the supply chain and monitoring of foreign trade operations, the Argentine government introduced the Import System of the Argentine Republic (SIRA) in October 2022. The new model restricted the issuance of non-automatic licenses (LNAs) and access to the foreign exchange market.

A non-automatic license is a tool countries use to control the entry of products into their territory. In essence, it means that Brazilian exporters can only ship their products once they receive the license from the Argentine government. In a survey conducted by the National Confederation of Industry (CNI) with 252 Brazilian exporters, 77% of companies reported a negative impact on export operations after the implementation of SIRA. Among these, 84% experienced a reduction in the value of exports to Argentina.

Among the exporters who reported a decrease in export value following the implementation of the new system, 49% indicated that the decline in sales to Argentina during the period was above 41%.

List of products subject to non-automatic licenses

With the implementation of the new system, the list of goods subject to non-automatic permits increased from 1,474 at the beginning of 2020 to 4,193 by the end of 2022 – with 99% of the products belonging to the manufacturing industry. Based on last year’s trade data, 59% of the total value of Brazilian exports to Argentina was subject to this measure.

When asked about the central issue related to non-automatic licenses, 82% of surveyed exporters who experienced a negative impact on operations indicated delays in approval. The second problem, cited by 55% of companies, was the lack of transparency and criteria for approval. The third issue listed was excessive bureaucracy, including the requirement for additional information, documents, and forms – highlighted by 44% of exporters.

New import restrictions in Argentina include approval from the Central Bank of the Argentine Republic (BCRA) to pay for imported goods. Regarding this process, the three main issues identified by surveyed exporters are excessively extended payment deadlines (79%), bureaucracy in releasing funds even after the established deadline has been met (55%), and changes to deadlines and extensions after SIRA approval (42%).

Furthermore, 68% of surveyed companies reported payment difficulties regardless of the payment method used in their operations.

Unpredictability in business deals

The survey with business owners also assessed the impact of SIRA on Brazilian exporters’ business operations. Regarding this factor, the main issue reported by respondents was the unpredictability in closing deals (86%), followed by missed opportunities with customers who refrained from purchasing (81%) and missed opportunities with customers who canceled orders (47%).

Source: CNI

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