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Thursday, December 01, 2022

The United States imposed a tough ban on a product where Argentina is a leader

The United States imposed a tough ban on a product where Argentina is a leader

A hard blow for Mendoza wine production Argentina in its links with the world: America Advances with penalties for national industry after complaints of alleged “dumping and subsidies” in the commercialization of Concentrated grape juice, as it should go. For this reason, that country had previously set the tariffs to be adjusted upwards, which were located at 8%, so that Argentine companies in the region were now required to enter that market from 12% to 30%. % will have to be paid.

It is a setback for a major Argentine export product, used as a natural sweetener, which has been receiving significant alerts since late last year. It is a product where Argentina is the leader in volume and second in value with a peak of up to US$200 million.

according to the information received Country, The United States Department of Commerce, as part of investigations against the two main companies, Fekovita and Cepas Argentinas, last week issued a new document with updated prices that caused much concern in the producing sector not to lose its core. The market place, which accounts for 38% of Argentine sales.

For the first firm, based on its defense and arguments, which in principle did not dissuade the US authorities, the highest tariff was applied: 30.3%, while the second was imposed an amount of 12.2%. , Between the two, an average is established that will control all other companies in the sector, for which they will pay 21%.

It all started with the presentation that a US company made in late 2021 to that country’s trade agency, which launched an investigation into alleged “dumping and subsidies” against the Argentine-focused industry for alleged exports, which are below is at the cost of. In addition to doing so with various state benefits and aids, that is sold in the domestic market.

Thus, this investigation focuses on these two chapters: dumping and subsidies. In this sense, the process implies that the two largest exporting companies from Argentina to the United States need to provide information so that the countries can analyze and rule on whether the exercises and maneuvers were contrary to US law. Similarly, it is worth clarifying that the entire burden of investigation is on the entire Argentine industry.

There are two stages to this process: a preliminary and a final one. Hence the concern of Argentina: The Commerce Department has previously concluded, determining that, in the case of subsidies, for its export return programmes, for the temporary import process of inputs and for the commercialization of a co-operative, which is exempt from profit, Fekovita, Argentina will face a penalty, as a foul is predicted.

Grape Juice Has Many Uses And Export Destinations
Grape juice has many uses and export destinationskindness

That is why the tariff adjustment was implemented in September, which will now average 5.5%, due to the issue of subsidy, while due to dumping, the average rate was fixed at 15.5%. Thus, overall, companies in the sector, which had already paid lower tariffs, will have to start paying 21% in the coming days, when the US decision becomes final, despite the fact that the process is final. Continuing towards the phase, which I will know only by the end of March next year.

Thus the new value of dumping has been added after the provision on tariff for subsidy in September. By extension, in the case of Cepas Argentina, 8.5% for dumping was added to 3.71% for subsidies in September, up from a total of 12.21% today.

For its part, Fekovita had 7.16% in subsidies and 23.7% in dumping, which is 30.33%. The rest of Argentina’s companies implemented a 5.5% tariff for subsidies in September, but will now face 15.88% more for dumping, for a total of 21.42%.

“It has a lot of effect: the loss of competition. Obviously, in this context, unfortunately, the volume is going to decline. It is not the only market served by Argentina, but represents about 40% of sales in the United States. For this reason, this initial determination affects us, although it depends on many factors. commented on Country Fernando Morales, President of the Argentine Chamber of Must Manufacturers and Exporters (CAFEME).

In this sense, for example, the businessman referred to competition from Europe, particularly Spain, which has a lower grape harvest than the previous year, so they do not have enough material available. “In the future, if Spain produces in large quantities, it will certainly displace Argentina because of the tariffs that they add to us. The process continues until the final determination; there they will confirm that the tariffs have been revised. will go or not. In general, if there are changes, they are usually on the downside, because now we have the possibility to present defenses, evidence and documents to demonstrate”, Morales added.

The United States market accounts for about 40% of Argentina’s exports.

The newspaper tried to communicate repeatedly with executives from Fekovita and other companies in the area, but the response was subject to clarifications given by Cafem. Meanwhile, he indicated to Koviyar that he would analyze the course of action. “We expect that to know the grounds for the ruling, to be able to make a formal presentation and to argue against that decision,” indicated to Country.

This complicated situation is another matter of Argentina’s trade disputes with the United States, of which biodiesel, But also the production of lemon juice, steel tubes and honey, among other products. AndThe government has staked claim in all cases and at all levels of US administration, but it is an uphill climb, as bids are tough.

This area tried to demonstrate that there was no “dumping”, what appears to be an inflationary gap. “The problem is clearly that inflation produces a growth on costs that does not coincide with the selling price. This, because the selling price is adjusted, due to exchange rate growth, and costs, due to CPI inflation. Clearly the exchange rate evolved less than the IPC and creates an imbalance to explain that the sale was made at a price with some cost”. Sector explained.

Wine Production Normally On Alert Due To United States Approval
Wine production normally on alert due to United States approvalfile archive

They also want to understand the situation in the north. “The iron position of the United States has to do with a working methodology that is built on more stable economies; not like Argentina, which has macroeconomic parameters, especially inflation and exchange rates, which are three-digit rates. develops on, and which does not do so equally. The exchange rate develops less than the inflation of cost and supply, and this creates an imbalance in the income statement. That’s what they see, that dumping will be anticipated”, he said.

Argentine production of concentrated grape musts or juices (JUC), based in San Juan and Mendoza, has, in recent years, become a great force worldwide, tripling its production and making the country the largest dispatcher by volume and It has made it second in turnover, with a peak of $200 million per year, behind Spain.

It is a versatile sweetener and due to its naturalness it is used by various industries such as food, juice, wine, sweets, jams and pastries. In this sense, the demand for healthy food and beverages from consumers around the world is what drives Argentine JUC into its future growth projections.

Argentina should also reach Japan, Canada, Saudi Arabia, South Africa and China, among other countries. However, the demand that is taking hold in the United States is starting to sound the alarm.

In collaboration with Rafael Mathus Ruizo

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