Imagine when we were kids and we had fun connecting the dots on a sheet of paper, going from one number to the next to reveal a fun figure. That’s similar to our U.S.-Argentina trade relationship today because taking a closer look at the statistics associated to trade between the two nations dispels the protectionist assumptions held by many and reveals our country for what it really is: a suitable partner.
The dots to be connected are furnished by the U.S. International Trade Commission, regarding the statistics for the first seven months of 2012 which were published this month. For starters, while the U.S.’s trade deficit grew 4.4 percent worldwide during this period, Argentina’s trade surplus grew 24.1 percent.
And there are more dots. What the United States sold to Argentina (+9.9 percent) grew almost twice as much as compared to its global exports (5.8 percent). And while purchases from Argentina fell 3.4 percent, U.S. imports from around the world grew by 5.3 percent. The picture revealed is not precisely that of a country that deserves the protectionist claims filed against it at the World Trade Organization. The picture that emerges is that of a suitable and beneficial trading partner for the United States.
Our case should be perceived within a certain context. A recent report by the United Nations Conference on Trade and Development (UNCTAD) warns that global growth is slowing, weighed down in part by the austerity measures implemented, which block demand in the markets of major developed countries. This in turn reduces the export prospects among developing countries, which are continually applying counter-cyclical measures to promote domestic demand and which become insufficient if growth does not rebound in the major advanced economies.
World growth fell from 4.1 percent in 2010 to 2.7 percent in 2011 and a further decline is projected in 2012, down to 2.5 percent. While a growth of barely 1 percent is projected in developed countries, in 2012 developing countries and countries with economies in transition will hope to grow 4 to 5 percent, respectively, which is of course lower than in previous years.
This is explained by the fact that developing countries are less dependent than before on developed and mature economies and have a more robust domestic demand. In fact, between 2006 and 2012 three-fourths (74 percent) of the growth in global production was generated in developing countries, and 22 percent in developed countries. In the 1980s and 1990s, these figures were exactly the opposite.
However, according to UNCTAD, developing countries are still vulnerable to a declining demand for its exports in developed economies, and this will probably continue if current austerity programs are maintained. This trend is reflected in the stagnation of exports to the markets of developed countries, as well as in declining commodity prices since the second quarter of 2011. This is where Argentina can play an important role.
The global economy’s problems will inevitably have an impact on trade, which, according to the WTO, will not expand beyond 3.7 percent. The average in the last 20 years was 5.4 percent. In view of this scenario, the highlights of the statistics provided by the U.S. Department of Commerce (International Trade in Goods and Services, July 2012) are like the dots we connected above, and show that Argentina is a good business partner.
Interestingly, the U.S. has filed claims against Argentina, which are inexplicable unless you consider the lobbying efforts undertaken by partial domestic interests, who do not take into consideration the overall balance of bilateral trade. Ironically, sectors such as the U.S beef and lemon producers encourage the same protectionist measures included in these complaints.
As in those naive childish pastimes, all we have to do is simply connect the dots of U.S. trade statistics to see that behind the disorderly complaints, the only apparent result is that Argentina is a suitable business partner which deserves to be cared for.
Jorge Argüello is ambassador of Argentina to the United States.