July 23, 2010

Argentine President Cristina Fernandez de Kirchner and Chinese President Hu Jintao have signed 18 agreements during Kirchner's five-day visit to China, instead of addressing the soy controversy.

The heads of Argentina and China met in Beijing last week for a series of talks, only to find themselves skirting the issue of China's recent import ban of Argentine soyoil, a subject that has created major trade tensions between the two countries since April. The agreements are to serve as the basis for 10 major infrastructure projects that China plans to undertake in the South American nation.

China stopped importing soyoil from Argentina in April, citing quality concerns. However, some observers say the halt in imports was a response to an anti-dumping measure that Argentina had imposed on certain Chinese manufactured goods, including shoes, textiles, and steel products.

Argentina's soyoil exports to China were valued at nearly US$2 billion per annum before the import suspension. Those shipments generated approximately US$600 million revenue for the Argentine government due to export duties on the product.

Argentine Foreign Minister Hector Timerman played down the soy issue, saying, "The primary objective of the trip was not to resolve the soyoil issue, though it is important, but to conduct a dialogue with China on other possibilities for Argentina industry and exports."

Spokesman Qin Gang of the Chinese Foreign Ministry also brushed off concerns over the import suspension promising that "the problem of exporting [Argentine] soyoil to China is a normal problem in the process of trade and economic development."

However, prior to the meeting, another high-level Argentine official had stated that-"No one would be pleased if the president were to leave here without, at the least, opening the door toward a solution in the medium term,"-leading to some surprise when the meetings did not lead to a more concrete result.

Should the import suspension continue much longer, it could spell trouble for Kirchner, who has already struggled through a separate political controversy this year. Kirchner has tried to play down concerns over the suspension, saying that Argentina can easily find other buyers, such as India.

However, the two countries did establish a commission to analyse the various problems in this bilateral relationship, without spelling out further details.