The private sector that operates in foreign trade complained to the Minister of Economy, Sergio Massa, and the President of the Central Bank, Miguel Pesce, that reverse the decision to postpone payment of international freight for 90 days.
The decision of the Central Bank, embodied in communication “A” 7746, further restricts the exchange rate in a bid for delay currency transfers for 2,000 million dollars.
However, it exposes the entire foreign trade chain to an exchange risk typical of the current context of high volatility and uncertainty. The reason: freight is charged locally in pesos and then the exchange market is accessed to obtain the dollars with which the shipping companies are paid.
Dollars are missing and companies are demanding
For this reason, the chambers that represent importers, exporters, and those who provide them with related services – shipping and international transport agents, and customs brokers – sent notes to the authorities stating his “absolute concern” about the scope of the rule, that “attempts against the normal functioning of foreign trade operations and flows”.
Strictly speaking, the decision of the Central Bank impacts the contractual relations and the ongoing operations of companies that import inputs so as not to stop their production line (and in the best of cases, export what is manufactured and generate foreign currency) as well as your dispatcher who intervenes before Customs to declare the operation (and establish the taxes that must be paid), the international cargo agent that hires the warehouse and the maritime agent that represents the ship upon arrival or departure from the country.
Not being able to pay the freight in a timely manner, as is the custom in international trade, and postponing its cancellation for 90 days will cause an “increase in the cost of operations and the possible shortage of inputs for national production, with loss of production, employment and millionaire income in foreign currency for Argentina”, they explained.
Maritime operations are delayed by the low availability of dollars for import freight.
The first rejection of the regulations came from the Navigation Center, which brings together shipping agents who they transfer the dollars to their principals abroad (the vast majority are related companies).
In the first 48, operations were paralyzed: given the obvious exposure to exchange risk, they leaned towards refusing to charge in pesos and asked clients to arrange payment abroad for freight with their counterparties.
Then, they began to offer the possibility of operating with financial dollars to finish, in the last hours, quoting the services with an “adjusted official dollar” to what it is estimated could arrive within 90 days, with values that oscillated between 235 and 250 pesos per dollar.
Central Bank and stocks on the dollar: alert for “unfeasible” measure
The claim of the Navigation Center was joined in a joint statement by the Customs Brokers Center (CDA) and the Argentine Association of International Cargo Agents (AAACI). The cameras warned the authorities that the measure “is not feasible”after underlining the risk that foreign shipping companies adopt the payment and collection of freight directly abroad as a policy and only viable solution, turning Argentina into a “dirty port”, that is, a place of high economic, commercial and operational risk for international business.
The letter -signed by the presidents of the Navigation Center, Julio Delfino; of the CDA, Héctor Pardal, and of the AAACI, Jorge Pereira- claims the “urgent intervention” by Massa and Pesce to revoke the rule.
For its part, the Chamber of Importers of the Argentine Republic (CIRA) pointed out that operational uncertainty is not limited to maritime transport -where more than 80% of imports arrive- it also covers the rest of the modes of transport (land and air).
Massa and Pesce will have to analyze the rule to reactivate the sector, without losing a large amount of US currency.
Just to mention an example of the operational nuisance generated, the CIRA recalled the impact that “making changes in logistics operations” have on businessmen. For example, the company that imports (generally, taking charge of the freight) transfers the hiring of the same to its exporting counterpart“something that is alien and difficult to put into practice”.
On the other hand, payments to suppliers of importers “are already post-dated in relation to what was indicated by the SIRA once it was authorized (SALI).”
Dollar stocks: alert for shortages
“Importers -we are the main supplier of the national industry in more than 83% of our imports- are making enormous efforts” in the current critical context, and this measure “evades any possibility of adaptation on our part and, inevitably, the supply of raw materials, inputs, capital goods and consumer goods could be severely affected”.
“What was previously stated It is a reality that is causing enormous confusion throughout the foreign trade community”, concluded from CIRA its president, Oscar Pérez, and its general manager, Fernando Furci.
Finally, the Chamber of Exporters of the Argentine Republic (CERA) also warned Massa about the virtual “paralysis” of foreign trade that the regulation causes.
“This new rule change is not limited to the minor financial effect of a forced delay in the payment chain: the Argentine supplier, Being forced to ask your international buyer to pay the freight at destination becomes not only less reliable but also less attractive”explained the president of the entity, Fernando Landa, together with the secretary director, Javier Manel Nascel.
The low availability of dollars for international freight slows down the production chain of various sectors.
They also pointed out that the current need for the standard “has the potential to negatively reconfigure the structure of the export sector,” particularly affecting SMEs by making the operation more expensive “to the point of making it unfeasible in many cases.”
“We are aware of the situation that foreign exchange reserves are going through, but our foreign trade needs to be more competitive every day, and exports are the genuine source of foreign currency that our country needs so much,” they concluded.
