Trade truce between Brazil and Argentina does not benefit the furniture industry

Export licenses are still pending and sales to that country dropped by 77.8% in the semester
 
The purpose of a trade agreement between Brazil and Argentina, allowing the entry of Brazilian pigs, furniture, footwear, textiles, car parts, tires, home appliances and farm machinery into the neighboring country has not brought, in practice, any benefits to the furniture sector. Working since 2009 with non-automatic import licenses, the member companies of the Furniture Industry Association of Bento Gonçalves (Sindmóveis) have had pending licenses for more than 180 days, while the limit allowed by the World Trade Organization (WTO) is 60. The possibility of a truce was announced by the departments of foreign trade of both countries during the last meeting of Mercosur in June.
Politorno, a manufacturing company that exported to Argentina half of their production until 2009, is still waiting for the issue of licenses requested by Argentinean customers last year. Currently, the neighboring country accounts for less than 10% of their foreign sales, with no prediction of recovery in this market. The company’s Export Manager Cesar Nepomuceno says that even with the issue of some of the pending licenses, the manufacture process cannot be started because there is no Advance Import Sworn Statement (DJAI), required since February this year. Brazilian product cannot enter Argentina without the two documents. To compensate for the loss of Argentinean customers,  Politorno had to invest resources to open new markets, particularly in Europe and South America. “We cannot count on this market at the moment. Regarding the truce, I consider it a purely political settlement and that will not bear any practical fruit in the coming months,” says Nepomuceno.
Unlike Politorno, which had a large number of customers in Argentina and lost business opportunities when the non-automatic licenses took effect, other furniture manufacturers in Bento Gonçalves did not even invest in a more extensive participation in the neighboring country due to the government barriers. Bertolini, for instance, had been prospecting customers for steel kitchens. However, because of the difficulties in issuing the licenses, the company backed down. Bertolini’s export supervisor Alexandre Boscaini points out that the company saw the potential in the Argentinean market, as the local industry does not meet the needs of the population. However, the contacts will be established again  only when the situation of the licenses have been effectively settled. “Right now, the Argentinean market does not interest us,” he says.
In contrast to the loss in the Argentinean market, other countries in Latin America and Africa have been showing continued economic growth in recent years having increased demand for furniture and consequently imports. In this context, the furniture companies were able to take advantage of the demand seen in these markets. Exports of furniture by the furniture industry in Bento Gonçalves grew by 6.6% in the first half of 2012 compared to the same period last year. Colombia, the main market in 2012, grew by 6.8% in the first semester. The other most significant growths in the first half included Uruguay (74.9%), Chile (23.8%), Peru (29.9%) and Angola (12.5%). Exports to Argentina dropped by 77.8% in this semester.