Argentina, China Sign Economic Cooperation Accords

Top agricultural exporter Argentina signed a raft of mostly farm-related agreements with China on June 25 at a ceremony in Buenos Aires attended by visiting Chinese Premier Wen Jiabao and his Argentine counterpart Cristina Kirchner.

Agricultural agreements

The agriculture ministers from both countries signed treaties to promote cooperation in transgenic seeds， biotechnology and bilateral-farm investments.

Premier Wen pointed out that the two countries’ agriculture industries are highly complementary， given Argentina’s rich resources， advanced technologies and China’s huge market potential.

Bilateral agricultural trade was about $5.5 billion in 2011， and most were exports from Argentina to China， according to Chinese customs figures.

China is ready to expand agricultural trade with Argentina， and increase mutually-beneficial cooperation in the investment， infrastructure and research in the agriculture sector， Wen said.

The Asian powerhouse is Argentina’s biggest taker of agricultural products and its second largest trade partner after Brazil. Trade between the two states totaled $14.8 billion in 2011， $8 billion in China’s favour.

Argentina is one of the world’s biggest producers of grain， oilseeds and related products such as soyoil. It is the world’s number one exporter of flour and soy oil， and number three soy bean exporter.

Eye more corn trade

“Wen said during the meeting with Argentine officials that China is interested in buying more corn from Argentina，” said Oscar Solis， deputy agriculture secretary for added-value and new technologies， as Reuters reported. Argentina is the world’s second-biggest supplier of corn after the United States.

Argentina signed a deal with China on corn exports earlier this year， raising market expectations that Argentine corn would soon start heading to the world’s most populous country.

However， traders and export industry sources say it is still unclear whether Argentine corn can enter the Chinese market because the accord did not cover some of the genetically modified strains produced in the South American country.

“Corn is a kind of diplomatic commodity. The trading volume much depends on how good the bilateral relationships are，” a trader said， adding that rising Chinese imports of U.S. corn were largely aimed at helping balance bilateral trade.

Traders say that as long as Argentine farmers grow the same kind of GMO corn as U.S. producers do， China should have no problem importing Argentine corn. China has approved 12 GMO corn strains for import.

Argentina is forecast to sell abroad 13 million tons of 2011/12 corn and 16 million tons of the 2012/13 crop， according to the U.S. Department of Agriculture.

Chinese corn imports are forecast to increase to 7 million tons in 2012/2013， due in part to rising livestock and industrial consumption， a report in June by a USDA attache in China said.

Cooperation in other fields

The two countries have been in talks for more than a year to reach the sanitary accord needed to clear the shipment of Argentina’s transgenic-corn varieties to China.

Argentine and Chinese officials also signed a treaty on mutual legal assistance in criminal matters.

Other agreements included trade financing， cooperation in nuclear energy and a Chinese loan to upgrade the Belgrano railroad.

The China Development Bank and the Industrial Commercial Bank of China will provide ARS9.5 billion ($2.1 billion) in financing to Argentina through a 15-year loan. The loan will be used to revive and extend the Belgrano Cargas railway， a 1，500-km (930 miles) route that stretches into important soy-growing regions in the north of the country.

During Wen’s visit， Argentina also hoped to draw Chinese investments in its oil industry， after having expropriating Spanish oil company Repsol’s controlling share of YPF， Argentina’s largest oil company.

Argentina has attracted significant direct investment from China in recent years， with Chinese firms investing in iron-ore mining， banking， oil and agriculture.

Wen， who ends his Latin American tour in Chile on June 26 after also visiting Brazil and Uruguay， asked leaders of South American trade bloc Mercosur to look into the possibility of a freetrade deal with China.