Strike at Ibama halts car exports to Brazil – 04/05/2024 – Market

A kind of cornerstone of the trade balance between the two countries, the export of cars from Argentina to Brazil is feeling the impacts of the strike by Ibama (Brazilian Institute of the Environment and Renewable Natural Resources) employees.

Adefa (Argentine Automobile Manufacturers Association) estimates that 18 thousand vehicles are stopped in Brazilian ports awaiting certification from the body, a fundamental stage of exports, according to the most recent survey, shared with Sheet.

Executive director of the association, Fernando Rodríguez Canedo says that the local business community has not yet felt the possible consequences of the process being blocked in their pockets, but they fear being forced to fail to comply with deadlines linked to Argentine criminal exchange law, which dictates the rules.

The sector has 60 days from the moment cars leave Argentine soil to send export earnings to the country.

Previously, Ibama certification, which allows cars to be sold in the Brazilian market, arrived in around 20 days.

Now, says Rodríguez Canedo, the time varies from 45 to 50 days. The association says it fears that this period will extend and approach 60 days to comply with local export regulations without being subject to fines or sanctions.

The theme permeates conversations between Brasília and Buenos Aires in these months of the beginning of the relationship between the Argentine president, the ultraliberal Javier Milei, and the Luiz Inácio Lula da Silva (PT) government.

Despite ideological differences, the assessment of interlocutors on both sides is that there is great appetite from the business community, notably the Brazilian one, with regard to gas from the Argentine region of Vaca Muerta, one of the bets for the coming years.

The delay in import licenses granted by Ibama has affected the export of hybrid and electric cars from several countries — China among them. There would be at least 60,000 cars of various origins (including 18,000 from Argentina) in port areas in Brazil awaiting certification, the association of environmental servants stated in the report.

The weight observed on the Argentine side is therefore related to the importance of Brazil for its automotive sector.

Throughout 2023, more than 207 thousand vehicles were exported to Brazil, making the country the representative of 63% of Argentine automobile exports. In comparison, other neighboring countries have smaller shares, such as Chile (6.8%) and Peru (6%).

Furthermore: automobiles, both those intended for transporting cargo and ordinary ones for passengers, make up the majority of Argentina’s annual exports to Brazil. Over the past year, when exports totaled US$11.8 billion (around R$59.4 billion), automobiles accounted for at least 27.5% of the total (more than US$3.2 billion), followed by wheat (more than US$800 million), almost 7%.

This is one of the factors that make Brazil the leader in the ranking of Argentine exports, followed respectively by the United States, China, Chile and Peru, according to updated data from Indec (National Institute of Statistics and Census) of Argentina.

The reverse movement is also important.

According to 2022 data from Adefa, Brazil was the origin of almost 80% of the cars imported by Argentina. Data for 2023 is not yet available, but it should be lower, given the galloping growth of Chinese imports.

“We have had a common automotive policy since 1994, which makes our relationship with Brazil fundamental”, says Rodríguez Canedo.

“Argentina specializes in some models and complements this, from an industrial and commercial point of view, with Brazil. It is not possible to imagine an Argentine industry not harmonized with the Brazilian one.”

The executive director of Adefa, however, argues that the moment invites debates on how to fine-tune this common market. “For example, removing locks like the one from Ibama, which we are seeing now. If a vehicle has already been validated in Argentina, according to local standards, it should not have to go through the same validation process in Brazil.”

The import license in question proves that Ibama is aware of the entry of these products into the national territory, certifying that the vehicles comply with the environmental rules in force in Brazil.

Ibama employees have been on strike since the first week of January. They ask that the current government implement a salary adjustment to resume field activities and also promote competitions.

Cleberson “Binho” Zavaski, president of the association of environmental employees, states that, of the current 2,800 employees who make up Ibama, a thousand will retire by the end of next year.

He also mentions widespread evasion of these cadres. “More than 20% of those who entered Ibama and ICMBio in the last three years [Instituto Chico Mendes de Conservação e Biodiversidade] have already left, many heading to the private sector.”

“We have been in this mobilization since January 2nd and, as there has not yet been a counter-proposal from the government that even minimally meets the civil servants’ demands, it is possible that this will continue for a while longer”, he says.