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Argentina expressed interest in joining the South American Free Trade Area announced by Brazil in Mar 1994, even though the regional free trade proposal lacked a clear framework. Argentina's grain exporters, farmers and maritime executives believe that Pres Carlos Menem is interested in free trade groups not as tools for trade promotion but for political gain. This is suggested from the way Menem and his advisers had been promoting Argentina's membership in existing and proposed trade groups in Latin America without any clear policy.

Union Industrial Argentina (UIA) has asked to delay the South American trade block Mercosur pending Brazil's shift to an economic policy similar to that of Argentina, Uruguay and Paraguay. The organization charged that Brazil is set to benefit from the start of Mercosur in Jan 1, 1995, at the expense of the Argentine economy and that this would defeat the goal of the free trade agreement. UIA also cited the widespread tax evasion in Brazil and its use of its inflation rate to control prices.

Argentine government trade officials and private traders are predicting a rise in Brazil's wheat imports for the 1993-1994 marketing year. Their presumption is based on Brazil's declining crop production and increasing domestic consumption. However, the uneven quality of Argentina's wheat exports and the small harvest are expected to limit the country exports for the said marketing year.

Argentina's grain industry is experiencing a surge in regional demand since Latin America's economy has improved. Brazil will import about 3 million metric tons of Argentine wheat in 1993 and 4 million more in 1994 aside from 800,000 metric tons of Argentine corn in 1993. Other major buyers of corn and wheat are Chile, Peru and Venezuela. Smaller grain markets such as Bolivia, Colombia, Ecuador and Paraguay are also expected to grow.

Argentine farmers complain that high interest rates and their increasing debt will cause 1993-94 wheat sowings to decline by 5% to 7%. The nation's high interest rates are making it impossible for the farmers to take out the necessary loans in order to begin sowing their crops. Inflation is also rising, sending up wheat prices. Bad weather in Buenos Aires and poor transport roads are also adding to farm debts.

A $52.7 million fiber optic cable will link the telephone systems of three South American trading partners. Argentina, Brazil, and Uruguay, three of the four members of the trade bloc Mercosur, expect that the improved communications link will bring economic benefits. AT&T, the company that sold the cable, expects it to be laid by September 1994.

Argentina is optimistic about the business prospects of the implementation of a recommended rail freight service that would link the country with Bolivia, Brazil and Chile. The mining industry will particularly benefit from the planned infrastructure. The service would connect Chilean copper mining areas with Argentina's mining provinces and Bolivia's main oil and natural gas producing territory.

Aluar Aluminio Argentina SA and Alcan Aluminium Ltd have agreed to jointly market their aluminum products in Argentina and its neighboring nations via the new firm C and K Aluminio. C and K Aluminio has an initial working capital of $30.4 million and will be the sole representative of Aluar and Alcan products ini the region. The firm expects to post increased aluminum product exports when it begins operations.

Argentina succeeded in entering the Asian market for farm exports despite its lack of historical and cultural ties with the region. Argentine exports have not yet reached the level of US and Australian exports, the two nations which dominate Asia's grain export market. Indonesia, Malaysia, Taiwan, Philippines and South Korea have been importing Argentine grain and oil seeds since 1989. Argentina decided to shift to the Asian markets following the decline of European demand for its products.

Argentina has failed to attract any bidders for 64% of the holdings of state-owned Petroquimica General Mosconi. The prospective bidders disfavored certain bid terms such as the $80 million debt responsibility and the naphtha feedstock purchasing provision. Mosconi, which is worth about $100 million, provides 300,000 metric tons of aromatics annually. Royal Dutch Shell, Diamond Shamrock and Perez Companc were among those who declined to bid.

Uruguay will begin accepting international bids on the 1st qtr 1992 for a pipeline construction to transport natural gas from Montevideo, Uruguay to Argentina. Legal frameworks for the construction have been ironed out in a joint protocol signed by both countries in Jul 1991. Although routing plans for the pipeline project remain unknown, Uruguay is expected to consume a daily natural gas requirement of 26. 47 million cubic feet with a potential demand estimated at 105.9 million.

Argentina has privatized its nationwide natural gas transmission network after 46 years of state ownership. The network, which is composed of two trunk-line companies and eight distributors, transports up to 2.54 billion cu ft of gas per day. Italy's Camuzzi Gasometri and Italgas will handle two gas distribution sectors each while the other four zones will be operated by Tractebel, Gasco, Gas Natural and British Gas.

Argentine farmers are worried that international competition in the soybean and sunflower seed markets will become tighter with economic downturns in Europe, the main market for its oilseed exports. Revenue from these products range from $2.5 to $3 billion annually, with the top exports being sunflower seed products, soyoil and soy pellets. Without the expected economic upswing and the favorable conditions from the GATT talks, Argentina would face stiff competition in the soy markets from the US and Brazil. Unlike the US, Argentina's farm products are not subsidized.

Argentina's intention to export canola to Japan has been undermined by production losses, quality problems related to transport and storage and farmers' unwillingness to replace winter cash crops with canola. The farmers have sent an initial 20,000 metric tons of canola to Japan in Jan 1992 but there are no forthcoming orders because of its inferior quality compared to Canadian canola.

Argentina's port handling costs for grain shipments remain high despite efforts by the government to regulate the maritime industry. Shippers complain that Argentinian ports are expensive and poorly maintained, noting that transport costs in Argentina are double those of other nations. Traders likewise report that port mismanagement has cost the country some $150 million to $200 million in potential foreign exchange losses.

Argentina's deregulation of the surface and maritime-transportation sector in Jun 1992 was not able to reduce grain shipping and handling costs. Buenos Aires shippers still pay the highest tolls despite the fact that highway networks are ill-maintained and the national railway system could not cope up with the demands of the trade. Grain handling costs at Buenos Aires cost three times more compared with Rotterdam and Brazil's Santos. Private operators remain adamant with high fees for highway tolls saying that these are needed for upgrading projects.

Pres Bush's decision to target 28 countries with more than 30 million metric tons of subsidized wheat under the Export Enhancement Program was criticized by Argentina since the move was viewed to undermine free international commerce. US targeting of Brazil with 500,000 metric tons of wheat also violates the agreement between the US and South American trade bloc Mercosur which also includes Argetina, Paraguay and Uruguay.

Despite the economic growth of Argentina, the country's farming industry is threatened by bankruptcies. Pres Carlos Menem has decided to give financial assistance to thecountry's farmers. Some of the measures include an increase in the amount of money available for lending and a reduction in interest rates. Argentine farmers, however, still consider the measures to be inadequate in alleviating their plight.