Argentina Sees Brexit as Chance for Trade Talks with U.K.

  • Macri government looks to bypass Mercosur for bilateral deal
  • U.K. scouting for markets as it prepares to leave EU

Argentine Foreign Minister Susana Malcorra gives a press conference at the foreign ministry building in Buenos Aires, on Dec. 14, 2016.

Photographer: Eitan Abvamovich/AFP via Getty Images

Argentina would be interested in negotiating a bilateral free-trade agreement with the U.K. as it prepares to leave the European Union, potentially turning around often-testy relations between the two countries.

Argentina has already been working bilaterally with the U.K. on a number of matters but, before launching trade negotiations, pending issues related to a long-standing dispute over the Falklands Islands need to be solved, Foreign Minister Susana Malcorra said in Buenos Aires.

“You know very well that our relation with the U.K. has its special characteristics, and we need to resolve some things before advancing with a bilateral negotiation,” Malcorra said at the sidelines of a news conference on Wednesday.

The U.K. also wants to negotiate its own trade agreements as it leaves the European Union, the U.K. Department of Trade said in an e-mailed statement. “We will look to build on our strong economic ties with trading partners. This includes the growing economies of Latin America, including Argentina.”

After three decades of simmering tensions in the aftermath of the Falklands War, relations between Argentina and the U.K. have taken a turn for the better since President Mauricio Macri assumed office a year ago vowing to open up the economy. The two countries in September agreed to work toward ending restrictions on oil and gas exploration, shipping and fishing affecting the Falkland Islands, which have been in place since the 1982 conflict. They also agreed to allow flights to the islands from Argentina.

Under former President Cristina Fernandez de Kirchner, Argentina and the U.K. regularly traded barbs over their rights to the Falklands, known as the Malvinas in Argentina. Just last year, Fernandez’s government filed criminal charges against five companies it accused of carrying out oil exploration near the islands without its permission. Argentina invaded the Falklands in 1982, leading to a 10-week war after which the U.K. retook the islands at a cost of over 900 lives lost on both sides.

The U.K. was the third biggest importer of prime cut “Hilton Quota” beef from Argentina in 2004. But imports had dwindled to almost nothing by 2014, according to Senasa, Argentina’s sanitary regulator. The U.K. was also the destination of 10 percent of all of Argentina’s wine exports in 2015, which makes it the second biggest importer of the country’s wines, according to the National Institute for Vitiviniculture.

Bypassing Mercosur

A deal with the U.K. would bypass the Mercosur free trade bloc, which also comprises Brazil, Uruguay, Paraguay and the currently suspended Venezuela. Other members of the bloc have also sought to make the bloc’s rules more flexible to sign their own bilateral trade agreements with other countries. 

Argentina on Wednesday assumed the presidency of Mercosur, and Malcorra said the bloc has agreed to prioritize free-trade agreements with the European Union, the European Free Trade Association, Canada, Japan, India and China.

— With assistance by Alex Morales

    Before it's here, it's on the Bloomberg Terminal.