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Venezuela Substitutes Colombian Imports through Trade Deal with Argentina

By Kiraz Janicke
August 12, 2009 -

Venezuelan President Hugo Chavez and his Argentine counterpart, President Cristina Fernandez de Kirchner, signed a $1.1 billion bilateral accord to promote trade between their respective countries during a visit by Fernandez to Caracas on Tuesday. Trade between the two countries was estimated at $1.4 billion last year.

Chavez is aiming to replace imports from Colombia and vowing to reduce trade with his neighbour over its decision to grant the United States the use of five additional military bases. Venezuela is Colombia's second biggest trading partner after the U.S. The two countries shared an estimated $7 billion in bilateral trade last year.

Venezuelan Trade Minister Eduardo Saman said that Venezuela aims to substitute all imports of raw materials from its neighbour by the end of this year.

As part of this policy, Venezuela signed a deal to import vehicles from Argentina to replace a recently halted deal to import 10,000 vehicles from Colombia.

Fernandez said, "We're not taking away anything from anyone," and added that the agreement is "very important" because it will boost vehicle production in Argentina.

"This bilateral meeting today is aimed at deepening our vital integration," said Fernandez, who was accompanied in Venezuela by a delegation of 70 Argentine businessmen.

The bilateral accord aims to promote trade between the public and private sectors of both nations, cooperation in agricultural and industrial sectors, as well as the formation of a number of joint companies. A permanent joint commission will be set up to monitor the progress of the accord.

As part of the deal, Venezuela's Science, Technology and Trade Ministries and Argentina's Production Ministry agreed to carry out a number of investment projects involving technology transfer, establishment of joint ventures, and technical assistance for trade in raw materials, goods, machinery and technologies.

Among the 22 cooperation agreements signed, the Venezuelan Agrarian Corporation (CVA) and Verandemi of Argentina agreed to carry out a feasibility study for the development of various projects related to the exploitation and production of soybeans.

As part of the push to substitute Colombian food imports with those from Argentina and other countries, Venezuela also agreed to purchase 80,000 tonnes of beef from Argentina. Last year Venezuela imported 200,000 tonnes of beef valued at $755 million - a third of its annual consumption - from Colombia.

Venezuela's state importing agency SUVINCA also signed a deal to purchase $100 million in textile imports from Argentina's textile makers association, Fundacion Pro Tejer, this year.

A cooperation agreement on the mutual recognition of quality certificates in the textile and auto parts sectors was signed, as well as other agreements in the areas of biotechnology, pharmaceuticals , purchase of drilling equipment, leather goods and poultry products.

Finally, Venezuela's Food Ministry and Argentina's Production Ministry signed a letter of intent to guarantee a steady supply of a range of basic food items in Venezuela.

During the meeting, Fernandez said the relations between Venezuela and Argentina are "an example of the struggle for unity on the continent."

Key to achieving development throughout the region is a policy of integration based on food and energy production, the Argentine president added.

"All the Argentine entrepreneurs who are participating in these agreements and are part of this integration process, have a wonderful business opportunity and Venezuelans should understand that the Argentines are here to work together with the sister republic of Venezuela, towards the goal that has to be achieved by the region: sovereignty and food security," she said.

President Chavez warned that U.S. imperialism had launched a new offensive against Latin American integration, signified by the coup in Honduras and the establishment of U.S. military bases in Colombia aimed at controlling the region's resources.

"We must be aware of the times we are living through, and to stand together in defence, to defend our raw materials, namely, our vast natural resources and, by acting together, promote the development of our peoples... and contribute to the development of peoples further afield," he said.

The consolidation of these agreements with Argentina is an important step in that direction, he added. The two countries will hold a second round of bilateral talks in November.



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