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October 24, 2014
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Rosario Port urges lifting of trans-shipping ban on Uruguayan harbours

SEPOR SA grain terminal at Rosario.
By Guillermo Háskel
Herald Staff

Container trade from Rosario Port Complex to southern Brazil has declined between 25 and 30 percent as a consequence of Resolution 1108/13

The port complex via which breadbasket Argentina exports about 70 percent of its harvest yesterday urged the administration of Peronist President Cristina Fernández de Kirchner to suspend a resolution that has banned the trans-shipment of cargo in Uruguayan ports, alleging that the measure is severely affecting regional trade.

“We demand the urgent suspension of the resolution and the opening up of a dialogue space to reach consensuses which benefit national logistics, Argentine exporters and the activity of the Port of Rosario,” the ENAPRO Rosario Port Complex authority said in a statement on Friday.

“That measure overrides the regional economy, is a stumbling-block for the integration of the region and of the Mercosur trade bloc, and is the result of a refusal to dialogue before adopting it, besides having a centralist spirit,” added the public, non-state, self-governing agency which rules one of the largest food export complexes in the world.

Argentina’s Undersecretariat of Ports and Navigable Ways headed by Horacio Tettamanti, on October 25, 2013 issued Resolution 1108/13 banning export cargo originating in Argentina to be trans-shipped in countries which, despite being members of the Mercosur trade bloc, don’t have maritime cargo accords with Argentina.

“As is publicly known, save for Paraguay and Brazil, the rest of the Mercosur countries don’t have transport accords (with Argentina) and, hence, in practical terms, cargo originating in the Port of Rosario has been unable to be trans-shipped in the Port of Montevideo,” ENAPRO said.

Argentina issued Resolution 1108/13 after last September Uruguayan President José “Pepe” Mujica authorized the UPM pulp mill (formerly called Botnia) to increase its output.

Argentina alleges that the plant contaminates its environment, a charge Uruguay denies.

The two countries resorted to the The Hague-based International Court of Justice which in June 2010 ruled that although Uruguay had violated a bilateral treaty by having failed to inform Argentina that a Finnish company was building the plant on Uruguayan territory, Argentina failed to prove its contamination allegations.

Argentina last June said that it would again resort to the World Court, this time, to challenge the output increase approved by Mujica.

The dispute tensed for years the otherwise fraternal links between the two nations, sparking protests by environmentalists who at some point blocked simultaneously the only three bridges between the two countries straddling the River Paraná.

At one point, then Argentine President (2003-2007), the late Néstor Kirchner, accused then Uruguayan President Tabaré Vázquez of having stabbed the Argentine people in the back by failing to inform about the construction of the plant. In turn, Vázquez later said that he even feared an Argentine invasion and that he had considered asking the United States for military help.

Uruguayan concerns

The Argentine resolution has also sparked concerns in Uruguay, according to Uruguayan media reports reproduced by the Montevideo-based EPP foreign trade services company.

Although Resolution 1108/13 came in the middle of the dispute over the pulp mill, and at a time when Argentina has imposed import restrictions prompting several nations to take it before the World Trade Organization (OMC), Argentina had attempted a similar measure back in 2005, as part of long-standing competition between the ports of the two countries, Uruguayan media said.

Mercosur has a Multilateral Transport Accord which “reserves” the intra-Mercosur trade to ships hoisting the flag of the bloc’s members. Uruguay has refused to sign the accord, among other reasons, because that would prevent its ports from benefitting from the trade from non-Mercosur countries using Uruguayan ports for trans-shipment.

According to some media reports at the time of the enforcement of Resolution 1108/13, the Uruguayan government has estimated that as a consequence Uruguayan exporters could lose about US$100 million as container trading could fall 25 percent.

Mario Baubeta, chairman of Uruguay’s Navigation Centre, was quoted as saying: “Some 200,000 containers would be at risk because, by having less large vessels, there would only remain a smaller port for containers.”

Furthermore, the Argentina measure could affect Montevideo’s image as a specialized hub port, affecting not only loading and unloading activities, but also storing and distribution activities, and operation in tax-free zones and, as a consequence, possible investments.

Montevideo’s daily El País quoted Juan Opertti, Director for Latin America for Katoen Natie global supplier of logistics and distribution services company, as saying that the Argentine decision “is a shot in the back of the neck for Montevideo.”

Baubeta was quoted by Montevideo daily El Observador as saying that the Argentine measure is dangerous because Montevideo is a concentrating port where ships unload containers which large vessels take away and, if the port loses critical mass, the large ships could stop coming.

José Polak, a former director of Uruguay’s National Ports Authority was quoted as saying that the Argentine measure could turn Montevideo into a “small port.”

Back to Rosario

The ENAPRO statement also said that before Resolution 1108/13 came into force, the Rosario Port Complex (a series of ports along a 70-kilometre stretch of the Paraná River some 300 kilometres northwest of Buenos Aires) had regular water transport links with the Puerto de Navegantes in Southern Brazil, the Port of Buenos Aires via barges and two regular lines with the Port of Montevideo, which, due to its regularity and good service was the choice of Rosario local loaders. It added that the reasons for the Resolution lie in the Argentine government intention that cargo logistics be directed to national ports, thus fostering the use of Argentine-flagged fleets.

However, after nearly 10 months the measure has been in force, it has had a “highly negative impact” while “it failed to meet its goal.” ENAPRO added that regarding the Rosario Port Complex, the government’s decision has “substantially affected the port’s fluvial-maritime connectivity.”

“As we had warned, if the aim was to prevent most of the fluvial cargo being trans-shipped in neighbouring countries’ ports, the Resolution has been no solution as, in the case of the Port of Rosario, loaders are now opting to send their products to the Puerto de Navegantes (operated by an international shipping company), or take their products to the Port of Buenos Aires, which causes truck bottlenecks along the roads and in no way benefits the national-flagged fleet.”

The communiqué also said that a clear example of the damage has been the recent confirmation of the suspension of the regular service connecting the Port of Rosario with that of Buenos Aires via Argentine-flagged vessels.

ENAPROS’s General Manager Nolasco Salazar told the Herald that container trade from Rosario has declined an estimated 25-30 percent as a consequence of the measure.

He added that once losing the link Rosario-Puerto de Navegantes, container shippers didn’t opt to send them through Buenos Aires either.

ENAPRO said that it has always advocating having a good fluvial connection with the Port of Buenos Aires, not as an exclusive exit but in line with the idea that Argentine requires a transport matrix, including a hub port within its territory.

This has led ENAPRO to sign an accord with the Port of Buenos Aires to improve the operation of local vessels originating in Rosario, in the trans-shipment operation to save time and attain greater efficiency, while at the same time always insisting on the need to modify customs practices so that export documentation can be issued in the original ports, ENAPRO said.

At the same time, it added, it supports the development of an Argentine-flagged fleet and a local shipbuilding industry and the creation of jobs in Argentina in all activities connected to navigation.

“As a consequence, we want to make it clear that our disagreement with the Resolution is not focused on the goals the government expressed but on the consequences of its application, beyond the fact that its enforcement was carried out in an arbitrary and untimely way.”

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