Business Round in Margarita, Venezuela Promises to Quadruple Trade with Argentina

A recent business round on the vacation island of Margarita, of Venezuelan and Argentinean businesses promised to quadruple trade between the countries. The increased trade represents an important further step in Latin American integration.

Unexpected prospects surged in Argentina around the Mega-Business Round in Margarita Island, Venezuela. The event was sponsored by the governments of Argentina and Venezuela and went from Wednesday, July 21 until Friday, July 23. Nearly 400 business people from both countries participated.

The Buenos Aires press decided to cover the event, indicating the interests that were at stake. The reports of the main channels and newspapers pointed out that Margarita “will be a new platform which will serve to give impulses to the Argentinean economy.”

In an unusual turn of events, the large private media, which usually only refers negatively or hardly at all to President Chavez, decided to change its discourse and to characterize as “positive” the Margarita meeting.

The six petals of Margarita

There are more or less six reasons that explain this change of the press’s treatment. First, in Margarita deals were closed for the development of the first phase of PetroSur, following the agreements with PetroEcuador. Second, it was confirmed that PDVSA set itself up in the Argentine market in the coming months. The first task will be to take two ships to be repaired in the main Argentinean shipyards. Third, because already a business is being created with ENARSA, the new Argentinean energy company with mixed capital. With these measures, in addition to the agreement signed between Kirchner and Meza in Bolivia earlier in the week, in order to receive more gas and to construct a gas pipeline, Argentina considers its energy crisis solved.

The fourth reason for the importance of Margarita meeting has to do with PDVSA’s interest in substituting US suppliers for Argentinean industrial products. Fifth, the event is, diplomatically speaking, an important element in breaking the isolation that Washington is attempting to submit the Bolivarian government to, via the OAS. And finally, bilateral commerce, as estimated from July onwards, could quadruple in one year.

It is interesting to note that the Venezuelan press’s treatment was the reverse. One of the most respected newspapers of Venezuela’s business community, El Universal, did not register the event in any of its pages. Other oppositional media covered the event, but relegated it as secondary information, mostly derivative of the presence of President Kirchner in Venezuela, when it actually was exactly the opposite: Kirchner came to Venezuela on the occasion of the Margarita Business Round.

For the Venezuelan government the event was of great importance. According to declarations of the minister of Commerce and Production, Wilmer Castro, the event will allow “the concrete continuation of the process of integration of Venezuela with Mercosur and to increase [Venezuela’s] economic relations with a country such as Argentina.” On of the first measures, in the area of trade, is to overcome the limited bilateral trade, which in 2003 was a mere $140 million.

Now this can be surpassed easily. According to information from the commerce attaché of the Venezuelan embassy in Argentina, bilateral trade will reach $600 million in 2004. This prediction was confirmed by the consultant Miguel Gago, who was in charge in Buenos Aires of organizing the business delegation to Margarita Island. “The level of interest that Argentinean business people expressed surprised us. We are bringing over 80 categories of products and various important companies that are interested in opening subsidiaries on Venezuelan soil,” Miguel Gago told Venezuelanalysis.com.

According to Gago, 392 business people from both nations met in Margarita. They discussed the possibility of exporting and importing 84 categories of products. 62% of these categories correspond to the agricultural sector. 21% of the Argentinean businesses represented wanted to cover PDVSA’s demand for replacement parts and services. Venezuela’s state owned oil company presented last April to Argentinean industries a list of 134 replacement parts that it needs for its industry. The objective is to substitute U.S. providers, as President Chavez ratified in Ensenada on July 8, when he came to integrate Venezuela into Mercosur. “If we can buy in Argentina, why do we continue to buy replacement parts for PDVSA in the U.S.?” he said on that occasion.

The binational event was sponsored by the governments of both countries, as part of the agreements and protocols that presidents Hugo Chavez and Nestor Kirchner signed last November 29, 2003, during the seminar “Business Opportunities with Venezuela” in Buenos Aires. High level officials from both countries had participated in that event.