A soybean oil dispute highlights the degree of dependence between Argentina and China.
The Argentina-China bilateral trade relationship is experiencing some mild turbulence thanks to a recent rift over soybean oil exports. The pairing of the world’s largest soybean oil exporter (Argentina) with the world’s largest consumer (China) was a match made in import/export heaven. But like all good relationships, jealousy often surfaces when one partner seems to be gaining the upper hand (the market dominance of China’s manufactured imports), followed by feelings of anger and retaliation (Argentina’s subsequent raising of tariffs to protect local industry). China, not universally recognized as the global arbiter of export purity, has countered by shifting more licensing authority to the government and simultaneously questioning the quality of Argentine soybean oil imports: moves which have dramatically slowed the pace of imports. So with China brooding in the master bedroom and Argentina sleeping on the sofa, will the relationship fall apart? Not likely, says Thomas Mielke, the executive director of Oil World, and it boils down to one word: dependence. “Neither the U.S. nor Brazil has the capacity to crush enough oil to meet China’s demand, making it ‘risky’ for China to continue rejecting Argentine imports,” Mielke said. The true test comes later this month when two Argentina soy shipments are scheduled to arrive in China. Gustavo Lopez of Agritrend agrees that dependence will ultimately smooth over this oily long distance dispute, “Each country needs the other, and doesn’t want this to get out of hand.” (WSJ.com article)
