From Lupicinio International Law Firm we bring you the latest news in international trade. This September continues to be marked by the crisis in Ukraine and its effects on the international scene. There is uncertainty in European countries in relation to energy supply, inflation and increase in export and import prices due to the conflict.
MINING AND ENERGY EXPORTS TO THE U.S. TOTALED 4.505 BILLION AS OF JULY
The Colombian-American Chamber of Commerce has announced that Colombia’s mining-energy exports to the U.S. have surpassed pre-pandemic figures as of the July cutoff. Specifically, the figure has gone from US$4,169 million in 2019 to US$4,505 million in 2022.
In addition, Colombia has increased its export share in other sectors, such as agriculture. Sales in the agriculture sector totaled US$2,750.6 million as of July, 62% more compared to the same period in 2019, 60% more compared to 2020 and, finally, an increase of 39.9% compared to 2021.
CONSTRUCTION OF A CHINESE MEGA-PORT IN CHANCAY, PERU
Cosco Shipping Ports (a Chinese business giant) is building the Chancay Multipurpose Port Terminal, located 80 km from Lima. Peru is a location of interest to the Chinese market as a supplier of materials, particularly copper. This infrastructure will significantly increase China’s presence in Peru and throughout South America.
An investment of US$3.6 billion has been made, in addition to a complex engineering work that is expected to attract 50% of the approximately US$580 billion in trade between China and South America each year. It will have the capacity to berth the world’s largest cargo ships, which can carry more than 18,000 containers. It will initially have four berths (which may grow to fifteen) and will have areas for container storage, heavy vehicle parking, customs and offices.
It is expected to significantly promote the country’s development as it will have the capacity to export goods worldwide. Despite these, some skeptics are not convinced that the project is all it is cracked up to be for Peru, as this is a country where the activity of foreign companies generates controversy and public debate. Furthermore, the project has raised concerns about its environmental impact, especially with a group of civil organizations that filed an appeal against the Environmental Impact Study carried out by the company.
THE “SOY DOLLAR” THAT COULD BE THE KEY TO THE ARGENTINE ECONOMY
There is a great lack of dollars in Argentina, a country where their demand is extremely high. They are used to buy inputs for production and are commonly used by citizens to purchase property or as a way to protect their savings against inflation. As 70% of the domestic market produces pesos, there is an imbalance between the demand for dollars and their production.
Sergio Massa has sought a series of solutions, among which we find the creation of the so-called “soybean dollars”. This is a special quotation received by those who export soybean, since it is Argentina’s main source of foreign currency. The need for this special quotation lies in the obligation of soybean farmers to exchange into pesos the dollars received for international exports at the official rate of the U.S. currency, which is imposed by the government. At the same time, they pay export taxes of 33%. All this makes many of them keep their crops until the peso devaluates in order to be able to charge more for the sale of soybeans. Precisely, the “soy dollar” was created to encourage the current sale of soybeans. The exception is that between September 5 and 30, those who sell their soybeans will receive $200 for each dollar they export.
Massa has stated that, having reached an agreement with the representatives of the countryside, an income of $5 billion dollars is foreseen for the month of September. This is undoubtedly a temporary solution for the government’s coffers, but the problem lies in what will happen once this special quotation comes to an end.
U.S.-RUSSIA TRADE FALLS TO 65%
Vladimir Ivin, the deputy head of the National Customs Service, has stated that the trade link between Russia and the United States has been reduced by 65%. Washington used to be one of Russia’s top 10 trading partners. Currently, China is the leader in terms of trade with Russia. In turn, trade with EU member states has also suffered a significant decline. Russia is currently the country most punished by the economic measures taken as sanctions.
SPAIN’S AUTONOMOUS COMMUNITIES AND CHAMBERS OF COMMERCE BOOST THE REGION’S EXPORTS WITH APPROXIMATELY THIRTY MISSIONS ABROAD
The Instituto de Fomento and the chambers of commerce of Murcia, Cartagena and Lorca to reinforce the increase in non-energy exports from the Region during the first half of the year. With regard to exports, during the first half of 2022 the number of exports from the Region was 7,338 million euros (24.3% more than the same period of the previous year). Regarding the Region’s imports, during the first half of 2022 the figure has increased by 92.21% due to the procurement of fuels and lubricants from Saudi Arabia, Mexico and Iraq. Thus, there has been an increase of 135%.
The actions to be carried out can be summarised as participation in both missions and fairs focused on different sectors (such as the footwear sector, packaging, technological products or the fruit and vegetable sector). These include participation in Fruit Attraction in Madrid and Sial in Paris.
RUSSIA PLANS TO START USING CRYPTOCURRENCIES FOR INTERNATIONAL TRADE IN 2023
In the face of imposed economic sanctions, Russia is contemplating the use of digital assets as a form of payment in foreign trade agreements in 2023. The Ministry of Economy and the Central Bank, among others, are studying the legality of such a measure. A series of legislative proposals are underway, which have not yet been submitted to the Government. In turn, the Federal Tax Service of Russia is developing the tax implications of international transactions with cryptoassets. The Ministry of Economic Development is in favor of the proposal as it considers that it could mitigate the limitations imposed by the sanctions.
IRANIAN PRESIDENT SEEKS ASSURANCES FOR POSSIBLE NUCLEAR DEAL AHEAD OF UN VISIT
Ebrahim Raisi, Iran’s president has stated in an interview that Tehran would consider reviving the agreement on its nuclear program if there were guarantees that the United States would not withdraw from it again. Last month, the Iranian foreign minister said Tehran required stronger guarantees from Washington in order to pursue reactivation of the 2015 deal. He ordered the UN atomic watchdog to abandon “politically motivated probes” into Tehran’s nuclear work.
It established that the Americans had broken their promises on the deal, under which Tehran had curtailed its nuclear program in exchange for relief from U.S., EU and UN economic sanctions.
However, there has been no sign that Tehran and Washington will succeed in overcoming their problems, but Iran is expected to use the UN General Assembly to keep up the diplomatic pulse by repeating its willingness to reach a sustainable agreement.
In Madrid, on this 30th day of September 2022
Department of International Trade and Sanctions
Lupicinio International Law Firm