Post date : 01.07.2015 4:47 pm
As Latin American leaders meet with Chinese President Xi Jinping in Beijing this week, President Cristina Fernandez de Kirchner will be unexpectedly absent due to an ankle injury. Yet, what will be missed in high-level, personal interaction, Argentina has made up for in legislative intent – in a lasting way.
On December 29th, in the dark days between holidays, Argentina’s Senate passed a regulatory framework for Chinese investments in Argentina, hereinafter referred to as the Argentina-China accord, which originated from the Presidents’ July meeting. Within the accord is an agreement to subvert Argentina’s labor force in favor of Chinese workers.
As one source put it, “Fernández’s party rushed a bill through the upper house of Congress that would give the cash-strapped Argentine government access to Chinese financing in exchange for sweetheart contracts that would allow the Chinese firms to import their own labor— a move that angered Argentina’s influential labor unions.”
The sweetheart contracts refer to long-term, low-rate credits that are not subject to the rules of a tender – as a result, China can offer poor quality goods and force Argentina to pay high prices.
And according to the Buenos Aires Herald, “Ex-ambassador Pérez Llana said that Chapter 5 of the agreement with Beijing allows China to bring in manpower “overriding the entire Argentine labour legislation.””
In essence, the passage of the Argentina-China accord is equal to the direct hiring of Chinese firms and Chinese labor to do what Argentine firms and workers could do instead. And furthermore, it establishes Argentina’s relationship with China as one more similar to an impoverished African nation than it does Chile or Costa Rica’s more even-footing approach to China.
Learning from Africa’s experience with China is important. “Critics say that Beijing is only interested in Africa as a potential wellspring of mineral resources, and that its projects there often benefit governments more than local people.”
Why would Argentina so explicitly cede its sovereign rights to the will of the Chinese government, you may ask?
Because Argentina’s refusal to negotiate with its creditors – which the nation’s leaders feel would create the illusion of losing sovereignty to U.S. courts – is leading Argentina to cede real sovereignty to China. Argentina is finalizing this one-sided accord in the face of blocked access to international capital markets, as well as obstructed IMF funding.
Reports show that within the overall Latin American engagement with China, nations like Costa Rica and Chile are better able to pursue a partnership. Such a win-win arrangement was not on the table for Argentina due to the weakened state of the government led by Cristina Kirchner. The streamlined manner in which the Argentina-China accord traversed Argentina’s Senate, and reported efforts to preclude dissent in the Chamber of Deputies, is demonstrative of Argentina’s weak governmental institutions.
Instead of signing a deal with China in such a fragile state, the government of Argentina should negotiate with its creditors. Such a negotiation would not impede Argentina’s relationship with China, but would allow Argentina to engage China on a more level playing field – not through a hat in hand, last ditch effort to access international financing.
Continual delays by Argentine leaders to engage in a true negotiation have hurt Argentina’s economy, if Argentina codifies into law the preferential treatment for the Chinese laborers, Argentina’s workforce will be the first to suffer the next blow.