FEDERAL MARITIME COMMISSION CHAIRMAN'S VISIT TO

UNCLAS BUENOS AIRES 000854 SIPDIS SIPDIS E.O. 12958: N/A TAGS: ECON EWWT AR SUBJECT: FEDERAL MARITIME COMMISSION CHAIRMAN'S VISIT TO ARGENTINA -------------- Summary -------------- ¶1. Federal Maritime Commission (FMC) Chairman Steven Blust met with GOA officials and industry representatives during his April 4-7 visit to Buenos Aires. Chairman Blust gave a presentation on the FMC's role in regulating maritime affairs to the Industrial Union of Argentina (UIA),the Chamber of Commerce of Argentina (CCA),the Chamber of Importers of Argentina (CIRA),the Navigation Center of Argentina (CNA), and the American Chamber of Commerce (AmCham). These organizations invited Chairman Blust to provide insights from his public and private sector experience with the goal of working toward establishing an organization similar to the FMC in Argentina. Blust met with Transportation Secretary Ricardo Jaime to discuss the regulatory challenges that larger container vessels present for the existing capacity of ports and waterways in the U.S. and Argentina. Chairman Blust's presentation, meetings, and press interview focused on the common issues that governments, communities, and businesses face in the U.S. and around the world as maritime traffic increases due to growth in international trade and travel. End Summary. -------------- Chairman Blust Comes to Buenos Aires -------------- ¶2. The Chamber of Importers of Argentina (CIRA) initiated the process of inviting Federal Maritime Commission (FMC) Chairman Steven Blust to visit Buenos Aires from April 4-7. CIRA's Logistics Director Juan Carlos Mondello worked in the U.S. with Chairman Blust at Delta Shipping Lines in the early 1980s and knew that Blust brought more than 30 years' experience to bear in his position as FMC Chairman. Mondello told Econoff that the impetus for inviting Blust was a growing private sector concern that Argentina needed a more cohesive approach to governing maritime affairs. Mondello worked with the Industrial Union of Argentina (UIA),the Chamber of Commerce of Argentina (CCA),the Navigation Center of Argentina (CNA),and the American Chamber of Commerce (AmCham) to extend a formal invitation to Blust. These organizations were interested in learning more about the FMC. According to Mondello, they also sought to harness insights from Blust's public and private sector experience to begin a national dialogue on improving Argentina's maritime regulatory environment and establish an organization similar to the FMC. ¶3. Chairman Blust gave a presentation on the FMC's history, legal mandate, and main areas of responsibility to members of UIA, CIRA, CCA, CNA, and AmCham. He emphasized that, in light of the number of firms in the industry and the variety in type and governing structure among deepwater ports in the U.S., the FMC's role was to promote efficiency and ensure transparency in the country's maritime industry. To that end, Blust said that the FMC had an obligation to maintain an open and ongoing dialogue with the private sector. -------------- Chairman Blust's Private Sector Meetings -------------- ¶4. The meetings that Chairman Blust held with the organizations that invited him to Argentina highlighted differences in the U.S. and Argentine maritime environments. CNA President Rodolfo Pineiro observed that Argentina "needs more efficient oversight" of the industry. He noted that GOA does not include an agency that has the FMC's regulatory role. He observed that the closest counterpart to the FMC in Argentina is the Office of the Under Secretary of Transportation for Ports and Waterways, which, Pineiro added, "has been vacant for more than half of the Kirchner administration's term." UIA's Transportation and SERVICES Director Jorge Iraola said that the Port of Buenos Aires is the country's largest port and "only has the capacity for one million containers annually." He lamented that the country's General Port Administration, which regulates only the Port of Buenos Aires, has a staff of 500 and an annual budget of more than USD 40 million compared to the FMC's staff of 125 people and an annual budget of USD 21 million. (Note: Chairman Blust clarified that the FMC is not a port authority and that port authority structures differ from city to city. Nevertheless, this perceived disparity was cited throughout Chairman Blust's visit as emblematic of the need to improve Argentina's maritime governance. End Note.) ¶5. The private sector representatives also outlined the challenges they face as they work to develop a maritime oversight authority within the GOA. CIRA President Diego Santisteban discussed the debate on the future of the Port of Buenos Aires noting that "some members of (Mayor of Buenos Aires Jorge) Telerman's cabinet have called for the transfer of the port to another location." CNA President Pineiro told Blust that Argentina's VAT reimbursement for exports, customs declaration requirements, and high fees at the Port of Buenos Aires serve increasingly as disincentives to use the Port of Buenos Aires as an export launchpad for containers originating in the interior. Pineiro estimated that 140,000 containers per year are diverted to the Port of Montevideo every year because of these regulations. UIA Director Iraola recounted a recent incident in which a ship with a capacity of 5,000 twenty-foot equivalent units (TEU) experienced difficulty navigating to the designated terminal within the port. Neither the channel nor the terminal berth were adequate to receive the ship, according to Iraola. ¶6. Chairman Blust responded that the U.S. is not immune to these issues. He reiterated that the differences among local governments meant that no single approach to managing port growth would suffice in the U.S. Blust said, in reference to the container diversions to Montevideo, that "it is a mistake to consider cargo captive." He described how the Port of New York had lost substantial container business in the 1970s to Halifax and required 20 years of working with the state and federal authorities to regain that business. He also reported that U.S. east-west trade has experienced such growth that 5,000-TEU ships are yielding to 8,000-TEU ships and that some U.S. firms have placed orders for 9,000-TEU ships and are negotiating the purchase of 10,000-TEU ships. -------------- International Trade Supplement Interview -------------- ¶7. The International Trade Supplement of Argentina's daily newspaper of record La Nacion interviewed Chairman Blust to discuss his views on Argentina. Blust commended Argentina's sustained economic recovery and was optimistic that the economy had potential for substantial growth. In response to a question on his familiarity with the debate on the future of the Port of Buenos Aires, he answered that communities near ports in the U.S. face the same infrastructure, congestion, and traffic issues. As for key elements in fostering stability in the industry, he emphasized the importance of achieving a balance between security and adopting regulations that promote, rather than hinder, growth in the industry. When asked whether Argentina's LOCATION put it at a disadvantage in international trade, Blust said that he did not think Argentina would be left behind. He observed that Argentina was in a position both to take advantage of opportunities to expand trade as larger capacity ships for east-west trade displace relatively smaller ships into north-south routes and to tie into expanded east-west trade capacity. In response to China's role in international trade, Blust commented that China would not necessarily crowd out all other countries. He added, however, that importers and exporters would need to work with the government to develop the appropriate regime to promote competitiveness. -------------- Meeting with the Secretary of Transportation -------------- ¶8. Chairman Blust met with one of President Kirchner's closest advisors, Secretary of Transportation Ricardo Jaime, to discuss common transportation challenges in the U.S. and Argentina. Blust noted that his meetings had revealed that Argentina was facing many of the same infrastructure, growth, and congestion issues as the U.S. and many other countries. Jaime said that the GOA was working with its Mercosur partners on enhancing multimodal transportation routes to enhance infrastructure in the region to connect ports on the Atlantic coast with those on the Pacific. He stated that the GOA would begin soliciting bids on a railroad concession to connect Buenos Aires and Chile. Jaime reported that Argentina and Brazil have been developing the 3,000-mile internal waterway that links Rosario, Santa Fe, and Mato Grosso in Brazil. He also expressed the GOA's interest in developing a plan to increase investments in the country's ports to reduce costs and delays. Blust observed that, as the 5,000-TEU ships begin to make way for larger ships in the east-west trade routes, Argentina would have an opportunity to make these plans operational. Jaime responded that this change could boost exports from southern ports such as Bahia Blanca in Buenos Aires Province and Puerto Madryn and Comodoro Rivadavia in Chubut Province. He suggested that cooperation with the U.S. might aid the GOA in organizing a central maritime authority to promote and regulate activity in the industry. -------------- Comment -------------- ¶9. Chairman Blust's visit to Buenos Aires helped reinforce the view of the U.S. as a partner in international affairs in general and maritime affairs in particular. The breadth of his experience and his understanding of U.S.-Argentina trade left a positive impression with Secretary Jaime, Argentina's business community, and the media. His visit opened the possibility of cooperating with the GOA on the development of a central maritime authority. It also generated interest in the private sector on formulating a plan of action to work with the GOA on drafting a strategy to strengthen the country's maritime industry. Post recommends inviting Chairman Blust and the FMC to promote maritime issues in other WHA posts. ¶10. To see more Buenos Aires reporting, visit our classified website at: http://www.state.sgov.gov/p/wha/buenosaires LLORENS