According to Brasília, Buenos Aires does so by charging tolls on waterway
08/08/2023
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Hidrovias do Brasil barge similar to the one retained in Argentina — Foto: Divulgação
The Lula administration is criticizing Argentina for Buenos Aires’ controversial decision to impose a toll on the Paraguay-Paraná waterway, the largest one in South America.
The toll — $1.47 per tonne — was imposed earlier this year and led to an unprecedented incident in late July: Argentine government officials detained a convoy of ships belonging to a Brazilian company, Hidrovias do Brasil. The convoy was flying a Paraguayan flag because it came from a subsidiary of the company in Paraguay.
The company disputed the legitimacy of the new toll and attempted to move on with the ships without paying the toll. Argentina detained the convoy on a stretch of the Paraná River from July 28 until August 4. The ships were released upon payment.
The government classified the detention as contrary to the freedom of navigation and an unrecommended move by Argentina. The discussion started at the technical level and now reached the political level. Argentina is Brazil’s largest trading partner in South America, and presidents Luiz Inácio Lula da Silva and Alberto Fernández are political and ideological allies.
“The Brazilian government, like the other countries that are part of the Paraguay-Paraná waterway agreement affected by the new tolls imposed by Argentina, questions the legitimacy of the charge in light of this international instrument,” the Foreign Affairs Ministry said in a statement in response to questions from Valor.
Bolivia, Paraguay, and Uruguay are also part of the agreement.
“In the understanding of Brazil, Bolivia, Paraguay, and Uruguay, Buenos Aires has not been able to demonstrate so far that the toll pays for services actually provided on the waterway, a condition provided in the agreement for any collection, taking into account that simple navigation cannot be legally taxed,” the ministry said in the note.
Brazil uses the corridor as an option to transport grain and ore to ports in Argentina and Uruguay. Part of the agricultural production of the Central West is shipped by Hidrovia’s barges. In terms of iron ore, one of the major producers sending shipments through the rivers is MCR, a company of the J&F Group.
Hidrovias do Brasil is one of the largest companies operating in the corridor. On Monday, the company said it had paid the amount demanded for the release of the ships on Friday. The company did not say how much it paid but reiterated that, in its view, the fee “is inappropriate for violating the agreement of the Paraguay-Paraná waterway of free circulation and will deal with the matter in courts.”
Hidrovias do Brasil said that, at least until Tuesday, only one of its convoys had been detained.
On the temporary detention of the company’s fleet of barges, the Brazilian government intensified its criticism of Argentina.
“The recent and unprecedented case of the retention of the tugboat [actually a type of vessel called a pusher boat] under the Paraguayan flag, owned by a Paraguayan subsidiary of a Brazilian company, constitutes, from Brazil’s point of view, a worrying event that contradicts the freedom of navigation that is the basis of the agreement and the legal certainty that is essential to guarantee the investments related to the development of the waterway as a central option for the flow of goods in the Río de la Plata Basin region,” the Foreign Affairs Ministry said in a statement.
The Brazilian Embassy in Buenos Aires was instructed to “make arrangements with the Argentine Ministry of Foreign Affairs and the relevant authorities of the neighboring government.”
When Argentina decided to start charging tolls on the Paraná Santa Fe and Confluencia rivers, companies and governments began to outline their initial reactions. But when the retention of ships came, Brazilian diplomacy seemed caught off guard.
“For months, Brazil has been seeking a constructive dialogue in the waterway’s institutional forums that would provide a solution to the situation. From the Brazilian point of view, therefore, we are concerned about the aggravation of the situation with the retention of vessels due to debt collection, when the discussion on the toll has been legitimately questioned by the other member states of the Waterway Agreement within the framework of this instrument,” said the Ministry of Foreign Affairs.
“Brazil does not consider the escalation of ongoing actions productive or advisable, which hinders the prospect of the issue being treated in a considered manner in the instances of the Agreement.”
The Brazilian assessment is that the space for discussing the Argentine tolls is within the bodies of the Paraguay-Paraná Waterway Agreement itself.
The issue, still from the perspective of Brazilian diplomacy, has already been discussed in the Agreement Commission, which is a technical forum for discussion among the signatory countries. However, they were unable to reach an agreement. “The issue should now be addressed in the Intergovernmental Committee on the Waterway (CIH), which is political.”
Natália Marcassa, CEO of MoveInfra, a group that brings together six major infrastructure groups – including Hidrovias do Brasil – says the situation started by Argentina creates legal uncertainty for those operating in the Paraguay-Paraná river corridor. But the reflexes go beyond that. And they can affect the perception of the infrastructure sector in general. “For some investors who have shares in companies in the infrastructure sector, this situation in the waterway prompts a warning. The question is: how much legal certainty does Brazil offer?” she said. While the criticism regarding the toll and the detention of ships is directed at Argentina, the question mark is how Brazil will deal with the situation to ensure legal certainty.
In addition to Hidrovias do Brasil, MoveInfra brings together CCR, Ecorodovias, Rumo, Santos Brasil, and Ultracargo. Ms. Marcassa said the company is in talks with the Ministry of Ports and Airports, which provides technical information on the Paraguay-Paraná corridor to the Ministry of Foreign Affairs.
Last week, Valor consulted the Argentine Embassy in Brazil about the toll and the retention of the boats. At the time, the embassy did not issue a statement. Valor reached the embassy on Tuesday and is awaiting a response from the Argentine diplomacy.
The General Administration of Ports (AGP), an agency of the Argentine Ministry of Transport, said in a note on its website last week that the toll was set in 2010. At that time, it was determined that the toll would be zero, but that it would be adjusted in the following years according to expenses. The adjustment was decided in 2022 and took effect in January 2023.
According to the AGP, maintenance work, improvements to beacons, replacement of equipment, expansion of the water meter network and work on a bridge are some of the actions carried out by the agency that justify the toll.
*Por Marcos de Moura e Souza — São Paulo
Source: Valor International