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President Obama announced that he was suspending trade benefits for Argentina.
President Barack Obama said on Monday that the US would be suspending trade benefits with Argentina because of the country's failure to pay compensation to two US companies, according to Reuters.
Argentina will be suspended in 60 days from the US Generalized System of Preferences which waives import tariffs on thousands of goods from developing countries, due to its failure to pay more than $300 million in compensation to two US companies over investment disputes.
The BBC noted that this is the first time a country has been suspended from the GSP for failing to pay a compensation award.
In 2005, the World Bank's International Center for the Settlement of Investment Disputes (ICSID) ordered the South American country to pay the US company, CMS Gas Transmission, $133.2 million plus interest for actions that damaged the firm's investment in infrastructure, said the BBC.
The next year, ICSID ordered Argentina to pay Azurix $165.2 million plus interest in another dispute. Argentina challenged both cases but the ICSID did not back down and CMS transferred its award to Blue Ridge Investments, according to the BBC.
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Goods totaling $477 million were imported last year under the GSP program, making up 11 percent of the US's total imports from Argentina, according to Bloomberg.
US Trade Representative Ron Kirk said in a statement, "We urge the government of Argentina to pay the subject awards. This would allow us to consider reinstating Argentina’s GSP eligibility and promote the growth of a mutually beneficial U.S.-Argentina trade and investment relationship."
Mauricio Claveri, an economist at Beunos Aires-based research company Abeceb.com, said the measure could lead to other countries retaliating against Argentina, according to Bloomberg. "There are several countries in Europe and in the region that are complaining against Argentina’s trade policies," he said. "This decision by the U.S. may generate further retaliations."
Obama's announcement was read on the House floor, and in it, he said Argentina had "not acted in good faith in enforcing arbital awards in favor of United States citizens or a corporation, partnership, or association that is 50 percent or more beneficially owned by United States citizens," according to The Hill.
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