Dow Jones reported that after trade tension between Argentina and Brazil is easing and after a difficult July 2011, Fiat Argentina is on track to set a new record for vehicle exports to Brazil in August 2011.

Mr Cristiano Rattazzi president of Fiat Argentina said that Fiat is expected to ship a record 15,000 vehicles in August 2011 and also set a new high mark for production.

Fiat is Argentina's third leading vehicle manufacturer behind General Motors and Peugeot, making almost 65,000 vehicles during the first seven months of 2011, up from 52,000 a year earlier.

In May 2011, Brazil stopped granting non automatic import licenses on a number of products imported from Argentina, including automobiles and auto parts, that led to delays at the border of up to 60 days. The move was in retaliation for similar restrictions that Argentina imposed on Brazilian imports earlier this year.

Mr Rattazzi said that the delay in receiving the import permits has fallen to just 10 days, still a costly lag, but the two governments are working together to deal with the problems. Brazil receives over 80% of Argentina's car exports.

Argentine manufacturers are also nervously eying a new clutch of industry protection measures implemented by Brazil.

Brazil's currency has strengthened against the dollar in recent years due to foreign capital inflows, while Argentina's peso has weakened versus the greenback over the same period. The measures include temporary tax cuts, industrial loans, and a government procurement program that will favor locally made products over less expensive imports.

While Fiat thinks the Brazilian tax breaks are a good idea and would like to see the same thing in Argentina, Mr Rattazzi is concerned about the effect of the Brazilian move to pay more for domestically made goods.

(Sourced from www.dowjones.com)