Brazilian shoe exports continued to decline in the first quarter, due in part to growing problems in its trade with Argentina. Its shipments to the neighboring country, which remains its second-largest foreign customer after the U.S., plunged by 46.7 percent in volume to 975,165 pairs during the period, contributing to an overall drop of 0.1 percent to 32.7 million pairs.

Shipments to the U.S. declined by 1.2 percent to 3.9 million pairs. There were also declines of 23.4 percent in Russia, 38.3 percent in the U.K. and 47.6 percent in Italy, but shipments to France, which ranked as Brazil's third-largest destination, grew by 188.4 percent to 1.2 million pairs.

Because of the continuously high value of the Brazilian real, the country's exports fell in terms of value by 17.1 percent to the equivalent of US$296 million, compared with the same quarter a year ago. However, the real has lost some of its value since the beginning of this year, following a decline in interest charges, and economists feel that it will continue to depreciate in the course of this year.

Meanwhile, some big Brazilian shoe companies such as Ramarin have completely stopped exporting to Argentina, while other majors such as Piccadilly and West Coast have reduced them considerably because of the growing problems that they are encountering with the Argentinian import licensing system.

According to Abicalçados, the Brazilian shoe industry association, almost 2.5 million pairs of Brazilian shoes are being held at the Argentinian border, 628,415 of which relate to applications for import licenses filed in the course of 2011. Of those, about 12,000 pairs have been waiting for processing since last June, a further 2,000 since last August and 337,000 since September.

It is taking now around 140 days for the Argentinian government to process requests for non-automatic import licenses, instead of the maximum 60-day period written into the agreement signed in May 2009 between Abicalçados and the Argentinean Footwear Chamber. The agreement limited the quantity to be imported into Argentina from Brazil at 15 million pairs a year, but only 14.1 million pairs were admitted into the country in 2010, and 12.5 million in 2011.

On the other hand, Argentinian authorities had decided that imports from China were supposed by be limited to a maximum of 25 percent of all imports of footwear, but in the end, they represented 39 percent of the total in 2009, 34.4 percent in 2010 and 39.8 percent in 2011.

In view of the situation, Abicalçados has decided not to sign a new bilateral restraint agreement with Argentina. At the same time, it has been putting pressure on the Brazilian government to negotiate a stricter deal with Argentina, if necessary with the support of Mercosur and of the World Trade Organization.

The trade situation is complicated by new regulations introduced by the Argentinian government in February, requiring importers to make formal declarations in advance about the quantity of products that they would like to bring into the country at specific times of the year. This goes with a commitment by the importer to ensure that a similar value of merchandise is exported within the year, under a measure introduced in mid-2011 to help restore Argetina's shaky balance of payments.

This sort of commitments has forced importers of all kinds of products to negotiate barter deals with Argentinian exporters of soybean, which is currently in short supply, and other products. Four-five big Brazilian groups that have shoe production facilities in Argentina – including Alpargatas, Paquetà and Vulcabras – are trying to abide by these regulations by producing and exporting larger quantities of shoes from their Argentinian facilities than they would normally do, in spite of their generally higher production costs and their lower productivity.