EU trade chief warns of imminent action against Argentina

European Union trade chief Karel De Gucht said Monday the bloc will shortly take action against Argentina's government, after its decision to seize control of oil giant Repsol's YPF subsidiary. "We will soon be moving forward with a response to Argentina's action in the Repsol case, in particular," De Gucht said in a speech during which he complained of a "growing tendency towards protectionism across Latin America." Argentine President Cristina Kirchner on Friday signed a bill expropriating 51 percent of YPF's stock from Repsol, its majority shareholder, sealing a measure that has roiled the country's trade ties with Europe. "Argentina has also continued other trade restrictive policies, like its import-licensing regime," De Gucht added. "And just last week we saw Bolivia take another step towards nationalising utility companies at the expense of a Spanish firm. "These types of moves are of course a problem for Argentina and Bolivia -- which will find it harder to secure the international investment they need," he underlined. EU officials have already complained about the "overly broad use" of red tape, notably in the "pre-registration and pre-approval of all imports into Argentina." Individual states may also suspend WTO-compliant preferential trade status accorded to Buenos Aires. Spain's Prime Minister Mariano Rajoy said Monday that the seizure will trigger a "tremendous" loss in investor confidence in the country, while other international organisations have also criticised the measure. Kirchner has argued that the move was justified because Argentina faces sharp rises in its bill for imported oil, and Repsol has failed to make agreed investments needed to expand domestic production. YPF accounts for 34 percent of Argentina's domestic oil production, 25 percent of domestic gas production and 54 percent of domestic refining, according to the Argentine Oil Institute. Repsol said it will seek at least $10 billion in compensation for its expropriated shares, as well as international arbitration to settle the claim. Argentina counters that Repsol is leaving a $9 billion debt, while in just over a decade it earned more than $15.7 billion, most of it sent overseas and not reinvested.