There has been an upsurge in people crossing the border from Argentina and doing their shopping in Chile; and it has had a damaging effect on the economy of Mendoza, a private report has warned of the negative economic ramifications. Chilean cities are actively competing to attract Argentine visits during the upcoming long weekend, offering up to 30% discounts on the products they carry in most cases. This coincides with the announcement of the Economic Federation that 400 Argentine businesses are closing because of a decline in sales.

The major border crossing points have been overwhelmed by the influx of Argentine tourists with shopping plans. Chilean shopping centers and cities have been advertising discounts exclusively available to Argentines which can only be obtained by showing their state issued DNI card.

The increasing number of travelers making the journey across the border is generating controversy. “I am not going to shop in Chile, nor leave my salary in another country. Argentina is going through a difficult time, we have to realize this and be a bit more patriotic” suggested Mayor Jorge Vergara Martínez of Malargüe – the southern town in Mendoza that has seen a visible decrease in trade as people cross the border into the Chilean city of Talca.

Outraged over the economic effect on his city, the mayor accused Argentines who are crossing the border to shop in Chile of being disloyal. “Why don’t the Argentines who are shopping in Chile go and work there? They’re destroying local businesses and industries and afterwards they blame the government for the economic situation? Even if it’s more expensive, I prefer to shop in my country”.

The debate regarding the traveling shoppers has set off the Chilean city of Talca which offers discounts up to 30% for Argentines during the upcoming long weekend. Talking to Clarín, Jose Abdala, a trader in Talca, explained its appeal: “We offer Argentines discounts on clothes, perfumery, and household appliances in our shopping centers; also it’s a great place to eat seafood and meat because we’re right next to the sea and are in an entirely agricultural zone.”

The migration authorities at the crossing point “El Pehuenche” that joins Malargüe wih Talce expect an overflow of tourists tempted by the offers. There is is 300km between the two towns but taking into account customs delays on both the Argentine and Chilean side the journey can last up to 10 hours; as well one can only pass through El Pehuenche between 9am and 7pm.

The Mendoza Economic Federation (FEM) confirmed that 400 businesses have closed in the last year which they attribute to the increased purchasing activity taking place in Chile. Retail sales in February also fell by 4.89% compared to the same month in 2015 – greater than the national average which was 4.1%.

“Mendoza has spent the last 14 months in decline. This has heavily been influenced by those going to Chile and continues to dent consumption and the Transparent Prices program which put an end to interest-free quotas in purchases” said Adolfo Tripode, president of FEM. The organization last week asked Congress for tax relief for bordering towns to compensate for the difference in prices and allow local Argentine businesses to compete. Coincidentally, Marcelo Marra of the Argentine Chamber of the City of Mendoza said that eliminating interest-free quotas took the only competitive advantage that it had with Chile away from Mendoza. “Many people found it less convenient to shop in Chile because they couldn’t pay in quotas, while in Argentina they could pay up to 18 interest-free quotas. But now we don’t have this advantage.” The most affected commercial areas were closing, shoes, toys, bookstores and jewellery stores.

Chile has become the new shopping haven for Argentines, with three million crossing the Cordillera de Los Andes last year, a 50% increase from 2015. A report from the Argentine Confederation of Medium Enterprises (CAME) revealed that Argentine spending on credit and debit cards in Chile reached 830 million dollars-exceeding the total amount of Argentine imports in Chile which was 689 million dollars.