Argentina is putting its partnerships with Brazil and other Latin American neighbors on the line in its bid to cut imports in response to a trade downturn.

Argentine imports are suffering because of recent drops in international commodity prices but critics also fault President Cristina Fernandez de Kirchner for restrictive policies that discourage traders.

Amid frequent run-ins with landlocked neighbor Paraguay, Uruguay and now Brazil, the outlook for Argentine economy has been deteriorating, prompting forecasts of a shrinking trade surplus, industry reports indicated.

Argentina had a trade surplus of more than $10 billion in 2011 but is unlikely to match that figure this year, trade data indicated.

Disputes with Brazil and other neighbors are taking their toll on business morale, with the government dragged into confrontations with business and farmers' groups. The government's response to continuing drought didn't include relief measures for farmers, in contrast to generous emergency aid provided by Paraguay to its own distressed and drought-stricken farmers.

Drought has caused major harvest disruptions in Argentina, Brazil, Paraguay and Venezuela and affected neighboring countries as well.

More pressing than disputes over drought relief, however, is the developing crisis in trade relations between Argentina and Brazil. The two sides met several times in the past few weeks to seek a compromise but came away empty-handed.

At issue is new Argentine trade legislation that seeks to restrict imports from Brazil and tilt the trade balance in Argentina's favor. Trade volume between the countries totaled $5.8 billion in 2011 but Brazil was the main beneficiary.

In yet another attempt to defuse the crisis, Argentine Foreign Trade Secretary Beatriz Paglieri met with her Brazilian counterpart Tatiana Prazeres but the talks ended with a "good understanding" and no accord.

Despite the developing crisis, it will be another two weeks before Paglieri and Prazeres can meet again, officials said.

Brazil objects to additional procedural requirements introduced in the new Argentine trade regulation. Before the ministers met, Brazilian trade leaders, including Sao Paulo State Industrial Federation President Paulo Skaf had talks with senior Brazilian government officials, including Economy Minister Hernan Lorenzino, to defuse the crisis. He, too, went back to Brazil empty-handed.

Brazil is already having difficulties with its export markets because of the overvaluation of the real, a result of major cash infusions into the Brazilian economy from overseas investors. Brazil is keen to avoid a confrontation with Argentina over a trade dispute and to retain all its export customers on good terms.

The developing dispute has also clouded the outlook for talks between the European Union and the Mercosur trade bloc, of which both Argentina and Brazil are key members. Previous EU efforts to build bridges with Argentina were thwarted by what EU negotiators called obstruction by Buenos Aires.