GOA PRESIDENT, OTHERS, DEFEND POLICIES RESTRICTING

C O N F I D E N T I A L BUENOS AIRES 000776

SIPDIS

E.O. 12958: DECL: 06/04/2018
TAGS: EAGR ETRD PREL AR
SUBJECT: GOA PRESIDENT, OTHERS, DEFEND POLICIES RESTRICTING
AGRICULTURAL EXPORTS

REF: A. STATE 53353

B. STATE 53346

C. STATE 52628

D. BUENOS AIRES 747

E. BUENOS AIRES 754

F. BUENOS AIRES 733

Classified By: Ambassador E. A. Wayne for reasons 1.5 b & d

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SUMMARY
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1. (C) Ambassador and Emboffs raised the points provided in
Ref A (Request to End Food Staple Export Restrictions),Ref B
(Agricultural Biotechnology as a Tool to Fight Hunger),and
Ref C (The President's Global Food Security Initiative and
Trade) demarches with the President, Foreign Minister, and
new Minister of Economy, as well as with other GoA officials
responsible for trade and agriculture issues. Responses at
all levels were consistent in justifying GoA agricultural
export taxes and other restrictions, and also highlighting
the surge in Argentine agricultural exports over the last
five years. Post expects that, when addressing these issues
(publicly and privately),GoA officials including the
President will not only continue to defend GoA policies, but
will also criticize agricultural subsidies by the US, EU and
others, as well as other agricultural policies of developed
countries. The President also seems intent on trying to
blame speculators for price jumps. End Summary.

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GoA Responses: President, Ministers, and others
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2. (C) Ambassador raised Refs A-C issues with GoA President
Cristina Fernandez de Kirchner (CFK) and Foreign Minister
Taiana on May 29 (Ref E),and with Economy Minister Fernandez
on May 28 (Ref D). CFK responded by emphasizing the role
that technology (presumably including biotech) could play in
increasing agricultural productivity gains, but also
expressed her concern about the impact of speculators on ag
commodity markets, which she subsequently reiterated on June
3 at UN/FAO conference in Rome. Taiana said that not only
were GoA agricultural policies defensible, but that Argentina
had increased its agricultural exports by 50% in the last 5
years. (Comment: Taiana appears to have been referring to
the increase in quantity/volume, as GoA statistics show a 53%
increase from 1Q2003 to 1Q2008 in the quantity of primary
agricultural exports, and a 38% increase in the quantity of
processed agricultural good exports, while the total value of
each category increased well over 100% -- a result of higher
world prices for these exports.) Taiana also added that the
U.S. probably "will not like to hear what Argentina has to
say about agricultural subsidies," but did not elaborate.
Carlos Fernandez, in his position only since April 25, had no
substantive comment, except to say he would inform the
President about these concerns prior to her departure for the
UN/FAO conference in Rome.


3. (C) DCM delivered Ref A and B demarches to Minister
Taiana's Chief of Staff Alberto D'Alotto on May 27, who
responded by noting the opportunity the current situation
affords Argentina as an agricultural producer, but also to
play a more visible and positive role in the world. He
expressed concern that Argentina was squandering this
opportunity by fighting (see Ref F) over who would benefit
from the commodity boom, which is reducing incentives to take
advantage of this historical price boom. DCM also delivered
Ref A demarche on May 30 to Ambassador Raul Ricardes,
National Director of International Organizations, who
received it without comment. DCM had previously raised Refs
B and C issues with Ricardes on May 23 in light of the UN/FAO
conference in Rome June 3-5. On that occasion, Ricardes
argued that developed world policies such as agricultural
export subsidies caused more world food market distortions
than GoA policies of export restrictions and export taxes.


4. (SBU) AgCouns delivered Refs A-C demarches to Geraldo
Petri, National Director for Markets in the Secretariat of
Agriculture (part of the Ministry of Economy) on May 22.
Petri called the issues of export restrictions and export
taxes very complicated politically. He also differentiated
between restrictions and taxes, calling the restrictions
(i.e., export bans and limits) short-term measures while
categorizing taxes as strictly a fiscal issue. Petri stated
that the GoA shares USG concerns about rising world food
prices, and said that rising fuel and transportation costs
were having a much greater impact on food costs than was
biofuel production. He noted as evidence that the cost to
ship Argentine wheat to its major export markets has risen
from $20 per ton to $90 per ton over the last few years. He
also argued that biotech was potentially an important part of
the solution to this problem, alluding to our cooperation
with Argentina in the WTO case against the EU over its
biotechnology approval moratorium.


5. (SBU) Econoff delivered demarches to Miriam Chaves,
agricultural specialist in the MFA's Multilateral Economic
Negotiations office on May 30. Chaves responded that
"biofuels especially" would be a controversial theme at the
Rome conference, noting that it will be difficult to find a
middle ground where all parties can agree. She commented
that Brazil perhaps would have a good defense for its ethanol
production, since sugar - unlike corn and soy - is not a
staple food. On export restrictions, she stated that the GoA
position is that the issue should be properly considered in
the WTO, not in a conference like the one in Rome. She also
argued that export taxes are strictly a domestic issue, and
therefore should not be addressed in any international fora.
She added that Doha negotiations were entering a defining
period, and successful completion of the round could help
alleviate some of the food supply problems the world
currently faces.

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COMMENT
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6. (C) The demarches were delivered in the context of a
major, long-lasting strike by agricultural producers
protesting export restrictions and taxes on their products
(Ref F and previous). The trigger for the strike was an
increase in export taxes on several key products in March,
and the strike and efforts to resolve it have been front-page
news nearly every day for the last eleven weeks. Post took
great pains to ensure that our message was delivered
discreetly to the GoA so that it would not appear that we
were taking sides in the dispute (i.e., with the ag
producers). It is not surprising that the GoA has defended
its export restrictions, nor that it argues that export
subsidies and import restrictions in the developed world have
had a greater effect on the worldwide spike in food prices
than have export taxes and quantity limits imposed by
developing countries. This line of argument usefully
deflects attention away from the GoA policies, which are even
more controversial within Argentina than beyond its borders.
The President's mention of "speculators" is also tied to
Argentina's domestic conflict with the ag sector. The
government is trying to split the farm community and put
blame for rising domestic prices on large farming
organizations funded by non-farmer investors (known locally
as sowing "pools"). The GoA also accuses these organizations
and their external capital of being speculators - despite the
fact that additional productive farms increase supply. End
Comment.
WAYNE