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Cablegate: Argentina: No Movement On Bilat Trade Issues, or Doha

VZCZCXYZ0003
RR RUEHWEB

DE RUEHBU #1285/01 2591915
ZNR UUUUU ZZH
R 151915Z SEP 08
FM AMEMBASSY BUENOS AIRES
TO RUEHC/SECSTATE WASHDC 2030
RUCNMER/MERCOSUR COLLECTIVE
RUEHRC/DEPT OF AGRICULTURE WASHINGTON DC

UNCLAS BUENOS AIRES 001285

USDOC for 4321/ITA/MAC/OLAC/PEACHER

SIPDIS
SENSITIVE

E.O. 12958: N/A
TAGS: ETRD WTRO ECON EAGR PREL PTER AR BL IR
SUBJECT: Argentina: No Movement on Bilat Trade Issues, or Doha

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SUMMARY
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1. (SBU) In a September 4 meeting with visiting Codel, Argentine
Foreign Minister Taiana and other Foreign Ministry officials
protested the lack of U.S. market access for Argentine lemons and
beef, but had no response to Codel requests for Argentina to allow
imports of U.S. beef and poultry. Codel members expressed hope that
Argentine decisions would be made on scientific, not political,
grounds, and that progress by the U.S. on the Argentine concerns
would be met with reciprocal GoA progress on U.S. concerns. On the
WTO Doha Round, both sides were pessimistic about reaching a final
deal in the short term, but Codel members played down GoA concerns
that a final Doha deal would conflict with the current Farm Bill on
subsidies for U.S. producers. Participants discussed potential
future bilateral cooperation on biofuels and concern over Bolivia
possibly allowing Iran to found a TV station. End Summary.

2. (U) USG participants were Representatives Collin Peterson, (D-MN
and Chair of House Committee on Agriculture), Ben Chandler (D-KY),
Marion Berry (D-AR), Jerry Weller (R-IL), Ambassador Wayne,
Agricultural Counselor, and Trade Officer (Notetaker). GoA
participants were Foreign Minister Jorge Taiana, Vice Foreign
Minister Victorio Taccetti, Secretary of Trade Alfredo Chiaradia,
National Director of International Economic Relations Nestor
Stancanelli, Ambassador to the U.S. Hector Timerman, and Alejandro
Casiro and Antonio Trombetta, Directors of North American Economic
and Political Affairs, respectively.

--------------------------------------------- -----
Bilateral Trade: Beefs about Beef, Lemons, Poultry
--------------------------------------------- -----

3. (SBU) Minister Taiana, after a brief discussion of the Codel's
itinerary and an exchange about the common ground our countries
share, noted Argentina's bilateral trade deficit with the U.S., and
that it was one of few bilat trade deficits Argentina currently
faces. However, he stated this was "not a problem for us," as it
gives Argentina an incentive to do better. Upon hearing that the
Codel's next meeting was with the Governor of Tucuman, Taiana noted
that lemons was a very important issue to that small province (Note:
U.S. imports of fresh Argentine lemons are currently blocked, and
there is an active U.S. anti-dumping investigation on Argentine
lemon juice). Trade Secretary Chiaradia argued that there is "no
technical reason for lemons not to enter U.S. market, or beef from
Patagonia." Rep. Peterson countered by expressing concern with
Argentine restrictions on imports of beef and poultry. On lemons,
he noted that USDA had attempted to resolve the issue but was held
back by a court case. He warned the Argentines that California
lemon growers may file a new case on different grounds seeking to
block renewed imports and suggested that Argentina work though its
Embassy to meet with the California growers. However, he added the
U.S. is "committed to following scientific" determinations, and
expressed hope that the Argentines would do the same. Rep. Weller
regretted the lack of bilat trade agreement between our countries,
and noted that while some Members of Congress are receptive to
Argentine lemon imports, they want some kind of reciprocity. As the
U.S. moves towards allowing imports of Argentine lemons, he noted
that the U.S. will expect movement from Argentina on allowing
imports of U.S. beef and poultry.

--------------------------------------------- ------
Doha: Some Common Ground, Farm Bill not the Problem
--------------------------------------------- ------

4. (SBU) Chiaradia raised the WTO Doha Round, noting active GoA
participation in the process, and stated the GoA was "concerned
about the quality of the package presented there." However, he also
noted that, except for the issues of agricultural subsidies and
industrial tariffs, the GoA shares most of the goals of the USG -
such as more open agricultural markets around the world, and
increased services trade. He described the Round as "not very
alive" at the moment, and said he thinks WTO Secretary General Lamy
and Brazilian FonMin Amorim are too optimistic if they believe it
will be resolved during September talks in Geneva. Peterson
expressed similar doubts, which the other Members echoed. Chiaradia
also opined that a Doha end result might conflict with current U.S.
laws, clearly implying the Farm Bill. Peterson disagreed that there
would be such a conflict: "If prices fell that far (such that low
prices forced total subsidies for U.S. growers higher than caps
being discussed in Doha negotiations), our producers would be out of
business - and so would yours." He stated that the U.S.
agricultural sector doesn't see this as a good agreement, largely
for lack of market opening by Japan, the EU and even Brazil. He
added that "I think it would be very hard to pass" in Congress, but
"if we have to make decisions, we'll make them at the time."
Chiaradia echoed the concerns about market access in those
countries, and then asked if cotton subsidies would be a conflict,
noting the proposal in the most recent draft for 82% cuts in U.S.
cotton subsidies. Rep. Berry stated, "Our cotton producers are in
trouble right now," and said he has been telling his constituents
not to expect a new Farm Bill when the current one expires in five
years.

-------------------------------------
Biofuels - Potential for Cooperation?
-------------------------------------

5. (SBU) Taiana cited biofuels as an area of potential mutual
benefit. Peterson noted unhappiness in Europe with the U.S. "splash
and dash" program (where biodiesel is imported from Argentina and
other countries, mixed with a small amount of U.S. biodiesel and
re-exported to the EU with a U.S. subsidy of $1 per gallon), plus
that it's costing U.S. taxpayers. He said Congress was trying to
fix the loophole, but that doing so could reduce imports of
Argentine biodiesel, because it might remove the incentive to use
imported biodiesel rather than domestic. He noted his long personal
history of trying to advance biofuels usage, opposition to the same
by large oil companies, and expressed his hopes for the biodiesel
industry to move away from food crops to other plants, which would
probably take at least five years. Weller suggested more
parliamentary exchanges on topics such as biodiesel. Ambassador
Wayne cited existing U.S./Argentine province/state relationships,
and suggested exploring more, perhaps with Minnesota on biofuels.

6. (SBU) Weller noted that Argentina had been the victim of Iranian
terrorist activity (referring to the 1994 bombing of the
Jewish-Argentine Friendship Center (AMIA) which killed 85 persons,
and for which international arrest warrants have been issued for
five current and former Iranian government officials and one
Lebanese Hizballah leader), and encouraged Taiana and his colleagues
to advocate against Bolivia allowing Iran to create a TV station in
Bolivia. He argued that this "could poison the minds of a lot of
people," especially since he understands the intent is to broadcast
throughout South America.

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Comment
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7. (SBU) The Argentine government has placed a high priority on
gaining market access to the U.S. for fresh lemons and beef.
Argentina is the largest lemon exporter in the world and views
additional access for lemons as a way to create employment in a poor
region of the country. The issue of beef is more symbolic
(particularly for the Patagonia region), since Argentina currently
limits beef exports. The Foreign Ministry gave no indication that
decisions to allow imports of U.S. agricultural products were
forthcoming, and their non-verbal responses reinforced that message:
while Weller's concern about the Iranian TV station was met with
nods and verbal affirmation, Peterson's expression of hope for
agricultural trade decisions to be made scientifically was met by
silence. Given the political pressures the GoA currently faces over
increased imports (see reftel for private sector demands about
increased imports from China and GoA response in 2007), it seems
unlikely that the GoA will open its markets unilaterally, no matter
how well justified the move may be on scientific grounds. However,
a U.S. market opening would provide political cover for the GoA to
allow additional market access, albeit limited, for some U.S.
agricultural goods.

WAYNE

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