WORLD TRADE
ORGANIZATIONG/AG/NG/W/39
25 October 2000
(00-4445)
Committee on Agriculture
Special SessionOriginal:  Spanish
THIRD SPECIAL SESSION OF THE COMMITTEE ON AGRICULTURE
28-29 SEPTEMBER 2000
Statement by Argentina
Comments on the EU's proposal on export competition
The European Community has been kind enough to put forward a number of proposals for the
agricultural negotiations.  Some of these concerning food quality, the blue box and the strange
concept of "animal welfare" are very far removed from our positions, which are based on the clearerand universal concept of the quest for human welfare . Human welfare in developing countries,
whose agricultural production is being endangered by subsidies; human welfare in net exporting
countries, which are being kept out of markets where there is a reliable source of demand;  and global
human welfare, which is being affected by environmental damage as a result of non-sustainable
production technologies.
1. The European Community's proposal on export competition is more relevant to the major
issues being discussed.  We welcome this proposal and the willingness to negotiate new reductions in
export subsidies expressed therein.  It is nevertheless a source of concern to us that this positive
statement of willingness to pursue the reform process is conditional upon the solution of other
problems which, in the EU's view, are equally or  even more harmful than export subsidies.
2. We do not wish to embark upon a sterile dialogue to determine whether cancer is worse than
leprosy.  It is a question of initiating a reform process that will lead to the elimination of all types of
export subsidy.
3. For developing countries, it makes little difference whether it is the price or the form of
payment that is subsidized.  What does concern us is that we are forced to compete with the most
powerful treasuries in the world.  Agriculture is of supreme importance for developing countries.  Asexporters or net importers, we all have large rural populations which, with a greater or lesser degree of
efficiency, with more or fewer comparative ad vantages, make a living from their rural work.
Growing globalization means that our producers have to compete both on the domestic and
international markets with products that show the sign ificant effect of massive subsidies.  In such a
competition, our producers only rely on the legitimate tools of competition, in other words, they haveto improve the quality and lower the price of their products.  Producers in the major developed
countries, on the other hand, receive massive subsidies from their governments.  Far from being
special and differential treatment, this is quite simply discriminatory against developing countries and
must be reversed as a result of these  negotiations.  For us, it is neither serious nor equitable that those
who virtually monopolize the utilization of price subsidies justify this by the malpractices by others
who are equally powerful.
4. The international economic crisis has greatly depressed the price of agricultural products.  In
many cases, the price of our exports is even lower than the price existing at the end of the Uruguay
Round.  This already critical situation has been exacerbated by an inexpedient increase in theG/AG/NG/W/39
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utilization of agricultural subsidies.  During these final years of implementation of the Agreement,
precisely at a time when we expected to see a reduction in the use of subsidies, the major partners in
this Organization have acted in an extremely selfish and irresponsible way.
5. Since 1997, the acute crisis in Asia has meant that demand for the major commodities on
which the exports of many developing countries depend has fallen.  A drop in demand usually leads toa fall in prices and is followed by a decrease in supply.  The outcome is a new balanced price.  This is
a "normal" cycle, but unfortunately the leading actors in this globalized economy have taken domestic
decisions without reflecting on their international impact.  Instead of curbing production, they have
made even greater use of subsidies, leading to even  larger surpluses, which in turn meant subsidized
prices in an international market that was already saturated.  The result was to increase the downward
spiral in prices and worsen the balance-of-payments difficulties in developing countries.
Allow me to substantiate this statement with figures.  According to the latest estimates
published by the OECD
1, in 1997, when the crisis began, support for agriculture as a whole by
member countries of the OECD amounted to US$328,762 million.  This represented 31 per cent of the
total for agriculture in OECD member countries.  In 1998, this figure rose to US$352,058 million and
in 1999 increased still further to US$361,493, representing 40 per cent of the total for the agricultural
sector in the OECD.
In other words, since the crisis began, subsidies have increased by 9.95 per cent and for each
US$100 received by a producer in an OECD country, US$40 come from direct and market-distorting
subsidies, representing an annual transfer to these rural producers equivalent to 1.4 per cent of the
GDP of the richest countries in the world.
6. The global impact of this is very serious.  The OECD2 itself has already estimated some of the
effects.  For example, if the EU did not subsidize its wheat exports, the price per tonne would be 4 per
cent higher today.  If the EU did not subsidize its maize exports, the price per tonne would be 9 per
cent higher.  Again, if the United States had not made greater use of domestic subsidies known as"marketing loan gains" and "loan deficiency payments", today soya beans would be worth 6 to 7 per
cent more.  These estimates only evaluate the "price impact" of two types of subsidy for three
products that play a major role in our exports.  Nevertheless, the downward trend in these
commodities undoubtedly affects the prices of substitute products;  for example, palm oil or substitute
cereals for wheat and maize.
7. In an increasingly globalized international economy it is normal to speak of "consistency"
between trade and financial policies.  Let me provide one example of total inconsistency.  In 1997, thecrisis in Asia occurred and, in that year and in 1998, the EU and to a lesser extent some other
countries decided to utilize accumulated export subs idies, that is to say "balances" not used in 1995
and 1996.  For example, in 1997 and again in 1998, the EU exceeded its annual limits for export
subsidies for sugar, both as regards budgetary outlay and volume.
3
                                                     
1 Agricultural Policies in OECD Countries.  Monitoring and Evaluation 2000.  PSE Tables and
Supporting Materials.  6 June 2000.
2 OECD Agricultural Outlook 2000 – 2005.
3 According to EU's notifications to the WTO G/AG/N/EEC/20 (97/98) G/AG/N/EEC/11 (96/97),
G/AG/N/EEC/5/Rev.1 (95/96).  In 1997 it overshot commitments in 22 per cent and in 18 per cent, in budgetary
outlays and volumes respectively.  In 1998 it overshot commitments in 34 per cent and 12 per cent, in budgetaryoutlays and volumes respectively.  See G/AG/NG/S/5, Background paper presented by the WTO Secretariat,
11/5/00.  The EEC also raised the subsidy equivalent from 151 per cent in 1996 to 164 per cent in 1997 (no1998 figures available).G/AG/NG/W/39
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As globalization also means interdependence, even the richest countries are being affected by
the growing economic crisis.  Our major partners, for example, have speedily had to make fresh funds
available to international credit institutions so that they would be able to contain the crisis.  In short,
European and North American taxpayers have had to pay twice.  First of all, they pay the subsidies
which exacerbate our balance-of-payments difficulties and then they pay for the credit that helps tocontain the crisis.
8. The EU tells us that price subsidies are just as bad as credit subsidies, in the same way as
certain dubious practices by State trading enterprises and abuses of food aid.  In theory, we agree with
this and we would like to see all such malpractices eliminated.  Nevertheless, we should not like to
see this theoretical comparison of evils prevent us from starting to eliminate the most obvious of
them.
9. My country has taken an active part in the search for disciplines on export credits and export
credit insurance.  We all know that the United Stat es has shown little interest in embarking upon these
negotiations and seeks to justify this attitude by the continued and intensified use of export subsidies
by the EU.
10. What will happen if, as everything appears to indicate, the requirements of Article 10.2 of the
Agreement on Agriculture are not fulfilled?  Will this justify the breakdown of negotiations?
Article 10.2 enjoins us to develop the relevant disciplines.  These must be approved by the
end of the implementation period.
If we do not have special disciplines on subsidized credits by 31 December of this year, 2000,
will these credits not be subject to any disciplines?
The answer is no.  Export credits, export credit guarantees or insurance will in any event be
subject to the general disciplines applicable to export  subsidies.  I refer in particular to Article 10 of
the Agreement on Agriculture, which was approved precisely to prevent the "circumvention of export
subsidy commitments".
In other words, if there are no special disciplines there are general disciplines applicable to
export credits, export credit guarantees and insurance.
In practical terms, this will have two consequences:(a) Products which are not in Part IV of each Member's Schedule will not be able to
benefit from export credits, insurance or credit guarantees that improve market
conditions;
(b) the subsidy element in credits, insurance and guarantees applicable to products which
are in Part IV of each Member's Schedule will have to be calculated as part of the
relevant reduction commitments.  If we do not manage to approve disciplines on
export credits, export credit guarantees and insurance by the end of this year, such
practices should be comparable to other forms of export subsidies, that is to say
subsidies which directly affect the price of the products exported.
11. For the major global exporters to enjoy the privilege of "special and differential treatment" to
keep us out of the market, either by subsidizing prices or payment terms for their exports, is also
unacceptable in our view.G/AG/NG/W/39
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12. We are ready to negotiate on the time-frame and the form for the elimination of all forms of
export subsidies.  We only have one condition.  The outcome of these negotiations should not erode
the rights we already have under the present Agreement.
The forthcoming expiry of the so-called "Peace Clause" means that, until 31 December 2003,
we have to accept that some Members may use the export subsidies listed in Article 9:1 of the
Agreement on Agriculture provided that:
(a) They respect the reduction commitments, specified in the respective national
Schedules both as regards budgetary outlays and quantities;
(b) the subsidies are not granted for non-specific products in the respective national
Schedules.
From 31 December 2003 onwards, export subsidies, both those listed in Article 9 and those
"not listed" as referred to in Article 10 of the Agreement, obviously including credits, credit
guarantees and insurance, will be subject to the provisions of Articles 3, 5 and 6 of the Agreement onSubsidies.
To summarize, as of 1 January 2004, export subsidies for products covered by the Agreement
on Agriculture will be "prohibited subsidies" in  accordance with the Agreement on Subsidies and
Countervailing Measures and, as such, will be subjec t to the action provided in Article 4 of the latter
Agreement.
Proposals by the EU ("blue box", "food quality" and "animal welfare")
We should like to thank the EU for having submitted these three proposals.  Setting aside our
differences, we believe that their submission shows the interest of Brussels in this process.
Unfortunately, we cannot agree with them.
Production-limiting subsidies
Argentina does not think that it can be stated that the blue box payments do not interfere with
market indications.  Rather it is our view that they complement or integrate them in the decision-making process of European producers and consequently the blue box also contributes to the growth
in global support measures and the support policies in the OECD area.
As we all know, the blue box payments were included in the calculation of the Aggregate
Measurement of Support, although they do not involve any reduction commitments.  In other words,they help to raise the value of domestic support in the base period used to calculate reduction
commitments, although they are exempt from such commitments.
The blue box subsidies are also related to the production-"limiting" programmes, but the
Agreement does not set the criteria for such programmes.  We are here to negotiate new commitmentsthat will enable us to achieve the objective of substantially and progressively reducing support and
protection.  We are more than willing to explore solutions that impose different reduction timetables
for the various subsidies that are presently distorting agricultural trade.  We cannot, however, accept
the continuation of the blue box on the pretext that "there are worse subsidies".
The objective of this reform process is "to establish an equitable and market-oriented system
of agricultural trade".  To achieve this, it will be necessary to eliminate all trade-distorting subsidies.
In this connection, we consider that the negotiations should set limits, reduction commitments and
disciplines for the direct payments now covered by Article 6.5.G/AG/NG/W/39
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"Food quality"
This proposal surprises us.  The EU justifies it by its concern to promote fair competition and
consumers' real freedom to choose.
We share the same concerns.  Consequently, to promote fair competition we are calling for
the immediate elimination of export subsidies.  To promote consumers' freedom, we would like to
eliminate all price subsidies and tariffs and give European consumers and consumers all over the
world the option of safe and reasonably-priced food stuffs produced in a sustainable, nature-friendly
environment through the work of farmers who received a fair wage.
Animal welfare
While the former surprises us, this causes us so me incredulity.  Argentina respects animals.
In my country, bullfighting is prohibited, there is no force feeding of ducks and geese, calves are not
kept in cages that do not allow them to develop muscles.
Why poultry and swine, yes, but geese, no, is something that escapes me, but I should like to
receive some explanations.  I am sure that the Commun ity will not find it easy to be consistent in this
respect.  If, as would appear, this is an issue that responds to special sensitivities or problems that are
specifically European, it should be dealt with on an intra-European level;  if it is a concern that is
shared, it should be dealt with in another international forum.  In any event, in our view it is difficult
to accept what appears to be an intention to extend the content of the blue box.
The European Community has been kind enough to put forward proposals for the agricultural
negotiations.  The proposals on food quality, the blue box and the strange concept of "animal welfare"
are very far removed from our positions, which are based on the clearer and universal concept of thequest for human welfare. Human welfare in developing countries, whose agricultural production is
being endangered by subsidies;  human welfare in net exporting countries, which are being kept out of
markets where there is reliable source of demand;  and global human development, which is being
affected by environmental damage as a result of non-sustainable production technologies.
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