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O 111412Z DEC 06
FM AMEMBASSY BUENOS AIRES
TO RUEHC/SECSTATE WASHDC IMMEDIATE 6724
INFO RUEHBR/AMEMBASSY BRASILIA PRIORITY 5645
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RUEHLP/AMEMBASSY LA PAZ DEC 4349
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UNCLAS BUENOS AIRES 002723 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
WHA FOR WHA/BSC AND WHA/EPSC 
E FOR THOMAS PIERCE, EB/TPP/ABT/BTT FOR MATTHEW KOCHS, 
SHARON WIENER, THOMAS LERSTEN AND HAROLD SLAUGHTER, PASS 
NSC FOR JOSE CARDENAS 
PASS FED BOARD OF GOVERNORS FOR PATRICE ROBITAILLE 
EX-IM BANK FOR MICHELE WILKINS 
OPIC FOR GEORGE SCHULTZ AND RUTH ANN NICASTRI 
PASS USTR FOR SUE CRONIN AND MARY SULLIVAN 
TREASURY FOR ALICE FAIBISHENKO 
USDOC FOR 4322/ITA/MAC/OLAC/PEACHER AND JOHN ANDERSEN 
USCINCSO FOR POLAD 
PASS AGRICULTURE FOR JEANNE BAILEY 
 
E.O. 12958: N/A 
TAGS: ECON PREL EAGR AR OREP ETRD
SUBJECT: CODEL GOODLATTE MEETINGS WITH ARGENTINE OFFICIALS 
 
 
¶1. (SBU) SUMMARY: CODEL Goodlatte November 30 meetings in 
Argentina included discussions with senior officials at the 
GoA Ministry of Foreign Affairs, the Ministry of Economy, and 
the Argentine Lower House of Congress, as well as with U.S. 
company representatives at the American Chamber of Commerce. 
Delegation discussions focused on Argentina's burgeoning 
agricultural sector and its important role in Argentina's 
economic recovery;  bilateral and multilateral 
agriculture-related trade frictions; Argentina's development 
of alternative bio-diesel fuels; the ongoing dispute between 
Monsanto and Argentine producers on royalty payments for its 
Roundup-Ready product; the GOA's controversial policies of 
price controls, export taxes and export controls; and the 
Argentine Congress interest in increasing contacts and 
cooperation.  END SUMMARY. 
 
---------------------------- 
American Chamber of Commerce 
----------------------------- 
 
¶2. (SBU) The American Chamber of Commerce hosted a breakfast 
meeting for CODEL Goodlatte and representatives of U.S. 
companies involved in Argentina's agro-industrial sector, 
including Cargill and Monsanto, who briefed the delegation on 
agriculture-related trade issues in preparation for meetings 
with GoA officials. Discussion focused on Argentina's strong 
economic performance and the large role that the agricultural 
sector had played in Argentina's now four year-long economic 
recovery.  Chairman Goodlatte asked about Argentina's ethanol 
and bio-diesel fuel production efforts.  Rep. Peterson 
mentioned that U.S. companies are concerned that Argentina's 
relatively low export tax (5 percent) on 
bio-diesel fuel would effectively subsidize bio-diesel 
exports to the U.S.  Cargill underscored the fact that export 
taxes in Argentina are a key fiscal policy instrument and 
said they were confident that, if bio-diesel becomes a major 
Argentine export, the GoA would certainly raise export taxes 
on this product to increase foreign exchange earnings. 
 
¶3. (SBU) Monsanto mentioned that Argentina is able to absorb 
high export taxes on agricultural products such as soybeans 
and sunflower seeds (currently 23.5%) due to Argentine 
producers ready access to river ports and due to their highly 
efficient production.  Other company reps commented on the 
perception that Argentina's top agricultural producers are 
wealthy, yet have little political power.  There are only 
four existing associations of agricultural producers, two of 
which announced their intention to strike November 29 to 
protest GoA domestic price controls, export taxes and export 
controls.  Rep. Herseth asked about Argentina's environmental 
policies and asked for an update on the diplomatic dispute 
between Uruguay and Argentina over the construction of a large 
paper mill on the river that defines the border between the two 
nations. Cargill called the dispute more political than an 
environmental issue, and noted that Argentina does not have a 
strong environmental consciousness. 
 
--------------------------------------------- ------ 
Meeting with Foreign Ministry - WTO, Monsanto, bilateral trade 
--------------------------------------------- ------ 
 
¶4. (SBU) The delegation met with Vice Foreign Minister 
Roberto Garcia Moritan and Secretary of Foreign Trade Alfredo 
Chiaradia.  The meeting focused on WTO negotiations but also 
addressed the Monsanto dispute and trade with Venezuela, 
China, the Middle East and the U.S.  On WTO, Chiaradia 
stressed that the GoA appreciated the strong U.S. position on 
opening developed and developing country markets, but made 
very clear the belief that the U.S. and EU would have to "do 
their part" to reach an agreement, by reducing subsidies (so 
countries can "compete with farmers, not with budgets") and 
increasing market access.  The GoA's "demand" is that the 
U.S. understand that subsidy reduction is necessary for Doha 
resolution.  Goodlatte appreciated the GoA's consistently 
strong position on non-agricultural market access and noted 
our common views on EU agricultural protection.  Goodlatte 
opined that historically high grain prices as a consequence 
of surging demand for grains as a feedstock for biofuels 
production could ease the subsidy issue, which will be 
addressed in a new Farm Bill sometime in the next year.  Rep. 
Peterson added that the Farm Bill's subsidy provisions will 
likely be drafted on the assumption that a Doha consensus 
will not be reached and added that TPA was not likely to be 
renewed.  Goodlatte observed that Congress probably would not 
have passed the last US Doha offer, and stressed that the EU 
had far more room for cuts in terms of both subsidies and tariffs. 
 
¶5. (SBU) Rep. Peterson questioned the apparent contradiction 
between the GoA's claim of wanting free trade and the GoA's 
current use of export taxes.  Chiaradia noted that export 
taxes are, like import tariffs, WTO-compliant.  He also 
explained that export taxes are helpful to domestic 
consumers, keeping products available on local markets at 
prices lower than international reference rates.  They are 
also helpful, Chiaradia explained, in encouraging Argentine 
domestic value-added processing of otherwise raw commodity 
exports by countering the tendency of importing countries to 
escalate tariff rates up the value-added chain, and a 
significant source of revenue for the GoA.  When asked if 
export taxes would rise as biofuel demand drives up commodity 
prices, Chiaradia deferred, saying that supply might rise to 
match the demand increase. 
 
¶6. (SBU) Goodlatte raised the Monsanto biotech soybean 
royalties collection issue, noting that U.S. economic 
strength was tied to the capacity of companies like Monsanto 
to innovate, and that, by helping increase soy production in 
Argentina, Monsanto had contributed significantly to 
Argentina's economic growth and prosperity.  Chiaradia noted 
our partnership on biotech in the WTO against the EU, and 
argued the Monsanto case was based on a misunderstanding 
about what should be protected.  While he stated that 
Monsanto "should capture the reward" for the use of their 
product, that idea applied to the seed itself, not to 
products which were derived from soybeans.  He explained that 
Monsanto originally sold its Roundup Ready seeds in Argentina 
without patent protection because Monsanto's application 
wasn't filed in time and so worked with licenses instead.  He 
said that Monsanto, "all of a sudden" decided to go to court 
in the EU.  "We have always been ready to negotiate with 
Monsanto," he said, suggesting that Goodlatte ask Monsanto 
why it hadn't taken up the GoA on its offer to talk. 
Goodlatte requested more GoA support for the protection of 
intellectual property, including better enforcement of 
existing laws and regulations. 
 
¶7. (SBU) In response to a question from Goodlatte on where 
MERCOSUR was headed with Venezuela as a new member, Chiaradia 
noted that MERCOSUR had already had a "free trade" framework 
with Venezuela, and Venezuela's membership had only 
accelerated a process of trade opening.  Many details of 
Venezuela's accession, he added, remain to be negotiated. 
Chiaradia explained that, while the four original MERCOSUR 
members are competitors in agriculture, Venezuela is not a 
significant agricultural producer.  Opening Argentine trade 
with Venezuela will offer preferential access to key 
Argentine exports, and provide Argentina greater access to 
Venezuela's productive strengths, including in hydrocarbons 
and steel.  He added that "five are more complicated than 
four," but downplayed integration difficulties by comparing 
Venezuela's accession to the EU's incorporation of new 
members.  "We will probably have more influence on Venezuela 
than Venezuela has on us," he said. 
 
¶8. (SBU) Garcia Moritan responded to a question about 
anti-terrorism efforts by noting the upcoming 3 1 tri-border 
discussions.  When asked about China trade, Chiaradia stated 
that Argentine exports were about USD 3.2 billion and imports 
USD 2.2 billion, so Argentina enjoys a surplus - but 
"probably not for very long," as the export composition is 
not favorable to Argentina in the long-term.  (Note: 
approximately 78% of Argentine exports to China in 2005 were 
oilseeds - mainly soybeans - and vegetable oils.)  On 
Argentine trade interests in the Middle East, Chiaradia 
said Argentina's trade policy is to trade where it can, and 
that Argentina has regular trade relations with all countries 
in the region except Iran. 
 
--------------------------------------------- --------- 
Meeting with Economy Minister and Agriculture Secretary - 
economy, export taxes, economic intervention, Mercosur, 
agricultural trade, Monsanto 
--------------------------------------------- --------- 
 
¶9. (SBU) Economy Minister Felica Miceli noted the great 
improvement in the economy since the economic crisis of 
2001-2002, and stated that the previous governments had not 
provided a good environment for growth, and hailed the 
results of President Kirchner's policies.  She said that many 
problems remained, highlighting unemployment, social 
inequalities, and poverty.  She frankly acknowledged the 
economic distortions that result from high export taxes and 
price controls, especially relating to agricultural 
products and argued that "as politicians, we all understand 
that we can't be fully happy, and at times, we have to choose 
among bad options."  Miceli concluded that the products 
impacted by GoA price controls, export tariffs and export 
constraints - bread, beef, chicken, milk, corn and wheat - 
would be "two or three times more expensive" if the 
government did not intervene, that millions of poor would 
be severely affected, that the producers were still in a 
"privileged" economic position, and if the GOA did not 
intervene, there would be social unrest. 
 
¶10. (SBU) In response to CODEL's questions about the nature 
and future of Mercosur, Miceli said that its goal was not to 
become "another European Union," and in any case it was not 
nearly as economically advanced.  She said it would take time 
and further negotiations to fully incorporate Venezuela as 
Mercosur's fifth member, but that she was optimistic about 
the process. 
 
¶11. (SBU) Secretary of Agriculture, Livestock, Fisheries, and 
Food, Miguel Campos complained about the "unfairness" and 
lack of consistency of the United States agricultural import 
policy restrictions of Argentine beef and other products.  He 
particularly complained about U.S. policies relating to Foot 
and Mouth and BSE disease, saying it is widely known that the 
former posed no risk to human health.  On "Mad Cow Disease," 
he said that there was no consistency on the part of the U.S. 
in its judging whether a country was safe from such diseases. 
 Campos said that the U.S. should establish "minimum risk" 
criteria for judging such disease transmission risk, akin to 
the model the U.S. had proposed to Japan.  He also asked for 
the same such quality and consistency of risk assessment on 
the risk of Newcastle disease in imported poultry.  Rep. 
Goodlatte responded that the U.S. is actively studying these 
issues, and that all requests will receive a full hearing. 
He noted that in 2005, the U.S. had re-opened its market to 
beef imports from Uruguay, demonstrating that the U.S. 
responsiveness to improved phytosanitary practices.  He also 
expressed his hope that Argentina would someday open up its 
own market to U.S. beef.  He expressed the hope that both 
sides might consider looking at nations' markets not in a 
national sense, but perhaps in a regional sense, as often 
such outbreaks are limited to small areas within vast land 
areas that comprise both our nations. 
 
¶12. (SBU) The group discussed, in very frank terms, the 
longstanding dispute involving Monsanto seeking compensation 
for the use of the Roundup Ready (RR) soybean technology. 
(Note: 98% of soybean grain in Argentina is RR.)  Rep. 
Goodlatte pointed out how important IPR and its protection 
are to the American economy, creativity, and jobs.  He asked 
about any latest progress on Monsanto.  Minister Miceli and 
Secretary Campos said they remained open and hopeful that 
 
SIPDIS 
Monsanto and the Argentine grain exporters could come to an 
agreement whereby the latter would pay for the use of the RR 
technology.  GOA officials noted that Monsanto never did 
obtain a patent in Argentina for its product but readily 
acknowledged Monsanto's tremendous success in Argentina. 
They agreed it is fair that Monsanto's should be compensated 
for its technology.  Miceli and Campos said that this dispute 
was between Monsanto and the exporters, and not with the GOA, 
adding they had been very hopeful last year that the two 
sides were close to an agreement, and were disappointed that 
an agreement was not ultimately reached.  (Note:  This 
observation is disingenuous.  The GOA has consistently 
obstructed the achievement of a solution to this issue.  End 
Note).  They were at pains to express that the GOA was not 
directly involved in these negotiations, but said they always 
encouraged that a solution be found.  However, once Monsanto 
sought legal redress in Europe (which the GOA officials 
described as a "big setback"), the GOA had no choice but to 
legally defend its Argentine citizen exporters. 
 
--------------------------------------------- --------- 
Meeting with Lower House of Congress - desire to increase 
contacts, information-sharing and cooperation 
--------------------------------------------- --------- 
 
¶13. (SBU) CODEL was then hosted for a luncheon by their 
counterparts from the Argentine House of Deputies.  The 
Argentine deputies represented a cross section of the 
Congress from both the ruling party and the opposition. 
Members included the president of the Argentine Agricultural 
Committee Ana Berrate and the president of the House of 
Deputies Alberto Balestrini.  Mr. Balestrini welcomed the 
opportunity to expand contacts and the exchange of 
information with their U.S. counterparts.  Mr. Goodlatte said 
the U.S. Congress was ready to engage with Argentine on a 
broader basis, noting that democracy is the foundation of 
economic development.  Opposition deputy Federico Pinedo 
noted that U.S.-Argentine relations had been based primarily 
on security issues and noted the need to enhance cooperation 
beyond these topics.  Mr. Peterson questioned the Argentine 
delegation on how they intended to develop and support the 
local biodiesel industry.  He also noted that whatever 
influence the Argentine Congress could have on MERCOSUR to 
restrain trade complaints would be useful. 
 
¶14. (U) The CODEL did not have a chance to clear on this 
cable. 
 
¶15. (U) For additional Buenos Aires reporting, please see 
http://www.state.sgov.gov/p/wha/buenosaires 
WAYNE