VZCZCXYZ0001
RR RUEHWEB

DE RUEHBU #1558/01 2220901
ZNR UUUUU ZZH
R 100901Z AUG 07
FM AMEMBASSY BUENOS AIRES
TO RUEHC/SECSTATE WASHDC 8878
INFO RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUCPDOC/USDOC WASHINGTON DC
RUEHRC/DEPT OF AGRICULTURE USD FAS WASHINGTON DC
RUEHC/DEPT OF LABOR WASHINGTON DC
RHMFIUU/HQ USSOUTHCOM MIAMI FL
RUEHAC/AMEMBASSY ASUNCION 6435
RUEHMN/AMEMBASSY MONTEVIDEO 6647
RUEHSG/AMEMBASSY SANTIAGO 0658
RUEHBR/AMEMBASSY BRASILIA 6293
RUEHLP/AMEMBASSY LA PAZ AUG CARACAS 1401
RUEHSO/AMCONSUL SAO PAULO 3464
RUEHRI/AMCONSUL RIO DE JANEIRO 2297
RUEHGV/USMISSION GENEVA 0656

UNCLAS BUENOS AIRES 001558 
 
SIPDIS 
 
SIPDIS 
SENSITIVE 
 
PASS USTR FOR KATHERINE DUCKWORTH AND MARY SULLIVAN 
USDA FAS/ONA FOR ROBERT RIEMENSCHNEIDER AND GREGG YOUNG 
EEB FOR DAS CHRIS MOORE 
EEB/TPP/MTA FOR BILL CRAFT AND CHEVER VOLTMER 
PASS NSC FOR DPRICE AND MSMART 
PASS FED BOARD OF GOVERNORS FOR PATRICE ROBITAILLE 
TREASURY FOR NLEE AND LTRAN 
USDOC FOR 4322/ITA/MAC/OLAC/PEACHER 
US SOUTHCOM FOR POLAD 
 
E.O. 12958: N/A 
TAGS: ETRD WTRO ECON EAGR EINV PREL AR
SUBJECT: ARGENTINA ON DOHA AGRICULTURE MODALITIES AND NAMA LINKAGE 
 
Ref:  (A) STATE 104815 
  (B) BUENOS AIRES 1445 
  (C) BUENOS AIRES 1341 
 
------- 
Summary 
------- 
 
¶1. (SBU) The GoA believes the latest Doha Agriculture Modalities 
draft is moving in the right direction and notes common ground with 
the paper's domestic support, market access, and export competition 
language.  Trade policy makers here appreciate that the USG is now 
"listening closely" to GoA Doha input and insist that Argentina is 
not seeking to undermine a successful conclusion to the Doha Round. 
They call their active participation in developing nation Doha 
negotiating fora, including the G-110, G-90, G-20, and the NAMA 11, 
a clear signal of the importance Argentina attaches to the 
multilateral process.  As before, the GoA call Doha Agriculture and 
NAMA texts inextricably linked, claim a "lack of balance" between Ag 
and NAMA draft text commitments, and argue that the less-than- 
full-reciprocity concept had been "distorted" in recent draft texts. 
 The GoA notes flexibility and room to maneuver on its Services 
offer, but cautions that current domestic political tensions require 
that any commercial policies reform -- particularly those implied by 
various NAMA formulas -- be gradual.  End Summary. 
 
------------------------------------- 
Ag Modalities Text: "Right Direction" 
------------------------------------- 
 
¶2. (SBU) Econ Counselor, Trade Officer, and Econ Specialist met July 
31 with Luis Niscovolos, Director of Multilateral Economic 
Negotiations in the Argentine Foreign Ministry, along with Deputy 
Director Conrado Solari-Yrigoyen and agricultural trade specialist 
Miriam Chaves to review GoA concerns on the Doha Round "Draft 
Modalities for Agriculture" paper tabled by the Committee on 
Agriculture Chairman Falconer.  Niscovolos called it a "modest 
contribution, but in the right direction," in which the GoA finds -- 
in contrast to the NAMA Modalities draft -- significant areas of 
agreement. 
 
¶3. (SBU) Niscovolos noted Ambassador and EconCouns' July 25 meeting 
with MFA Director for International Negotiations Ambassador 
Stancanelli to review GoA NAMA concerns (Ref B), and appreciated 
that the USG is now "listening closely" to GoA Doha input.  He 
stressed that Argentina is not seeking to undermine a successful 
conclusion to the Doha Round.  Rather, the GoA's active 
participation in a variety of developing nation Doha negotiating 
fora, including the G-110, G-90, G-20, and the NAMA 11, is a clear 
indication of the importance Argentina attaches to the multilateral 
process.  He called the drafting of Paragraph 24 of the Hong Kong 
Declaration "almost wholly an Argentine initiative" and said that 
Argentina was the author of the June 2007 NAMA 11 communique (WTO 
document TN/MA/W/86) that called a Swiss 35 coefficient a balanced 
result that takes into account the needs and interests of developing 
nations (Ref B).  Argentina, he concluded, wants to leave its 
"fingerprint" on Doha negotiations. 
 
¶4. (SBU) Niscovolos regretted that, in his view, the dynamic of 
end-game negotiations is such that Doha has shifted from being a 
"Development Round" to one that focuses on developed country 
priorities, with the developed nation mantra of a 
"market-opening-outcome-that-results-in-meani ngful-new trade-flows" 
an abstract concept that was never included in the original Doha 
negotiating mandates. 
 
¶5. (SBU) Niscovolos highlighted a number of specific concerns with 
the Agriculture Modalities paper that the GoA had flagged in its 
July 26 Trade Negotiations Committee intervention in Geneva: 
 
DOMESTIC SUPPORT:  Niscovolos noted that proposed OTDS (overall 
trade-distorting support) tiers are close to what the G-20 proposed, 
and offered that the lower levels of OTDS cuts proposed are 
acceptable to Argentina.  He expressed concern, however, at the lack 
of precision in definitions of Amber and Blue Box product specific 
limits. 
 
Niscovolos argued that proposed U.S. Farm Bill legislation would 
preserve U.S. domestic support at existing levels.  The Falconer 
paper, in contrast, would require significant U.S. OTDS cuts.  He 
cited as evidence a paper by French NGO Solidarite entitled "The 
U.S. Overall Agricultural Trade Distorting Domestic Support OTDS for 
2006 put in Perspective from 2001."  The paper calls the commonly 
accepted $11-odd billion value of U.S. OTDS misleadingly low in 
light of recent rulings that U.S. cotton subsidies are not green box 
and calculated that $25 billion was a more reasonable measure of 
U.S. OTDS. 
 
GREEN BOX:  Niscovolos noted that conservation programs, for 
example, while belonging in the Green Box, opened a "Pandora's Box" 
of potential abuses by subsidies that are conservation in name but 
actually have a "distorting effect" on trade.  Such abuse would 
weaken Green Box disciplines, and the GoA wants more "precise 
criteria" included in the Agriculture Modalities text to better 
define conservation. 
 
MARKET ACCESS:  Niscovolos noted a high degree of "coincidence" 
between GoA, G-20 and USG positions here, including on levels of 
ambition.  "Our difference is with the EU position here," he said. 
Niscovolos emphasized that, while average bound duty reductions were 
capped at 36-40% for developing countries, there was no 
corresponding minimum for developed countries.  He again cited 
common ground with the USG on the fact that there is no 100% tariff 
cap for developed countries, and expressed concern about the higher 
range of tariff lines which could be designated "sensitive" in the 
Falconer draft versus the G-20 position, which could limit tariff 
reductions for developed countries.  "We are afraid," he concluded, 
that special products and safeguards could be used as a shield 
against change. 
 
Chaves added that tariff-rate quotas for sensitive products could 
expand inappropriately if based partly on import levels rather than 
only on domestic consumption.  She argued that the EU proposal, 
since it is based on import levels, would limit tariff cuts on 
sensitive products by restricting the expansion of TRQ quotas for 
that product.  Niscovolos also criticized TRQ loopholes in the 
G-33's market access proposal, adding that agricultural tariffs are 
already complex and this will do nothing to simplify them. 
 
EXPORT COMPETITION:  Niscovolos offered that the GoA agreed with the 
suggested elimination date of 2013, but argued that there was too 
much "frontloading" in the proposal.  He also made clear that this 
issue was of lesser importance to the GoA. 
 
PEACE CLAUSE AND SPECIAL SAFEGUARDS:  Finally, Niscovolos made clear 
there was "no way" the GoA would accept insertion of a new "peace 
clause" such as that found in the 1994 WTO "Agreement on 
Agriculture" Article 13.  He also criticized the special safeguard 
mechanism in Article 5 and argued that it should be eliminated, 
since the safeguard could be used in a way that would "neutralize" 
the true market access increase negotiated in an eventual Doha 
agreement, and the actual tariff cut would be "very modest" compared 
to the proposed base tariff cuts.  Chaves noted that the GoA has 
co-presented two papers - JOB(07)/85 and JOB(07)/90 - with this 
 
argument. 
 
------------------------------------ 
"Room to Maneuver" on Services Offer 
------------------------------------ 
 
¶6. (SBU) Niscovolos regretted that service sector negotiations were 
given lower priority that Agriculture and NAMA in recent Geneva 
talks.  "Argentina has worked hard since the beginning on this, with 
two of our best service sector negotiators now serving on the WTO 
Secretariat's service staff."  Argentina, he said, had undertaken 
 
SIPDIS 
specific commitments in six of the 12 GATS sectors, had participated 
in the extended telecom negotiations and had ratified the Fourth 
Protocol.  Argentina has "no significant barriers" and has made 
broad commitments in financial services (with the exception of 
insurance), telecom services, business services, distribution 
services and tourism, as well as Mode 4 access.  He concluded noting 
that Argentina understands the importance of the services pillar to 
developed countries in general and to the U.S. in particular and has 
"room to maneuver" on its offer. 
 
------------------------------------------- 
GOA: "Can't Separate" NAMA from Agriculture 
------------------------------------------- 
 
¶7. (SBU) The GoA "can't separate" NAMA and agriculture in the Doha 
negotiations, Niscovolos said, because they are equally important 
and because the Hong Kong Declaration mandate specifically calls for 
a "balance" between the two.  Solari stressed the "lack of balance" 
between agricultural and NAMA commitments in the draft texts, 
emphasizing that the concept of "real market access" was not a Doha 
Round mandate.  The "less than full reciprocity" concept had been 
"distorted" in recent draft texts, he said, challenging the U.S. to 
"find something wrong" with the supporting data and calculations 
included in the Argentine-drafted NAMA 11 communique (WTO document 
TN/MA/W/86). 
 
¶8. (SBU) Niscovolos closed noting that middle income Argentina, with 
its history of economic volatility and recently growing income 
inequality, combines characteristics of developed and developing 
nations.  The consequent domestic political tensions require that 
any reform of domestic commercial policies -- including those 
implied by various NAMA formulas -- must be gradual. 
 
------- 
COMMENT 
------- 
 
¶9. (SBU) While Argentina's share of world trade was less than 0.37% 
in 2006 (and declining), its share of world agricultural exports 
that year exceeded three percent, and Argentina remains a leading 
player in international oil seed and meat markets.  It is no 
surprise, then, that the GOA is deeply interested in the technical 
nuance of the Doha Agriculture Modalities paper.  GoA linkage of 
Agriculture and NAMA pillars reflects an articulated GoA policy (Ref 
C) that Argentina must develop a diverse industrial base to increase 
domestic value-added and limit dependence on agricultural commodity 
exports; that current windfall GoA revenues (via high commodity 
export tariffs) should be used to provide targeted subsidies to 
develop domestic industry; and that these subsidies should be 
combined with strongly protectionist trade policies -- including 
maintaining the highest possible NAMA-consistent  tariffs -- in 
order to facilitate this economic restructuring. 
 
¶10. (SBU) The considerable Foreign Ministry energy put into 
multilateral trade talks has been interpreted by some local analysts 
as compensatory behavior for this Ministry's limited profile in 
Kirchner administration foreign policy initiatives.  It is also seen 
as one of a series of Argentine plays to one-up Brazil for influence 
within the G-20.  Foreign Ministry Trade Secretary Alfredo 
Chiaradia, in a clear reference to Brazil, said in June that "some" 
countries might seek a Doha deal that is bad economically in 
exchange for political gain.  The sense in the GoA appears to be 
that Argentina has little to gain from agreeing to current Doha 
drafts but much to gain domestically, in a pre-election period rife 
with protectionist populism, from holding out against one. 
 
WAYNE