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U.S. Statement on the Fourth WTO Trade Policy Review of Argentina

U.S. Statement on the Fourth WTO Trade Policy Review of Argentina

World Trade Organization
Geneva, Switzerland
March 20, 2013 

*As Prepared for Delivery*

"Thank you, Chair. The United States welcomes Argentina’s delegation, led by Beatriz Paglieri, Secretary of Foreign Trade, and Ambassador Augusto Costa, Secretary of International Economic Relations, together with the rest of their team from Buenos Aires and Geneva. We greatly appreciate Argentina’s report for this meeting, which we found to be useful in learning more about how Argentina views its trade policies and the challenges it has faced during the time period of this review. As always, we are grateful to the Secretariat for its report on Argentina’s trade and economic environment. Both of these reports helped us to better understand the developments that have taken place in Argentina since its last Trade Policy Review in 2007. We would also like to thank the discussant Ambassador Trung Thanh Nguyen (Viet Nam) for his insightful remarks today.

"Argentina enjoyed robust economic growth over the past five years, with an enviable average annual GDP growth rate of 6.4 percent from 2007 to 2011. As with many other economies in the global system, Argentina’s growth slowed in 2008 and 2009 due to the global financial crisis, but rebounded to about 9 percent in 2010 and 2011. Argentina has benefited enormously from its participation in the world economy during the period under review. According to the Secretariat, goods exports reached about US$84 billion in 2011, nearly twice the level reported in 2006, a factor that contributed to Argentina’s rapid recovery from the global crisis. High prices on international markets for Argentina’s commodity exports also contributed to strong economic growth.

"The United States and Argentina have a robust trade and investment relationship. We remain mindful that trade contributes to economic growth, resulting in increased incomes and higher living standards. Since the time of Argentina’s last trade policy review in 2007, U.S.-Argentine two-way goods trade increased 42 percent, from US$10.3 billion in 2007 to $14.7 billion in 2012. Two-way services trade increased nearly 83 percent, from US$4.1 billion in 2007 to $7.5 billion in 2011.

"Despite our robust bilateral trade and investment relationship, there have been some challenges in our relationship as well. For example, Argentina’s increasingly expansive use of import restrictive measures has been a growing concern since 2008. As a result, in August of last year, the United States requested dispute settlement consultations with Argentina regarding certain aspects of its import restrictions. The United States and many other WTO Members repeatedly raised concerns with the Argentine government both bilaterally and in the WTO. But, our concerns have not been addressed and we therefore had no other alternative but to pursue this matter formally through dispute settlement proceedings. This was not a decision we made quickly or easily. Litigation is a measure of last resort. We remain open to finding a solution to this issue that would end the litigation and allow us to focus our attention on improving our bilateral trade relationship. In the meantime, however, we simply cannot accept these types of measures that hurt U.S. exporters, as well as traders in many other countries, and appear so clearly to us and to other WTO Members to be inconsistent with Argentina’s WTO obligations. Unfortunately, Argentina’s repeal of the various product specific non-automatic import licensing requirements in January does not resolve the matter.

"While we congratulate Argentina on the strong economic growth it has experienced over the past five years, we note that some policy measures are threatening the sustainability of that growth. As noted by the Secretariat, Argentina has resorted to trade policy measures intended to achieve short-term objectives thereby requiring constant policy adjustments that add complexity to the trade regime, generate costs for the economy, and create considerable uncertainty for traders. The Argentine government has increased its reliance on a growth strategy based heavily on import substitution. To carry out this strategy, Argentina has imposed a range of measures, in addition to the use of import licenses, aimed at curbing imports. These include: increasing the value-added tax on imports of consumer and capital goods; requiring a 'certificate of free circulation' on imported food products; and, increased reliance on local content requirements. Argentina’s inclination to raise tariffs is also concerning, including the most recent tariff increase in January 2013, which affected 100 products. The Secretariat highlighted this trend in its report, noting that in 2006 a total of 14.6 percent of tariff lines were duty-free, whereas in 2012, the duty-free lines accounted for only 7.5 percent of the total tariff lines.

"Argentina imposes taxes on all but a few exports, including significant taxes on key hydrocarbon and agricultural commodity exports, in order to generate revenue and encourage development of domestic value-added production. The government also requires major commodities to be registered for export, and the government retains the authority to reject or delay exports of certain commodities depending on domestic prices and supply conditions. Exports of wheat, corn, beef, and dairy products continue to be subject to periodic restrictions in order to maintain low domestic prices.

"Since 2001, Argentina has introduced a range of requirements for the purchase and transfer of foreign currency. These controls have become a central feature of Argentina’s current economic policy and are used to boost reserves, manage the exchange rate, limit private sector foreign currency liabilities, and prevent capital flight.

"We have submitted a number of specific questions to clarify individual points on these and other issues. The United States looks forward to reviewing Argentina’s responses to our written questions. We value the opportunity to engage in this dialogue with Argentina, and other Members. We look forward to discussing further Argentina’s trade policy regime, not only those issues where we are already cooperating well, such as in agriculture biotechnology and efforts to eliminate fisheries subsidies, but also on issues where we do not see eye-to-eye. The United States stands ready to engage in an open dialogue with the Argentine government in the hope of re-establishing a more cooperative and productive trade relationship."