WORLD TRADE
ORGANIZATIONWT/MIN/(98)/ST/97
20 May 1998
(98-2100)
MINISTERIAL CONFERENCE
Second Session
Geneva, 18 and 20 May 1998Original:  Spanish
ARGENTINA
Statement Circulated by H.E. Mr. Guido Di Tella,
Minister for Foreign Affairs, International Trade and Worship
1. The Second Ministerial Conference of the WTO and the 50th Anniversary of the creation of
the GATT coincide with a period of radical change in international economic relations.Notwithstanding the serious problems and strains currently caused by the crisis in Asia, structural
unemployment and the adjustments due to the globalization process, the temptation of protectionism
cannot be seen as a viable or desirable alternative means of meeting the demands of our societies.
This feeling of collective confidence in the process of economic liberalization, which Argentina fully
shares, is the unmistakable sign of a genuine change in the way in which the problems caused byglobalization and its underlying policies are resolved.
This is not fortuitous.  After five consecutive decades of organized efforts to liberalize trade
by creating and strengthening the rules of the multilateral trading system, the majority of mankind is
ready to tackle the problems, on the basis of more rational formulas than renewed protectionism.  Inthis situation, our only concern is a certain hesitation, some contradictions and fears among the ranks
of those who are expected to exercise stronger leadership.  This is especially true when we see that
some countries that preach global liberalization only commit themselves to selective and hence
discriminatory liberalization, leaving out key sectors of international trade.
We all face political exigencies or difficult electoral processes.  It would be a matter of
concern if, faced with the first diffuse signs of internal imbalance caused by these changes in the most
developed societies, some people, on the eve of th e 21st century, showed an inclination to await better
times and turn back the clock of history.
2. Nevertheless, the draft Ministerial Declaration to be submitted to us by the General Council
points in the right direction and makes it clear that this Organization has the determination needed to
consolidate liberalization efforts and make the further progress we all seek in the multilateral trading
system.
The Declaration opens the door that will allow us to adopt the decisions needed to ensure that
at our next meeting, on the occasion of the Third Ministerial Conference, it will prove possible to
initiate a broad and comprehensive negotiating process without delay so as to create new and better
production, employment and foreign trade opportunities for all Members of the Organization on the
basis of consensus and a balance of interests.
Consensus is the instrument that will allow us to be certain that the agreements we reach are
effectively implemented, while the criterion of balance will ensure that all the whole range of
objectives contribute to the success of the respective understandings.  This contrasts with a sectoral
approach to negotiations which, by definition, ends by being of greater benefit to a limited number of
Members.WT/MIN/(98)/ST/97
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The first goal set and met by this Conference has been to approve the procedures for pursuing
the trade liberalization process under way on the basis of respect for the current mandate in terms of
the timetable for initiating future negotiations co ntained in existing Agreements such as those on
Agriculture and Services.  This has been clearly reflected in the Declaration, where the interests of all
WTO Members are taken into account in a balanced and comprehensive manner.
The second goal we have managed to reach on this occasion has been that our future action
will also reflect the scope and modalities of negotiations to resolve the problems encountered in
implementing the aforementioned Agreements and the su bstantive provisions of the so-called "built-in
agenda".  This package is not divisible:   both implementation and the built-in agenda are included in
the commitments already undertaken in the Uruguay Round, so no Member should pay an additional
price in order to ensure that obligations already existing are met.
For us, implementation problems do not necessarily imply a change in the provisions but
simply mean that they are not being fulfilled.  Gene rally speaking,  the legitimate interest that certain
Members might have in amending a provision or a set of provisions can only be considered within the
framework of new negotiations because experience may have shown that the rules previously agreed
have not been effective or sufficiently ambitious in meeting the objectives envisaged by Members
when they concluded the various Agreements that already exist.
These disciplines, however, emerged from the balance of rights and obligations that were
agreed in the Uruguay Round, so any modification mu st be undertaken within the framework of new
comprehensive negotiations.  Nevertheless, this should not mean renegotiating or paying a higher cost
in order to satisfy the provisions of the built-in agenda as these are an indisputable commitment to
application or implementation.
The third objective is to pursue work on the planned revision of the existing Agreements and
on the decisions adopted in Singapore in a constructive spirit, respecting the agendas agreed and
without creating advantageous or artificial priorities for any Member or group of Members, or with
regard to particular issues.
No one must be excluded or obtain premature sectoral advantages.  No negotiation under the
mandate should become a hostage to other decisions,  because this would lead us to increase the cost
of the rights and obligations already negotiated and agreed in the past.
3. We welcome the debate that has started in certain forums on regionalism.  Nevertheless, we
consider, that certain elements essential to an understanding of this process are missing, beginningwith the need to undertake a realistic, objective and non-dogmatic analysis of the contribution made
by integration agreements to the global liberalization process.  Much remains to be done in particular
regarding the complementarity and consistency of regional measures and measures within the
multilateral trading system.  A specific reference to re gionalism in the rules of the multilateral trading
system is an essential step towards ensuring the functioning of the WTO.  Moreover, we believe thatthe WTO provides the reassurance needed to integrate the various processes under way.
Those of our countries and regions that have made a strong political and economic
commitment to this process would view with great interest and would firmly support extensive and in-
depth work on these issues.
4. The WTO is not a select club, as was sometimes said about the GATT.  Today, it is an
institution that has 132 Members, with another 31 countries and territories negotiating their accession.We have shown our concrete interest in seeing a rapid and satisfactory outcome to these accession
procedures, because it is essential to increase the universal coverage of our Organization, maintainingWT/MIN/(98)/ST/97
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the integrity of the existing rules and the commercial viability of the concessions agreed with each
potential Member.  This is the only way in which the WTO can properly serve its current and future
members.
5. We would like to focus on the agricultural sector.  The Asian crisis, in addition to its immense
impact on the macroeconomic functioning of the countries concerned, also has a direct bearing on the
international trade issues discussed and agreed in the WTO, including the implementation of theAgreement on Agriculture.
In Singapore, we said that this sector had been the subject of systematic "apartheid" during
the lifetime of the GATT.  We also forecast that there was a danger of ruinous competition similar to
a price war on international markets.  Unfortunately, this latter prediction has become a fact today.
The world's major exporters are making greater use of cumulative export subsidies or have announced
that they intend to do so, even though it is obvious that the prices of the major agricultural
commodities are already below the depressed levels that existed before the end of the UruguayRound.  Other partners in the system have shown great creativity in circumventing the disciplines
applicable to export subsidies.
This ruinous competition will be prejudicial to all those involved, starting with those who do
not subsidize or have the funds or legal right to do so.  Lower prices will mean lower income for
exporters, fewer incentives to promote domestic production in importing countries and fewer
incentives to maintain supplies in the next agricultural year.  When the cycle ends, we will all havepaid unnecessarily, particularly net-food importing developing countries, which shows that it is
subsidies and not the lack of subsidies that is the real enemy.
The Asian crisis led to the reintroduction of competitive practices that we believed were gone
for good.  Just as in the first external debt crisis in the years 1982-83, some came to the "aid" of
countries affected by this situation with highly subsidized agricultural export credits, which help to
reduce prices in international markets drastically and confer undue advantages, to the detriment of
other exporters, especially those that do not subsidize, as a result of the rapid displacement of markets.
This partly explains why the Uruguay Round commitments have not yet been implemented and welack disciplines on agricultural export credits.
Given these disturbing signals, we once again urge that these serious distortions should
immediately be eliminated.  No one benefits from the use of export subsidies, much less from their
cumulative use.  No one benefits from the continued existence of a chaotic export credit market, or
from the use of the power of state trading enterprises to neutralize market access commitments and
the import or export disciplines approved in the Uruguay Round.
Regarding the latter topic, the limited progress noted in the application of the disciplines on
transparency approved during the Uruguay Round cannot be ignored.  The scant progress achieved in
the supervision of commitments regarding the operation of state trading enterprises weakens thepossibility of reviewing current and future compliance with the obligations of WTO Members and of
those countries which are negotiating accession and which base a substantial proportion of their
economic system on the activities of such enterprises.
6. The future negotiations in the field of agriculture must be more constructive, and efficient and
of shorter duration than the previous ones.  They should serve once and for all to place agriculture onan equal footing with the disciplines and concessi ons relating to non-agricultural products.  There
appears to be no end of ingenious methods of increasing protection and subsidies.  Some OECD
countries seem to have discovered quite recently that rural activity serves not only to produce
foodstuffs and raw materials, but also to provide employment, protect the countryside, maintain
growth in the agri-food sector and, perhaps, to pres erve the environment.   Like Molière's Bourgeois
Gentilhomme, they had unwittingly been speaking in prose.WT/MIN/(98)/ST/97
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It is only in connection with the aim of definitively incorporating agricultural trade in the
general disciplines of the multilateral trading system that we see a possibility of addressing the so-
called "multifunctionality" of agriculture in a debate which appears to be relevant to countries inclined
to link environmental protection with the need to continue subsidizing agriculture.  Up until  now, no
one has been able to demonstrate on economic or environmental grounds that export subsidies or
producer prices are an effective means of achieving legitimate environmental objectives.
It is our wholehearted wish that common sense should have an opportunity to prevail in the
forthcoming negotiations on agriculture, since otherwise they will be unnecessarily complex.  We
believe and propose that the negotiations should be confined to a sensible discussion on how soon
export subsidies will be rolled back;  on how we can rapidly put an end to all types of domestic price
support and on ways of rationalizing Green Fund subsidies;  on how to strike a balance between
agricultural and industrial tariffs; on how to eliminate the dual exemptions presupposed by the special
safeguard and how to simplify the extremely complex pattern of tariff quotas established in theUruguay Round.  Before embarking on this process, we must resolve the thorny issue arising from
non-fulfilment of  the commitment entered into duri ng that Round, by virtue of which we agreed to
approve disciplines in respect of agricultural export credits, which in our view should be ambitious.
Subjecting farmers to the disciplines of the international market is not an attack on their
livelihood, but will strengthen their capacity to serve the community and their own interests.  No
agricultural producer, whether operating in a developed or a developing country, can survive on non-remunerative prices.
7. We should now like to comment on the links between agriculture and the legitimate objective
of achieving sustainable development.  We are aware that the liberalization of agricultural trade is not,in itself, the only guarantee of improved environmental protection.
In order to promote complementarity between environmental protection policies and the
multilateral trading system, it is necessary to begin by eliminating those distortions of trade which
work against "healthy" international prices, those which prevent production costs from being fully
reflected.  Prices determine the conduct of investors, producers and consumers.  Price "message" is
distorted, the relative scarcity of a specific factor of production is concealed, and this hampersascertainment of the system's capacity to maintain a particular level of output over time (i.e.
sustainable output).
Export subsidies have a detrimental effect on international prices, and this distortion is felt at
global level.  Investment is wrongly targeted, output  is wrongly targeted, in the long run, consumption
is skewed, attacking the very basis of the aim of sustainable development.
When in 1987 alone, and despite the "limits" imposed by the Agreement on Agriculture, the
OECD countries devoted 280 thousand million dollars to subsidizing agriculture, we must ask
ourselves whether they genuinely wished to achieve the objective of sustainable development to
which they proclaim their attachment and what a sort of "multifunctionality" they expect from theagricultural sector.
The environmental consequences are also disastrous.  A country without resources cannot
protect its rural producers from the subsidization policies of its "trading partners", nor can it imposeenvironmental policies which inevitably involve sacrif icing short-term gains in order to preserve the
sustainable development of resources.
8. These comments should extend to one aspect of the implementation of commitments which
causes us serious concern.  We are referring to the macroeconomic consistency of the commitments of
WTO Members with their commitments as members of  multilateral financial institutions such as the
International Monetary Fund and the World Bank.WT/MIN/(98)/ST/97
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Argentina sees the instruments approved in Marrakesh and the bilateral agreement between
the WTO and the International Monetary Fund and the World Bank as components of disciplines
which are mutually supportive, not mutually exclusive.  Consequently, we consider it important that
the decisions of our Organization should reflect the overall constructive thrust of those instruments,
without disregarding explicit responsibilities.
9. At the same time, we believe in the integrity of the current agreements on competition rules,
which in our view should be maintained without am endment, enabling progress to be made in those
areas which pertain to implementation of the package agreed in the Uruguay Round.  This should not
hamper serious efforts to improve transparency or to make the notification review mechanisms more
efficient.
10. Argentina believes that the dispute settlement mechanism is one of the pillars of the WTO,
that it broadly satisfies the expectations of Members and that it only needs operational fine-tuning,
possibly including the adjustment of one or more of its provisions through additional interpretation ofsome of its rules.
No such adjustment will be complete without increased representation and balance, within the
legal services of the WTO Secretariat, of staff with adequate training in the world's different legal
systems.  The process of universalization of the WTO, which followed the conclusion of the Uruguay
Round and which is constantly furthered by accessions of new Members, must also be reflected in thegreater representation of the different schools of legal theory, as mentioned above.
We also consider it important to strengthen technical cooperation in this area, where the
protection of specific commercial interests increasingly calls for specialized, updated and
sophisticated legal knowledge, which in turn give s rise to a growing need to train suitable human
resources.
Finally, we would be less than frank if we failed to mention that we are not satisfied by the
excessive and, at times, undue use which some Members make of this mechanism.  The establishment
of a dispute settlement mechanism based on principles of fairness, procedural dispatch, efficiency and
mutual acceptance on the part of States involved in a dispute, is one of the most important
contributions made by the Uruguay Round to the multilateral trading system.
Nevertheless, its significance as an essential tool of the WTO should not conceal the basic
fact that, under this system, a dispute is a deviation from the proper functioning of the disciplines on
which agreement has been reached.  The WTO should look ahead and not base its very existence on
the dispute settlement mechanism, since its future cannot be built on the basis of disputes.  The greater
the consensus achieved and the greater the progress made in the liberalization process, the less needthere will be to use dispute settlement as a means of ensuring full adherence to the principles of the
multilateral trading system.
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