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Chile to take Argentina to WTO over agriculture subsidies

Thursday, February 15th 2007 - 20:00 UTC
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Chile announced early this week that it would file a new lawsuit against Argentina before the World Trade Organization (WTO) for the country's use of agricultural subsidies. The pending lawsuit would further strain relations between the two southern cone neighbors, as Argentina has already has filed two lawsuits against Chile before the WTO

Although Argentina and Chile share a long border, the two countries have historically been known for their lack of economic integration. As international trade increases, the vast differences between Chile's market-based economic principles and Argentina's penchant for subsidies are increasingly being felt. Argentina already takes issue with Chilean sanctions imposed on Argentine milk and cheese imports (Chile contends the sanctions are necessary to combat milk industry subsidies), but Chile is under increasing pressure from its own farmers over Argentina's generous farming subsidies. Argentina currently imposes maximum prices on wheat, corn, milk, and soy, and Argentine food processors are reimbursed by Argentina's government if they are forced to pay more than the official prices dictate. Processed foods imported to Chile from Argentina, as a result, are often cheaper than their Chilean counterparts. The WTO opposes price ceilings, but any lawsuit brought before the organization must demonstrate damages on specific products. President Michelle Bachelet recently received a letter from several lawmakers and industry officials regarding what they described as the unfair situation, and Chile responded by sending a formal letter of "preoccupation" to the Argentine embassy in Santiago. Bachelet, however, must walk a fine line between defending the interests of her country and maintaining a strong relationship with Argentina. Chile is dependent on Argentina natural gas and is attempting to renegotiate an energy contract that expires in August. As Bolivia has refused to export natural gas to Chile because of a long-standing diplomatic dispute over sea access, Argentina remains the only source of energy for Chile's growing industry. Chile has very little reserves of gas or oil. Chile government officials also said they were keen on maintaining good relations, as Argentina is a primary recipient of Chilean foreign investment By Nathan Crooks The Santiago Times

Categories: Economy, Argentina.

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