C O N F I D E N T I A L BUENOS AIRES 000787
SIPDIS
E.O. 12958: DECL: 06/06/2018
TAGS: PGOV, EAGR, AR
SUBJECT: ARGENTINA TIGHTENS CONTROLS ON AGRICULTURE EXPORTS
REF: BUENOS AIRES 766 AND PREVIOUS
Classified By: Ambassador E. Anthony Wayne for reasons 1.4 (B) and (D).

1. © SUMMARY: The president of Cargill Argentina met with the Ambassador on June 4 to discuss concerns about the rising stream of regulations to increase GOA control of agricultural exports. The new regulations are being issued without consulting the major exporters and with little regard to possible damage to his company and the agricultural sector in general. Companies operating in his sector (the most important exporers in Argentina) have been unable to gain access to the very limited inner circle of decision-makers. The Ambassador agreed to raise concerns with the GOA about the impact of these policies on investment in Argentina while protecting Cargill. The ongoing battle between the GOA and farm sector threatens to have long-term negative consequences as the GOA increases its control on the sector. END SUMMARY

2. © Cristian Sicardi, President of Cargill Argentina, the largest exporter of agricultural products in Argentina met with the Ambassador on June 4 to discuss his concerns about the direction of government policy in Argentina. Sicardi explained that the GOA is issuing new regulations to increase control of agricultural exports almost daily, with many of the regulations making little sense. He is concerned not only about the possible damage to the operations of his company, but also about the medium to long-term damage the government is doing to the country by attacking the highly efficient agricultural sector.

3. © Sicardi expressed frustration at the lack of access for his company and other major exporters to key policy makers in the government. He noted that GOA decisions are taken by a very small, closed group that is close to President Cristina Fernandez de Kirchner and her husband Nestor Kirchner. The GOA is issuing major new regulations without prior consultation, with the new rules developed by a small group that does not understand the sector. Representatives of his sector have been unable to meet with contacts that have access to this limited inner circle.

4. © Of specific concern for Cargill is a regulation to shorten the period for shipping exports to 45 days (a proposal that he called unworkable on world markets) that is now being applied to wheat, but which will likely be expanded to other products. He also noted that the GOA has modified export registration requirements for several agricultural products to give itself authority to reject exports for virtually any reason (or no reason). Sicardi was particularly concerned about further changes that could be coming down the road, such as a proposal to modify the system for export registrations to increase revenue and apply the change retroactively up to the last five years.

5. © Sicardi described recent government policies for the agricultural sector and exporters as a machine gun approach, where it is issuing a steady stream of new regulations with little regard to what they hit. The ongoing farm strike is having a major impact on the ability of Cargill to export (with major agricultural exporters already down to 50 percent of capacity), but the new regulations being issued in the middle of the dispute will have a longer-term negative impact. He wanted to draw this to the attention of the Ambassador because of the potential damage to his company and the larger economy of Argentina. He was not, however, ready to have Cargill identified as asking the U.S. to intervene out of concern the GOA could target them.

6. © The Ambassador agreed to raise with high level officials in the government concerns about the impact of the extensive new regulations (without specifically mentioning Cargill). The arbitrary nature of new requirements and attempts to collect taxes retroactively will seriously undermine future investment by companies looking at Argentina, which could have serious implications for growth of the country. The Ambassador also noted that the bilateral investment treaty provided some guarantees for U.S. companies.

7. © COMMENT: The extended impasse between the agricultural sector and the government is threatening to have a long-term negative impact on the Argentine economy and U.S. companies operating here. The intention of former president Nestor Kirchner to “bring the sector to its knees” as a show of strength is inflicting severe collateral damage on the economy. END COMMENT.

WAYNE