December 12, 2006

 

WTO rules for Argentina in Chile wheat tariff dispute

 

 

The World Trade Organization (WTO), on Friday (Dec 8) ruled in favour of Argentina in a dispute with Chile involving tariffs placed on Argentine wheat.

 

A WTO panel found that "Chile is acting in a manner inconsistent with Article 4.2 of the Agreement on Agriculture, and has thus failed to implement the recommendations and rulings of the Dispute Settlement Body."

 

Chile accuses Argentina of dumping and applies a 14 percent import duty on wheat from Argentina. Chile imports most of its wheat from Argentina, Canada and the US.

 

In 2002, Argentina won a judgment from the WTO due to the import barriers. However, Chile has not reformed its laws in compliance with the 2002 ruling, the panel decided in this latest judgment.

 

"We recommend that the Dispute Settlement Body request Chile to bring its price band system into conformance with its obligations under the Agreement on Agriculture," the panel said Friday.

 

In late November, Argentina petitioned the World Trade Organization for a consultation and panel ruling after Chile extended the safeguards.

 

For years, Argentina and Chile have been at odds over Chile's safeguards and price bands for agricultural products.

 

Earlier this month, Chile's Market Distortion Commission extended a 23 percent safeguard duty on select dairy imports from Argentina for a year and extended the 16.2 percent anti-dumping duty on wheat flour imports from Argentina.

 

In early October, the Chilean government slapped a provisional 23 percent safeguard duty on Argentine liquid and powdered milk as well as gouda-type cheeses, on the grounds these imports where damaging local producers.

 

The safeguards will help stem "the fall in prices for domestic producers and correct subsidies in the Argentine industry related to the prices of feed ... and the lower cost of energy," the Agriculture ministry said at the time.

 

Argentina, Chile's sole source of imported natural gas, early in 2004 began to unilaterally limit gas exports to stave off a domestic shortage amid rising demand for energy on both sides of the Andes.