July 17, 2008

Argentine Senate’s Rejection of Export-Tax Bill Harsh Blow to President – Agency

Text of report by government-owned Argentine news agency Telam

[Report "Argentine Senate Rejects Export-tariff Bill" - Telam Headline]

Buenos Aires, 17 July: Argentina's Senate voted against a government-backed grain-export tax package early Thursday by the narrowest of margins, dealing a harsh blow to President Cristina Fernandez.

The vote was deadlocked at 36 apiece after 17 hours of debate, but Vice President Julio Cobos - in his capacity as president of the upper house -cast the deciding vote against the measure. The bill went to the Senate after being approved in the lower house by a vote of 129-122 on July 5 after another marathon session. The conflict between the countryside and the government broke out on March 11, when Fernandez's administration decreed a sliding-scale increase in export taxes on wheat, sunflower seed, soy and corn, tying the tariffs to global commodity prices. Opposition to the new tax regime resulted in strikes, highway blockades, demonstrations and shortages of food and raw materials for industry.

In May, the government announced a drastic scaling-back of the graduated export duties, but Federacion Agraria Argentina, Coninagro, Confederaciones Rurales Argentinas and Sociedad Rural Argentina, together representing about 290,000 producers, continued to demand that the new tax scheme be scrapped entirely. In an attempt to resolve the dispute, Fernandez decided to submit the tariff package to a vote in Congress.

The Fernandez administration, which earlier announced measures to effectively exempt small-and medium-sized farmers from the increased taxes, says big agribusiness firms that have enjoyed years of soaring profits can afford to pay higher export duties whose proceeds have been earmarked for building roads and hospitals. The government also saw the tariffs as a way to keep more Argentine farm products in the local market and drive down prices, but farmers said they were being unfairly punished as they try to deal with rising costs for materials such as fertilizer. In casting his vote, Cobos called on the president to submit a new bill that takes into account the ideas expressed during the tense debate in the Senate. He said the divisions that the dispute has caused are regrettable and that he voted according to his convictions and because he is convinced that a solution acceptable to all sides is necessary.

Cobos also said Thursday after the vote that he had no plans to resign.

The president of Federacion Agraria, Eduardo Buzzi, hailed the vote in the Senate, where Fernandez's Peronist Party has a clear majority, and praised the "bravery and democratic act" of Cobos, a member of the opposition Radical Civic Union party. Prior to the vote in the Senate, Fernandez's husband and predecessor, Nestor Kirchner, led a huge demonstration in support of the taxes, while a competing mass demonstration was held by farmers in another capital square.

Kirchner said during the rally that the government would abide by the Senate's decision.

Buenos Aires daily Pagina/12 reported last month that despite the rural conflict, Argentina's exports of grains and grain-derivatives in the first five months of this year totalled 28.8 million tons, up 893,000 tons from the same period in 2007. Citing customs data, the paper said that even with the higher duties, agricultural exporters made $10.4 billion, 63 per cent more than they did in the January- May period of 2007. Argentina leads the world in exports of sunflower seed and ranks second in corn exports, third in foreign sales of soy and fourth in exports of wheat.

Originally published by Telam news agency, Buenos Aires, in Spanish 1412 17 Jul 08.

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