Abstract

Argentina is the world's second largest exporter of grains, oilseeds, and oilseed products. Traditionally, Argentina's economic policies have taxed the agricultural sector, which produces goods for exports, to subsidize the mostly insulated industrial sector. Despite this unfavorable treatment, the agricultural sector has remained Argentina's economic mainstay and competes successfully in world markets. Recurrent economic crises have led to substantial changes in Argentine economic policies, which may eventually reduce the agricultural sector's burden of subsidizing the manufacturing sector's growth. Although this transition may take several years to accomplish, the predicted outcome is even greater competitiveness of Argentina's agricultural exports in world markets. From the perspective of the General Agreement on Tariffs and Trade (GATT), Argentina's agricultural sector stands to benefit greatly from trade liberalization. Argentine farmers have been taxed rather than subsidized, so they have no preferential treatment to lose in the GATT negotiations. Also, subsidized agricultural production and exports from countries such as those in the European Community have greatly undermined the profitability of Argentine farm businesses. If these countries agree to decrease or remove their subsidies as a result of the GATT, the Argentine agricultural sector should benefit.