1. Trade, environment and development: the Argentine case in the 1990s Daniel Chudnovsky CENIT & Universidad de San Andrés Argentina

2. Argentine development issues In a country with poor development record, the currency board and structural reforms in the 90s ended in a huge crisis whose causes are not easy to explain. The government negotiates well with the IMF, is active in trade negotiations but little has been done on microeconomic issues. Poverty & unemployment are priorities but not environment and institutional rebuilding

3. Trade Liberalization and Environment To what extent growth under trade liberalization(without complementary policies) in 1991-98 affected the environment? Some evidence on the manufacturing sector and on the agriculture production in the Pampas is available to provide preliminary answers to this key question.

4. Exports of manufacturers In 1990, high and medium-polluting sectors accounted for 72 % of total manufactured exports. Despite the deep trade liberalization, the changes which occurred in the Argentine economy and the significant growth in the export value, in 1997 they represented 69% of the manufactured exports. Hence, neither a “cleaner” nor a “dirtier” export pattern is visible.

5. Trade and FDI liberalization Trade (and FDI) liberalization has affected manufacturing firms mostly born during the ISI period. While many firms went bust, others were acquired by foreign firms and/or increased their competitiveness upgrading their technologies and adopting environmental management (EM), despite the lack of effective technology and environmental policies.

6. EM in manufacturing firms In our work we found that EM was relatively more diffused in large firms than in SMEs and in export oriented and foreign owned large firms. Pollution prevention measures were more diffused in firms with medium or high innovatory capabilities, though they were geared to introduce simpler and cheaper PP measures.

7. Environmental impact of trade liberalization in industry Trade liberalization has not led to a win-win situation in the manufacturing sector. Taking into account the improvements in the environmental management of the large firms with a high export profile, it does not seem that a win-lose situation occurred either, though more research is required.

8. Agriculture expansion The elimination of taxes and withholdings on agricultural exports, the substantial reduction of import tariffs on inputs and capital goods and the deregulation of some markets created favorable conditions for large expansion of production volumes for cereals and oilseeds (from 26 million tons in 1988–1989 to over 67 million in 2000–2001), and particularly for soybeans - which soon became Argentina’s leading export-.

9. Adoption of new technologies This growth in agricultural production is a result of both a substantial expansion of the planted area (basically at the expense of livestock) and an increase in physical productivity per unit area, derived from a significant adoption of no tillage and transgenic crops (100% of planted area in RRsoy, 20% in Bt corn and 7% in Bt cotton).

10. Direct Impacts of RR Soybeans $20-25 Reduction in costs of production Expansion of agricultural area > 4.6 m. Ha Important expansion of exports

11. Sales of Glyphosate 9% Increase in Production 70% Costs reduction 12% Sales of SeedSeed 9% Total Accumulated Benefits 1996/97-2001/02 5.082 millions of USD Adoption of RR Soybean: Distribution of Benefits (with bolsa blanca) Benefits to farmers 82 % Benefits to input providers 18 %

12. Indirect Impacts of RR Soybeans Increased employment in the agricultural sector Facilitated the expansion of area under reduced/no till practices Reduced the use of high toxicity herbicides

13. Indirect Impact of RR Soybeans : Positive Env.Effects from increased no tillage area Área con siembra directa GlifosateAtrazine Area under reduced/no tillage Year Sales (mill. l) Thousands of has

14. Transgenics in Argentinean Agriculture: Distribution of Gross Accumulated Benefits (%) CASEFARMERS INPUT PROVIDERS SOYBEAN RR With “bolsa blanca” 8218 Without “bolsa blanca” 8713 COTTON Bt1783 MAIZE Bt2179

15. A win-win situation in soy From this perspective, the soybean case in the Pampas would fit into a win-win situation in which the sharp expansion of agricultural production has not had a negative effect on the environment thanks to the adoption of environmentally-friendly technologies developed abroad.

16. An open ended story The extraordinary success of the RR soybean may affect the fertility of the soil for an excessive reliance on this crop Increasing eco labeling requirements in import markets may reduce prices for GMOs. It does not seem that diffusion of other GMOs may follow the soy pattern.