BUENOS AIRES (Dow Jones)--Argentina should not cede to internationalpressure and give up a differential tax plan that encourages theproduction of soyoil and soymeal, the Argentine Oilseed Chamber saidWednesday.The Argentine government taxes exports of soybeans and soybeanproducts at 23.5% and 20%, respectively. The lower tax on soy productsaims to boost production of these goods because they bring added value tothe economy.However, the European Union, the U.S. and other nations oppose thedifferential tax, saying it gives an unfair advantage to the localsoybean-processing industry. The policy has complicated recentnegotiations between the E.U. and Mercosur, a regional trade bloccomprising Argentina, Brazil, Paraguay and Uruguay."The Argentine Oilseed Chamber expresses its support for the positionadopted by the government to defend the policy of not negotiating thedifferential tax in Mercosur-E.U. talks or in the World TradeOrganization," the chamber said in a statement.While soybeans can be exported directly, soymeal and soyoil must firstbe extracted from the bean at processing plants. The derivatives, around95% of which are exported, are then packaged and sold at higher prices.In addition to adding value to the final product, this processfortifies Argentina's industrial sector and provides jobs for localworkers.For the E.U. and the U.S., however, the differential tax is akin to anexport subsidy. Both have called on Argentina to ax the benefit,especially since Argentina often complains about export subsidies in theE.U. and U.S."Amid this pressure, it's worth noting that the differential exporttax is not - and does not resemble - a subsidy such as those thatdeveloped nations use to boost their production and exports," the chambersaid in the release. "Second, this is a legal tool that favors theindustrialization of raw materials in the country, which creates morework, investment and export capacity."The chamber said it was unacceptable for Argentina to give up thedifferential tax and that doing so would "bring grave consequences" to thecountry's economy.Meanwhile, the chamber said the tax serves to compensate for higherimport tariffs that developed nations place on elaborated products such assoyoil."Raw materials - in this case grains - do not currently face importtaxes in world trade, though processed products face very high tariffs orthey are subject to quotas," the chamber said in the release."The differential tax compensates for this," Alberto Rodriguez, thechamber's executive director, told Dow Jones Newswires Wednesday.Finally, the chamber slammed the existence of export subsidies indeveloped nations, particularly in the U.S.Subsidies to U.S. soybean farmers between 1998-2000 boostedproduction, causing world soybean prices to decline to their lowest levelsin 30 years, the chamber said."This led to the bankruptcy of seven large Argentine oilseed companiesand caused the sector to lose a minimum of $1 billion," the chamber saidin the release.Argentina is the world's third-biggest soybean exporter and the topexporter of soyoil and soymeal. This is despite the fact that farmers inthe U.S. and Brazil, the world first- and second-ranked soybean producers,respectively, face no export taxes.