Identifier
Created
Classification
Origin
04BRASILIA862
2004-04-08 19:38:00
CONFIDENTIAL
Embassy Brasilia
Cable title:  

FTAA: INITIAL BUENOS AIRES FALLOUT IN BRASILIA

Tags:  ETRD BR FTAA 
pdf how-to read a cable
This record is a partial extract of the original cable. The full text of the original cable is not available.
C O N F I D E N T I A L SECTION 01 OF 03 BRASILIA 000862 

SIPDIS

DEPT FOR WHA/BSC, WHA/EPSC, EB/TPP
PASS TO USTR FOR PALLGEIER, RWILSON, KLEZNY, RSMITH, SCRONIN
USDOC FOR APREACHER
USDA FOR JB PENN, U/S, FFAS

E.O. 12958: DECL: 04/07/2014
TAGS: ETRD BR FTAA
SUBJECT: FTAA: INITIAL BUENOS AIRES FALLOUT IN BRASILIA

REF: BUENOS AIRES 1009

Classified By: ECONOFF JANICE FAIR FOR REASONS 1.4 (b) AND (d)

C O N F I D E N T I A L SECTION 01 OF 03 BRASILIA 000862

SIPDIS

DEPT FOR WHA/BSC, WHA/EPSC, EB/TPP
PASS TO USTR FOR PALLGEIER, RWILSON, KLEZNY, RSMITH, SCRONIN
USDOC FOR APREACHER
USDA FOR JB PENN, U/S, FFAS

E.O. 12958: DECL: 04/07/2014
TAGS: ETRD BR FTAA
SUBJECT: FTAA: INITIAL BUENOS AIRES FALLOUT IN BRASILIA

REF: BUENOS AIRES 1009

Classified By: ECONOFF JANICE FAIR FOR REASONS 1.4 (b) AND (d)


1. (U) Summary. Following the informal FTAA discussions in
Buenos Aires March 31-April 1, which ended without agreement
(reftel),Brazilian Foreign Ministry (Itamaraty) officials
launched an aggressive media campaign to get the word out
that U.S. intransigence was to blame for the impasse.
Foreign Minister Amorim was widely quoted, claiming a U.S.
pullback from the compromise achieved in the FTAA Ministerial
in Miami last November. Although the level of public
outrage was lower than that following the Trinidad & Tobago
TNC meeting last year, the private sector and other
ministries have apparently communicated to Itamaraty their
consternation regarding its negotiating posture. Despite
headlines heralding an end to the FTAA, high-level officials
from the Ministry of Development, Industry and Trade (MDIC)
informed Ambassador that the GoB has not abandoned the FTAA
negotiations and is formulating new proposals, including
improved market access offers. End Summary.

--------------
Blame Game
--------------


2. (U) Immediately following adjournment of the informal
FTAA discussions in Buenos Aires, Itamaraty launched a media
blitz to assign blame for the impasse that prevented progress
in negotiating a common set of rights and obligations under
the new FTAA framework. U.S., and to a lesser extent
Canadian, intransigence was identified as the main culprit.
In interviews and in discussions with members of Brazil's
Congress, Foreign Minister Amorim accused the U.S. of trying
to reopen the Miami Ministerial compromise, most probably in
reference to a proposal to allow for additional provisions in
the common set in the future. He reiterated Brazilian claims
that the U.S. is unwillingly to provide real market access
for Brazilian agricultural products, specifically in
addressing domestic support and export subsidies, while it is
trying to reintroduce new rules in Brazil's sensitive areas
of services, investment, IPR and government procurement. As
in the past, Amorim argued for moving on from the
"philosophical" discussion on rules and instead beginning

market access negotiations; he reaffirmed that Brazil will
not negotiate services market access in any format other than
bilateral. On April 7 and 8, there was widespread reporting
on the contents of a letter Minister Amorim sent to USTR
Zoellick on April 5, outlining GoB concerns with U.S.
positions within the common set negotiations.


3. (U) Similar commentary was attributed to Regis Arslanian
and Tovar da Silva Nunes, Director General of Itamaraty's
Trade Negotiations Department, and Head of its FTAA Division,
respectively. In addition to bemoaning the lack of U.S.
flexibility, Nunes asserted to journalists that the outcome
of the Buenos Aires talks had prompted Itamaraty to shift its
trade policy focus toward negotiation of agreements with some
30 developing countries, with the EU, and toward WTO trade
talks. Negotiations with the EU were singled out as
exemplifying a more collaborative process than the FTAA and a
higher probability of success, a questionable assertion.
Striking a more balanced tone, Amorim told Brazilian Deputies
on April 6 that the GoB plans to focus more on the WTO
negotiations, unwilling to concede anything within the
regional FTAA or bi-regional EU agreements that would
undermine Brazil's interests within the global trade talks.

--------------
Not Everyone is On Board with Itamaraty
--------------


4. (U) Despite Itamaraty's best efforts, not everyone
appeared to accept its characterization of the problems
besetting the negotiations nor its supposed readjustment in
policy focus. While less public than after the contentious
Trade Negotiations Committee (TNC) meeting in Trinidad &
Tobago last September, press reports cited divergent
positions within the GoB, and private sector demands that
Itamaraty demonstrate more flexibility in the FTAA
negotiations. In addition, an "O Estado" editorial last
weekend refused to play the blame game and called for
Itamaraty flexibility, pointing out how much Brazil stands to
lose from failure of FTAA negotiations.


5. (C) MDIC's more forward leaning position on the FTAA was
confirmed in informal discussions with Minister Furlan and
staff during a dinner hosted by Ambassador April 7. DCM,
Deputy Senior Commercial Officer and Econoff also attended.
Mario Mugnaini, Executive Secretary of Camex, the GoB's
formal decision-making body for trade policy, rejected
assertions that the GoB does not want to negotiate the FTAA.
However, he conceded that subsequent to the informal Buenos
Aires talks, Itamaraty is being forced to moderate its
positions. He was adamant that pressure from, among others,
Minister Furlan would ensure a more pragmatic approach by
Brazilian negotiators in the future, and argued that TNC
Co-Chars should meet soon to consider how to get the process
moving again.


6. (C) Expressing optimism on an eventual successful outcome
for the FTAA, Mugnaini pressed the Brazilian line that the
current impasse on the common set language would more easily
be overcome if market access negotiations could proceed
immediately. At least part of Mugnaini's optimism seems to
flow from his expectations of a positive response by the U.S.
toward improved Mercosul market access offers in goods,
services and investment, which he intimated would be unveiled
soon. (Note, one press report admitted that Mercosul's
initial goods market access offer was the "worst" of any FTAA
delegation.) Ambassador insisted that Brazil must work
seriously according to the directions from Ministers in Miami
and negotiate the common set before market access talks could
begin. Mugnaini made references to Itamaraty moving "in the
right direction" regarding positions on common set issues,
but provided no further detail. Articles the same day
reported a lack of support within the Ministries of
Development, Agriculture, and Finance, as well as within the
private sector, for Itamaraty's insistence on including
within the common set a mechanism to compensate for
agricultural domestic support within the U.S. and Canada.

--------------
Comment
--------------


7. (C) Recent events and statements would seem to confirm
Itamaraty's lack of commitment toward the FTAA negotiations.
That being said, there remain pro-FTAA forces within the
Brazilian government and private sector that make it very
difficult for Itamaraty to just walk away. There is plenty
of room for continued mischief, however. The GoB will likely
continue to press for four-plus-one market access talks to
begin forthwith. Eventually, Itamaraty may present a
reformulation of some of its positions within the common set
talks, but these may not prove useful in bridging the gaps
that currently exist between FTAA delegations. We suspect
that representatives from other ministries and from the
private sector who are pushing for more flexibility by
Itamaraty, may not prove as effective checks on Itamaraty
excesses as would be hoped, due to a less than full
appreciation of the nuances within the common set text
negotiations.


8. (C) Post recommends a continued neutral posture regarding
blame for an inability to reach consensus on the common set
elements so that domestic interests will have the space to
make their own case for a change in GoB posture. However,
reinforcement of the message that what we are seeking is a
"balanced" common set would be helpful in keeping the focus
on revising or eliminating the more problematic GoB positions.
HRINAK