COLOMBIA'S REACTION TO U.S.-PERU FTA

UNCLAS SECTION 01 OF 02 BOGOTA 011615

SIPDIS

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C O R R E C T E D - C O P Y (CHANGE TO TEXT PAR 8)
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E.O. 12958: N/A
TAGS: ETRD ECON ECON CO COETRD FTA
SUBJECT: COLOMBIA'S REACTION TO U.S.-PERU FTA


1. Summary: GOC policy makers are putting a positive
public spin on Peru's decision to sign a Free Trade
Agreement (FTA) with the U.S. on December 7. With the Peru
agreement, Colombia now has a clear understanding of the way
forward to completion of its own FTA. Critics are
suggesting the GOC delay further negotiations, while the GOC
seems determined to close as soon as possible. End Summary.

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No Surprise, but Some Disappointment
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2. Soon after the announcement that Peru and the U.S. had
agreed to an FTA, GOC ministers, including Trade and
Commerce Minister Jorge Humberto Botero, reported to the
press that Colombia was not surprised by Peru's faster
closing. The GOC lead FTA negotiator, Hernando Jose Gomez
pointed out in public reports that the Peruvian economy is
less complex with fewer products to defend. As a result, he
said, the GOC has expected for some time that Peru would be
able to move forward quicker than Colombia.


3. Although the GOC expected Peru to sign with the U.S.,
the government held out some hope that it could keep the
Andean negotiating block together. The split will now force
Colombia to accept in public certain FTA terms that it would
have preferred to negotiate in private. In the Colombian
press, the GOC referred several times to their desire avoid
signing on to a "tratado de adhesion" (translated as docking
onto an existing agreement). Before even reading press
releases about the U.S.-Peru agreement, Gomez acknowledged
his approval. He was quoted saying, "we have received
verbal assurances from the Peruvians that our common area of
concern - intellectual property - met our general
interests." Gomez also stated that Peru's signing was not a
solitary act, but rather due to the coordinated efforts of
all Andean nations over several months.

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A New Roadmap for Colombia
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4. The U.S.-Peru agreement includes concessions on
important principles that Colombia will use as a roadmap
toward the completion of its own FTA. While there is some
pressure to try and get a "better deal" (something that
happened in Colombia's negotiations with Mercosur),the GOC
realizes that it must accept the U.S. redlines without much
room for deviation from the Peru agreement. Colombia's
intransigent position on certain agriculture issues, such as
permanent protection for chicken leg quarters and rice, has
been considerably weakened and should be off the table in
subsequent discussions.

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Concern over ATPDEA
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5. Considerable debate in the press concerning the possible
extension of unilateral trade preferences under the Andean
Trade Preference and Drug Eradication Act (ATPDEA) has
focused on the waning prospects for renewal of the program
(which expires at the end of 2006),given the conclusion of
the U.S.-Peru FTA. While the U.S. position has been
consistent that ATPDEA will not be renewed, FTA opponents
repeatedly point out that Colombia does not need an FTA
because the U.S. Congress will continue to provide the
country with unilateral trade benefits in exchange for
cooperation in the war against drugs. Repeated admonitions
to the contrary by visiting members of the U.S. Congress
have not had much effect on the advocated of this position.

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Now or Later?
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6. Opponents of the FTA in Colombia's congress and in
affected sectors have called on the government to delay
signing the FTA until after the Congressional elections take
place in March. Some Senators have suggested that the GOC
wait several years before completing negotiations. The
Colombian negotiators, however, seem as determined as ever
to close as quickly as possible. New offers have been
presented in agriculture, perhaps clearing the way for a
final round to take place in January. While it appears that
President Uribe wants to finish negotiations before his
Presidential campaign begins at the end of January, it is
unclear how FTA politics will affect the upcoming
Congressional elections, should Colombia and the U.S.
finalize its agreement in the near term.

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Press Coverage
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E.O. 12958: N/A
TAGS: ETRD ECON ECON CO COETRD FTA

SUBJECT: COLOMBIA'S REACTION TO U.S.-PERU FTA


7. Although the leading national daily attempted to
diminish the impact of the agreement between the U.S. and
Peru arguing that Colombia's "special relationship" with the
U.S. would in the end move the U.S.'s position, regional
media outlets and conservative-leaning weeklies have
welcomed the agreement as "positive pressure" and as a "wake-
up call" with the "clock ticking" for Colombian negotiators.
Equally, the two financial dailies of record, have carried
columns arguing in favor of signing the agreement - even if
the U.S. position is characterized as "inflexible."
Regional newspapers, particularly those of Antioquia
(Medellin is the Department capital),continue to call for
the Colombian government to sign on the dotted line,
pointing out that the "agreement is crucial for the
department." And, for those in the government and in the
media hoping or wishing for an ATPDEA extension, the most
widely read weekly noted that the agreement with Peru marked
"ATPDEA's death certificate."


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Comment
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8. The GOC appears committed to completing the FTA in
January. If they were ever in doubt, the GOC negotiators
now fully know what is expected, and the government must
decide if the country is ready to trade off some
politically important agricultural interests for access tot
en U.S. economy for Colombian exports. To deal with the
political fallout from critics of the FTA, the GOC has
announced WTO-consistent support programs to aid affected
Colombians during transition periods in sensitive sectors.
In another positive sign, large trade associations, whose
members would benefit from the FTA, have begun to speak
publicly about the importance of signing the agreement.

Wood