Identifier
Created
Classification
Origin
05LIMA4273
2005-09-30 20:42:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Lima
Cable title:  

TRADE MINISTER FORESHADOWS FTA RED LINES

Tags:  ETRD ECON EINV PGOV PREL PE 
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UNCLAS SECTION 01 OF 02 LIMA 004273 

SIPDIS

SENSITIVE

USTR FOR AUSTR VARGO AND BHARMAN
USDA FOR FAS/ITP/BERTSCH

E.O. 12958: N/A
TAGS: ETRD ECON EINV PGOV PREL PE
SUBJECT: TRADE MINISTER FORESHADOWS FTA RED LINES

REF: LIMA 3888

UNCLAS SECTION 01 OF 02 LIMA 004273

SIPDIS

SENSITIVE

USTR FOR AUSTR VARGO AND BHARMAN
USDA FOR FAS/ITP/BERTSCH

E.O. 12958: N/A
TAGS: ETRD ECON EINV PGOV PREL PE
SUBJECT: TRADE MINISTER FORESHADOWS FTA RED LINES

REF: LIMA 3888


1. (SBU) Summary: In meetings with the Ambassador, Trade
Minister Ferrero and Peru's Chief FTA Negotiator de la Flor
highlighted two red lines for Peru in the U.S.-Andean FTA
negotiations. They warned that Peru's Congress would not
accept an FTA that permitted the importation of used
clothing or went beyond CAFTA's intellectual property
commitments. De la Flor did note that Peru is prepared to
accept data protection provisions in the CAFTA deal. On the
public diplomacy front, Ferrero lamented that
representatives from the private sector are not more vocal
in their support of the FTA. The Ambassador noted that he
planned to host a meeting with business association leaders
to bolster FTA public outreach. The Ambassador also
expressed concern about timing for solving the Engelhard
dispute. End Summary.


2. (SBU) The Ambassador met separately with Trade Minister
Alfredo Ferrero and later with Peru's FTA Chief Negotiator
Pablo de la Flor and Agriculture Negotiator Julio Paz on
September 28 to review progress in the U.S.-Andean FTA
negotiations. The Ambassador described his recent trip to
Washington, including Capitol Hill, where President Toledo
had left a positive impression during his visit there the
week before. Noting the USG's desire to close the trade
deal by November, the Ambassador expressed concern to
Minister Ferrero about the resolution timing of the
Engelhard dispute. The Ambassador noted that all Members of
Congress raised Peru's commercial disputes. Ferrero took
note.

Peruvian Show Stoppers
--------------


3. (SBU) Both the Trade Minister and Vice Minister de la
Flor emphasized that Peru would not be able to go beyond the
IPR coverage outlined in the CAFTA deal. Ferrero indicated
that President Toledo and Peru's Congress would not accept a
trade deal that included second-use patents, particularly
since the accords with Central America and Chile omitted
them. De la Flor added surgical techniques, plants and
animals to the list of patents they could not support, but
he noted that Peru could accept the data protection
provisions in the CAFTA deal. The Chief Negotiator noted
that while he wants to resolve the remaining contentious
issue in the IPR group, Ecuador is slowing down the
negotiations.


4. (SBU) A second red line for the Peruvians is used
clothing. Both Ferrero and de la Flor emphasized that
Peru's Congress would reject an FTA that permitted the
importation of used clothes from the United States. They
explained that Peru's internal market is small and could not
absorb such importations. De la Flor emphasized that
accepting used clothing would displace small apparel
producers.

Countering Venezuela's Initiatives
--------------


5. (SBU) Minister Ferrero urged U.S. flexibility on the two
above issues, arguing that concluding an FTA with Peru and
Colombia is in the best interest of the United States. He
noted that an FTA with the Andeans would bolster support for
U.S. allies at a time when Ecuador and Bolivia are growing
weaker and increasingly susceptible to Venezuela petroleum
diplomacy and influence. The Minister noted that an Andean
FTA that eventually included Ecuador and Bolivia would be a
big blow to Chavez and Brazil.

FTA Debate Heating Up
--------------


6. (SBU) Ferrero lamented that the private sector is not
doing more to express its support publicly for the FTA. He
indicated that the GOP is reevaluating its FTA public
affairs campaign, and wants to focus increasingly on radio
coverage to promote the FTA. Citing a decline in FTA
support from 65 to 53 percent between January-September
polling data, the Ambassador indicated he planned to host a
meeting with business leaders to encourage coordinated and
active FTA public outreach. The Minister welcomed the
initiative.


7. (SBU) De la Flor publicly announced that he would be
traveling to Washington with members of Peru's FTA team the
week of October 3 to discuss Rules of Origin, Market Access,
and Textiles. He prefers not to announce the bilateral
digital video conference between agriculture negotiators on
October 6 to review Peru's latest offer, which he described
as superior to CAFTA and ready to close. The Ambassador
stressed the further need for flexibility on the part of
Peru's ag negotiators.

Comment: Crunch Time
--------------


8. (SBU) Eager to finish negotiations, the Peruvian
negotiators are making clear in public statements that late
November is the deadline to wrap up the FTA. Meanwhile, GOP
officials increasingly fear opposition anti-FTA campaigns,
which are picking up.

STRUBLE