GPS UNDER REVIEW; MIDDLE EAST; 08/08/06

UNCLAS BUENOS AIRES 001787 SIPDIS STATE FOR INR/R/MR, I/GWHA, WHA, WHA/PDA, WHA/BSC, WHA/EPSC CDR USSOCOM FOR J-2 IAD/LAMA SIPDIS E.O. 12958: N/A TAGS: KPAO OPRC KMDR PREL MEDIA REACTION SUBJECT: GPS UNDER REVIEW; MIDDLE EAST; 08/08/06 ¶1. SUMMARY STATEMENT Today's most important international story include USTR Susan Schwab's announcement that the Bush administration will analyze whether it will limit, suspend or remove commercial advantages granted to the country under the GSP; and US President George W. Bush urging the UN to approve a cease fire for the war in the Middle East. ¶2. OPINION PIECES AND KEY STORIES - "The US could impose commercial sanctions on Argentina" Ana Baron, Washington-based correspondent for leading "Clarin," writes (08/08) "The Bush administration will analyze whether it 'will limit, suspend or remove' the commercial advantages granted to Argentina in the framework of the so-called GPS (General Preferences System). This would affect some 15 per cent of the Argentine trade flow with the US, which amounts to 616 million dollars. It would affect exports of leather, aluminum, textiles, among others. "... Another 12 countries could also be affected in the same way (Brazil and Venezuela in Latin America). Argentina has already suffered commercial retaliation through this system... "A USTR's spokesperson, Stephen Norton, said that 'this is not a punitive measure' for what happened in WTO Round negotiations or the positions vis-`-vis the FTAA. However, it is not a secret that the GPS has always been used not only to help developing countries but also to advance US commercial interests. "A Latin American diplomatic source told 'Clarin' that the Bush administration recently used this system to pressure the smallest Central American and Caribbean countries to sign bilateral trade deals with the US." - "A political sign" Daniel Juri, columnist of leading "Clarin," writes (08/08) "Washington's decision to suffocate the Mercosur 'biggies' will be an issue for President Nestor Kirchner, who has never hesitated to confront even 'God's representatives on Earth' themselves. However, Kirchner has always measured his words with the Bush administration and he took care of his relationship with President Bush. "This is why Argentine diplomacy will have to be balanced vis-`-vis this Washington reaction. This is a political rather than an economic sign. And, as a consequence, it smells like a warning vis-`-vis (Kirchner's) increasingly closer ties with Venezuelan Hugo Chavez, the new Uncle Rich of the region." - "The US hinders Argentine exports for 1.5 billion dollars" Business-financial "Ambito Financiero" front-pages (08/08) "Last week, in the framework of an IDB Board meeting, the USTR had a critical position about Argentina when discussing an IDB fund release for the country. She was right because the bank had released a loan to promote Argentine meat exports, which were banned by the Government. However, yesterday's decision of the USG was much more important. "The USG will remove tariff preferences for Argentine products, which will negatively impact on (Argentine) exports for 1.5 billion dollars. Truly enough, the measure will affect some other countries (Brazil, Venezuela, China and India). This is the group that set the strongest position in the recent failed Doha Round negotiation - it wanted to eliminate farm subsidies of the US, the EU and Japan. "Nonetheless, approaching Venezuelan Hugo Chavez and allowing his entry into Mercosur had to have a cost and influenced George W. Bush's decision. Who wins? Countries like Chile, which negotiated an FTA with the US outside of Mercosur." - "The US punishes Argentina - it will hinder more exports" Carlos Burgueo, columnist of business-financial "Ambito Financiero," writes (page 3) "The US announced yesterday that it could remove its GSP as retaliation against developing countries for not accepting the US proposal in the failed Doha Round. In the case of Argentina and Brazil, the US also wants to punish their partnership with Venezuela within Mercosur, the commercial deal that they reached with Cuba, and their lack of willingness to discuss the FTAA. "If the measure is put into practice, Argentina could lose commercial advantages involving exports up to 1.5 billion dollars. On the contrary, Peru, Ecuador, Chile, Colombia and perhaps Uruguay could reap benefits. "... The US is currently Argentina's third largest commercial partner, after Brazil and the EU... The products involved by the GSP would from now on pay tariffs up to 35% and, as a consequence of this, the US could go down in its trade relationship with Argentina and become its fifth commercial partner." - "The US could make Mercosur exports more expensive" Alejandro Bercovich, economic columnist of business-financial "El Cronista," comments (08/08) "The USG announced yesterday that it will analyze whether it 'will limit, suspend or remove' the commercial advantages it has unilaterally granted for 32 years to Argentina, Brazil, Venezuela and other ten mid-sized developing countries. According to these advantages, these countries have been allowed to place their imports in the US market under the so-called GSP. "... The announcement of the review occurred just a few weeks after the failure in WTO negotiations... However, the spokesperson of the USTR, Stephen Norton, told EFE wire service that 'this review should not be interpreted as a punitive measure.'" - "'The decision to grant preferences is a unilateral measure'" Business-financial "El Cronista" carries an interview with Argentine Secretary for International Economic Relations Alfredo Chiaradia, SIPDIS who opines 'These kinds of reviews are usually performed because they are unilateral. We are granted them following a unilateral decision and we can be deprived of them in the same way because those measures are not negotiated among governments.' "... 'In this way, we are fully aware that this is a unilateral scheme that is subject to regular reviews... The current review the USG is carrying out is something legitimate.'" - "Bush is analyzing the elimination of commercial advantages previously granted to our country" Conservative "La Prensa" reports (08/08) "According to USTR Susan Schwab, the USG is analyzing 'limiting, suspending or removing' the commercial benefits it has granted to Argentina, Brazil, Venezuela and other developing countries for three decades. "The review of the GSP occurred after the failure of the WTO Doha Round, which was due to the lack of consensus on the reduction of farm subsidies and tariffs." - "Exports to US are jeopardized" Business-financial, center-right "InfoBae" reports (08/08) "According to USTR Susan Schwab, the US is analyzing whether it will remove the commercial benefits it has granted to Argentina for decades, which involve exports to the US for more than 600 million dollars per year. "The possibility to eliminate GSP benefits was announced some weeks ago after the failure of WTO Doha Round negotiations was made public. "In said negotiation, many developing countries, which are now on the verge of losing benefits, questioned the US farm subsidies." - "The Argentine Government is awaiting a formal notification" Natasha Niebieskikwiat, political columnist of leading "Clarin," writes (08/08) "There will not be any official response from the Argentine Government to the announcement made by Washington, which put in doubt the continuity of the GSP... "A high-ranking FM source said 'We will not comment on something that has not been officially notified.' "'Washington officials clarified that the decision to suspend, limit or remove the GSP is not retaliation. Therefore, we do not take this decision as retaliation.' "However, even in Washington, it has been sustained that the GSP suspension would be hiding sanctions that are aimed at wielding political and commercial pressure." - "Bush urges the UN to approve a cease fire" Leonardo Mindez, on special assignment in Washington for leading "Clarin," comments (08/08) "(US President) George W. Bush interrupted his vacation in Texas to urge the UN to approve 'as soon as possible' a resolution putting an end to the war in Lebanon and Israel. "While the US President acknowledged the Arab League's criticism of the US-French draft resolution, he insisted that this is the best choice for a total cease fire. "... While the US president and Secretary Rice admitted that they were listening to the claims from both sides to draft the resolution, Bush did not accept the main Arab claim - the immediate withdrawal of Israeli troops from Lebanon. The US prefers to wait until the international force is deployed in the area before pressuring Israel to withdraw its troops." - "The obstacles to an agreed upon resolution" Oscar Raul Cardoso, international analyst of leading "Clarin," opines (08/08) "The US and France managed to merge their wishes in one draft resolution on the war in Lebanon, which, in spite of this consensus, was not passed yesterday by the UN Security Council. Just like any other forced solution, the proposal had to leave aside many central issues of the crisis. "While Washington managed to introduce the idea of future international troops under Chapter 7 of the UN Charter, Paris privileged the idea of a cease fire that could become a real one in a fast way. The text has already been rejected by the Lebanese government... "... Even when a first resolution was approved by the UN Security Council, there is no security about the next step, this is the formation of an international force intended to create a barrier of separation between Hezbollah and Israel. The risk that this force could become a virtual Israeli representative in the fight on ultra-Islamic guerrillas makes that just a few countries are willing to contribute to it." To see more Buenos Aires reporting, visit our classified website at: http://www.state.sqov.gov/p/wha/buenosaires MATERA