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