Identifier
Created
Classification
Origin
06BUENOSAIRES2061
2006-09-11 10:19:00
CONFIDENTIAL
Embassy Buenos Aires
Cable title:  

ARGENTINE FOREIGN TRADE SECRETARY: WHY URUGUAY

Tags:  ETRD EFTA ECIN ECON AR 
pdf how-to read a cable
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R 111019Z SEP 06
FM AMEMBASSY BUENOS AIRES
TO RUEHC/SECSTATE WASHDC 5859
INFO RUEHAC/AMEMBASSY ASUNCION 5657
RUEHBO/AMEMBASSY BOGOTA 1396
RUEHBR/AMEMBASSY BRASILIA 5482
RUEHCV/AMEMBASSY CARACAS 0954
RUEHLP/AMEMBASSY LA PAZ SEP LIMA 1857
RUEHME/AMEMBASSY MEXICO 1161
RUEHMN/AMEMBASSY MONTEVIDEO 5774
RUEHQT/AMEMBASSY QUITO 0752
RUEHSG/AMEMBASSY SANTIAGO 5266
RUEHSO/AMCONSUL SAO PAULO 2969
RUEAIIA/CIA WASHINGTON DC
RHMFISS/DEPT OF JUSTICE WASHINGTON DC
RUEHC/DEPT OF LABOR WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RHMFISS/HQ USSOUTHCOM MIAMI FL
RHEHNSC/NATIONAL SECURITY COUNCIL WASHINGTON DC
RUCPDOC/USDOC WASHDC
C O N F I D E N T I A L BUENOS AIRES 002061 

SIPDIS

SENSITIVE
SIPDIS

E FOR THOMAS PIERCE, WHA FOR WHA/BSC AND WHA/EPSC
PASS NSC FOR JOSE CARDENAS
PASS FED BOARD OF GOVERNORS FOR PATRICE ROBITAILLE
PASS USTR FOR AUSTR EISSENSTAT, SUE CRONIN AND MARY SULLIVAN
TREASURY FOR ALICE FAIBISHENKO
USDOC FOR 4322/ITA/MAC/OLAC/PEACHER
US SOUTHCOM FOR POLAD

E.O. 12958: DECL: 09/08/2016
TAGS: ETRD EFTA ECIN ECON AR
SUBJECT: ARGENTINE FOREIGN TRADE SECRETARY: WHY URUGUAY
CAN'T SIGN AN FTA

REF: A. BUENOS AIRES 1985

B. MONTEVIDEO 774

-------
SUMMARY
-------

C O N F I D E N T I A L BUENOS AIRES 002061

SIPDIS

SENSITIVE
SIPDIS

E FOR THOMAS PIERCE, WHA FOR WHA/BSC AND WHA/EPSC
PASS NSC FOR JOSE CARDENAS
PASS FED BOARD OF GOVERNORS FOR PATRICE ROBITAILLE
PASS USTR FOR AUSTR EISSENSTAT, SUE CRONIN AND MARY SULLIVAN
TREASURY FOR ALICE FAIBISHENKO
USDOC FOR 4322/ITA/MAC/OLAC/PEACHER
US SOUTHCOM FOR POLAD

E.O. 12958: DECL: 09/08/2016
TAGS: ETRD EFTA ECIN ECON AR
SUBJECT: ARGENTINE FOREIGN TRADE SECRETARY: WHY URUGUAY
CAN'T SIGN AN FTA

REF: A. BUENOS AIRES 1985

B. MONTEVIDEO 774

--------------
SUMMARY
--------------


1. (C) Charge paid a courtesy call on Ambassador Alfredo
Chiaradia, Secretary of External Trade in the Argentine MFA,
on August 29. The conversation ranged over prospects to
re-energize the Doha Round (not optimistic),the possibility
of Argentina joining the FTAA (even less so),and USTR's GSP
review (ref A),but focused on Argentina's view of Uruguay's
apparent desire to sign a bilateral FTA with the U.S. and its
possible effect on MERCOSUR. Chiaradia was adamant that
Uruguay could not both conclude an FTA (or any trade
agreement which goes beyond treatment offered within MERCOSUR
on services, government procurement and IPR) and remain in
MERCOSUR. He downplayed earlier public comments by President
Kirchner, which appeared to give Uruguay license to sign a
U.S. FTA. END SUMMARY

URUGUAY CAN'T HAVE THEIR MERCOSUR AND AN FTA TOO
-------------- ---


2. (C) While covering the largest trade issues on the GoA's
horizon, Secretary of External Trade Alfredo Chiaradia
offered to Charge and Econoffs a clear signal that the GoA
would not permit Uruguay to both sign an FTA with the U.S.
and remain a member of MERCOSUR, as Uruguayan President
Tabare Vazquez publicly said he would seek permission from
MERCOSUR to do (ref B). MERCOSUR rules preclude Uruguay from
offering trade disciplines to any country that are stronger
than those agreed to within MERCOSUR (e.g. IPR) or that
include disciplines not covered within the Mercosur agreement
(e.g. services and government procurement). Chiaradia said
that "if the U.S. wants to offer quota access or special
tariff rates to Uruguay, go ahead," but that Uruguay, as a
member of MERCOSUR, would not be able to reciprocate. He

claimed "We understand Paraguay's and Uruguay's concerns,"
that they are not benefiting adequately from regional trade
preferences and that MERCOSUR is "trying to make rules of
origin more flexible to benefit" the two smaller countries.
But Chiaradia emphasized "it would be crossing a red line" if
Uruguay were to sign an agreement that offered services,
government procurement and/or IPR treatment stronger than
enjoyed by MERCOSUR countries. When asked about public
comments Kirchner made in January, indicating that Argentina
"would not block" Uruguay in its efforts to reach a favorable
trade agreement, he noted that "The Presidents always talk
generically," and that MERCOSUR rules were clear and
inflexible on the matter.

DOHA AND THE FTAA: DEAD AND DEADER?
--------------


3. (C) On the status of Doha, Chiaradia expressed
disappointment, agreeing with the U.S. that the EU isn't
opening its ag markets but noting that neither were
developing countries. He noted that WTO Director General
Pascal Lamy's July 17 plea to re-energize Doha talks "for us,
was absolutely unacceptable" and that the GOA "questioned the
special safeguards" of India's proposal. He thought the EU
might be prepared to resume negotiations if progress is made


by including some developing countries "like Brazil, for
example, who are more constructive" because they are prepared
to pay the commercial cost of access to a bigger markets. As
for the FTAA, he said "our mutual interests are not
convergent," even "contradictory." He stated that "we need
market access, for agricultural goods in particular," saying
that the U.S. proposal was more advanced - "3rd or 4th
generation" - than an agreement that Argentina needs.

COMMENT
--------------


4. (C) While Chiaradia described himself as being very
pro-free trade, he carefully articulated the current GoA
line. He also stressed that "the worst would be for Uruguay
to leave MERCOSUR," and added that if that happened, "the
action of the U.S. would have costs." He seemed to genuinely
regret not being able to accommodate Uruguay, but noted that
"the political margin here is bigger than the commercial
margin - that is the message we will send on this matter."
Note: Local analysts comment that, within MERCOSUR, there is
more flexibility in negotiating political accommodations than
in resolving trade frictions: Trade between MERCOSUR
countries, they note, was scheduled to have been completely
duty free by January 1, 2006. Instead member countries still
squabble over safeguards. Twelve years after its founding
with the goal to evolve into a full customs union, MERCOSUR
has yet to establish a common external tariff. There are
rumors that Chiaradia may be retiring soon, and be replaced
by a political appointee. This would be disappointing:
Chiaradia brings a wealth of experience in diplomacy and
economics to the table.

MATERA
MATERA