AUSTR EISSENSTAT VISIT TO ARGENTINA

UNCLAS BUENOS AIRES 002292

SIPDIS

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
EX-IM BANK FOR MICHELE WILKINS
OPIC FOR GEORGE SCHULTZ AND RUTH ANN NICASTRI
PASS USTR FOR SUE CRONIN AND MARY SULLIVAN
TREASURY FOR ALICE FAIBISHENKO
USDOC FOR 4322/ITA/MAC/OLAC/PEACHER
US SOUTHCOM FOR POLAD

E.O. 12958: N/A
TAGS: ETRD ECON UR AR
SUBJECT: AUSTR EISSENSTAT VISIT TO ARGENTINA

REF: A. BUENOS AIRES 2061


B. MONTEVIDEO 943

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


1. (SBU) Assistant United States Trade Representative Everett
Eissenstat met October 4 with Foreign Ministry Secretary of
International Economic Relations Chiaradia to review WTO,
GSP, and regional trade issues, including the U.S. bilateral
dialogue with Mercosur member Uruguay. Chiaradia stressed
common interests in re-energizing the WTO process, asking for
U.S. movement on agriculture domestic support issues, and
offering to engage in Geneva
on non-agricultural market access (NAMA) issues. He
understood the administrative nature of our GSP
review/renewal process and hoped that any program
modifications would be "minimally disruptive" to bilateral
trade. Chiaradia said the GoA has been following Uruguay's
domestic debate on the relative costs and benefits of
Mercosur membership and noted Uruguay's dissatisfaction with
internal Mercosur market distortions that have skewed
industrial investment to its larger members. He called
Argentina sympathetic to Uruguay's industrial development
concerns and its desire for a deeper bilateral trade dialogue
with the U.S. AUSTR Eissenstat explained that the U.S. had
exchanged Bilateral Investment Treaty instruments of
ratification with Uruguay and that the US is now moving to
launch Trade and
Investment Framework Agreement negotiations to deepen our
U.S./GoU bilateral dialogue. In response, Chiaradia
suggested that Argentina and the U.S. consider revitalizing
our own Bilateral Committee on Trade and Investment (last
convened in the spring of 2004) as a vehicle to similarly
deepen the U.S./GoA trade and investment dialogue.
Eissenstat also met with the American Chamber of Commerce
Executive Committee and separately with representatives of
companies with intellectual property, patent and trademark
concerns in
Argentina). Press coverage of the visit - based largely on
an interview AUSTR Eissenstat held with local media at the
Embassy - was generally balanced and positive. END SUMMARY.

--------------
GoA VIEW - COMMON GROUND
--------------


2. (SBU) AUSTR Eissenstat, USTR Brazil and Southern Cone
Director Sue Cronin and Department of Commerce Argentine Desk
Officer Alex Peacher met October 4 with Foreign Ministry
Secretary of Trade and International Economic Relations

SIPDIS
Alfredo Chiaradia and members of his trade team, including
Under Secretary for Economic Integration Eduardo Sigal, Under
Secretary for International Commerce Luis Kreckler, and

SIPDIS
Director of North American Affairs Vicente Espeche Gil.
Discussions focused on WTO negotiations, with Chiaradia
stressing common interests in re-energizing the WTO process,
asking for U.S. movement on agriculture


domestic support issues, and offering to engage in Geneva on
non-agricultural market access (NAMA) issues. Movement on
the Doha Round, Eissenstat noted, might give some impetus to
the U.S. Congress' renewal of Trade Promotion Authority.
Chiaradia suggested Argentina could contribute
"constructively" to the WTO dialogue on services, but
indicated that could only happen after resolution of
agricultural market access issues. Eissenstat appreciated
Chiaradia's offer to engage on NAMA and stressed the need to
move rapidly together to revitalize broad Doha Round
negotiations.


3. (SBU) On GSP, Eissenstat noted the administrative,
objective and transparent nature of the ongoing program
renewal review. He stressed that Argentine media's
presumption that our GSP review is a punishment linked to
Argentina's WTO negotiating stance is simply not the case.
Chiaradia called the GSP review "legitimate" but expressed
concern that its end result might be "too extreme." If
Washington rumors that the U.S. will ultimately alter
treatment of over 80% of products that currently receive GSP
benefits are true, Chiaradia said, it would not be a renewal
but rather an entirely new GSP program. Mentioning four
different draft GSP renewal bills currently under
consideration by the U.S. Congress, Chiaradia said the GoA
favors a proposal by House Ways and Means Chairman Bill
Thomas that "focuses on CNL waivers but does not alter the
basics of the GSP program." Chiaradia noted the GoA's
"measured" response (ref A) to the Federal Register public
comment request, said the Argentine "government is not going
to be the one to raise the level of difficulty" in the GSP
debate, and concluded that the GoA would be "comfortable"
with a modified GSP program not "disruptive to overall
trade." He also indicated that the GoA would be willing to
work with the U.S. to dampen domestic political fallout if an
eventual GSP renewal decision is interpreted unfavorably by
the Argentine public.


4. (SBU) Chiaradia asked for a briefing on AUSTR Eissenstat's
trade discussions in Uruguay earlier that week (ref B).
Eissenstat noted U.S. efforts to expand our bilateral trade
dialogue with all/all trade partners, including Uruguay. He
understood Argentina and Mercosur members' interest in these
discussions and expressed U.S. support for all WTO-consistent
regional economic integration initiatives, including
Mercosur, making clear that our ongoing discussions with the
GoU are in no way meant to undermine broader Mercosur
integration efforts. Chiaradia responded, "You're trying to
improve your relationship with Uruguay; we're trying to do
the same." He noted that the GoA has been following
Uruguay's domestic debate on the relative costs and benefits
of Mercosur membership, adding that Uruguay has long
expressed dissatisfaction with internal Mercosur market
distortions that have skewed industrial investment to the
common market's larger members. He added that rules of
origin and local content remain particularly sensitive issues
in a Mercosur customs union that has yet to perfect its
common external tariff, and cited as an example Mercosur
member concern over Uruguay's attempt to import bicycle kits


from China to assemble and market internally to Mercosur
partners. As the only member of the Mercosur bloc that sees
itself both as a small member (relative to Brazil) and a
large member (relative to Uruguay and Paraguay),Chiaradia
called Argentina sympathetic to Uruguay's industrial
development concerns and its desire to deepen its bilateral
trade dialogue with the U.S. He closed repeating that the
U.S. and Argentina have similar objectives in enhancing
bilateral dialogues with Uruguay.


5. (SBU) AUSTR Eissenstat explained that the U.S. had
exchanged Bilateral Investment Treaty instruments of
ratification with Uruguay, that the treaty will enter into
effect in 30 days, and that we are now moving to launch Trade
and Investment Framework Agreement (TIFA) negotiations as a
follow-on step in deepening our bilateral dialogue. In
response, Chiaradia suggested that Argentina and the U.S.
consider revitalizing our own Bilateral Committee on Trade
and Investment (BCTI - last convened in the spring of 2004)
as a vehicle to continue and deepen today's dialogue.
Eissenstat promised to discuss the idea with Deputy USTR
Veroneau.

--------------
PRIVATE SECTOR - TROUBLE ON THE HORIZON
--------------


6. (SBU) During a follow-on lunch with American Chamber of
Commerce's Executive Committee members, several expressed
concern about the Kirchner administration's macroeconomic and
micro-price control policies. A number focused on limited
electricity sector generating capacity as a likely near term
constraint on growth. One noted that an energy conference
planned for the next day, where criticism of GoA energy
sector policies would have received media attention, was
canceled due to pressure from President Kirchner. A
representative of Exxon added "Every day we get calls from
government officials, demanding price rollbacks and otherwise
intervening in our market." A representative of Cargill
questioned how Argentina would maintain its primary fiscal
surplus when global commodity prices inevitably fall, since
such a high percentage of GoA revenue depended on export
tariffs. He also expressed doubt about the future of
MERCOSUR, noting that "with the incorporation of Venezuela,
the picture is much more messy."


6. (SBU) AmCham Board members asked about U.S. TIFA
negotiations with Uruguay, which Eissenstat explained were
based on Uruguay's own interest and efforts to move forward
on bilateral trade and investment opportunities. In response
to a question on why the U.S. has chosen to pursue bilateral
agreements with Latin American nations rather than the
hemispheric FTAA, Eissenstat explained that the U.S.
continues to pursue all available multilateral, regional and
bilateral opportunities to lower trade barriers and promote
international commerce.


7. (SBU) AUSTR Eissenstat later attended an Embassy-hosted
reception with representatives of U.S. companies with patent,


copyright and trademark intellectual property concerns. He
also provided a group interview to reporters from newspapers
La Nacion, Clarin and Cronista Comercial. Articles based on
the interview on October 5 focused on WTO, Mercosur and GSP
themes. Transcripts have been forwarded to USTR and the
Department.

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


8. (SBU) AUSTR Eissenstat's visit offered a worthwhile
opportunity to re-engage with the GoA on bilateral and
regional trade issues. Chiaradia's remarks in our meeting
were forthcoming and his offer to engage on NAMA issues
welcome. His comments on GSP and TPA made it clear that the
GoA is closely following the political debate in Washington.
AUSTR Eissenstat's description of his discussions in Uruguay
and our steps to pursue TIFA (rather than full FTA)
negotiations were an obvious relief to GoA trade officials,
given the concern Chiaradia had earlier expressed (ref A)
that Mercosur disciplines and integrity be maintained. For
their part, U.S. private sector representatives were hopeful
that this renewed USTR engagement with the GoA and a U.S./GoU
TIFA dialogue might together help encourage the GoA to seek
to improve Argentine trade and investment disciplines.
Continued high-level trade dialogue is all to the good, and
post strongly supports a revitalization of the Bilateral
Committee on Trade and Investment as a vehicle to re-engage
the GoA on trade-related and investment climate concerns.


9. (U) AUSTR Eissenstat has cleared this cable.
MATERA