EU AWAITS ANDEAN COMMUNITY STANCE TOWARD TRADE

UNCLAS LA PAZ 001565

SIPDIS

SENSITIVE
SIPDIS

STATE FOR WHA/AND LPETRONI
STATE PASS TO USTR FOR BHARMAN
COMMERCE FOR JANGLIN
TREASURY FOR SGOOCH

E.O. 12958: N/A
TAGS: ETRD EINV ECON PREL PGOV BL
SUBJECT: EU AWAITS ANDEAN COMMUNITY STANCE TOWARD TRADE
TALKS



1. (U) Summary: At a June 8 breakfast, the European
Commission Delegation's chief trade representative said the
European Union (EU) would await a clear Andean Community
stance toward trade talks before pursuing association
agreement negotiations. EU member states hope to see
consensus emerge after the June 13-14 Andean Community
meeting in Quito. With a clear statement of the group's
desire to initiate association agreement negotiations, the
trade representative said, the EU could consider moving ahead
with discussions later this year. End summary.


2. (U) At a June 8 breakfast, Angel Gutierrez, Chief of the
Political, Economic, and Commercial Section of the European
Commission Delegation in Bolivia, said the European Union
(EU) would await a clear Andean Community stance toward trade
talks before pursuing association agreement negotiations.
Gutierrez noted that Venezuela's April 22 withdrawal from the
Andean Community had thrown the group into disarray and said
members displayed clear divisions over the group's external
trade policies at the May 11-13 EU-Latin America and the
Caribbean Summit in Vienna. In light of such disunity,
Gutierrez said, EU member states hesitated to push for trade
talks.


3. (U) EU members hope to see consensus emerge after the June
13-14 Andean Community meeting in Quito, at which bloc
members expect to debate their positions toward international
commercial exchange and the EU's proposed association
agreement. Gutierrez said he hoped Bolivia and its
counterparts would "put their house in order" and forge a
common position on foreign trade. He explained that the EU
preferred multilateral to bilateral negotiations and would
consider talks only on a multilateral basis.


4. (U) With a clear statement of the Andean Community's
desire to initiate association agreement negotiations,
Gutierrez said, the EU could consider moving ahead with
discussions later this year. EU member states have proposed
replacing existing Generalized System of Preferences benefits
- under which 90 percent of Bolivian exports to the EU,
including textiles and some agricultural goods, already enter
EU markets duty-free - with a customs union. The EU would
seek common external tariffs, uniform customs administration,
common trade policies, and lower intraregional non-tariff
barriers to trade.


5. (SBU) Comment: Gutierrez suggested the Andean Community's
lack of consensus could be an obstacle to opening association
agreement negotiations but stopped short of completely
discounting the possibility. It appears the EU genuinely
hopes to begin discussions, even if the current outlook is
uncertain. End comment.
GREENLEE