PRESIDENT-ELECT GARCIA WANTS THE US-PERU FTA

C O N F I D E N T I A L LIMA 002323

SIPDIS

SENSITIVE
SIPDIS

USTR FOR AUSTR EEISSENSTAT AND BHARMAN,DEPT FOR WHA/AND,
EB/TPP, WHA/EPSC
COMMERCE FOR 4331/MAC/WH/MCAMERON

E.O. 12958: DECL: 06/08/2016
TAGS: ETRD ECON EINV PGOV PE
SUBJECT: PRESIDENT-ELECT GARCIA WANTS THE US-PERU FTA

REF: LIMA 2292

Classified By: Ambassador J. Curtis Struble. Reasons: 1.4 (B & D)


1. (C) Summary: Media reports of President-elect Garcia imply
that he wants to "revise" the Free Trade Agreement. In fact,
Garcia wants and needs the FTA fully ratified before he takes
office July 28. End Summary.


2. (SBU) A number of US newspapers have reported remarks by
Peruvian President-elect Garcia that appear to call into
question his support for the U.S.-Peru Free Trade agreement.
Unfortunately, these remarks may cause turbulence in the U.S.
Congress as it considers when to take action on the Peru FTA.
The following is our analysis of the situation.


3. (C) Garcia,s government needs the FTA. His political
base is along Peru's coast, which benefits greatly from
export-related jobs. Moreover, Garcia,s campaign proposal
for transformation of poverty-inducing traditional
agriculture in the Andes highlands is based on involving
those farmers in production of higher-paying export products.


4. (C) At the same time, Garcia is taking a Missourian
attitude toward the agreement negotiated by the Toledo
Administration. The ultimate objective of this is not to
call ratification of the FTA into question, but to fix
responsibility on the Toledo government for controversial
concessions made by Peruvian negotiators.


5. (U) Some U.S. news accounts have misinterpreted one of
Garcia,s statements. He said that he would &review8
(revisar in Spanish) every line of the FTA text; &revisar8
was translated as &revise8 by some reporters.


6. (C) APRA (Garcia,s party) Congressmen have told the
Embassy in private conversations that the FTA will be
approved with their support in June by Peru's Congress.


7. (U) A number of APRA spokesmen, such as the author of the
campaign's Economic proposals, Enrique Cornejo, have publicly
called for the FTA approval while saying that additional
compensation above that proposed by the Toledo government
should be given to adversely-effected producers.


8. (C) Comment: Garcia has told us that wants the FTA signed,
sealed and delivered before he takes office. This would
provide him with the benefit that any fallout could be
attributed to the deal that Toledo struck. Garcia also wants
to show his people that he has gone through a thorough
process, carefully dissecting the Agreement and making the
deal better. He knows he cannot renegotiate the deal. But
he can show Peruvians that he has identified the good and the
bad, and done something about the bad. He may talk publicly
about an addendum, but should settle for internal
compensation that will satisfy constituents: perhaps greater
subsidies to affected farmers or workers, perhaps extracting
from the U.S. more poverty alleviation programs. End Comment
STRUBLE