TRADE ENVOY DE SOTO DISCUSSES PTPA STRATEGY

UNCLAS LIMA 003385 SIPDIS SENSITIVE SIPDIS DEPT FOR WHA/AND, WHA/EPSC, EB/OMA, EB/TPP COMMERCE FOR 4331/MAC/WH/MCAMERON USTR FOR EEISSENSTAT AND BHARMAN GENEVA FOR USTR E.O. 12958: N/A TAGS: ETRD ECON EINV PGOV PREL PE SUBJECT: TRADE ENVOY DE SOTO DISCUSSES PTPA STRATEGY REF: LIMA 3316 AND PREVIOUS ¶1. (SBU) Summary: Hernando de Soto, President Garcia's recently named Personal Representative for the U.S.-Peru Trade Promotion Agreement (PTPA),told the Ambassador on August 22 that he would develop a plan of activities to promote U.S. Congressional passage of the PTPA before traveling to the U.S. for a few weeks o/a September 10. He stressed the need to develop a fallback position in case the U.S. Congress voted against the agreement, and asked what the prospects would be for ATPDEA extension in that case. The Ambassador replied that a negative vote would make ATPDEA extension hopeless, so the GOP should put all its eggs in the approval basket. De Soto said he would coordinate his strategy closely with GOP ministries, the previous Toledo administration's trade team, and USG officials to ensure maximum effectiveness. The Ambassador advised De Soto to establish regular contact with USTR and its legislative affairs office. De Soto will meet with A/USTR Everett Eissenstat during his August 30-September 1 visit to Lima, and with House Ways and Means Committee staff member Angela Ellard on August 24. End Summary. ¶2. (SBU) Ambassador met with Hernando de Soto, President Garcia's personal representative for the U.S.-Peru Trade Promotion Agreement (PTPA),on August 22 to discuss De Soto's plans for taking up his new responsibilities (see REFTEL). De Soto said that President Garcia had taken it for granted that President Toledo would nail down U.S. ratification of the PTPA before Toledo left office, and had absolutely no contingency plan for lobbying Washington. De Soto plans to devote himself between now and September 10 to "drawing a map" of activities he will undertake to promote U.S. Congressional passage of the PTPA. ¶3. (SBU) De Soto knew that President Toledo had innocently put himself in the middle of a U.S. partisan dispute on labor standards in FTAs, and said he would work to avoid such missteps. He said he would welcome pointers from U.S. officials. The Ambassador said that the most important piece of advice he could offer was that De Soto should coordinate as closely as possible with USTR and its legislative affairs people. De Soto plans to consult with GOP ministries, the previous Toledo administration's team and USG officials so that he can pick up where the outgoing government left off and "avoid traps along the way." Given the suddenness of his appointment, De Soto has not even had a chance to be briefed by key people like former Ambassador to Washington Eduardo Ferrero. ¶4. (SBU) De Soto said that he planned to moderate the GOP's public statements of confidence about PTPA approval by the U.S. Congress. Both former President Toledo and Ambassador Ferrero had publicly said that everything was set up and the new government only needed to give a little push to win approval. De Soto knows there are a lot of uncertainties on timing and that nothing should be taken for granted. The Ambassador said he would be careful not to contradict De Soto, but suggested De Soto avoid being too pessimistic lest it feed back in an unhelpful way to the U.S. De Soto was concerned about developing a fallback position in case the U.S. Congress votes down the PTPA, and asked what the prospects would be for ATPDEA extension if that happened. The Ambassador told De Soto he should assume that a negative vote would also mean ATPDEA extension would be hopeless. The Ambassador recommended that since Peru only gets one shot at this in the U.S. Congress, the GOP should put all its eggs in the approval basket. ¶5. (SBU) De Soto plans to send staff ahead to Washington to prepare the ground, including Ambassador Jorge Valdez, on loan from the MFA as the Director of International Affairs at De Soto's Institute for Liberty and Democracy (ILD),and ILD Finance Director Alfonso Grados. De Soto also hopes to recruit former Trade Vice Minister and PTPA negotiator Pablo de la Flor, who he noted came out of ILD. (Note: De la Flor, who is well-known to Washington trade officials, told Ambassador later in the day that he would like to help De Soto but doesn't know if he can because he just accepted a job with Booz Allen Hamilton. End Note.) De Soto has previously planned commitments in Washington on September 10 (to review ILD initiatives with a couple of U.S. senators) and in New York from September 20-22 (to participate in the Clinton Global Initiative). He plans on spending the weeks in between in the U.S., working the Congress and others. ¶6. (SBU) De Soto had seen materials from one of the U.S. lobbying firms contracted by the GOP and said it looked liked they knew what they were doing. The Ambassador said that he had heard from Washington contacts that Peru's team was pretty good, and noted that with so much turnover in Peru's Trade Ministry and Washington Embassy, De Soto would probably find it useful to have some continuity. De Soto agreed. De Soto will meet with A/USTR Everett Eissenstat during his August 30-September 1 visit to Lima. He will also see Ways and Means staffer Angela Ellard, who is on vacation in Peru, on August 24. ¶7. (SBU) When asked why he took on this new challenge, De Soto told the Ambassador that he had conversed with President Garcia a number of times before the election about his "TLC adentro" ("internal FTA") ideas--proposals to allow more businesses and producers to participate in international commerce (see REFTEL and http://www.ild.org.pe/pdf/TLC_Interno-Peru.pd f). Garcia's offer of the special envoy position caught De Soto by surprise and was hastily finalized. Garcia had offered De Soto other GOP positions, but De Soto said he turned them down because he had spent years building his and ILD's reputation and influence, and it was important that he spend that capital carefully. He did not want to have an appointment that would identify him too broadly with the government, pulling ILD into issues outside of its range. The big draw of this position for De Soto is that the inward-focused, "internal FTA" element matches the reform agenda that ILD promotes globally. De Soto already has some initiatives lined up for his "internal FTA" plan, and plans to start rolling them out in September. STRUBLE