NICARAGUA: LETTER TO USTR SCHWAB FROM TRADE

UNCLAS MANAGUA 002383 SIPDIS SENSITIVE SIPDIS DEPT FOR WHA/CEN, EB/TPP DEPT PLEASE PASS TO USTR DEPT OF AGRICULTURE FOR USDA/OIT AND USDA/COTS E.O. 12958: N/A TAGS: ETRD EAGR WTO NU SUBJECT: NICARAGUA: LETTER TO USTR SCHWAB FROM TRADE MINISTER ARGUELLO ¶1. (U) On October 19, the Embassy received a letter in Spanish dated October 16 and addressed to U.S. Trade Representative Susan Schwab from the Minister of Trade, Industry, and Development Alejandro Arguello. We offer the following English translation to speed communication while we forward the original to USTR. We draw attention to Arguello,s reference to U.S. subsidies on peanuts, which we explain further in Paragraph 3. ¶2. (SBU) Begin informal translation of text. Susan C. Schwab Executive Office of the President The United States Trade Representative Washington, D.C. 20508 United States of America Dear Ms. Schwab: I have the pleasure of writing to you in reference to your recent communication, where you presented the U.S. commitment put forth by President Bush at the General Assembly this past September and shared some ideas about how to contribute to the success of Doha Development Agenda negotiations. In this respect, Nicaragua hopes that multilateral trade continues to contribute to the economic growth, sustainable development, and improvement in the standard of living of WTO member countries. This is the reason why we expect and trust that Doha Development Round negotiations will arrive at a happy conclusion, according to the mandate set forth in the WTO Ministerial Declaration of November 2001. Nicaragua, as a small economy and according to its level of development, is in an excellent position to contribute towards achieving a satisfactory outcome of trade negotiations for all. For this reason, all countries must detail flexibilities in their negotiating positions, trusting like you, that this will result in mutual understanding of key issues, with the aim of restarting talks and putting the negotiations on a path toward achieving ambitious results. For this reason, I am pleased to hear that the United States stands ready to eliminate all tariffs, subsidies, and other obstacles to the free flow of goods and services. Beyond this, I share your flexible approach, and will demand that other members adopt a similar approach. We are convinced that the elimination of these types of policies is crucial for Nicaragua, since it would favor an increase in trade flows of products that currently benefit from large state subsidies and market interventions, as in the case of peanuts. I am sure that the elimination or substantial decrease in such market interventions would encourage trade between our two countries. I reiterate the willingness of Nicaragua to work in the way that you expressed in your letter, and hope that you are successful in consultations, both internally and with colleagues in other countries, so that the current break in negotiations permits the reflection necessary for negotiations to resume without further delay. Without further business, I would like take this opportunity to express to you my highest consideration and esteem. Alejandro Arguello Minister of Trade, Industry, and Development Republic of Nicaragua End informal translation of text. ¶3. (SBU) In reference to Minister Arguello,s mention of U.S. subsidies on peanuts, we can pass along that Arguello is clearly under pressure from local peanut producers who are complaining bitterly about U.S. competition, particularly in Mexico. Nicaraguan peanut producers believe they could expand regional exports rapidly if they did not have to compete with exports of subsidized U.S. peanuts. In recent weeks, Arguello has raised the topic with us on more than one occasion, saying at one point that he was considering the possibility of filing a WTO case. We explained to him that the issue of agricultural subsidies had to be managed within the context of Doha Development Agenda talks, and advised him to approach USTR separately with his concerns. This letter may be his opening salvo. TRIVELLI