VAZQUEZ LOBBIES HARD FOR TRADE TALKS WITH U.S. WORKING GROUPS FORMED

,C O N F I D E N T I A L MONTEVIDEO 000418 SIPDIS SIPDIS DEPT FOR WHA/AS SHANNON AND EB/AS WAYNE DEPT ALSO FOR WHA/BSC FOR BARNES, CROFT AND MURRAY DEPT PLEASE PASS USTR TREASURY FOR OASIA FOR DOUGLAS COMMERCE FOR ITA/MAC BASTIAN NSC FOR FISK AND CRONIN SOUTHCOM FOR POLAD E.O. 12958: DECL: 05/10/2016 TAGS: ETRD ECON PREL UY SUBJECT: VAZQUEZ LOBBIES HARD FOR TRADE TALKS WITH U.S. WORKING GROUPS FORMED Classified By: Charge d'Affaires James D. Nealon for reasons 1.4 (b) and (d). ¶1. (C) Summary: President Vazquez appears to have wasted no time in pushing his trade agenda. At the May 8 Cabinet meeting, he recounted the results of his ten-day trip to the U.S. and Mexico, and of his meeting with POTUS on May 4. He advocated for expanded trade talks with the U.S., which he said could eventually lead to a Free Trade Agreement (FTA). His Cabinet strongly supported Vazquez in this endeavor, with 11 ministers in favor and only two against (ForMin Gargano and Communist Minister for Social Development Arismendi). Charge met on May 10 with Industry Minister Lepra, who had accompanied Vazquez on the trip, to get a first-hand account of the GOU's next steps. Lepra confirmed the overwhelming Cabinet support and requested that we provide some information on specific benefits of trade agreements for public consumption. He confirmed that the GOU was looking at its FTA with Mexico as a model to start talks (Note: Post is translating this agreement for USTR. End Note.) He added that he would lead a committee of five ministers to oversee the trade talks, and he provided the names of the members of the technical negotiating team. When reminded of the importance of a clear leader to head this technical team, Lepra immediately picked up the phone to call Economy Minister Astori. After the conversation with Astori, he told Charge that they had decided upon EconMin Director of Trade Sarachaga as the team leader. This would be confirmed after discussing the issue with Vazquez at the next Cabinet meeting on May 15. It appears that Vazquez and his economic team have found more support for an FTA than they may have thought possible so early after their return and are capitalizing on the momentum. End Summary. ¶2. (C) On Monday May 8, shortly after his return, President Vazquez called a Cabinet meeting to inform his ministers about his ten-day trip to the U.S. and Mexico. Vazquez is reported to have explained his vision of an increased trade relationship with the U.S., leading to a possible FTA by October. According to Vice-President Novoa and Industry Minister Lepra, 11 out of 13 ministers expressed their support for Vazquez's vision, with only Foreign Minister Gargano (Socialist) and Social Development Minister Arismendi (Communist) dissenting. According to the reports, Astori led a strong, well-founded defense of the advantages of an FTA, while Gargano threatened to resign if an FTA was ever signed with the U.S. It appears that the level of support that Vazquez garnered in this first Cabinet meeting was stronger than expected. On the public front, the left-leaning daily La Republica was unusually supportive, with overall favorable reporting under a headline claiming that "The Government pressed on the accelerator to make good on commercial agreement with the U.S." A poll conducted by El Pais indicated a strong majority of public support for a trade agreement with the U.S. ¶3. (C) Charge met on May 10 with Industry Minister Lepra to get a better understanding of the GOU's plans and to coordinate actions. Lepra was very upbeat about the trip and about the prospects for an FTA. He relished in the increased isolation in which ForMin Gargano was finding himself. Lepra and Charge agreed to coordinate public stance regarding the ongoing negotiations, to ensure that the Embassy not move ahead of President Vazquez. Lepra confirmed that the model FTA that the GOU favored was the Uruguay-Mexico FTA, ""for political reasons"". This agreement was supported by the entire political spectrum, he explained, and by Uruguay's Mercosur partners. In addition, Lepra noted that the Uruguay-Mexico FTA, signed in 2004, is a third-generation agreement based on an improved NAFTA model. Charge confirmed that post was in the process of translating this document so that USTR may compare it with our latest FTA. Lepra then requested our assistance in providing him with information about our FTA with Vietnam, not because it is a particularly good FTA, he noted, but rather to counter opposition from the Communist Party. "If Communist Vietnam, after fighting a brutal war against the U.S., can turn around and sign an FTA," he explained, "how can our Communists be against it?" Lepra also requested information on job creation, investment and poverty reduction brought about by FTAs, again for the GOU's campaign to build up public support. Charge pledged to provide the information. Post would appreciate any and all such information to be shared with the GOU. ¶4. (C) Lepra said he would lead a political committee of five ministers (Industry, Economy, Agriculture, Foreign Affairs and Tourism),responsible for the trade talks. He also had a technical negotiating team in mind, but was still unclear as to who would lead this team. Charge noted the importance of a solid negotiating team, with clear lines of authority, given the short time frame in which negotiations were to be conducted. Lepra immediately picked up the phone to call EconMin Astori, with whom he agreed to have EconMin Trade Director Sarachaga lead the negotiating team. He and Astori would confirm their choice after the next Cabinet meeting on May 15, he said. ¶5. (C) Comment: Clearly, Vazquez has returned from the U.S. in a strengthened position to initiate trade talks and is making the best out of the momentum he has encountered. The GOU appears to be keenly aware of the tight timeframe to negotiate an agreement and determined to make the most of this opportunity. Embassy will continue to be the interagency coordinator" for the GOU to ensure that no time is lost due to lack of focus on organizational details. End Comment. Nealon