ECONMIN ASTORI SAYS GOU IS ON TRACK FOR JCTI

C O N F I D E N T I A L MONTEVIDEO 000828

SIPDIS

SIPDIS

STATE FOR WHA/BSC AND EB
DEPT PASS USTR FOR EISSENSTAT AND CRONIN
NSC FOR FISK AND CARDENAS
TREASURY FOR OASIA FOR DOUGLASS
USDOC FOR ITA/MAC/BASTIAN
SOUTHCOM FOR POLAD

E.O. 12958: DECL: 09/07/2016
TAGS: PREL ETRD ECON UY
SUBJECT: ECONMIN ASTORI SAYS GOU IS ON TRACK FOR JCTI

REF: MONTEVIDEO 811

Classified By: Charge d'Affaires James D. Nealon for
reasons 1.4 (b) and (d).


1. (C) Summary: Charge met with Economy Minister Danilo
Astori on September 6 to ascertain the GOU's plans prior to
the October 2-3 JCTI in Montevideo. Astori noted President
Vazquez's personal investment to build consensus for his FTA
vision and stressed the importance of the upcoming
Vazquez-Lula meeting on September 8. He confirmed that
Industry Minister Lepra will go to Washington in
mid-September and seek a meeting with USTR's Susan Schwab, at
which time he may formally request an FTA. Astori said he
understands that an FTA would have to be modeled after the
Peru FTA, given the time constraints linked with TPA
expiration, but he emphasized the need for selected
modifications, so as to avoid the appearance of Uruguay
having "rolled over." In a separate meeting on the same day,
EconMin Trade Policy Director Dario Sarachaga told EconCouns
that his technical team could accept much of the Peru FTA but
would push very hard to put the GOU's imprimatur on the IPR
chapter, for which the Uruguayan clear preference is the text
of the US-Chile FTA. Astori was convinced that Vazquez "is
committed to an FTA and will look for any and all ways to
reach this goal." The next few weeks will be crucial. End
Summary.


2. (C) Astori was very much focused and on message. He
recalled that he had first enunciated the need for closer
trade relations with the U.S. over a year ago, and that nine
months had already elapsed since his bombshell January
interview in the business weekly Busqueda, which had called
on the GOU to negotiate an FTA with the U.S. Astori
described the August 31 meeting of ministers in much the same
way as Lepra had (reftel),with Vazquez very much in charge,
laying out the strategy to follow and giving ministers their
marching orders. (Note: Today's Busqueda ran an extensive
description of this meeting, in which Lepra was tasked with
continuing contacts with the U.S., Astori with lobbying his
Brazilian and Argentine counterparts --this was done late
last week in Rio--, Ag Min Jose Mujica with enlisting
Chavez's support, and ForMin Reinaldo Gargano with contacts
with the Argentine Foreign Minister. The article also
explains how Mujica succeeded in "co-opting" Gargano to go
along with the President's plans. End Note.) Astori also
said that Vazquez had mentioned he had contacted Chavez, who
was allegedly ready to assist in bringing Brazil and
Argentina over to Uruguay's position on FTAs (Note: We had
heard a similar line from Lepra. End Note.)


3. (C) Astori emphasized the importance of the upcoming
September 8 meeting between Lula and Vazquez in Porto Alegre.
He confirmed that the single-item agenda for this one-hour
meeting was to seek Brazil's support for Uruguay's decision
to seek bilateral FTAs. Astori said he expected to have
"good news to report on Friday." He added that the GOU
planned to present a formal request to Mercosur after the
October JCTI regarding an FTA with the U.S. The request
would be made at an extraordinary assembly of the Mercosur
Council called for this specific purpose, to be held either
in Uruguay or in Brazil. Astori quipped that Brazil appeared
of late to be much more worried about Uruguay negotiating an
FTA with China than one with the U.S.


4. (C) Astori confirmed that Lepra will go to Washington in
mid-September to advance the JCTI, possibly accompanied by
Presidential Chief of Staff Gonzalo Fernandez. Lepra will
seek to meet with USTR Susan Schwab, he said, and quite
possibly --depending on advances at Vazquez's next meeting of
ministers on September 14-- to verbally request the opening
of FTA negotiations at that time, i.e. prior to the JCTI.
Astori said that Vazquez understood that the GOU would have
to accept much of the text of the Peru FTA, if an agreement
were to be concluded prior to the expiration of Trade
Promotion Authority. However, Astori emphasized that the GOU
could not say so publicly and that some alterations would
have to be made in a few chapters, so as to put Uruguay's
imprimatur on the document. He explained that this was the
only way to "sell" an agreement to the government's
constituency. The President is "committed to an FTA", Astori
sressed, and "will look for any and all ways to reach this
goal."


5. (C) Earlier in the day, EconCouns had met with EconMin
Trade Policy Director Dario Sarachaga, to assess progress by
the GOU's technical teams. Sarachaga said the teams were
making good progress with their analysis. He noted that they
were receiving technical assistance from the World Bank and
from Chilean experts who had been involved in Chile's own FTA
negotiations. He said the document that Vazquez had
cirulated to the opposition some three weeks ago, which gave
a preliminary assessment of the cost-benefit of an FTA, had
been a poor summary of the study the Econ Ministry had
prepared. Since then, the Econ Ministry had absorbed the IPR
portfolio from the Industry Ministry, so that it now handles
almost all sectors, except for minor areas left to the
Foreign Ministry. In passing, he lamented "confusing" USG
signals over the past month, which had made his job more
difficult. We all know that an FTA is the only way to get
what we want, he said.


6. (C) It was clear to the technical team, Sarachaga said,
that the GOU would have to accept the quasi-totality of the
Peru FTA because of TPA time constraints. He stressed,
however, that this could in no way be admitted publicly. We
could accept the first ten chapters as they are, he said, but
we would have to make changes in some of the following
chapters, most of them cosmetic to give the appearance that
the GOU is not being "dictated" a format. He expected,
however, that the GOU would push hard for more subtantial
changes to the IPR chapter, "the only chapter where we have
more significant discrepancies." Sarachaga noted that the
IPR chapter in the US-Chile FTA was more consistent with the
Uruguayan reality and would not require any legislative
changes. He believed that, because of the visibility of IPR
issues, this was the perfect chapter in which to put
Uruguay's imprimatur, as evidence that the GOU did not just
accept the text of the Peru FTA wholesale. In addition, he
noted that any and all references to a Chilean text would
make the whole document much easier to "sell", because of the
ideological affinities between the Chilean and Uruguayan Left.


7. (C) Comment: Our meetings at the Econ Ministry track with
what we had heard from Lepra. The additional information and
details gleaned in these meetings confirm that Vazquez is
moving down the road towards an FTA with eyes wide open and
with a defimite plan of action. Vazquez has invested himself
personally in this endeavor and he has put his government's
credibility on the line. We will report next week following
the Vazquez-Lula meeting. End Comment.
Nealon