NICARAGUA LETTER TO USTR SCHWAB AND SECRETARY OF

UNCLAS MANAGUA 000197

SIPDIS

SENSITIVE
SIPDIS

DEPT FOR WHA/CEN, EB/TPP
DEPT PASS TO USTR
USDA/FAS/OCRA/WHA/CMARSTON
USDA/FAS/ONA/MED/LCOONROD

E.O. 12958: N/A
TAGS: ETRD EAGR FAS WTO NU
SUBJECT: NICARAGUA LETTER TO USTR SCHWAB AND SECRETARY OF
AGRICULTURE ON U.S. PEANUT SUBSIDIES


1. (U) On January 18, 2007 the Embassy received an original
letter in English dated December 12 and addressed to U.S.
Trade Representative Susan Schwab and to Secretary of
Agriculture Mike Johannes from the Minister of Development,
Industry, and Trade Alejandro Arguello and Minister of
Agriculture Mario Salvo. Post contacted both ministries to
confirm that the letter, penned before the Ortega
Administration took office on January 10 2007, reflected the
current government's position. New ministers have since been
appointed. Director for External Commerce at the Ministry of
Development, Industry, and Trade Sonia Somarriba confirmed to
us that it did, and further informed us that on January 22
Nicaragua formally joined Canada's WTO request for
consultations on U.S. subsidies and domestic support for corn
and other agricultural products.


2. (SBU) The original letter, the text of which follows,
will be forwarded to WHA/CEN via Diplomatic Pouch registered
under 5531166.

Begin text.

The Honorable
Susan Schwab
United States Trade Representative
600 17th Street, N.W.
Washington, DC 20508

The Honorable
Mike Johannes
Secretary of Agriculture
United States Department of Agriculture
1400 Independence Avenue, S.W.
Washington, DC 20250

Dear Ambassador Schwab and Secretary Johannes:

As you know, one of Nicaragua's principal objectives in the
Doha Development Round has been to achieve substantial
reductions in agricultural export subsidies and domestic
supports. Given the Round's uncertain outlook at this
juncture, and the upcoming efforts in the United States to
reauthorize U.S. Farm Bill subsidy programs, we are writing
to express Nicaragua's growing concern over U.S. peanut
subsidy payments, which are threatening the future viability
of Nicaragua's peanut industry.

Peanuts are Nicaragua's leading agricultural export after
coffee, and a vital source of employment for many thousands
of Nicaraguan producers and allied workers in the rural areas
of the country. The health of the sector is of utmost
importance to our country's continued economic development.

We are concerned; therefore, that U.S. peanut marketing
assistance loan payments, direct payments, and
counter-cyclical payments are severely eroding the Nicaraguan
industry's export sales and profitability. Those subsidies
are distorting the U.S. and global marketplace, and
drastically disrupting the historical competitive
relationship between the U.S. and Nicaraguan peanut
industries.

Nicaragua is eager to begin a dialogue with the U.S.
government on reasonable reforms that would help safeguard
the trading and economic interests of all concerned. With so
much at stake in this sector, we look forward to receiving
your initial views on this matter and to working
constructively on program reforms that would help sustain a
sound global peanut market.

Please accept the assurances of our highest regard.

(Signed) Alejandro Arguello Ch.
Minister of Development, Industry and Trade

(Signed) Mario Salvo H.
Minister of Agriculture

End text.
TRIVELLI