MEXICO'S NEW TRADE CZAR - BEATRIZ LEYCEGUI

UNCLAS SECTION 01 OF 02 MEXICO 000149

SIPDIS

C O R R E C T E D COPY (PARA RENUMBERED)

SENSITIVE
SIPDIS

STATE FOR WHA/MEX/ROTH, WHA/EPSC/MARTILOTTA, WHA/CAN/SPROW,
WHA/AND, INR/B, AND EB/TPP/RECHT
STATE PASS USTR FOR EISSENSTAT/MELLE/SHIGETOMI
COMMERCE FOR ITA/BASTIAN/RUDMAN/WORD
USDA FOR ONU

E.O. 12958: N/A
TAGS: ETRD EAGR PREL PINR MX VE
SUBJECT: MEXICO'S NEW TRADE CZAR - BEATRIZ LEYCEGUI


MEXICO 00000149 001.4 OF 002



1. (SBU) The Secretariat of Economy's new Sub-Secretary for
International Trade Negotiations, Beatriz Leycegui, is a
seasoned trade hand (she was a Mexican NAFTA negotiator and
has since worked in the private sector as a trade lawyer and
consultant) and committed to maintaining good commercial
relations with the United States and deepening NAFTA. During
the initial courtesy call paid by Embassy's Ag, Commercial,
and Econ sections, she asserted that the U.S., as Mexico's
most important trading partner, would be her top priority, as
demonstrated by the fact that her first official overseas
trip had been to Washington, D.C. She promised to work
closely with the Embassy on all the issues in her portfolio,
and seemed ready to help make successful the upcoming visits
of Commerce Secretary Gutierrez (February 1) and Agriculture
Secretary Johanns (tentatively scheduled for February),as

SIPDIS
well as the Western Hemisphere Conference on Competitiveness
to be held in June in Atlanta.

Mexico Complies With Its Obligations, Expects Same From US
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2. (SBU) Leycegui pointed out that the first major task she
handled upon assuming her current position was ensuring that
Mexico's Congress amended the law governing the country's
anti-dumping regime and eliminated the 20 percent tax on
beverages sweetened with anything other than cane sugar, both
changes mandated by WTO rulings in favor of aggrieved U.S.
exporters. She also asserted that Mexico would fully comply
with its NAFTA obligation to open up its corn and bean
markets at the start of next year. She said this move made
economic sense, but would require deft political handling.
She agreed that our two governments need to come up with a
public relations strategy for presenting it in the most
favorable light possible. She then pointed out that Mexico
expects the U.S. to keep up its side of the bargain as well,
referring to the cross-border trucking issue and discussion
of it during her January 4 meeting in Washington with
Department of Transportation Under Secretary Jeff Shane. One
of her deputies, Director-General for Negotiations Ken Smith
Ramos, pointed out that an early resolution of this issue
would be a major victory for the Calderon Administration in
refuting the arguments of Mexico's NAFTA critics, but noted
that likely opponents back in the U.S. were already
mobilizing.

Outstanding Trade Issues Raised with Deputies
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3. (SBU) Leycegui had to depart early for another meeting,
but Smith and fellow Director-General (for Trade Policy) Jose
Saenz stayed on to discuss specific issues. Neither Smith
nor Saenz, both holdovers from the Fox Administration, had
seen the letters written by Treasury Deputy Secretary Kimmitt
and U.S. Trade Rep Schwab late last year to their respective
Fox Administration counterparts regarding the Fireman's Fund
investment dispute. Emboff subsequently passed copies of the
letters to them to share with Leycegui. With regard to the
longstanding pending applications for accreditation in Mexico
of U.S. certification organizations (UL, Intertek),Smith
said Leycegui had been fully briefed and was committed to a
speedy resolution, something the outgoing Fox Administration
had hoped, but failed, to accomplish. Smith said Leycegui
plans to discuss the issue soon with her fellow Sub-Secretary
Arce, who is responsible for such certifications. It was
Smith's understanding that Economy Secretariat lawyers were
finalizing a legal opinion that would side-step resistance
from Mexican private organizations that were holding up the
process.


4. (SBU) Smith and Saenz then raised the following issues of
concern to them: 1) Mexico hopes to get the necessary USDA
certification to allow Mexican poultry from a processing
plant in Yucatan to be exported to the U.S. (Embassy Ag
MinCouns noted that USDA cannot act until the Mexican ag
authorities certify the plant); 2) Mexico would like to talk
with us about sugar policy in light of the fact that our
respective markets will be integrated when the final barriers
to sugar trade among the NAFTA economies are removed on
January 1, 2008; 3) Mexico is interested in discussing NAFTA

MEXICO 00000149 002.3 OF 002


export subsidy provisions in light of Doha round developments
and in the hopes of avoiding pressure to lodge anti-dumping
cases against U.S. exports of sensitive agricultural products
like beans and milk; and 3) Mexico is very interested in the
ongoing U.S. litigation over imports of Mexican tuna and
would like to be informed as quickly as possible of any new
developments that might require a Mexican response (Embassy
Commercial MinCouns agreed to provide an update).

Venezuela Trade Feelers Get No Response
--------------


5. (SBU) Commenting on recent press reports that Mexico was
interested in negotiating a new trade agreement with
Venezuela to replace the G-3 accord from which Chavez
withdrew last year, Smith said that, despite some optimistic
interventions from the Venezuelan Embassy here, there
appeared to be no interest in talks, at least yet, back in
Caracas. Mexico and Venezuela are not big trade partners,
but Smith and Saenz noted that bilateral trade is important
for several niche industries (like steel and auto parts) in
both countries.

Still No Position on P4P/SPP Alphabet Soup
--------------


6. (SBU) When asked about the future of the Partnership for
Prosperity (P4P),Smith asked whether the U.S. believed that
it had effectively been assimilated into the trilateral
Security and Prosperity Partnership (SPP) framework. Smith
said there was still no official Mexican position, as the
Office of the Presidency had not yet had time to focus on
these initiatives. He predicted that the upcoming SPP
ministerial and leaders meetings in February and June,
respectively, would force the bureaucracies in all three
North American countries to decide how to take these forward.


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