MEXICO ECONOMIC NOTES, DECEMBER 28, 2006 - JANUARY

UNCLAS SECTION 01 OF 02 MEXICO 000059

SIPDIS

SENSITIVE
SIPDIS

STATE FOR A/S SHANNON
STATE FOR WHA/MEX, WHA/EPSC, EB/IFD/OMA
STATE FOR EB/ESC MCMANUS AND IZZO
STATE FOR EB/CIP SAEED AND FETCHKO
USDOC FOR 4320/ITA/MAC/WH/ONAFTA/ARUDMAN
USDOC FOR ITS/TD/ENERGY DIVISION
USDOC FOR NTIA JCOFFIN
TREASURY FOR IA (ALICE FAIBISHENKO)
DOE FOR INTERNATIONAL AFFAIRS KDEUTSCH AND ALOCKWOOD
STATE PASS TO USTR (EISSENSTAT/MELLE)
STATE PASS TO FEDERAL RESERVE (CARLOS ARTETA)
STATE PASS TO FCC (EMILY TALOG)
NSC FOR DAN FISK

E.O. 12958: N/A
TAGS: ECON ECPS EFIN ELAB MX PGOV PREL
SUBJECT: MEXICO ECONOMIC NOTES, DECEMBER 28, 2006 - JANUARY
5, 2007

REF: A. MEXICO 7110

B. MEXICO 6973

Sensitive but unclassified.

Summary
--------------


1. (SBU) The Embassy held its second meeting with new Under
Secretary for Communications Rafael del Villar who again

SIPDIS
asked to exchange views with USG officials on key telecom
issues (Refs A and B) National Action Party (PAN) Secretary
General Jose Espinosa called for a third television network.
The Mexican Ambassador in Venezuela called attention to A
Mexico-Venezuela trade agreement under negotiation. Cane
workers and government officials restarted negotiations on a
long-stalled sugar law. A Chinese offical said he expected
increased Chinese investment in Mexico, and the local press
picked up a Department of Energy report critical of the
Mexican oil sector. End Summary.


Communications Under Secretary Seeks Dialog with U.S.
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2. (SBU) On January 5, Emboffs met for a second time with
new U/S for Communications Rafael del Villar and his staff
for what del Villar would like to become regularly scheduled
informal gatherings to exchange ideas. Del Villar also
invited officials from the Canadian Embassy to the January 5
meeting. Del Villar said his interest was in exchanging
ideas that could help extend telecom services to rural, poor
communities in Mexico that were cut off from development. He
also noted the goal of attracting investment to Mexico to
create high value jobs and improving competitiveness in North
America. Specifically, del Villar and his staff asked for
information on U.S. and Canadian experiences in policies and
regulation regarding broadband and wireless access, access to
the internet, Voice over Internet Protocol (VOIP),television
digitalization, telecom convergence, electronic signatures,
and administration of radioelectronic spectrum for current
and future services. They also asked how the U.S. and
Canadian governments were organized to regulate
telecommunications and establish policies, including the
split between federal, state and municipal responsibilites
for extending telecom services to their people. Regarding
calling party pays (CPP),del Villar said his Ministry was
aware that the new system for charging for cell phone calls
to Mexico had hit U.S. customers hard, was worried about U.S.
perceptions, and wanted to hear U.S. views on CPP
implementation in Mexico. Emboffs agreed to provide
information on these topics, and to look into coordinating
digital video conferences to link Secretariat of
Communications and Transportation (SCT) officials with
relevant USG experts.

PAN Supports Greater Competition in Broadcasting
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3. (U) PAN Secretary General Jose Espina told the press that
further competition in the broadcast sector was an important
step for Mexican modernization; and, the PAN would support
approval of additional broadcast networks to bring
competition to the industry, though he stopped short of
saying the PAN would propose new legislation.

Mexico Seeking New Trade Agreement with Venezuela
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4. (U) Mexican Ambassador to Venezuela Nicolas Escalante
announced that Mexico and Venezuela have been negotiating a
trade agreement following Venezuela's decision to quit the
G-3 (Mexico, Venezuela, and Colombia). The new agreement
will be developed under the guidelines of the Latin American
Integration Association (ALADI). Mexico-Venezuela trade had
increased substantially during the previous decade when the
G-3 arrangement was in place.

Cane Union Optimistic on Sugar Law Deal to Spur Production
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5. (U) Carlos Blackaller, leader of Mexico's Nation Cane
Workers Union (UNC) announced that talks have begun with
incoming Agriculture Secretary Alberto Cardenas over
interpretation of Mexico's 2005 Sugar Cane Law. Workers and
the government agreed to push the process forward to spur
production. They believe Mexico could place 400 thousand
additional tons of cane sugar in the U.S. market. The law,
passed in 2005 has not been brought into force under an
agreement between the executive and legislative branches.
Parts of the text had been declared unconstitutional by
Mexico's Supreme Court.

Chinese Trade Representative on Mexico
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6. (U) An Dali, Chinese Counsel for International Trade
Promotion told the press that Chinese investors in Mexico
were most interested in the logistics, automotive and auto
parts, and general manufacturing sectors. As the United
States continued its de-industrialization, Canada will be
replaced by China as the United States' leading supplier with
Mexico in second position, he added.

Press Raises an Eyebrow at DOE Report
--------------


7. (U) Left-leaning daily "La Jornada" noted publication of
a new Department of Energy Energy Information Agency Report
on Mexico with the front page headline "Mexico, open to
permitting energy investment: US." Nonetheless, the story
has seemed to go no further, and we have heard comments only
from industry insiders.


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GARZA