Identifier
Created
Classification
Origin
07MONTEVIDEO98
2007-01-30 13:49:00
CONFIDENTIAL
Embassy Montevideo
Cable title:  

DUSTR VERONEAU SIGNS TIFA WITH URUGUAY

Tags:  ECON ETRD PREL ECIN UY 
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DE RUEHMN #0098/01 0301349
ZNY CCCCC ZZH
R 301349Z JAN 07
FM AMEMBASSY MONTEVIDEO
TO RUEHC/SECSTATE WASHDC 6763
INFO RUCNMER/MERCOSUR COLLECTIVE
RUEHCV/AMEMBASSY CARACAS 0478
RUEHLP/AMEMBASSY LA PAZ JAN SANTIAGO 2963
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHDC
RUMIAAA/CDR USSOUTHCOM MIAMI FL
RHEHNSC/NSC WASHDC
C O N F I D E N T I A L MONTEVIDEO 000098 

SIPDIS

SIPDIS

DEPT FOR WHA/BSC, WHA/EPSC AND EB/TPP
DEPT PLEASE PASS USTR
TREASURY FOR OASIA FOR JASPER HOEK
COMMERCE FOR ITA/MAC/BASTIAN
NSC FOR CARDENAS
SOUTHCOM FOR POLAD

E.O. 12958: DECL: 01/30/2017
TAGS: ECON ETRD PREL ECIN UY
SUBJECT: DUSTR VERONEAU SIGNS TIFA WITH URUGUAY

Classified By: Ambassador Frank Baxter for reasons
1.4 (b) and (d).

C O N F I D E N T I A L MONTEVIDEO 000098

SIPDIS

SIPDIS

DEPT FOR WHA/BSC, WHA/EPSC AND EB/TPP
DEPT PLEASE PASS USTR
TREASURY FOR OASIA FOR JASPER HOEK
COMMERCE FOR ITA/MAC/BASTIAN
NSC FOR CARDENAS
SOUTHCOM FOR POLAD

E.O. 12958: DECL: 01/30/2017
TAGS: ECON ETRD PREL ECIN UY
SUBJECT: DUSTR VERONEAU SIGNS TIFA WITH URUGUAY

Classified By: Ambassador Frank Baxter for reasons
1.4 (b) and (d).


1. (C) Summary: DUSTR John Veroneau came to Uruguay on
January 25-26 to sign a Trade and Investment Framework
Agreement (TIFA) with Presidential Chief of Staff Gonzalo
Fernandez. Accompanied by AUSTR Everett Eissenstat, Director
Sue Cronin and Ambassador Frank Baxter, Veroneau met with
Economy Minister Danilo Astori and Industry Minister Jorge
Lepra, who were joined by Uruguayan Ambassador Carlos
Gianelli, to chart the way forward. A lunch was also held
with private sector representatives. What emerged from all
meetings was a GOU committment to move forward on the TIFA's
work plan, with the goal of negotiating an FTA if conditions
warrant. It was agreed to meet again in Washington in April
to take stock of the progress. Veroneau also enlisted the
GOU's help in working towards an agreement in Doha, which
would generate meaningful trade flows. Post is very
appreciative of the DUSTR's visit, which enhanced bilateral
relations and confirmed the GOU's keen interest and political
will in moving towards an FTA with the U.S. End Summary.


2. (C) The TIFA signing ceremony was followed by a press
conference, in which most questions related to the workplan
and the next steps. Veroneau explained that the two
governments were committed to enhancing the trade
relationship but steps would be taken one at a time. At a
lunch with leading private sector representatives, Veroneau
took stock of the private sector's keen interest in an FTA
between the U.S. and Uruguay. The businessmen also noted the
idiosyncracies of business in Uruguay, in particular the less
than fluid labor market and the general lack of
entrepreneurial spirit within the business community. On a
positive note, one participant at the lunch noted that
Uruguay's transparent legal system and respect for the rule
of law created an attractive investment climate.



3. (C) At a meeting with Astori, Veroneau repeated President
Bush's statement to President Vazquez at the White House in
May 2006: "If you want an FTA, we also want one." Veroneau
pointed out, however, that the USG needed to see a strong GOU
committment and that the GOU had to know fully well what it
was getting into. "There will be no first step until we know
we can take the last step," he said. Veroneau also made it
clear that Mercosur issues were something for the GOU to
resolve and were not a factor for the U.S. Astori replied
that the GOU "worried a lot about Venezuela's discourse"
within Mercosur. Mercosur is becoming more political to the
detriment of its economic foundation, Astori said, adding
that "this is not the project we had signed onto initially."
He praised the signing of the TIFA as a good step forward and
a signal to Mercosur that Uruguay had passed the time for
complaining and was now taking action. "This is not a game
we are playing," he said, "and it is not a threat (to
Mercosur),but it is rather an indication of the path forward
for us." Uruguay's priority is "international insertion,"
Astori explained, and the TIFA is a first step in that
direction. Astori also lamented that Mercosur's image had
deteriorated internationally and he warned that "an open
region does not work well with a bad image."


4. (C) Eissenstat and Cronin then outlined the workplan on
the TIFA, proposing that talks start immediately on seven
areas, proposals be exchanged between both sides, and a
stocktaking of progress be taken at the next meeting of the
Joint Council in April in Washington. Astori agreed to the
proposals and introduced Director of Trade Policy Fernando
Lorenzo as the point of contact within his ministry for the
technical discussions. Veroneau closed the meeting by asking
for GOU support in the Doha Round so that an agreement may be
reached to generate "meaningful trade flows." Astori agreed
that an agreement in Doha was paramount and pledged that the
GOU would work to this purpose. He pointed out that services
were of particular interest to Uruguay.


5. (C) Veroneau then met with Lepra, to whom he reiterated
the USG's committment to "go as far we can as quickly as we
can." He noted, however, that the USG was looking for
"informed consent" before embarking on an FTA. "An FTA is a
good goal to have," he said, but he pointed out that the
three FTAs pending congressional ratification (Peru, Colombia
and Panama) were a priority before USTR would consider steps
beyond the TIFA. He noted that the picture may be clearer by
the time of the next Joint Council meeting in Washington and
called for significant progress on texts in the interim.
Points of contact must be identified quickly, Cronin noted,
and she outlined the several areas where progress could be
made. Veroneau noted that there were no deal breakers and
suggested that any problematic area be set aside, so as to
move forward on consensus areas. Lepra embraced the plan.
The day ended with a dinner at the Ambassador's Residence for
the two delegations.


6. (C) Comment: This was a very positive visit by DUSTR
Veroneau and Post is very appreciative of the DUSTR's
efforts. The visit confirmed the USG interest in enhancing
the bilateral trade relationship. It provided an opportunity
to emphasize the need for deep understanding by the GOU of
the obligations and responsibilities of an FTA with the
United States. The next steps will be determined by how
quickly progress can be made on the TIFA's workplan. End
Comment.


7. (C) Cable cleared by USTR delegation.
Baxter