CHILE SUPPORTS U.S. GOALS FOR APEC INCLUDING LONG-TERM GOAL

UNCLAS SECTION 01 OF 02 SANTIAGO 000506

SIPDIS

SIPDIS

E.O. 12958: N/A
TAGS: ECON ECIN ETRD CI
SUBJECT: CHILE SUPPORTS U.S. GOALS FOR APEC INCLUDING LONG-TERM GOAL
OF ASIA-PACIFIC FTA


SANTIAGO 00000506 001.7 OF 002



1. SUMMARY. The U.S. Senior Official to APEC, Ambassador Michael
Michalak, visited Chile March 12-14. There is general convergence
between U.S. and Chilean goals for APEC. Senior GOC officials
described APEC as very important to Chile. The GOC strongly
supports the long-term goal of an overarching FTA for the
Asia-Pacific region but understands the importance of a successful
conclusion to the Doha Round first. The GOC supports the U.S. goals
to strengthen APEC's institutions and to maintain the membership
moratorium for now. Once the moratorium is lifted, Chile is
interested in seeing Colombia join. Chile would like to see Peru's
APEC year in 2008 be successful and is prepared to do whatever it
can to be helpful. End Summary.


2. (U) U.S. Senior Official to APEC Ambassador Michael Michalak
visited Chile March 12-14. He met with senior MFA trade negotiator
Carlos Furche, Chile's Senior Official to APEC German King and
Deputy Foreign Minister Van Klaveren, as well as academics, students
and the press. He was accompanied by WHA/EPSC Deputy Director
Matthew Rooney.

Chilean Support for U.S. APEC Goals
--------------


3. Ambassador Michalak discussed U.S. priorities for APEC with
Ambassador Carlos Furche, the Director General of the MFA's Economic
Directorate (DIRECON) and Chile's lead trade negotiator. Michalak
told Furche while the primary U.S. trade goal was a successful
conclusion to the Doha Round negotiations, the U.S. supported a Free
Trade Agreement for the Asia-Pacific region (FTAAP) as a long-term
goal. Michalak listed items on the U.S. agenda for APEC in 2007 as
a more robust agenda on intellectual property rights, completed
model measures which could serve as FTAAP building blocks, continued
work on security issues, and assistance to Peru as it prepared to
host APEC in 2008.


4. Furche underscored Chile's strong commitment to APEC. He said
Chile supported the model measures initiative and the concept of an
FTAAP, especially with Doha apparently stalled. The GOC was
prepared to help Peru host the APEC summit in 2008 and had offered
its assistance. He said Chile supported Colombia's strong interest
in joining APEC. At one point, Furche said Colombia was clearly
obsessed with joining APEC. However, he realized the moratorium on
new members would need to stay in place until APEC institutional
reforms were complete.


5. Furche continued that Chile fully agrees with the U.S. effort to
re-focus APEC on trade and investment issues. The GOC also shares
the U.S. interest in strengthening APEC's institutions. Chile would
also like to see APEC decisions be more binding. Chile, like the
U.S., sees the model measures as building blocks for a future FTA
among APEC members. Michalak responded the trend was towards APEC
decisions being binding, which meant that it was more important than
ever to improve the organization's institutions.

Chile Ready to Help Peru's APEC Year
--------------


6. Ambassador Michalak met with Chile's APEC team headed by German
King, who after years of being Chile's acting Senior Official to
APEC, now officially holds that title. King opened by saying Chile
was prepared to help Peru logistically and substantively host the
APEC summit in 2008. King thought that President Garcia was likely
to base the agenda on domestic issues such as anti-corruption and
social responsibility, areas where Chile could offer real help.
However, Peru had not yet responded to Chile's offer of assistance,
and it was unclear in the end how Peru would frame its agenda.


7. Michalak told King that Peru's agenda items would likely include
small and medium enterprises, anti-corruption and public-private
partnerships. King said Chile had met with every APEC member in
planning its own year (in 2004) to develop the agenda. Michalak
said Peru was moving ahead on some issues and had expressed interest
in an education ministerial. Korea had expressed a similar interest
and so the U.S. had suggested a compromise: a planning seminar in
Korea followed by the education ministerial in Peru.

Chile's Ultimate Focus is on APEC FTA
--------------


8. Michalak spoke with Deputy Foreign Minister Van Klaveren about
Chile's interest in a FTAAP. Michalak said the U.S. had been
initially skeptical of an FTAAP but as a long-term goal we supported
it. That being said, the U.S. was aware that some in APEC remained
unsure of the viability of the FTA concept but, in general, the idea
enjoyed solid support. In the near term, the U.S. wanted to see
institutions strengthened and the APEC agenda re-focused on trade
and investment.


9. Van Klaveren said Chile shared the U.S support for an APEC-wide
FTA and a renewed emphasis on trade and investment. He said any FTA

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would take a long time to negotiate but that it was better to remain
ambitious than complacent. Michalak explained the U.S. had reviewed
various frameworks for Asia and concluded APEC offered the best
vehicle for economic integration. To that end, the U.S. was pushing
a reform agenda which, while off to a good start, would require
several more years. The U.S. envisioned a beefed up Secretariat and
more resources. The U.S. planned to double its contribution to APEC
to USD 5 million annually. The U.S. supported maintaining the
moratorium until reforms were completed.


10. Van Klaveren described APEC as "very important" to Chile. Chile
had limited relations with Asia before joining APEC. Since joining
the change in relations had been dramatic but more obviously
economic than political -- Asia was now the main regional
destination for Chilean exports. On the political side, APEC
membership had helped Chile deepen its bilateral ties with a number
of countries in Asia. Chile was interested in an FTAAP and agreed
the model measures were good building blocks for it. Van Klaveren
said Chile had a great deal of FTA experience to share. Chile had
followed a bilateral road in its trade relationships simply because
this was faster. The multilateral approach offered by an FTAAP
would be more efficient and the prime long-term goal for Chile in
Asia.

Comment
--------------


11. There is broad consensus in Chilean society about the importance
of Asia to Chile's future. In the GOC, this is reflected in the
wide spectrum of trade agreements Chile has with Asian partners -
New Zealand, Singapore, Brunei, Korea, China and now Japan, with
Australia and Thailand on the horizon. The GOC's commitment to APEC
is another sign of Chile's focus on Asia. We can expect Chile to
continue to take a constructive, pro-active approach to APEC that
will largely support U.S. priorities. And when the time comes to
negotiate an overarching FTA for the Asia-Pacific region, Chile will
be ready, willing and able to help the U.S. achieve this goal as
well.
KELLY