D/USTR VERONEAU REASSURES LUGO OF US TRADE INTERESTS

UNCLAS ASUNCION 000785

SENSITIVE
SIPDIS

FOR WHA/BSC MDASCHBACH, BFRIEDMAN, MDRUCKER, WHA/EPSC MROONEY,
BMUMTEAN,
OPS FOR USTR

E.O. 12958: N/A
TAGS: PREL ECON ETRD PA
SUBJECT: D/USTR VERONEAU REASSURES LUGO OF US TRADE INTERESTS


1. (SBU) SUMMARY: Deputy U.S. Trade Representative John Veroneau met
with President Lugo early November 20 to reinforce President Bush's
interest in strengthening trade relations with Paraguay. Lugo said
international solidarity is key to Paraguay's development, and
asserted that Paraguay needs fair, transparent trade. Veroneau
asserted that U.S. trade with the region is on the rise, and said
that Free Trade Agreements with partners in the Western Hemisphere,
most recently with Peru, are responsible for the up-tick in commerce
and job creation. Veroneau assured Lugo that the U.S. stands ready
to help Paraguay, and to support Lugo as he tackles economic
development issues. Lugo and Veroneau had a warm exchange, which
served to consolidate U.S. interest in closer trade relations and to
encourage Paraguay to reconsider its position in the WTO on U.S.
trade preference programs (septel). END SUMMARY.


2. (SBU) Deputy U.S. Trade Representative Veroneau met with
President Lugo early November 20 to reinforce President Bush's
interest in strengthening trade relations with Paraguay. (NOTE:
Veroneau was accompanied by Ambassador Ayalde, USTR's Duckworth, and
Pol/Econ Chief (notetaker). Foreign Minister Hamed Franco also sat
in. END NOTE.) Veroneau told Lugo that President Bush was pleased
with their October 27 meeting in Washington and that President Bush
sent him to Paraguay to further explore expanding trade relations
and to support Lugo's goal of job creation. Veroneau explained that
his job allows him to travel extensively, and that his experience
has taught him that open markets are critical to broad-based
economic growth. He cited Uruguay and Chile as economic success
stories as a result of openness and broad-based trade. Veroneau
noted that the challenge is to broadly share the benefits of trade,
as opposed to limiting the growth to a small segment of the
population. Despite worldwide successes in countering severe
poverty, Veroneau said there is still much work to be done to
improve the plight of the poorest billion people in the world, and
that trade is the best mechanism to do that.


3. (SBU) Lugo, grateful for Veroneau's message, said international
solidarity is key to Paraguay's development. Lugo asserted that
Paraguay needs fair, transparent trade, and that U.S. assistance can
yield great dividends for the Paraguayan economy. Lugo said
political and diplomatic relations are important, but that real
economic change for Paraguay will come as a result of consolidated
trade relations. Lugo acknowledged Paraguay's long history of close
relations with the United States, but said "this is the moment" for
commercial relations, not just for the United States with Paraguay,
but with Latin America in general. Lugo said he wouldn't copy
regional economic models, but would take inspiration from Uruguay,
Chile and others about tools Paraguay could use to promote economic
development.


4. (SBU) Veroneau asserted that U.S. trade with the region is on the
rise, and said that Free Trade Agreements, most recently with Peru,
are responsible for the up-tick in commerce. Veroneau discussed the
opportunity for the private sector to request a detailed seminar led
by a USTR expert to help the Lugo administration and the private
sector maximize benefits from the existing GSP program. Lugo
admitted that Paraguay has not been efficient in exploring markets
for its products, but seemed perplexed about why Paraguay's growth
in the region had stagnated in comparison to its neighbors.


5. (SBU) Ambassador Veroneau assured Lugo that the U.S. stands ready
to help Paraguay, and to support Lugo as he tackles economic
development issues. Ambassador Veroneau asserted his belief that
U.S. interest in Paraguay would not lessen under the Obama
administration, but that President-elect Obama would look for ways
to continue to develop trade relations. Lugo said U.S. interest in
Paraguay, conveyed by the A/USTR's visit, "gives us hope about new
possibilities," mentioning exploration for oil in Paraguay as a
potential source of wealth for the country. "God continues to bless
us," Lugo said in closing. COMMENT: President Lugo and Ambassador
Veroneau had a warm exchange, which served to consolidate U.S.
interest in closer trade relations and to encourage Paraguay to
reconsider its position in the WTO on U.S. trade preference programs
(septel). END COMMENT.

This message was cleared by USTR Duckworth.

AYALDE