Identifier
Created
Classification
Origin
08LIMA1439
2008-08-29 19:24:00
CONFIDENTIAL
Embassy Lima
Cable title:  

EEB A/S SULLIVAN AND WHA PDAS KELLY PITCH TRADE &

Tags:  ETRD ECON PREL EFTA UNGA PE 
pdf how-to read a cable
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DE RUEHPE #1439/01 2421924
ZNY CCCCC ZZH
P 291924Z AUG 08
FM AMEMBASSY LIMA
TO RUEHC/SECSTATE WASHDC PRIORITY 9255
INFO RUEHWH/WESTERN HEMISPHERIC AFFAIRS DIPL POSTS
RUCNDT/USMISSION USUN NEW YORK 0199
C O N F I D E N T I A L SECTION 01 OF 02 LIMA 001439 

SIPDIS

E.O. 12958: DECL: 08/28/2018
TAGS: ETRD ECON PREL EFTA UNGA PE
SUBJECT: EEB A/S SULLIVAN AND WHA PDAS KELLY PITCH TRADE &
PROSPERITY INITIATIVE TO GOP

REF: STATE 87631

Classified By: Charge' d'Affairs James D. Nealon, reasons 1.4(b)&(d)

SUMMARY
-------

C O N F I D E N T I A L SECTION 01 OF 02 LIMA 001439

SIPDIS

E.O. 12958: DECL: 08/28/2018
TAGS: ETRD ECON PREL EFTA UNGA PE
SUBJECT: EEB A/S SULLIVAN AND WHA PDAS KELLY PITCH TRADE &
PROSPERITY INITIATIVE TO GOP

REF: STATE 87631

Classified By: Charge' d'Affairs James D. Nealon, reasons 1.4(b)&(d)

SUMMARY
--------------


1. (C) A/S Sullivan and PDAS Kelly engaged the GOP's Foreign
and Trade Ministers on the details of the Alliance for Growth
& Prosperity (AGP) initiative in Lima on August 20-21. The
visit revealed some differences among our GOP interlocutors
and moved Peru from questioning to problem-solving mode, but
also highlighted several concrete GOP concerns. One of these
was the AGP's potential duplication of the GOP-supported Arc
of the Pacific initiative. Foreign Minister Garcia Belaunde
also expressed concerns about creating an "exclusive" bloc
that could further divide the region, and about jilting
Ecuador and Brazil. A/S Sullivan and PDAS Kelly sought to
allay these concerns by stressing that the AGP complemented
the Arc, offering to include GOP language in the communique,
and underscoring the initiative's bipartisan and
non-exclusive nature. Both ministers said they would try to
convince President Garcia to travel to New York for the
September 24 meeting. End Summary.

DETAILED, FRANK DISCUSSIONS
--------------


2. (C) EEB A/S Dan Sullivan and WHA PDAS Craig Kelly
discussed the Alliance for Growth and Prosperity (AGP)
initiative (reftel) in separate meetings with Minister of
Foreign Affairs Jose Antonio Garcia Belaunde, Minister of
Trade and Tourism Mercedes Araoz, and Vice Minister of
Foreign Affairs Gonzalo Gutierrez in Lima on August 20-21.
The Peruvians had previously received reftel and previous
demarches on the AGP, and Trade Minister Araoz had just
returned from a meeting with Commerce Secretary Gutierrez on
the margins of the America's Competitiveness Forum; so all
three meetings were engaging, detailed and frank discussions
on how to move the initiative forward. Interestingly, the
degree of enthusiasm and the specific concerns expressed in
each meeting, described in sequential order below, were
somewhat different.

VICE FM WON OVER
--------------


3. (C) MFA Vice Minister Gonzalo Gutierrez, an early skeptic

of AGP, listened carefully to the presentation and agreed
that the AGP and the Arc of the Pacific (a Peru-led grouping
of Latin American Pacific Coast nations that share a
commitment to free trade, deepened commercial ties and
expanded insertion into the global economy) could be mutually
reinforcing. A/S Sullivan and PDAS Kelly aso addressed VM
Gutierrez's concerns about carryover in the next US
Administration. VM Gutierrez even suggested that the
post-September 24 AGP ministerial be held in a Latin country
(other than busy-with-APEC Peru).

TRADE MINISTER ENTHUSIASTIC,
STAFF WORRIED ABOUT ARC OVERLAP
--------------


4. (C) Trade Minister Araoz was very supportive of the AGP
initiative. Araoz said she had pitched the initiative to
President Garcia on August 20, and that he was very
interested but that the "only issue was timing" of the
September 24 meeting. She said she would follow up with the
President. Minister Araoz said President Garcia had asked
her to write a letter to President Bush about both the AGP
and the Millennium Challenge Account (MCA). She was
particularly interested in the development and assistance
components of the AGP, especially for countries like Peru
that are moving into middle-income range.


5. (C) Vice Trade Minister Eduardo Ferreyros and other staff
were principally concerned over potential overlap and
duplication of effort (given limited GOP staff) with the Arc
of the Pacific, which will have its next meeting in Santiago
in October. In response, A/S Sullivan stressed that the USG
supported the Arc. He observed that the US Congress would
not be ready politically for regional trade cumulation and
rules of origin measures for some time, so the USG sees the
broader AGP as complementary to the Arc. He also invited
President Garcia to lead the discussion of one of the five
pillars during the September 24 meeting in New York.

FM CONCERNED ABOUT ECUADOR, BRAZIL AND ARC
--------------


6. (C) Foreign Minister Garcia Belaunde was cautiously

LIMA 00001439 002 OF 002


supportive and made clear that he was not worried about
carryover into the next US Administration nor Venezuela or
Bolivia's reactions to the AGP. However, he expressed the
following inter-related concerns:

-- That the AGP would exclude neighboring Ecuador, an Arc
participant that had been helpful to Peru in bypassing
Bolivian intransigence on US FTA-related trade issues in the
Andean Community (CAN);

-- That Brazil, an increasingly important partner for Peru,
would see the AGP as divisive and exclusive;

-- That the AGP would undo the Peru-led Arc of the Pacific;
and

-- that an FTA with the US not be the defining credential for
membership, as it would project a negative "bloc" image.


7. (C) FM Garcia Belaunde said that, in the launching phase,
it would be key to send a clear message that the AGP
complements the Arc and that membership would be open to
willing participants. MFA officials told us later that FM
Garcia Belaunde's explicit concerns about Brazil and the
region were new to them, and asked for a readout of future
US-Brazil discussions on AGP.

PRESIDENT GARCIA TO NYC?
--------------


8. (C) Minister Araoz seemed optimistic that President
Garcia could be convinced to attend the leaders' meeting on
September 24. Minister Garcia Belaunde said he could "not
commit the President," but would ask him to attend. He noted
that President Garcia has sought to distance himself from his
disastrous first term not only on economic policy but also by
traveling outside Peru as little as possible. For example,
President Garcia did not plan on attending any UN General
Assemblies during his 5-year term. While they make no
guarantees, other MFA officials have suggested that an
eventual call from President Bush to President Garcia could
seal the deal.

COMMENT
--------------


9. (C) The draft AGP documents and this series of high-level
meetings helped move Peru from skepticism to constructive
consideration of the AGP initiative. For one, Peru has no
beef with the themes, as spreading the benefits of trade-led
growth to rural areas and small business is a top GOP
priority. While the Trade Minister and Vice Foreign Minister
were supportive, we still need to work to persuade the
Foreign Minister. According to MFA contacts, the Minister
wants to hear and absorb neighboring countries' reactions and
concerns before taking the AGP plunge. In that sense,
keeping Peru in the loop on others' responses, and offering
to include GOP language in the AGP text and communique,
should help. President Garcia's participation in the
September 24 meeting remains in doubt, but we will continue
to press for it. End Comment.


10. (U) EEB Assistant Secretary Sullivan and WHA Principal
Deputy Assistant Secretary Kelly cleared this cable.
NEALON