"ARC OF THE PACIFIC" INITIATIVE QUIETLY PROGRESSES

C O N F I D E N T I A L LIMA 000564 SIPDIS SIPDIS E.O. 12958: DECL: 04/02/2018 TAGS: PREL PGOV ETRD ECON PINR PE SUBJECT: "ARC OF THE PACIFIC" INITIATIVE QUIETLY PROGRESSES REF: A. LIMA 3709 ¶B. LIMA 0072 Classified By: POL/C ALEXIS LUDWIG FOR REASONS 1.4 (B) ¶1. (C) Summary: Eleven Latin American governments led by Peru's President Alan Garcia launched the "Arc of the Pacific" initiative in Cali, Colombia in January 2007 as a new forum to promote Latin American economic and political integration. The Arc initiative so far has held two ministerial-level meetings and plans another for April 13-14; four working groups are creating proposals in the areas of integration, infrastructure, investment, and trade. The Arc initiative has been warmly received by several of Peru's neighbors, and the GOP sees it as a forum, at least in the first instance, for generating a Latin American consensus. End Summary. A Political and Economic Forum -------------- ¶2. (U) In January 2007, President Alan Garcia led eleven Latin American nations in launching the Arc of the Pacific initiative (then called the Pacific Rim initiative) as an effort to bring together like-minded neighbors that face the Pacific Ocean in a new political and economic forum (ref A). The original purpose of the Arc was to help counteract the isolation that Peru and Colombia face as moderate, centrist governments in a region susceptible to populism, say our Foreign Ministry counterparts. Garcia has envisioned the Arc as an alternate regional forum for debate shielded from the distractions often caused at regional meetings by Bolivia and Venezuela. The pro-democratic and pro-free market trajectory of most Arc governments, says the Foreign Ministry, enables positive discussions on abroad range of topics such as trade, investment and economic integration. If discussions are successful, the Arc could eventually move beyond talk to implementation of economic integration, which could in turn serve as a kind of platform for the strategic projection of a "pragmatic" regional view. Progress So Far -------------- ¶3. (C) The Arc members held two Ministry-level meetings in 2007 and will hold another this year in Cancun, Mexico on April 13-14. At the last meeting, participating Ministers established four working groups to discuss the issues of integration, infrastructure, investment, and trade. All have produced draft working papers that will be debated and approved at this month's meeting. Further ministerial meetings have been planned through 2009. A trade ministry contact tells us that the political will to develop the Arc is strong, but adds that the eventual goal of creating a "free trade area" remains distant. Broad divergences in key areas such as tariff rates, sanitary and phyto-sanitary regulations, rules of origin, and technical barriers make such a trade area unlikely in the near future. Regional Reception of the Arc -------------- ¶4. (C) Several of Peru's neighbors have warmly received the Arc initiative and view it as an opportunity to increase engagement with the region. Our contacts at the Mexican Embassy stress that the Arc fits well with their key foreign policy goal of expanding and diversifying its relations with Latin America. Chile sees the project as a space for cooperation with Peru apart from the frictions that sometimes disrupt bilateral relations. Peru's Foreign Ministry point-person on the Arc says that Chile has remained engaged despite a cooling of relations in other areas due to the maritime border issue being taken to the Hague (ref B). Canada, although not an Arc member, has also shown great interest and hopes to eventually get involved, according to its Embassy's Political Counselor. He believes his government became interested after Prime Minister Stephen Harper sat in on a September 2006 meeting at APEC where Garcia and Chilean President Michelle Bachelet discussed the initiative. Comment: The Arc and Us -------------- ¶5. (C) The GOP has largely welcomed U.S. regional initiatives, seeking more attention from us rather than less. President Garcia himself has sometimes mused out loud with visiting U.S. VIPs about the need for a contemporary successor to the "Alliance for Progress." At the same time, the GOP sees the Arc of the Pacific as a forum for generating an automous Latin American consensus on the pragmatic (vice populist) way forward. In that context, GOP officials tell us that including the U.S. as a formal member of the arc now would (in their view) be counterproductive. They also acknowledge that because Arc members are linked by their FTAs (in some stage) with the U.S., eventual U.S. membership is a matter of time. MCKINLEY