"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
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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