MEXICO LAUDS CAFTA-DR TEXTILE CUMULATION AS FIRST

UNCLAS SECTION 01 OF 02 MEXICO 001907 SIPDIS STATE FOR A/S SHANNON STATE FOR WHA/MEX, WHA/EPSC. WHA/CEN, EEB/TPP/BTA, EAP/CM, EAP/EP STATE PASS USTR FOR EISSENSTAT/MELLE/SHIGETOMI/QUISENBERRY USDOC FOR 4320/ITA/MAC/WH/ONAFTA/GERI WORD TREASURY FOR IA (LUYEN TRAN, RACHEL JARPE) NSC FOR RICHARD MILES, DAN FISK EXIM FOR MICHELE WILKINS STATE PASS TO FEDERAL RESERVE (BORA DURDU) E.O. 12958: N/A TAGS: ETRD KTEX PREL ELAB MX CH SUBJECT: MEXICO LAUDS CAFTA-DR TEXTILE CUMULATION AS FIRST STEP TOWARD INTEGRATION REF: (A) 08 MEXICO 1523 (B) 08 MEXICO 1333 (C) 08 MEXICO 1810 MEXICO 00001907 001.2 OF 002 Summary -------------- ¶1. (U) Mexico's Economy Secretary and the head of the national textiles chamber praised the impending entry into force of the textiles cumulation provisions in the Dominican Republic-Central America-U.S. Free Trade Agreement (CAFTA-DR) as key to raising Mexican and regional competitiveness (particularly vis-a-vis China) in the textile-apparel production chain, and as a first step toward achieving greater intra- and inter-regional economic integration in all traded sectors. End summary. ¶2. (U) On June 16 the National Chamber of the Textile Industry (CANAINTEX) held a press conference to highlight the scheduled August 15 entry-into-force of the textile cumulation provision of the CAFTA-DR. A number of Mexican economic officials, ambassadors and diplomats from the CAFTA-DR countries, and econoff were invited to attend. CANAINTEX President David Garcia predicted that the national textile industry will register US$250 million of additional exports once the U.S. begins to offer CAFTA-DR benefits to apparel imports from Central America and the Dominican Republic that make use of Mexican textile inputs. He added that if exports do increase as expected, the industry might be able to generate jobs for another 20,000 workers beyond the 150,000 currently employed in textile manufacturing. ¶3. (U) After Garcia's comments, Mexican Economy Secretary Eduardo Sojo called this a first step in the process of greater commercial integration among common free trade partners, a theme he and his top officials have been pressing since the Calderon Administration took office (REFS A and B). He called for the inclusion of cumulation provisions for all sectors, not just textiles, in what he called "second generation" trade agreements. Mexico, he said, was particularly interested in linking up in this fashion its FTAs with corresponding U.S. FTAs. However, he noted that Mexico was also willing to pursue this sort of integration with the European Union (which he noted was in the process of negotiating trade agreements with Central America and the Andeans),Canada, and other partners. In this context he highlighted the meetings of the Pacific Arc group, which aims to harmonize rules of origin among pro-trade Latin American countries (REFS A and B). ¶4. (U) According to Sojo, cumulation is essential to fostering integrated supply chains of sufficient economic scale to compete in the global marketplace. During the question and answer session, he was asked whether this accord would help Mexico improve its performance vis-a-vis China. Sojo noted the recent agreement between the Mexican and Chinese governments that would lower Mexican barriers to Chinese imports while maintaining protection for some Mexican sectors through 2011 (REF C). He also said that Mexico, together with the U.S., had been successful in using the WTO to force China to abandon some of its unfair subsidies to MEXICO 00001907 002.2 OF 002 exporters. He also pointed out that costs in China are rising, naturally leading to a more level playing field and making this a particularly promising time to improve Mexican competitiveness. Visit Mexico City's Classified Web Site at http://www.state.sgov.gov/p/wha/mexicocity and the North American Partnership Blog at http://www.intelink.gov/communities/state/nap / GARZA