A/S SULLIVAN AND PDAS KELLY MEETING WITH ECLAC ON

C O N F I D E N T I A L SANTIAGO 000936

SIPDIS

STATE PLEASE PASS TO USTR KDUCKWORTH
STATE FOR WHA/BSC, EEB/TPP/BTA/EWH, AND WHA/EPSC
TREASURY FOR SSENICH
COMMERCE FOR KMANN

E.O. 12958: DECL: 10/20/2018
TAGS: ECON ETRD OVIP UNGA EFTA CI
SUBJECT: A/S SULLIVAN AND PDAS KELLY MEETING WITH ECLAC ON
NEW TRADE INITIATIVE (PATHWAYS)

Classified By: Ambassador Paul E. Simons. Reason 1.4 (b) and (d).


1. (C) Summary. A/S Sullivan and PDAS Kelly met August 22
with officials from the UN Economic Commission for Latin
American and the Caribbean (ECLAC/CEPAL) to provide a brief
on U.S. economic engagement in the Western Hemisphere and
preview USG plans for a new initiative (now called Pathways
to Prosperity in the Americas) designed to broaden the
benefits of free trade among the populations of the U.S. and
its FTA partners and increase hemispheric economic
integration. ECLAC Executive Secretary Barcena endorsed the
initiative and suggested ECLAC could support it with the
publication of a document analyzing FTA,s in the hemisphere.
A/S Sullivan and PDAS Kelly supported the document but
stressed that it should be released as a follow-on to the
launch of the U.S. initiative. Barcena agreed to the
approach and said she would wait for a go-ahead from the U.S.
before proceeding with the document. PDAS Kelly asked for
Barcena,s ideas in promoting alternative development in
Bolivia. She said ECLAC was ready to help with any U.S.
programs and suggested Bolivia might benefit from a sale to
the World Food Program. End Summary.

U.S. Hemispheric Engagement and a New Initiative
-------------- ---


2. (U) EEB A/S Sullivan, WHA PDAS Kelly, and Ambassador
Simons met with ECLAC Executive Secretary Alicia Barcena and
Secretary Laura Lopez on August 22 in Santiago. Other U.S.
participants in the meeting were: WHA/EPSC Director Rooney,
TPP Senior Policy Advisor Lurie, E/POL Counselor Alsace, and
Econoff. Other ECLAC participants were: Osvaldo Rosales,
Director of the International Trade and Integration Division,
and Gerardo Mendoza, Programs Director.


3. (C) A/S Sullivan began the meeting by underlining U.S.
commitment to the Western Hemisphere and our strong record of
economic engagement. He noted assistance to the hemisphere
had doubled under the Bush Administration and 10 new
countries were now receiving U.S. aid. A/S Sullivan
explained the U.S. will continue to maintain a strong focus
on the hemisphere, especially regarding free trade. The USG
was developing an initiative (Pathways to Prosperity in the
Americas) on taking free trade to the next level, starting
with countries with which the U.S. already had Free Trade
Agreements (FTA). In the future any country would be welcome
to participate, but it was only logical to start with the
U.S., current free trade partners. A/S Sullivan noted he
was due to meet with Ministers Foxley and Velasco later in
the day to discuss the initiative, but his first meeting, by
design, was with ECLAC.


4. (C) A/S Sullivan explained the initiative would attempt to
deepen links already established by FTA,s in a larger, more
comprehensive framework in the hemisphere. This would ensure
that the broadest array of citizens in these countries could
take advantage of the free trade architecture built over the
last 25 years in a variety of areas such as English language
training, development assistance, and small and medium
enterprise financing. The Bush Administration wanted to
pursue this initiative, despite the upcoming U.S.
presidential election, because it would continue the strong
momentum of progress in free trade in the Americas. A/S
Sullivan noted constant forward progress was key in issues of
free trade, as standing still often led to negative
developments. The USG initiative had already received
enthusiastic responses from several countries. PDAS Kelly
added the U.S. was working very hard to emphasize the
benefits of free trade for real people such as reductions in
income disparity and improving health programs.

ECLAC Document on Free Trade
--------------


5. (C) Executive Secretary Barcena endorsed the initiative
and congratulated A/S Sullivan and PDAS Kelly on their good
timing, explaining the question of free trade was more
salient than ever. There was a perception in the hemisphere
that the U.S. was not focused on Latin America. A/S Sullivan
noted he thought the perception unfair given the numbers and
the results, such as those of the U.S.-Chile FTA. Barcena
agreed and opined that the moment was ripe for the
publication of a book of facts on FTA,s. She recommended a
short-and-sweet document showing the evolution of FTA,s with
the U.S., the pros and cons of free trade, and pending issues
(such as Brazil,s reluctance to continue the FTAA process).
The document could be prepared by ECLAC with the
participation of the Inter-American Development Bank and the
Organization of American States (who all participate in the
FTAA tripartite committee). However, it would need to be
produced quickly, probably within the next two months. The
document could then be launched at a public event in Mexico
or Chile or even at the upcoming APEC Summit in Peru. The
World Bank (WB) could also be of assistance in the project
since WB President Zoellick was a strong proponent of free
trade. A/S Sullivan noted the USG initiative had stemmed
from some of Zoellick,s ideas.


6. (C) A/S Sullivan thought the ECLAC document had a lot of
potential and should offer an objective look at free trade,
both benefits and costs. However, it should concentrate on
economic arguments and avoid political issues such as Brazil
and free trade. A/S Sullivan explained the USG was
considering a high-level event to launch the new initiative
(should it be approved),but it might be difficult to tie to
the ECLAC document. If ECLAC could express its support at
the launch of the initiative, it would be extremely helpful.
PDAS Kelly suggested the document might be helpful as a
follow-on to the launch of the initiative.


7. (C) Ambassador Simons suggested the need for a segment on
institution building, noting that the U.S.-Chile FTA had
promoted much closer institutional links on phytosanitary
cooperation, culminating in the announcement of two-way trade
in beef and chicken. Ambassador Simons also suggested a
focus on regional investment noting that Chilean investors
valued the investment chapter of the U.S.-Colombia FTA as a
boost to regional investment protection. A/S Sullivan cited
the U.S.-Chile FTA as a great example of the success of free
trade. He noted the staggering numbers showing U.S. exports
had increased 200 percent and Chilean exports had increased
170 percent since the signing of the FTA. Unfortunately,
there was rarely much attention paid to the collateral
positive developments, such as the institutional cooperation
cited by Ambassador Simons. Stressing these lesser known
achievements was one of the goals of the USG initiative.


8. (C) Barcena appreciated the suggestions and admitted it
would be best to focus the ECLAC document on facts, numbers,
and flows. She undertook to begin production of the
document, but wanted to wait for the go-ahead from the U.S.
She asked Director Rosales to follow-up with Post. Rosales
applauded the U.S. effort noting a hemispheric initiative was
critical given the efforts of Europe and Asia to move beyond
bilateral trade agreements. It was also critical to energize
efforts to continue the Doha negotiations.

ECLAC Help in Bolivia
--------------


9. (C) PDAS Kelly told Barcena that INL A/S Johnson and WHA
A/S Shannon had just been in Bolivia, where the relationship

was very delicate. The GOB was attacking the Embassy and
Ambassador frequently, and the USG was hoping to keep to the
high-road and maintain focus on the many worthwhile USG
programs in Bolivia such as alternative development. He
asked Barcena if she had any suggestions. She replied that
ECLAC was happy to support U.S. alternative development
efforts in Bolivia. She noted the World Food Program needed
to buy $80 million of food for Haiti. Some of this purchase
could be made in Bolivia to demonstrate the value of
alternative crops, which needed a captive market to maintain
any credibility in Bolivia.


10. (U) This cable has been cleared by A/S Sullivan and PDAS
Kelly.
SIMONS