SAGARPA ON CCA MOU, COOL AND NAFTA

UNCLAS MEXICO 002623

SENSITIVE, SIPDIS

STATE PASS USTR/MURPHY, MELLE, O'CONNOR
USDA FOR FFAS/MILLER, FAS FOR OA/MICHENER, STOLL,
- ADAMS; OCRA/HIGGISTON, ZANIN; OSTA/HAMILTON;
- ONA/RIEMENSCHNEIDER, GRUNENFELDER
PASS APHIS FOR SMITH, FSIS FOR ALMANZA, JONES
PASS AMS FOR LIVESTOCK AND GRAIN MARKET NEWS

E.O. 12958: N/A
TAGS: EAGR ETRD NAFTA TBIO MX
SUBJECT: SAGARPA ON CCA MOU, COOL AND NAFTA

SENSITIVE BUT UNCLASSIFIED


1. (SBU) SUMMARY: SAGARPA does not appear to be
certain exactly where to take its proposal to amend
the memorandum of understanding for the Consultative
Committee on Agriculture, but plans to consult with
the Secretariat of Economy (SE) September 4 to clarify
the GOM's position. COOL remains an irritant with
SAGARPA. SAGARPA warned that the new PRI-dominated,
anti-NAFTA Mexican Congress makes imperative efforts
to demonstrate the benefits of NAFTA to the Mexican
economy. END SUMMARY.

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CCA MOU
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2. (SBU) In a September 2 meeting at SAGARPA,
Under Secretary Francisco Lopez Tostado, ASERCA
Director in Chief Graciela Aguilar, and
Coordinator for International Affairs Victor
Villalobos offered agoffs confusing and
conflicting views as to what exactly the Mexican
side has in mind for amending the MOU
underpinning the U.S.-Mexican Consultative
Committee on Agriculture. Lopez Tostado finally
said it is in Villalobos' hands, and Villalobos
promised to get back to us (he called the
following evening to advise that SAGARPA and SE
will meet the morning of September 4 at the
working level to come up with a proposal).


3. (SBU) The two common threads evident from this
conversation were SAGARPA's (and presumably SE's)
view that the CCA should be made "more efficient",
though what exactly that means was not made clear,
plus a desire for two CCA meetings per year.
Aguilar suggested that the Presidents'
declaration from the North American Leaders'
Summit in Guadalajara should perhaps be
incorporated into the CCA MOU. Villalobos added
that he would like to see the CCA MOU amended to
"give it teeth."

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COOL
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4. (SBU) Aguilar raised mandatory country of
origin labeling (COOL),noting that the per-head
discount on prices of Mexican cattle sold to U.S.
buyers may not be as bad as Mexico has claimed,
but is still bad, around USD 60 per head. She
asserted, "some companies are using COOL as a
pretext to discount prices" when negotiating
contracts. In response to a request for price
data, Aguilar replied that SE's legal counsel had
advised her not to share Mexican price data with
the USG.

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NAFTA
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5. (SBU) Aguilar noted that the July
congressional elections had resulted in a PRI-
dominated Congress characterized by deeper anti-
NAFTA sentiment than the previous Congress. Thus,
she said, it is imperative that the U.S. and
Mexico "show progress" in implementing NAFTA, as
well as demonstrating NAFTA's benefits to the
Mexican economy, in order to blunt opposition.

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COMMENT: NEED TO SHOW PROGRESS ON NAFTA
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6. (SBU) Post will follow up with Villalobos
afternoon of September 4 to learn the status of
proposed revisions to the CCA MOU. The state of
confusion over where to take the CCA appears to
be bound up in Mexico's desire to engage the U.S.
and Canada on SPS and TBT regulatory cooperation
trilaterally, aware that the CCA is only a
bilateral forum.


7. (SBU) COOL remains very much on SAGARPA's (and
perhaps more important, its stakeholders') mind.
Lopez Tostado and his team recognize that the
issue is in litigation and thus out of their
hands, but nevertheless feel compelled to raise
COOL whenever the opportunity arises.


8. (SBU) This atmospheric plus the impact of the
trucking issue underlie, at least in part,
Aguilar's urgent desire to demonstrate the
benefits to Mexico of NAFTA.
PASCUAL