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Viewing cable 06BUENOSAIRES854, FEDERAL MARITIME COMMISSION CHAIRMAN'S VISIT TO

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Reference ID Created Released Classification Origin
06BUENOSAIRES854 2006-04-13 20:29 2011-08-25 00:00 UNCLASSIFIED Embassy Buenos Aires
VZCZCXYZ0003
RR RUEHWEB

DE RUEHBU #0854/01 1032029
ZNR UUUUU ZZH
R 132029Z APR 06
FM AMEMBASSY BUENOS AIRES
TO RUEHC/SECSTATE WASHDC 4166
INFO RUEHAC/AMEMBASSY ASUNCION 5471
RUEHBO/AMEMBASSY BOGOTA 1322
RUEHBR/AMEMBASSY BRASILIA 5270
RUEHLP/AMEMBASSY LA PAZ APR LIMA 1810
RUEHMN/AMEMBASSY MONTEVIDEO 5481
RUEHQT/AMEMBASSY QUITO 0718
RUEHSG/AMEMBASSY SANTIAGO 5072
RUEHRI/AMCONSUL RIO DE JANEIRO 1951
RUEHSO/AMCONSUL SAO PAULO 2853
UNCLAS BUENOS AIRES 000854 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON EWWT AR
SUBJECT: FEDERAL MARITIME COMMISSION CHAIRMAN'S VISIT TO 
ARGENTINA 
 
 
------- 
Summary 
------- 
 
1.  Federal Maritime Commission (FMC) Chairman Steven Blust 
met with GOA officials and industry representatives during 
his April 4-7 visit to Buenos Aires.  Chairman Blust gave a 
presentation on the FMC's role in regulating maritime affairs 
to the Industrial Union of Argentina (UIA), the Chamber of 
Commerce of Argentina (CCA), the Chamber of Importers of 
Argentina (CIRA), the Navigation Center of Argentina (CNA), 
and the American Chamber of Commerce (AmCham).  These 
organizations invited Chairman Blust to provide insights from 
his public and private sector experience with the goal of 
working toward establishing an organization similar to the 
FMC in Argentina.  Blust met with Transportation Secretary 
Ricardo Jaime to discuss the regulatory challenges that 
larger container vessels present for the existing capacity of 
ports and waterways in the U.S. and Argentina.  Chairman 
Blust's presentation, meetings, and press interview focused 
on the common issues that governments, communities, and 
businesses face in the U.S. and around the world as maritime 
traffic increases due to growth in international trade and 
travel.  End Summary. 
 
------------------------------------ 
Chairman Blust Comes to Buenos Aires 
------------------------------------ 
 
2.  The Chamber of Importers of Argentina (CIRA) initiated 
the process of inviting Federal Maritime Commission (FMC) 
Chairman Steven Blust to visit Buenos Aires from April 4-7. 
CIRA's Logistics Director Juan Carlos Mondello worked in the 
U.S. with Chairman Blust at Delta Shipping Lines in the early 
1980s and knew that Blust brought more than 30 years' 
experience to bear in his position as FMC Chairman.  Mondello 
told Econoff that the impetus for inviting Blust was a 
growing private sector concern that Argentina needed a more 
cohesive approach to governing maritime affairs.  Mondello 
worked with the Industrial Union of Argentina (UIA), the 
Chamber of Commerce of Argentina (CCA), the Navigation Center 
of Argentina (CNA), and the American Chamber of Commerce 
(AmCham) to extend a formal invitation to Blust.  These 
organizations were interested in learning more about the FMC. 
 According to Mondello, they also sought to harness insights 
from Blust's public and private sector experience to begin a 
national dialogue on improving Argentina's maritime 
regulatory environment and establish an organization similar 
to the FMC. 
 
3.  Chairman Blust gave a presentation on the FMC's history, 
legal mandate, and main areas of responsibility to members of 
UIA, CIRA, CCA, CNA, and AmCham.  He emphasized that, in 
light of the number of firms in the industry and the variety 
in type and governing structure among deepwater ports in the 
U.S., the FMC's role was to promote efficiency and ensure 
transparency in the country's maritime industry.  To that 
end, Blust said that the FMC had an obligation to maintain an 
open and ongoing dialogue with the private sector. 
 
---------------------------------------- 
Chairman Blust's Private Sector Meetings 
---------------------------------------- 
 
4.  The meetings that Chairman Blust held with the 
organizations that invited him to Argentina highlighted 
differences in the U.S. and Argentine maritime environments. 
CNA President Rodolfo Pineiro observed that Argentina "needs 
more efficient oversight" of the industry.  He noted that GOA 
does not include an agency that has the FMC's regulatory 
role.  He observed that the closest counterpart to the FMC in 
Argentina is the Office of the Under Secretary of 
Transportation for Ports and Waterways, which, Pineiro added, 
"has been vacant for more than half of the Kirchner 
administration's term."  UIA's Transportation and Services 
Director Jorge Iraola said that the Port of Buenos Aires is 
the country's largest port and "only has the capacity for one 
million containers annually."  He lamented that the country's 
General Port Administration, which regulates only the Port of 
Buenos Aires, has a staff of 500 and an annual budget of more 
than USD 40 million compared to the FMC's staff of 125 people 
and an annual budget of USD 21 million.  (Note: Chairman 
 
Blust clarified that the FMC is not a port authority and that 
port authority structures differ from city to city. 
Nevertheless, this perceived disparity was cited throughout 
Chairman Blust's visit as emblematic of the need to improve 
Argentina's maritime governance.  End Note.) 
 
5.  The private sector representatives also outlined the 
challenges they face as they work to develop a maritime 
oversight authority within the GOA.  CIRA President Diego 
Santisteban discussed the debate on the future of the Port of 
Buenos Aires noting that "some members of (Mayor of Buenos 
Aires Jorge) Telerman's cabinet have called for the transfer 
of the port to another location."  CNA President Pineiro told 
Blust that Argentina's VAT reimbursement for exports, customs 
declaration requirements, and high fees at the Port of Buenos 
Aires serve increasingly as disincentives to use the Port of 
Buenos Aires as an export launchpad for containers 
originating in the interior.  Pineiro estimated that 140,000 
containers per year are diverted to the Port of Montevideo 
every year because of these regulations.  UIA Director Iraola 
recounted a recent incident in which a ship with a capacity 
of 5,000 twenty-foot equivalent units (TEU) experienced 
difficulty navigating to the designated terminal within the 
port.  Neither the channel nor the terminal berth were 
adequate to receive the ship, according to Iraola. 
 
6.  Chairman Blust responded that the U.S. is not immune to 
these issues.  He reiterated that the differences among local 
governments meant that no single approach to managing port 
growth would suffice in the U.S.  Blust said, in reference to 
the container diversions to Montevideo, that "it is a mistake 
to consider cargo captive."  He described how the Port of New 
York had lost substantial container business in the 1970s to 
Halifax and required 20 years of working with the state and 
federal authorities to regain that business.  He also 
reported that U.S. east-west trade has experienced such 
growth that 5,000-TEU ships are yielding to 8,000-TEU ships 
and that some U.S. firms have placed orders for 9,000-TEU 
ships and are negotiating the purchase of 10,000-TEU ships. 
 
---------------------------------------- 
International Trade Supplement Interview 
---------------------------------------- 
 
7.  The International Trade Supplement of Argentina's daily 
newspaper of record La Nacion interviewed Chairman Blust to 
discuss his views on Argentina.  Blust commended Argentina's 
sustained economic recovery and was optimistic that the 
economy had potential for substantial growth.  In response to 
a question on his familiarity with the debate on the future 
of the Port of Buenos Aires, he answered that communities 
near ports in the U.S. face the same infrastructure, 
congestion, and traffic issues.  As for key elements in 
fostering stability in the industry, he emphasized the 
importance of achieving a balance between security and 
adopting regulations that promote, rather than hinder, growth 
in the industry.  When asked whether Argentina's location put 
it at a disadvantage in international trade, Blust said that 
he did not think Argentina would be left behind.  He observed 
that Argentina was in a position both to take advantage of 
opportunities to expand trade as larger capacity ships for 
east-west trade displace relatively smaller ships into 
north-south routes and to tie into expanded east-west trade 
capacity.  In response to China's role in international 
trade, Blust commented that China would not necessarily crowd 
out all other countries.  He added, however, that importers 
and exporters would need to work with the government to 
develop the appropriate regime to promote competitiveness. 
 
-------------------------------------------- 
Meeting with the Secretary of Transportation 
-------------------------------------------- 
 
8.  Chairman Blust met with one of President Kirchner's 
closest advisors, Secretary of Transportation Ricardo Jaime, 
to discuss common transportation challenges in the U.S. and 
Argentina.  Blust noted that his meetings had revealed that 
Argentina was facing many of the same infrastructure, growth, 
and congestion issues as the U.S. and many other countries. 
Jaime said that the GOA was working with its Mercosur 
partners on enhancing multimodal transportation routes to 
enhance infrastructure in the region to connect ports on the 
 
Atlantic coast with those on the Pacific.  He stated that the 
GOA would begin soliciting bids on a railroad concession to 
connect Buenos Aires and Chile.  Jaime reported that 
Argentina and Brazil have been developing the 3,000-mile 
internal waterway that links Rosario, Santa Fe, and Mato 
Grosso in Brazil.  He also expressed the GOA's interest in 
developing a plan to increase investments in the country's 
ports to reduce costs and delays.  Blust observed that, as 
the 5,000-TEU ships begin to make way for larger ships in the 
east-west trade routes, Argentina would have an opportunity 
to make these plans operational.   Jaime responded that this 
change could boost exports from southern ports such as Bahia 
Blanca in Buenos Aires Province and Puerto Madryn and 
Comodoro Rivadavia in Chubut Province.  He suggested that 
cooperation with the U.S. might aid the GOA in organizing a 
central maritime authority to promote and regulate activity 
in the industry. 
 
------- 
Comment 
------- 
 
9.  Chairman Blust's visit to Buenos Aires helped reinforce 
the view of the U.S. as a partner in international affairs in 
general and maritime affairs in particular.  The breadth of 
his experience and his understanding of U.S.-Argentina trade 
left a positive impression with Secretary Jaime, Argentina's 
business community, and the media.  His visit opened the 
possibility of cooperating with the GOA on the development of 
a central maritime authority.  It also generated interest in 
the private sector on formulating a plan of action to work 
with the GOA on drafting a strategy to strengthen the 
country's maritime industry.  Post recommends inviting 
Chairman Blust and the FMC to promote maritime issues in 
other WHA posts. 
 
10.  To see more Buenos Aires reporting, visit our classified 
website at: http://www.state.sgov.gov/p/wha/buenosaires 
LLORENS