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Viewing cable 06LIMA3674, ASSISTANT USTR EISSENSTAT DISCUSSES PTPA WAY FORWARD WITH

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Reference ID Created Released Classification Origin
06LIMA3674 2006-09-14 22:23 2011-08-25 00:00 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Lima
VZCZCXYZ0000
RR RUEHWEB

DE RUEHPE #3674/01 2572223
ZNR UUUUU ZZH
R 142223Z SEP 06
FM AMEMBASSY LIMA
TO RUEHC/SECSTATE WASHDC 2300
INFO RUEHBO/AMEMBASSY BOGOTA 3896
RUEHBU/AMEMBASSY BUENOS AIRES 2578
RUEHCV/AMEMBASSY CARACAS 9778
RUEHQT/AMEMBASSY QUITO 0682
RUEHLP/AMEMBASSY LA PAZ SEP SANTIAGO 0845
RUEHGV/USMISSION GENEVA 0468
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RHEHAAA/NATIONAL SECURITY COUNCIL WASHINGTON DC
UNCLAS LIMA 003674 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
DEPT FOR WHA/AND, WHA/EPSC, EB/OMA, EB/TPP 
COMMERCE FOR 4331/MAC/WH/MCAMERON 
USTR FOR EEISSENSTAT, BHARMAN AND MCARRILLO 
GENEVA FOR USTR 
 
E.O. 12958: N/A 
TAGS: ETRD ECON EINV OTRA PE
SUBJECT: ASSISTANT USTR EISSENSTAT DISCUSSES PTPA WAY FORWARD WITH 
TRADE MINISTER 
 
 
1. (SBU) Summary:  Assistant USTR Everett Eissenstat discussed 
Congressional passage of the Peru Trade Promotion Agreement (PTPA) 
during a visit to Peru August 31 - September 1, 2006 with Minister 
of Trade Mercedes Araoz, key trade officials and other government 
and private sector representatives.  During his main working meeting 
at the Trade Ministry, Eissenstat urged GOP officials to focus on 
marshalling arguments for the U.S. Congress to pass the PTPA rather 
than pushing for renewal of Andean Trade Preference Act 
(ATPA/ATPDEA/ATPDEA) preferences.  He stressed the importance of 
coordinating the GOP messages among the different players, such as 
Presidential envoy Hernando de Soto, Trade Minister Mercedes Araoz 
and the private sector.  He urged GOP officials to be in a listening 
mode with the U.S. Congress and to try to address their concerns on 
labor and other issues in a coordinated fashion.  End Summary. 
 
Urgency of Passage 
------------------ 
 
2. (SBU) Assistant U.S. Trade Representative Everett Eissenstat met 
with newly appointed Minister of Trade and Tourism Mercedes Araoz on 
September 1.  Eissenstat was accompanied by the Ambassador, Deputy 
A/USTR Bennett Harman, USTR Director for Andean Affairs Michelle 
Carrillo, and Emboffs.  Minister Araoz stressed that the GOP looked 
to swift passage of the PTPA by the U.S. Congress and entry into 
force as soon as possible because the uncertainty on timing was 
creating anxiety among Peruvian and American businesses.  Eissenstat 
said the USG was strongly supportive of the PTPA and said the Garcia 
Administration's new team was very strong. 
 
3. (SBU) Minister Araoz noted that implementation would take some 
time, so quick action by the U.S. Congress was needed to make entry 
into force by January 1 possible.  She also explained that the 
Peruvian Congress' committees on the economy, agriculture, and trade 
were currently favorable to the Garcia Administration and the PTPA, 
and that the Garcia Administration was still enjoying its honeymoon 
phase.  She said the later the Peruvian congress looked at passing 
implementing measures, the more difficult, noting that the PTPA 
would be "dead" if Ollanta Humala's party took over the chairmanship 
of the Agriculture Committee (it's currently chaired by President 
Garcia's APRA party).  Eissenstat said this was a very compelling 
argument to keep moving the process along as expeditiously as 
possible. 
 
Engaging US Congress 
-------------------- 
 
4. (SBU) Assistant USTR Eissenstat told the trade ministry officials 
that USTR was fully engaged with the U.S. Congress on the PTPA, and 
said he would be meeting with Senate staffers to discuss labor 
issues in Peru.  Eissenstat recommended that on their first visits 
to Washington, Peruvian officials, including President Alan Garcia's 
special envoy for the PTPA Hernando de Soto, be in listening mode. 
 
 
Bridging Any ATPA/ATPDEA-PTPA Gap 
-------------------------- 
 
5. (SBU) The Peruvians asked if a very brief ATPA/ATPDEA extension 
would be possible if PTPA does not pass before January 1, or if the 
USG was planning other measures to bridge any time gap in order to 
avoid a spike in tariffs.  They said textile companies, Peru's 
primary non-traditional export employer, were already losing U.S. 
clients who feared having to pay 20-23 percent tariffs (e.g. JC 
Penney recently dropped a Peruvian supplier), and that banks did not 
want to give investment loans due to the uncertainty of passage and 
entry into force timing.  Minister Araoz said that U.S. buyers had 
also contacted the trade ministry because they wanted to keep their 
suppliers.  She noted that the growth rate of textile exports to the 
U.S. had been cut in half in the last quarter and that potential 
investments were on hold or had gone elsewhere because of the 
uncertainty.  Minister Araoz said the GOP was exploring whether it 
could insure Peruvian exporters against potential duty liabilities 
and asked if the USG could provide administrative relief in the 
event of a lapse in benefits. 
 
6. (SBU) A/USTR Eissenstat assured the trade officials that the USG 
 
was engaged with the U.S. Congress on the problem, but that only 
Congress can extend benefits.  He noted that many in Congress 
currently refused to consider an ATPA/ATPDEA extension, but that 
political will to solve the problem might increase as the PTPA 
momentum builds.  He stressed that the primary objective should be 
to secure Congressional passage of the PTPA, since no passage would 
be much worse than a possible transition gap. 
 
Resolving Beef SPS Issue 
------------------------ 
 
7. (SBU) Following a high-level meeting with President Garcia, envoy 
de Soto and Foreign Minister Garcia Belaunde on August 31, Araoz 
said a GOP multiagency working group would likely find a way to 
resolve the issue of exporting U.S. beef of over 30 months of age. 
She requested that USTR send a letter to the GOP similar to the one 
provided to Colombia, which stated that exported U.S. beef of over 
30 months of age met the same standards as beef consumed in the 
U.S., scientifically safe, etc.  She said this letter would give 
President Garcia cover to explain to the Peruvian public that the 
GOP was not giving in to arbitrary U.S. demands, but had received 
the adequate assurances that beef over 30 months was proven safe to 
consume.  A/USTR Eissenstat said he would carry that request back to 
Washington. 
 
Labor: Requesting Assistance 
---------------------------- 
 
8. (SBU) Minister Araoz said the PTPA should prove less contentious 
on labor than CAFTA or the Oman FTA.  She said President Garcia had 
prioritized improving labor conditions.  The GOP has already been 
working on increasing the number of labor inspectors, improving 
rights for service workers and has "named and shamed" a list of 
several thousand companies with unpaid labor and workplace fines 
that totaled almost USD 50 million.  Her team noted that some of the 
International Labor Organization (ILO) complaints had already been 
resolved or lifted.  They said the GOP would be requesting labor 
capacity building funding from the U.S. and from the ILO similar to 
what was provided to other countries that concluded FTAs with the 
U.S. 
 
9. (SBU) A/USTR Eissenstat said USTR would discuss labor issues with 
the U.S. Congress and with the GOP as they emerged.  Minister Araoz 
said it would be important to highlight this U.S.-Peru labor 
cooperation during President Garcia's October visit to Washington. 
 
Implementation 
-------------- 
 
10. (SBU) The Peruvian trade officials asked for USTR's guidance on 
how to proceed with implementation, stressing they wanted to avoid a 
painful process and have the agreement enter into force as soon as 
possible.  They said they had already established interagency 
working groups and asked who would be their USG counterparts. 
A/USTR Eissenstat said that USTR would consult with the GOP on an 
implementation package, but urged that the focus for the immediate 
term be on U.S. Congressional consideration of the agreement.  He 
mentioned the experience of the CAFTA countries and the need for 
quick and accurate translations, and said implementation issues 
could be discussed further during Minister Araoz's visit to 
Washington. 
 
COMMENT 
------- 
 
11. (SBU) A/USTR Eissenstat's discussions with Peruvian officials 
here have helped focus the government on what they will need to do 
as Congress considers the Peru Trade Promotion Agreement this fall. 
Business remains somewhat concerned on the timing of Congressional 
action on the agreement, and the potential downside if ATPA/ATPDEA 
expires and the agreement has not entered into force.  President 
Garcia's naming of economist Hernando de Soto as his personal envoy 
and the President's own public reaffirmation of support for the PTPA 
have allayed some concerns at home and abroad.  As Peruvian 
officials and private sector representatives step up their travel 
and consultations in Washington, the GOP will have a clearer picture 
 
of how to better craft their message and work with their 
Congressional and USG interlocutors to obtain passage of this 
important agreement.  End Comment. 
 
12. (U) This cable has been cleared by USTR. 
 
STRUBLE