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Viewing cable 07LIMA2250, PERU'S CONGRESS APPROVES AMENDMENTS TO FREE TRADE

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Reference ID Created Released Classification Origin
07LIMA2250 2007-06-28 22:12 2011-08-25 00:00 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Lima
VZCZCXYZ0000
PP RUEHWEB

DE RUEHPE #2250/01 1792212
ZNR UUUUU ZZH
P 282212Z JUN 07
FM AMEMBASSY LIMA
TO RUEHC/SECSTATE WASHDC PRIORITY 6019
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC PRIORITY
RUEATRS/DEPT OF TREASURY WASH DC PRIORITY
RUEHC/DEPT OF LABOR WASHINGTON DC PRIORITY
INFO RUEHBO/AMEMBASSY BOGOTA 4818
RUEHBR/AMEMBASSY BRASILIA 7430
RUEHBU/AMEMBASSY BUENOS AIRES 2952
RUEHCV/AMEMBASSY CARACAS 0503
RUEHGT/AMEMBASSY GUATEMALA 1028
RUEHLP/AMEMBASSY LA PAZ JUN PANAMA 0848
RUEHQT/AMEMBASSY QUITO 1309
RUEHSN/AMEMBASSY SAN SALVADOR 2429
RUEHSG/AMEMBASSY SANTIAGO 1356
RUEHUL/AMEMBASSY SEOUL 0554
RUEHTG/AMEMBASSY TEGUCIGALPA 0763
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RHEHAAA/NATIONAL SECURITY COUNCIL WASHINGTON DC
RUEHRC/DEPT OF AGRICULTURE WASHINGTON DC
UNCLAS LIMA 002250 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR E, EB, EB/TPP, WHA/AND 
STATE PLEASE PASS TO USTR FOR VERONEAU, EISSENSTAT, HARMON 
COMMERCE FOR MCAMERON 
TREASURY FOR LEE, JEWELL 
PLEASE PASS TO EXIM 
 
E.O. 12958: N/A 
TAGS: ETRD ECON PGOV PE
SUBJECT: PERU'S CONGRESS APPROVES AMENDMENTS TO FREE TRADE 
AGREEMENT 
 
 1.  (SBU) Summary: Almost a year to the day after passing 
the U.S.-Peru Trade Promotion Agreement (PTPA), the Peruvian 
Congress approved the agreement's subsequent amendments June 
27 by vote of 70 to 38, with one abstention.  Following two 
hours of spirited debate, the three major political blocs, as 
announced, supported the bill.  Nationalist parties (UPP and 
PNP) voted against, and used the debate to criticize the 
government.  Business groups received the news positively.  A 
victory for President Alan Garcia, the GOP now only awaits 
action on the PTPA by the U.S. Congress, which the GOP hopes 
will approve the agreement with amendments before the August 
recess.  End Summary. 
 
2. (U) Trade Minister Mercedes Araoz, who had jubilantly 
signed the amendments Monday June 23 in a widely publicized 
event, outlined the documents to the Congress on the 
afternoon of June 26.  Accompanied by Prime Minister Jorge 
del Castillo and the rest of the cabinet, Araoz, in top form, 
explained how the amendments were clearly in the country's 
interest.  She asked legislators how could any of them vote 
against better health, better enforcement of core labor 
rights, and more resources to fight illegal logging?  Citing 
Chilean and Mexican experts at a well-timed conference 
earlier this week (sponsored by the Congress), Araoz pointed 
to the successes of US free trade agreements with those 
countries. 
 
THE "INTERNAL" FTA 
------------------ 
3.  (U)  Araoz described the PTPA as necessary for the Garcia 
government's policies, i.e. implementing an FTA "hacia 
adentro," an "internal" FTA agenda that would enable more 
Peruvians to take advantage of free trade agreements, as well 
as other antipoverty programs that seek to decrease poverty 
by 10% by 2011, lower child malnutrition, eliminate forced 
and child labor, and improve infrastructure and government 
services. 
 
4.  (SBU) Several congresspersons stressed the need for 
internal reforms to properly implement and take advantage of 
the PTPA, such as increasing formalization and improving 
infrastructure.  One curious absence in the past weeks has 
been economist and Presidential envoy Hernando de Soto, who 
had been replaced in January 2007 as the GOP's chief lobbyist 
in Washington by former Production Minister David Lemor.  De 
Soto's absence was even noted in the debate.  Nevertheless, 
both FTA opponents and supporters echoed de Soto's idea of an 
FTA "hacia adentro," i.e. an effort to enable Peruvians to 
take fuller advantage of a trade agreement. 
 
SUPPORTERS POINT TO ATPA, BIOFUELS 
---------------------------------- 
5.  (U) Among the government's allies, the Fujimoristas 
(Alianza para el Futuro) said they supported continuing 
progress along the economic reform / trade opening lines that 
former President Alberto Fujimori initiated in the early 
1990s.  Others, from the pro-business Unidad Nacional (UN) 
party, cited the need to continue the success of the one-way 
Andean Trade Preferences Act (ATPA).  Rafael Yamashiro, a UN 
Congressman from Ica, the seat of the asparagus industry, 
described how the growth of the agro-export industry in his 
region through ATPA and ATPDEA had reduced poverty and 
created full employment and a substantial higher quality of 
life in the last 10 years.  The PTPA, he said, was necessary 
to give that chance to other egions in Peru. 
 
6.  (U) A number of Members expressed with satisfaction that 
Peruvian ethanol would now enter the US duty-free and exempt 
from internal US taxes as a result of the PTPA.  Peru, which 
will likely be self-sufficient in energy, notably gas, by 
2011, is attracting new investment in biofuels.  Several 
Members expressed hope that the amendments would improve 
labor and environmental enforcement in Peru.  Others thanked 
U.S. Democrats for improving Peru's access to generic 
medicines. 
 
OPPONENTS: "GENUFLECTING" BEFORE THE U.S. 
----------------------------------------- 
 
7.  (SBU) The debate included vocal (and often abusive) 
complaints from anti-FTA Members:  criticizing the Garcia 
Administration for signing the amendments without thoroughly 
consulting the Congress, that they were only given the text 
the day before, and that they were only allowed a couple of 
hours of floor debate without review by the relevant 
committees (a motion to send to committees was defeated 
38-70).  PNP Member Isaac Mekler, representing Callao, asked 
how Peru could accept that the U.S., the "world's worst 
environmental offender" could monitor Peru's forests.  He 
criticized pro-trade advocates, saying that while they might 
believe that "rising tides lifted all boats," in reality, 
"only the yachts" would be lifted.  Anti-FTA groups had 
organized a protest in front of the Congress the night before 
the vote, but only 30-40 people participated. 
 
8.  (U) Opposition Members also complained that the 
amendments were entirely imposed by the USG, with no 
amendments by the GOP (such as more protection for Peru's 
farmers).  Several Members referred to U.S. imperialism or 
Peru "genuflecting" before the U.S.  They also criticized 
President Garcia for flip-flopping on his early campaign 
promises to renegotiate the PTPA to make it more favorable to 
Peru's farmers. 
 
9. (U) Peru's principal business groups reacted positively to 
the vote. Jaime Caceres, president of CONFIEP, Peru's most 
important business association, expressed his hope that this 
vote would lead to the U.S. Congress' s approval of the 
agreement.  Jose Luis Silva, president of Peru's exporters 
association(ADEX) congratulated the Congress for supporting 
jobs and economic integration, and urged his countrymen to 
work together on the "internal agenda". 
 
COMMENT:  BALL IN WASHINGTON'S COURT 
------------------------------------ 
10. (SBU) Despite the sharp comments in the debate, the 
Congressional discussion over the PTPA amendments actually 
had an almost palpable air of inevitability.  In fact, most 
Peruvians do agree that the PTPA is essential for the 
country's continued economic growth and for the government's 
plans to significantly reduce poverty.  The latest polls 
(CPI, 2007) actually show public support for the trade 
agreement increasing from 55% in May 2006 to 59% in May 2007. 
 With the Peruvian legislature expeditiously approving the 
amendments requested by the U.S. Democratic congressional 
majority, all eyes are now on the U.S. Congress.  Peruvians 
most earnestly hope the U.S. Congress will take up and 
approve the amended PTPA before the August recess now that 
Peru has completed its side of the bargain. 
STRUBLE