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### Viewing cable 05LIMA3888, THE TOLEDO-URIBE MEETING AND PERU'S GAME PLAN FOR

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Reference ID | Created | Released | Classification | Origin
--- | --- | --- | --- | ---
05LIMA3888 | 2005-09-08 20:57 | 2011-06-21 00:00 | UNCLASSIFIED//FOR OFFICIAL USE ONLY | Embassy Lima
Appears in these articles: http://elcomercio.pe

`

    This record is a partial extract of the original cable. The full text of the original cable is not available.

` `

    UNCLAS SECTION 01 OF 03 LIMA 003888

    SIPDIS

    SENSITIVE

    DEPT FOR WHA/AND, EB/TPP
    COMMERCE FOR 4331/MAC/WH/MCAMERON
    USTR FOR RVARGO AND BHARMAN

    E.O. 12958: N/A
    TAGS: ETRD ECON EINV PGOV PREL PE
    SUBJECT: THE TOLEDO-URIBE MEETING AND PERU'S GAME PLAN FOR
    U.S.-ANDEAN FTA

    REF: BOGOTA 8415

    ¶1. (SBU) Summary:  In separate meetings with the Ambassador
    the Ministers of Trade, Foreign Relations and Production
    described Toledo's one-day trip to Colombia as productive.
    The GOP believes Uribe was not previously aware of how much
    Colombia's FTA team is out of sync with Peru's.  Peruvian
    business representatives who accompanied Toledo expressed
    dismay over the negative attitudes and unrealistic
    expectations of their Colombian counterparts; Some Peruvian
    commercial reps wonder whether Colombia's lead negotiator
    intentionally put them up against anti-FTA counterparts in
    the hopes of reining in Peruvian enthusiasm.  Peruvian
    participants perceived a change of tone once Uribe staked
    out a strong position in favor of wrapping up negotiations
    in October, but remain cautious about whether this will
    happen.  Toledo and Uribe reportedly agreed to visit
    Washington together in mid-October to meet with US officials
    regarding the FTA.  Trade Minister Ferrero told us that
    wrapping up the FTA in concert with Colombia remains plan A,
    but the GOP is weighing a Plan B: concluding an agreement
    with the U.S. first in the expectation it would force
    Colombia's hand.  End Summary.

    Got Uribe's Attention
    ---------------------

    ¶2. (SBU) The Ambassador and Econcouns met with Trade
    Minister Alfredo Ferrero on September 7 to review President
    Toledo's recent visit to Colombia (reftel) and Peru's plans
    for the U.S.-Andean Free Trade Agreement (FTA).  Ferrero
    said Toledo performed well, describing the September 5
    meeting with Colombian President Uribe as productive,
    resulting in a public commitment by both presidents to
    conclude the FTA negotiations in October.  While President
    Uribe appears sincere in his desire to finish negotiations
    next month, Ferrero was skeptical Colombia could achieve
    this.

    ¶3. (SBU) Ferrero noted that Uribe realized that his FTA team
    is moving at a different pace than Peru.  Ferrero also
    noticed disunity among the Colombian Ministers and FTA
    negotiators, making it unclear who is in charge or makes the
    decisions.  In response to Colombian complaints that they
    are tired of presenting proposal that receive no U.S.
    response, Ferrero said he encouraged the Colombians to make
    more realistic proposals and not waste time on dead-end
    issues.  For example, he told them they should assume U.S.
    exclusion for sugar, and propose something to get in return.
    Ferrero said he urged the Colombian team to take risks,
    noting that in the end, nothing is final until the whole
    package is accepted.

    GOP Strategy: Negotiate Peru First
    ----------------------------------

    ¶4. (SBU) Ferrero described two scenarios, either of which
    President Toledo is prepared to pursue.  Plan A is to
    negotiate the FTA alongside Colombia; under this scenario
    Ecuador would follow afterwards.  Plan B is for Peru to
    negotiate the FTA with the U.S. by itself, without Colombia
    and Ecuador.  The two Andeans would join later when ready.

    ¶5. (SBU) Ferrero emphasized that Peru previously pulled the
    Andean trade cart during negotiations with Mercosur.  Once
    Peru concluded that deal by itself, the other Andeans
    followed suit, signing a similar deal with the Mercosur
    countries six months later.  Ferrero expected a similar
    result in the U.S.-Andean FTA: the two Andean partners would
    feel left out and disadvantaged under a Peru-first FTA
    scenario.  Consequently, Colombia and perhaps Ecuador would
    return to the negotiating table with more realistic
    expectations and positions to close the deal.

    ¶6. (SBU) The Trade Ministers' only reservation about going
    it alone is that Colombia might later negotiate a better
    deal than Peru's.  The Peruvian trade negotiators received
    considerable criticism at home when Colombia and the other
    Andeans signed what was perceived by some to be an improved
    deal with Mercosur.  Ferrero stated that Peru could guard
    itself against such a hypothetical (and deflect potential
    criticism of its strategy) by stipulating in the FTA text
    that Peru could equalize any arrangements negotiated in
    subsequent Andean FTA deals.

    Concerns About U.S. Ally
    ------------------------

    ¶7. (SBU) Ferrero noted that Plan B -- Peru leading the way -
    - would only work if USTR were willing to conclude with Peru
    first.  Without a U.S. commitment to test this approach,
    Ferrero fears that an Andean FTA would slip away,
    particularly given the upcoming Andean electoral campaigns.
    Ferrero indicated that he will accompany President Toledo to
    Washington in mid-September to bolster support for the
    Andean FTA in Congress and within the executive.

    ¶8. (SBU) The Trade Minister noted that a good portion of the
    discussion in Bogota focused on Andean concerns with USTR.
    They lament that the Andean FTA is not on the U.S. political
    agenda.  Ferrero added that Hurricane Katrina might further
    shift the U.S. Congress' attention to other priorities.  He
    also revealed Andean disappointed with changes of some U.S.
    negotiators.

    Other Ministerial Perspectives
    ------------------------------

    ¶9. (SBU) In a separate meeting, Foreign Minister Maurtua
    told the Ambassador that Uribe agreed to accompany Toledo to
    Washington on or about October 11 to meet with US officials
    regarding the FTA.  The Foreign Minister expected the two
    leaders to seek an appointment with President Bush.
    Production Minister Lemor gave the Ambassador an account of
    the Bogota meeting that was consistent with Ferrero's, but
    he was even less convinced that Uribe's marching orders to
    finish in October would stick.  Lemor noted that the
    Colombians had not advanced as far as Peru in discussing
    internal compensation, domestic opposition to an FTA is
    greater there, and the politics of early closure play out
    quite differently for Uribe.

    Peru's Private Sector View
    --------------------------

    ¶10. (SBU) Peru's Exporter Association (ADEX) President Luis
    Vega, who accompanied President Toledo to Bogota, told the
    Ambassador on September 7 that his Colombian business
    interlocutors demonstrated an unrealistic appreciation of
    the situation.  Some Colombian commercial leaders argued
    that ATPDEA could be extended.  Also worrisome, the
    Colombian timeline for FTA closure was much longer, Vega
    lamented.  On the positive side, When President Uribe
    announced the October goal, Vega noted that the head of the
    Colombian business group adjusted his comments accordingly.
    Vega opined that the Colombian Government had done a poor
    job preparing its private sector, failing to develop (as had
    the Toledo administration) compensation mechanisms for the
    most sensitive agricultural products.

    ¶11. (SBU) The Executive Director of AmCham, another Peruvian
    private sector participant, expressed similar disappointment
    with Colombia's private sector leaders.  He expressed dismay
    that some of them argued Colombia would be worse off with a
    U.S.-Andean FTA.  Several Peruvian business representatives
    found it perplexing that the Colombian Government did not
    present its most supportive private sector FTA advocates.
    Both they and the Minister of Production wondered whether
    Colombia's lead FTA negotiator had convoked FTA skeptics in
    order to put the brakes on the process.

    Toledo Engages on Issues
    ------------------------

    ¶12. (SBU) Peru's Chief FTA Negotiator Pablo de la Flor told
    us that President Toledo's September 2 meeting with select
    ministers and his FTA negotiators sparked the decision to
    travel to Colombia.  President Toledo spent four hours
    reviewing options on difficult issues necessary to close the
    deal with USTR.  Describing it as the most substantive
    meeting yet with Toledo, De la Flor stated that Peru's
    agriculture package should now fall into place.

    ¶13. (SBU) De la Flor argues that it is critical to reach the
    "handshake" with the United States by October.  The
    subsequent signing of the accord could be determined later,
    decided by political considerations (e.g., electoral
    calendars, resolution of commercial disputes, Colombia
    joining the deal).  With the new cabinet led by Pedro Pablo
    Kuczynski, de la Flor believes that Peru is in the best
    position to conclude the FTA negotiations (non-FTA
    supporters such as former Prime Minister Carlos Ferrero and
    Foreign Minister Rodriguez left the government).

    Comment: Now is the Time
    ------------------------

    ¶14. (SBU) It remains to be seen whether the GOP will be as
    flexible and determined in the upcoming FTA round as our
    interlocutors have claimed.  What is not in question is that
    as we approach Peru's national elections in April 2006,
    Toledo's ability to wrap up the trade accord with the
    current broad consensus in Congress and among the public
    will probably diminish.  The President realizes that his
    window to finish the FTA is closing, and he appears ready to
    cut a deal, with or without Colombia.  Peruvian exporters
    also are increasingly concerned that without a permanent
    substitute for ATPDEA in place by next May-June, U.S. buyers
    and manufacturers will look elsewhere for alternatives to
    Peru.

    STRUBLE

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