US embassy cable - 05LIMA4273

UNCLAS SECTION 01 OF 02 LIMA 004273 
 
SIPDIS 
 
SENSITIVE 
 
USTR FOR AUSTR VARGO AND BHARMAN 
USDA FOR FAS/ITP/BERTSCH 
 
E.O. 12958: N/A 
TAGS: ETRD, ECON, EINV, PGOV, PREL, PE 
SUBJECT: TRADE MINISTER FORESHADOWS FTA RED LINES 
 
REF: LIMA 3888 
 
1. (SBU) Summary:  In meetings with the Ambassador, Trade 
Minister Ferrero and Peru's Chief FTA Negotiator de la Flor 
highlighted two red lines for Peru in the U.S.-Andean FTA 
negotiations.  They warned that Peru's Congress would not 
accept an FTA that permitted the importation of used 
clothing or went beyond CAFTA's intellectual property 
commitments.  De la Flor did note that Peru is prepared to 
accept data protection provisions in the CAFTA deal.  On the 
public diplomacy front, Ferrero lamented that 
representatives from the private sector are not more vocal 
in their support of the FTA.  The Ambassador noted that he 
planned to host a meeting with business association leaders 
to bolster FTA public outreach.  The Ambassador also 
expressed concern about timing for solving the Engelhard 
dispute.  End Summary. 
 
2. (SBU) The Ambassador met separately with Trade Minister 
Alfredo Ferrero and later with Peru's FTA Chief Negotiator 
Pablo de la Flor and Agriculture Negotiator Julio Paz on 
September 28 to review progress in the U.S.-Andean FTA 
negotiations.  The Ambassador described his recent trip to 
Washington, including Capitol Hill, where President Toledo 
had left a positive impression during his visit there the 
week before.  Noting the USG's desire to close the trade 
deal by November, the Ambassador expressed concern to 
Minister Ferrero about the resolution timing of the 
Engelhard dispute.  The Ambassador noted that all Members of 
Congress raised Peru's commercial disputes.  Ferrero took 
note. 
 
Peruvian Show Stoppers 
---------------------- 
 
3. (SBU) Both the Trade Minister and Vice Minister de la 
Flor emphasized that Peru would not be able to go beyond the 
IPR coverage outlined in the CAFTA deal.  Ferrero indicated 
that President Toledo and Peru's Congress would not accept a 
trade deal that included second-use patents, particularly 
since the accords with Central America and Chile omitted 
them.  De la Flor added surgical techniques, plants and 
animals to the list of patents they could not support, but 
he noted that Peru could accept the data protection 
provisions in the CAFTA deal.  The Chief Negotiator noted 
that while he wants to resolve the remaining contentious 
issue in the IPR group, Ecuador is slowing down the 
negotiations. 
 
4. (SBU) A second red line for the Peruvians is used 
clothing.  Both Ferrero and de la Flor emphasized that 
Peru's Congress would reject an FTA that permitted the 
importation of used clothes from the United States.  They 
explained that Peru's internal market is small and could not 
absorb such importations.  De la Flor emphasized that 
accepting used clothing would displace small apparel 
producers. 
 
Countering Venezuela's Initiatives 
---------------------------------- 
 
5. (SBU) Minister Ferrero urged U.S. flexibility on the two 
above issues, arguing that concluding an FTA with Peru and 
Colombia is in the best interest of the United States.  He 
noted that an FTA with the Andeans would bolster support for 
U.S. allies at a time when Ecuador and Bolivia are growing 
weaker and increasingly susceptible to Venezuela petroleum 
diplomacy and influence.  The Minister noted that an Andean 
FTA that eventually included Ecuador and Bolivia would be a 
big blow to Chavez and Brazil. 
 
FTA Debate Heating Up 
--------------------- 
 
6. (SBU) Ferrero lamented that the private sector is not 
doing more to express its support publicly for the FTA.  He 
indicated that the GOP is reevaluating its FTA public 
affairs campaign, and wants to focus increasingly on radio 
coverage to promote the FTA.  Citing a decline in FTA 
support from 65 to 53 percent between January-September 
polling data, the Ambassador indicated he planned to host a 
meeting with business leaders to encourage coordinated and 
active FTA public outreach.  The Minister welcomed the 
initiative. 
 
7. (SBU) De la Flor publicly announced that he would be 
traveling to Washington with members of Peru's FTA team the 
week of October 3 to discuss Rules of Origin, Market Access, 
and Textiles.  He prefers not to announce the bilateral 
digital video conference between agriculture negotiators on 
October 6 to review Peru's latest offer, which he described 
as superior to CAFTA and ready to close.  The Ambassador 
stressed the further need for flexibility on the part of 
Peru's ag negotiators. 
 
Comment: Crunch Time 
-------------------- 
 
8. (SBU) Eager to finish negotiations, the Peruvian 
negotiators are making clear in public statements that late 
November is the deadline to wrap up the FTA.  Meanwhile, GOP 
officials increasingly fear opposition anti-FTA campaigns, 
which are picking up. 
 
STRUBLE