US embassy cable - 03BRASILIA356

UNCLAS BRASILIA 000356 
 
SIPDIS 
 
SENSITIVE 
 
USTR FOR RSMITH, SCRONIN 
 
E.O. 12958: N/A 
TAGS: ETRD, BR, Fee Trade Agreement of America (FTAA) 
SUBJECT: UPDATE ON TIMING OF MERCOSUL FTAA OFFERS 
 
REF: A) 1/21/03 FAIR-MALITO/SMITH EMAIL B) 1/24/03 
 
     FAIR-SMITH/MALITO EMAIL 
 
SENSITIVE BUT UNCLASSIFIED. 
 
1. (U) Brazilian dailies Gazeta Mercantil and O Estado 
reported today on the progress of market access discussions 
this week between Mercosul FTAA negotiating teams meeting in 
Asuncion.  The dailies note that a consensus position 
regarding all of the FTAA market access offers has not been 
achieved.  O Estado reported that Brazil had been unable to 
convince its Mercosul partners to delay submission of offers 
for services, investment and government procurement beyond 
the February 15 deadline, and speculated that this would 
pressure Brazil to accelerate preparation of its offers. 
 
2.  (SBU) ECONOFF subsequently spoke to Ana Patricia Neves 
Tanaka, an official who follows the FTAA market access 
negotiations within Itamaraty's FTAA Coordinating Office 
(COALCA), to clarify the situation; Tovar da Silva Nunes, 
head of COALCA, is still in Asuncion.  Although no final 
decision will be made until Mercosul Ministers meet in 
Montevideo on February 5, it is expected that, as previously 
reported, joint Mercosul offers for industrial and 
agricultural goods will be made by February 15. 
 
3.  (SBU) Contrary to what was reported in O Estado, Neves 
Tanaka confirmed that Brazil still plans at this time to make 
a separate services offer also by February 15 (ref A); she 
expects that the other Mercosul countries will do likewise. 
Driven by differing legislation and national interests, the 
Mercosul partners have reportedly agreed to proceed with 
individual offers in services, investment and government 
procurement.  According to Neves Tanaka, the main 
disagreement surrounds Brazil's interest in delaying its 
market access offers for investment and government 
procurement. 
 
4. (SBU) Brazil is reportedly facing opposition to its 
proposal to delay investment and government procurement 
offers because Argentina, Uruguay and Paraguay have theirs 
prepared and want to meet the February 15 deadline.  The 
expectation in Itamaraty has been that Mercosul proposals in 
the areas of services, investments, and government 
procurement would be presented under common preambles, with 
separate market access offers attached. 
 
5. (SBU) Neves Tanaka believes it is unlikely that Brazil 
will change its decision to delay investment and government 
procurement offers until after February 15.  This would leave 
its Mercosul partners in the uncomfortable position of having 
to decide if they will all hold back, or present an even less 
than united front by moving forward without Brazil. 
 
6.  (SBU) Neves Tanaka explained that the first three days of 
the meeting this week were political in nature and that 
discussions yesterday and today are technical.  Technical 
work is focused on developing the joint goods offers.  One 
thorny technical issue being discussed is how to treat 
products for which the Mercosul members have different 
tariffs rates due to the many exceptions that have been taken 
to the group's Common External Tariff.  No additional 
information regarding characteristics of the Mercosul goods 
offers is available at this time (ref B). 
HRINAK