US embassy cable - 03BRASILIA2364

UNCLAS SECTION 01 OF 03 BRASILIA 002364 
 
SIPDIS 
 
USTR FOR SCRONIN, KLEZNY 
DEPT FOR E:ALARSON; WHA:CSTRUBLE, SPINKHAM; EB:BMANOGUE 
NSC FOR JOANNA WALLACE 
USDA FOR JBPENN 
 
E.O. 12958: N/A 
TAGS: ETRD, BR, Fee Trade Agreement of America (FTAA) 
SUBJECT: BRAZIL: NO PUBLIC SIGN OF RETREAT FROM FTAA 
PROPOSAL 
 
REF: BRASILIA 2231 
 
1.  (SBU) Summary.  Following the FTAA Trade Negotiating 
Committee meeting in San Salvador July 8-11, during which 
Mercosul unveiled Brazil's 3-track proposal for restructuring 
negotiations to unenthusiastic Vice-Ministers, public debate 
in Brazil over the FTAA has been unusually quiet.  Itamaraty 
officials have generally declined comment.  In responding to 
questions after the swearing-in ceremony of Ambassador Luiz 
Macedo Soares as Under Secretary for South America on July 
21, Foreign Minister Amorim stated that the GOB's intention 
is to continue pushing the proposal, but signaled a possible 
opening for compromise on the specifics.  Comments by Amorim 
on the same occasion regarding the desirability of more 
commitment to the pursuit of current GOB policies among, at 
least, the top diplomatic echelon of the Ministry, prompted a 
public rebuke by former Foreign Minister Lafer.  End Summary. 
 
BACKGROUND - THE PUBLIC UNVEILING 
 
2. (SBU) On the eve of the FTAA Trade Negotiating Committee 
(TNC) meeting in San Salvador July 8-11, Foreign Minister 
Amorim wrote an op-ed in which he publicly unveiled Brazil's 
Mercosul proposal to transform the FTAA by establishing three 
paths or "tracks" for considering various elements of the 
current negotiation, including moving some elements to the 
WTO (see reftel).  Amorim argued that a new approach was 
needed because within the FTAA, Brazil was "encountering a 
negotiating context that is complex from the standpoint of 
Brazilian interests,"  and that the FTAA project as currently 
envisioned goes far beyond the meaning of "free trade" in its 
strict sense since it includes rules for services, 
investment, government procurement, and intellectual property 
rights, which have a "direct effect on the regulatory powers 
of the countries concerned."  He depicted the proposal as one 
that would create an "FTAA that is possible"  by balancing 
Brazil's (offensive) interests with compromises on its 
ability to design and execute policies for social, 
environmental, technological and other types of development. 
 
STANDING FIRM 
 
3. (SBU)  Following the less than enthusiastic response the 
proposal received from Vice-Ministers attending the TNC 
meeting, public discussion in Brazil of the FTAA and the 
proposal has been unusually quiet.  One press source claimed 
that he was trying to write an article about the FTAA 
proposal, but was unable to find Itamaraty officials willing 
to be interviewed.  However, answering questions after the 
swearing-in ceremony of Ambassador Luiz Macedo Soares as 
Under Secretary for South America (and FTAA lead negotiator) 
on July 21, Minister Amorim stated that the GOB's intention 
is to continue pushing the 3-track proposal.  Amorim said the 
GOB's position had not changed "by so much as a dot."  He 
went on to claim that the current format of the negotiations 
among the 34 FTAA countries "does not suit the United States 
just as it does not suit us."   The article reported that 
according to a government source, the U.S. negotiators at the 
TNC meeting had maintained complete silence, which prompted 
Amorim to comment that "silence gives consent." 
 
COMPROMISE ON THE DETAILS? 
 
4.  (SBU) Amorim sought to distance himself somewhat from the 
specifics of the proposal by stating that he does not plan to 
involve himself in a debate over "formalities."  According to 
press reports, he said that Brazil might even accept 
"agreements on investments and other systemic topics (in the 
FTAA path) provided they do not go beyond the WTO's current 
guidelines."  Amorim also again stated a preference for a 
focus within the FTAA on a market access agreement between 
the United States and Mercosul. 
 
5.  (SBU) In late June, the Lula administration came under 
sharp criticism from anti-FTAA forces for supposedly 
providing unwarranted impetus to the negotiations by 
re-committing to their conclusion by January 2005 as part of 
the U.S.-Brazil presidential summit.  Now, Itamaraty is 
facing criticism from the opposite direction.  Press has 
suggested that some ministries fear Itamaraty may have 
imparted a "less palatable" tone to the proposal during the 
TNC meeting, leading to a lack of support.  According to 
press reports, the National Confederation of Industries 
(CNI), which advises the GOB on trade policy through 
coordination of the Brazilian Business Coalition, also has 
noted concern that the current 3-track proposal is 
considerably less ambitious for achieving integration than 
the present FTAA scope.  However, this concern is coupled 
with an acknowledgment by CNI that different economic and 
political circumstances in Brazil warrant some change to the 
FTAA. 
 
6.  (SBU) Note.  In describing the tit-for-tat approach of 
"moving" elements for negotiation from the FTAA to the WTO, 
Brazilian officials, industry representatives and press 
continue to erroneously characterize USG and GOB motives as 
each taking "sensitive" issues to the WTO.  No 
differentiation is made between the "sensitive" nature of 
investment or intellectual property rights for Brazil, and 
the structural difficulty of negotiating domestic support in 
a regional forum because of domestic agricultural support 
programs being global versus country specific, with two of 
the three major users of such programs (EU and Japan) not 
located within the hemisphere.   End Note. 
 
IDEOLOGICAL LITMUS TEST 
 
7.  (SBU) Minister Amorim stirred up a separate debate this 
week when he, as one journalist characterized, "broke with 
the maxim that a diplomat is an official of the State, and 
therefore, will be above the ideological directives of the 
(Presidential) Planalto Palace and everyday political games." 
 As part of his official address during Macedo Soares 
swearing-in, Amorim said that in making appointments, two 
things should be considered: professional competence and the 
person's "natural affinity with the orientation of the 
Government, the President of the Republic, and the Minister." 
 He went on to say that the professional (diplomatic) corps 
ought to be "enthusiastically engaged" with certain political 
lines and "orientations" and claimed that Macedo Soares 
fulfilled these requirements.  His comments drew a swift 
rebuke from former Foreign Minister Lafer in the form of an 
op-ed in which Lafer insisted that a diplomat's duty is 
simply to serve Brazil. 
HRINAK