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Cablegate: Mexico Eager for Tangible Progress On Agp And

VZCZCXRO4277
PP RUEHCD RUEHGD RUEHHO RUEHMC RUEHNG RUEHNL RUEHRD RUEHRS RUEHTM
DE RUEHME #1333/01 1231835
ZNR UUUUU ZZH
P 021835Z MAY 08
FM AMEMBASSY MEXICO
TO RUEHC/SECSTATE WASHDC PRIORITY 1681
INFO RUEHXC/ALL US CONSULATES IN MEXICO COLLECTIVE PRIORITY
RUEHBO/AMEMBASSY BOGOTA PRIORITY 4051
RUEHGT/AMEMBASSY GUATEMALA PRIORITY 3691
RUEHPE/AMEMBASSY LIMA PRIORITY 1548
RUEHMU/AMEMBASSY MANAGUA PRIORITY 1025
RUEHZP/AMEMBASSY PANAMA PRIORITY 2311
RUEHQT/AMEMBASSY QUITO PRIORITY 1366
RUEHSJ/AMEMBASSY SAN JOSE PRIORITY 1822
RUEHSN/AMEMBASSY SAN SALVADOR PRIORITY 2580
RUEHSG/AMEMBASSY SANTIAGO PRIORITY 0623
RUEHDG/AMEMBASSY SANTO DOMINGO PRIORITY 0764
RUEHTG/AMEMBASSY TEGUCIGALPA PRIORITY 1778
RULSDMK/DEPT OF TRANSPORTATION WASHINGTON DC PRIORITY
RUEATRS/DEPT OF TREASURY WASHINGTON DC PRIORITY
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC PRIORITY
RUEAHLA/DEPT OF HOMELAND SECURITY PRIORITY
RUEHRC/DEPT OF AGRICULTURE WASHINGTON DC PRIORITY
RHEHNSC/NSC WASHINGTON DC PRIORITY

UNCLAS SECTION 01 OF 03 MEXICO 001333

SIPDIS

SENSITIVE
SIPDIS

STATE FOR A/S SHANNON AND A/S SULLIVAN
STATE FOR WHA/MEX, WHA/EPSC, EB/TPP
USDOC FOR A/S BOHIGIAN
USDOC FOR 4320/ITA/MAC/WH/ONAFTA/GERI WORD
TREASURY FOR IA (LUYEN TRAN, RACHEL JARPE)
DHS FOR CBP/PSO/MARTINEZ_FONTS
NSC FOR RICHARD MILES, DAN FISK
STATE PASS TO USTR (EISSENSTAT/MELLE)
STATE PASS TO FEDERAL RESERVE (ANDREA RAFFO)
STATE PASS TO GSA/PEPPLER

E.O. 12958: N/A
TAGS: ETRD ECON PBTS KTEX EAGR MX
SUBJECT: MEXICO EAGER FOR TANGIBLE PROGRESS ON AGP AND
BORDER FACILITATION BEFORE JANUARY 2009

REF: (A) 08 SECSTATE 41895 (B) 07 MEXICO 6186

Summary
--------

1. (SBU) Top Mexican trade officials are anxious to register
concrete progress on the Alliance for Growth and Prosperity
(AGP) and the Joint Border Facilitation Working Group (BFWG)
before the end of President Bush's second term. They also
want to institutionalize these sorts of cooperative
structures, including the Security and Prosperity Partnership
(SPP), as much as possible to ensure that they survive the
transition to the next U.S. Administration. In the meantime,
Mexico recently hosted a meeting of the Pacific Arc Forum in
Cancun at which the eleven participating Latin countries
agreed to advance their efforts on cumulation of origin among
common free trade partners and examine possibilities of
convergence in other areas. Mexico was disappointed by the
failure of the Dominican Republic to pass legislation needed
for implementation of the CAFTA-DR textile cumulation
mechanism in time for an announcement in New Orleans, and
asked for the U.S. re-consider its position on this issue.
End summary.

2. (U) On April 29 Econ MinCouns and EconOff met with Beatriz
Leycegui, Under Secretary of International Trade Negotiations
for the Ministry of Economy, Juan Carlos Baker, her Director
General for NAFTA, and Roberto Zapata, her Director General
for Multilateral Affairs. In addition to delivering
demarches on the U.S. WTO re-manufacturing initiative and
U.S. priorities for APEC 2008 (Mexican responses to these
will be reported separately), we discussed at length Mexican
views on various initiatives aimed at greater bilateral and
hemispheric economic integration.

Shrinking Window of Opportunity with U.S.?
------------------------------------------

3. (SBU) Leycegui and her colleagues expressed great interest
in the ongoing U.S. election campaign and noted the beating
that trade in general and NAFTA in particular have taken in
the Democratic primary. Leycegui asserted that this was why
it was so important to strengthen the institutional framework
for promoting greater economic integration in the few months
remaining before the next President takes office. Econ
MinCouns noted the commitment expressed by Secretaries Rice,
Espinosa, and Bernier at their April 8 meeting in Washington
to support the AGP (REF A). Leycegui agreed that the U.S.
and Mexico are natural AGP partners, but noted that, while
the State Department seemed enthusiastic, USTR naturally had
passage of the pending Colombia, Panama and Korea FTAs at the
top of its list of priorities. Nonetheless, she proposed
selecting one or two easily-accomplished AGP proposals, like
the idea for English language training raised during the
November 2007 visit of Assistant Secretaries Sullivan and
Lowery (REF B), and making a serious effort to achieve
concrete progress that would give some legitimacy to the AGP
that might help it survive the transition to the next U.S.
administration. Leycegui emphasized that Mexico stood ready
to support concrete AGP proposals from the U.S. side. She
also planned to call Commerce A/S Bohigian soon to discuss

MEXICO 00001333 002 OF 003


doing something similar on the BFWG, i.e., picking one or two
specific projects that the two sides could make visible
progress on before January 2009 in order to demonstrate the
value of this group to the next occupant of the White House.
Leycegui also proposed more joint tours of the border during
that same time-frame. She noted that, from the Mexican
perspective, border facilitation had been one of the two
major "prosperity pillar" commitments coming out of the April
North American Leaders' Summit held in New Orleans. The
other was regulatory cooperation in the automotive and
agri-business sectors. With regard to the latter, she said
U.S. and Mexican agriculture were complementary, with the
U.S. specializing in grains and Mexico in fresh fruits and
vegetables. Both were extremely competitive in their
respective areas, and thus it made sense to harmonize our
sanitary and phyto-sanitary measures to improve our ability
to export world-wide.

Moving Ahead with Pacific Arc
-----------------------------

4. (SBU) Leycegui reported that the third meeting of the
Pacific Arc Forum (PAF, a.k.a. Pacific Basin Initiative
Forum) that took place in Cancun April 13-14 on the fringes
of the World Economic Forum was a success. The eleven
participating economies were Colombia, Chile, Costa Rica,
Ecuador, El Salvador, Guatemala, Honduras, Mexico, Nicaragua,
Panama, and Peru. She said that the group was still working
on establishing cumulation of origin amongst common free
trade partners with the ongoing assistance of the
Inter-American Development Bank, and indicated that there was
the possibility that formal negotiations on this topic could
commence as early as the next PAF meeting, which Chile has
agreed to host. She said the group was also discussing
convergence in other free trade disciplines. Asked about
chances for achieving real results, Leycegui said the PAF
does not require the approval of all its members for moving
on any particular initiative. Rather, those interested in
forging ahead are free to do so, with others reserving the
right to join up later. She said that Mexico, Colombia, Peru
and Chile were at present the most gung-ho, and that
hopefully they would be able to produce substantial results
in integrating their FTAs that others, especially the U.S.,
would be able to dock onto once their respective domestic
politics allowed.

Disappointed on Textiles Cumulation
-----------------------------------

5. (SBU) A major disappointment for Mexico at New Orleans
was the failure of the lower house of the Dominican
Republic's legislature to approve the amendment to its trade
laws that would have permitted the activation of the textile
cumulation provisions in the U.S. and Mexican FTAs with the
Centrals/DomRep. Mexico had been hoping to annouce at the
Leaders' Summit the entry into force of these provisions,
which would have permitted the duty-free export to the U.S.
market of Centrals/DomRep apparel that made use of Mexican
textile inputs, and vice versa. According to Leycegui, the
Dominican Republic determined that it could extract
additional concessions from the U.S. that would take some

MEXICO 00001333 003 OF 003


time to work out. She asked that the USG re-consider the
possibility of allowing the textile cumulation provisions to
take effect for the Central American partners that have
already made the necessary amendments to their laws.
Econoffs commented that the USG position on this point had
been made abundantly clear last year, but promised to pass
the Mexican request back to Washington.

Comment
-------

6. (SBU) Mexico's top economic officials are firmly convinced
that greater economic integration with their neighbors, both
to the north and the south, is essential to their country's
ability to compete in the global marketplace. They see the
AGP as a promising vehicle for advancing that agenda on the
broadest hemispheric scale, but are worried that unless
clearly positive results are produced before a new President
occupies the White House, the initiative will at best lose
steam and could evaporate altogether. The same concerns
apply to the BFWG, and more broadly to the SPP. Uncertain of
whether they will be able to make progress in the near-term
with their most important trading partner, the Mexicans seem
serious about trying to harmonize their various free trade
agreements with other Latin countries via the Pacific Arc
Forum, with the hope that when the U.S. decides it is ready
to join such an undertaking, there will already be something
substantial in place for it to dock on to. The jury remains
out on Mexico's optimism that it can achieve significant
trade convergences with its Latin partners. Even in Mexico
such proposals could face considerable political resistance.
But there is no doubt about the Calderon Administration's
commitment to making the attempt. End comment.
Visit Mexico City's Classified Web Site at
http://www.state.sgov.gov/p/wha/mexicocity and the North American
Partnership Blog at http://www.intelink.gov/communities/state/nap /
BARCLAY

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