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Cablegate: Mexico Publicly Pushes for Progress On

VZCZCXRO8596
PP RUEHCD RUEHGD RUEHHO RUEHMC RUEHNG RUEHNL RUEHRD RUEHRS RUEHTM
DE RUEHME #1523/01 1411227
ZNR UUUUU ZZH
P 201227Z MAY 08
FM AMEMBASSY MEXICO
TO RUEHC/SECSTATE WASHDC PRIORITY 1926
INFO RUEHXC/ALL US CONSULATES IN MEXICO COLLECTIVE PRIORITY
RUEHBO/AMEMBASSY BOGOTA PRIORITY 4060
RUEHGT/AMEMBASSY GUATEMALA PRIORITY 3694
RUEHPE/AMEMBASSY LIMA PRIORITY 1574
RUEHMU/AMEMBASSY MANAGUA PRIORITY 1028
RUEHZP/AMEMBASSY PANAMA PRIORITY 2315
RUEHQT/AMEMBASSY QUITO PRIORITY 1369
RUEHSJ/AMEMBASSY SAN JOSE PRIORITY 1825
RUEHSN/AMEMBASSY SAN SALVADOR PRIORITY 2583
RUEHSG/AMEMBASSY SANTIAGO PRIORITY 0626
RUEHDG/AMEMBASSY SANTO DOMINGO PRIORITY 0767
RUEHTG/AMEMBASSY TEGUCIGALPA PRIORITY 1781
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 04 MEXICO 001523

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 PUBLICLY PUSHES FOR PROGRESS ON
CROSS-BORDER TRUCKING, BORDER INFRASTRUCTURE, AND ALLIANCE
FOR GROWTH AND PROGRESS-TYPE GOALS

REF: (A) 08 SECSTATE 41895 (B) 07 MEXICO 6186 (C) 08
MEXICO 1333

Summary
--------

1. (U) In a May 14 briefing to the Trade and Investment
Committe of the American Chamber of Commerce in Mexico,
Mexican Under Secretary of International Trade Negotiations
for the Ministry of Economy Beatriz Leycegui urged the
business community to support GOM efforts to improve the
competitiveness of North America. She said the top priorities
were for the U.S. to meet its NAFTA obligation to open the
border to cross-border trucking; facilitating border
crossings and improving border infrastructure; and reducing
trade barriers caused by differing technical norms and
sanitary and phyto-sanitary standards (SPS). She reviewed
Mexico's "vision" for confronting the declining
competitiveness of North America, which focused on deepening
trade integration within the Americas including through the
Pacific Arc Forum (REF C), but included efforts to deepen
trade ties with Europe and Asia. She explained that although
there could be no renegotiation of NAFTA, the agreement would
benefit from some specific revisions and improvements. End
Summary


2. (U) Leycegui first presented an analysis of how North
America was losing competitiveness compared to Brazil,
Russia, India and China, and then laid out Mexican efforts to
confront the problem. She said a top Mexican goal was the
successful conclusion of the Doha Round because a failure of
the Round risked increased global protectionism, especially
given pressures stemming from the global crisis in food
prices.

Deepening Trade Integration Within North America
--------------------------------------------- --

3. (U) With North America, Leycegui said Mexico's priorities
were the cross-border trucking demonstration project,
facilitating border crossing and improving border
infrastructure, and regulatory cooperation. On trucking, she
said the only NAFTA obligation not yet implemented was the
U.S. obligation to fully open the border to cross-border
trucking. She stressed the importance of meeting this
obligation for North American competitiveness, noting that
the current requirement to transfer cargo between three
trucks when crossing the border posed a serious competitive
disadvantage, negating the benefit of Mexico's location
adjacent to the United States.

4. (U) Leycegui explained that the purpose of the one-year
cross border trucking demonstration project was to show that
Mexican trucks are ready to enter the United States and
comply fully with U.S. regulations. She said that under the
program, Mexican trucks have crossed into the U.S. more than
6000 times without any incident. She expressed concern that
more companies were not participating in the program, noting
that as long as it was only a one-year "pilot," companies

MEXICO 00001523 002 OF 004


would not make the required investment. She expressed
gratitude for the Bush Administration's complete commitment
to the demonstration project, and to moving from the one-year
pilot to a completely free flow of trucks across the border
as required by NAFTA. She noted that the U.S. and Mexican
governments were both highly concerned that legal challenges
could suspend the program. She noted that once it becomes
clear that the program will continue, the Mexican Trucking
Association, CANACAR, will pressure the Mexican Senate to put
restrictions on U.S. trucks reciprocal to those placed on
Mexican trucks. (Note: CANACAR claims that U.S. regulations
on Mexican trucks are currently more strict than vice versa.
End note.)

5.(U) Regarding the other two priorities, Leycegui noted that
there were "very specific measures needed urgently" to
improve border infrastructure, and explained that technical
norms, sanitary and phyto-sanitary standards, and the failure
of Mexico, the U.S., and Canada to recognize each others'
certifications posed a major barrier to trade.

6. (U) Leycegui stressed the importance of the Security and
Prosperity Partnership (SPP) as a mechanism to overcome these
challenges, especially its Presidential- and
Ministerial-level meetings. She emphasized the need to deepen
and institutionalize such regional integration in North
America.

7. (U) She urged the private sector to participate in the
"Great Debate about NAFTA" in order to publicize its benefits
for consumers and the overall economies of our three
countries. She further urged the private sector to seek
bilateral and trilateral synergies with the U.S. and Canada
to expand the benefits of NAFTA. She said that there could
be no renegotiation of NAFTA, but NAFTA could use revision
and improvement, for example to make its rules of origin more
flexible, further integrate the sugar sectors, make
much-needed improvements to the services chapters, and to
expand recognition of professionals.

Regional Trade Integration in Latin America
--------------------------------------------

8. (U) In contrast to the U.S., Leycegui said there was a
favorable geopolitical environment in Latin America to deepen
trade ties. Her description of Latin American efforts to
widen their integration was similar to what she gave Econoffs
on April 29 (REF C). She reviewed how certain Latin American
countries, especially Mexico, Colombia, Peru and Chile, were
working through the Pacific Arc Forum (PAF, a.k.a. Pacific
Basin Initiative Forum) to establish cumulation of origin
amongst common free trade partners, starting with texile
cumulation with CAFTA. She said the ultimate goal was
convergence among the Latin American FTA's. She noted that
those countries most interested were forging ahead, with
others able to reserve the right to join up later. She said
that Canada was very interested in the Pacific Arc Forum, and
the United States was positive about the idea of cumulation
of origin, but not participating due to its domestic
political environment. She noted that because the United

MEXICO 00001523 003 OF 004


States was the most
important market for the Latin America countries now working
to integrate their FTA's, the rules and standards these
countries were seeking to harmonize naturally tended toward
standards for the U.S. market. She said this fact would make
it easier for the United States to join the process once U.S.
domestic politics allowed.

9. (U) In addition to efforts via the Pacific Arc Forum,
Leycegui said Mexico and Colombia were deepening their FTA.
Mexico was in an advanced state of negotiations on an FTA
with Peru, was committed to negotiating an FTA with Panama,
and should have an FTA with the Dominican Republic in about
four years. She said Mexico was seeking to widen coverage of
its "Economic Complementarity Agreements" with Brazil,
Ecuador, Argentina and Cuba.


Trade Integration with Asia
----------------------------

10. (U) With Asia, Leycegui said Mexico was being careful in
its FTA negotiations with South Korea, following the U.S. and
Canadian examples of ensuring provisions to protect the auto
sector. She asked the American Chamber to provide input for
the GOM position in these negotiations. She explained that 86
percent of what Mexico imports from South Korea is already
liberalized, so Mexico is trying to take greater advantage of
this already liberalized trade.

11. (U) Leycegui said Mexico was optimistic about
Strengthening its "Economic Association Agreement" with
Japan. With China, however, she said the "precarious"
situation of bilateral trade with China prevents Mexico from
negotiating an FTA right now. She said the GOM was aware,
however, that Chile had an FTA with China, and Peru and Costa
Rica were negotiating FTA's, which meant those countries
would receive trade benefits in the growing Chinese marker
that Mexican exporters would not enjoy. Leycegui also noted
that there are several upcoming meetings with China to
address various trade concerns.

Trade Integration with Europe
----------------------------

12. (U) With the European Union, she said Mexico was
negotiating revisions to its chapters on agriculture,
services and investment. She said Mexico was also working
with the EU program to facilitate trade under this FTA, and a
separate EU program to support small- and medium-sized
enterprises in Mexico.

Comment
-------

13. (U) Leycegui's public comments are further affirmation
that Mexican leaders remain committed to greater
liberalization and integration as the best ways of ensuring
national and regional competitiveness in the global
marketplace of the 21st Century. We underline Leycegui's

MEXICO 00001523 004 OF 004


public statement that the one-year demonstration project due
to end in September will be followed by full liberalization
of cross-border trucking. Clearly Mexico sees this as
important to improving North American competitiveness. 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 /
GARZA

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