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Cablegate: Mexico Lauds Cafta-Dr Textile Cumulation As First

VZCZCXRO2323
PP RUEHCD RUEHGD RUEHHO RUEHMC RUEHNG RUEHNL RUEHRD RUEHRS RUEHTM
DE RUEHME #1907/01 1762037
ZNR UUUUU ZZH
P 242037Z JUN 08
FM AMEMBASSY MEXICO
TO RUEHC/SECSTATE WASHDC PRIORITY 2316
INFO RUEHXC/ALL US CONSULATES IN MEXICO COLLECTIVE PRIORITY
RUEHBJ/AMEMBASSY BEIJING PRIORITY 0443
RUEHBO/AMEMBASSY BOGOTA PRIORITY 4071
RUEHGT/AMEMBASSY GUATEMALA PRIORITY 3704
RUEHPE/AMEMBASSY LIMA PRIORITY 1582
RUEHMU/AMEMBASSY MANAGUA PRIORITY 1034
RUEHZP/AMEMBASSY PANAMA PRIORITY 2321
RUEHSJ/AMEMBASSY SAN JOSE PRIORITY 1831
RUEHSN/AMEMBASSY SAN SALVADOR PRIORITY 2591
RUEHSG/AMEMBASSY SANTIAGO PRIORITY 0631
RUEHDG/AMEMBASSY SANTO DOMINGO PRIORITY 0774
RUEHTG/AMEMBASSY TEGUCIGALPA PRIORITY 1789
RUEHCN/AMCONSUL CHENGDU PRIORITY 0017
RUEHGZ/AMCONSUL GUANGZHOU PRIORITY 0054
RUEHGH/AMCONSUL SHANGHAI PRIORITY 0023
RUEHSH/AMCONSUL SHENYANG PRIORITY 0024
RUEHBS/USEU BRUSSELS PRIORITY
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC PRIORITY
RUEATRS/DEPT OF TREASURY WASHINGTON DC PRIORITY
RUEHC/DEPT OF LABOR WASHINGTON DC PRIORITY
RHEHNSC/NSC WASHINGTON DC PRIORITY

UNCLAS SECTION 01 OF 02 MEXICO 001907

SIPDIS

STATE FOR A/S SHANNON
STATE FOR WHA/MEX, WHA/EPSC. WHA/CEN, EEB/TPP/BTA, EAP/CM,
EAP/EP
STATE PASS USTR FOR EISSENSTAT/MELLE/SHIGETOMI/QUISENBERRY
USDOC FOR 4320/ITA/MAC/WH/ONAFTA/GERI WORD
TREASURY FOR IA (LUYEN TRAN, RACHEL JARPE)
NSC FOR RICHARD MILES, DAN FISK
EXIM FOR MICHELE WILKINS
STATE PASS TO FEDERAL RESERVE (BORA DURDU)

E.O. 12958: N/A
TAGS: ETRD KTEX PREL ELAB MX CH
SUBJECT: MEXICO LAUDS CAFTA-DR TEXTILE CUMULATION AS FIRST
STEP TOWARD INTEGRATION

REF: (A) 08 MEXICO 1523 (B) 08 MEXICO 1333 (C) 08
MEXICO 1810

MEXICO 00001907 001.2 OF 002


Summary
-------

1. (U) Mexico's Economy Secretary and the head of the
national textiles chamber praised the impending entry into
force of the textiles cumulation provisions in the Dominican
Republic-Central America-U.S. Free Trade Agreement (CAFTA-DR)
as key to raising Mexican and regional competitiveness
(particularly vis-a-vis China) in the textile-apparel
production chain, and as a first step toward achieving
greater intra- and inter-regional economic integration in all
traded sectors. End summary.

2. (U) On June 16 the National Chamber of the Textile
Industry (CANAINTEX) held a press conference to highlight the
scheduled August 15 entry-into-force of the textile
cumulation provision of the CAFTA-DR. A number of Mexican
economic officials, ambassadors and diplomats from the
CAFTA-DR countries, and econoff were invited to attend.
CANAINTEX President David Garcia predicted that the national
textile industry will register US$250 million of additional
exports once the U.S. begins to offer CAFTA-DR benefits to
apparel imports from Central America and the Dominican
Republic that make use of Mexican textile inputs. He added
that if exports do increase as expected, the industry might
be able to generate jobs for another 20,000 workers beyond
the 150,000 currently employed in textile manufacturing.

3. (U) After Garcia's comments, Mexican Economy Secretary
Eduardo Sojo called this a first step in the process of
greater commercial integration among common free trade
partners, a theme he and his top officials have been pressing
since the Calderon Administration took office (REFS A and B).
He called for the inclusion of cumulation provisions for all
sectors, not just textiles, in what he called "second
generation" trade agreements. Mexico, he said, was
particularly interested in linking up in this fashion its
FTAs with corresponding U.S. FTAs. However, he noted that
Mexico was also willing to pursue this sort of integration
with the European Union (which he noted was in the process of
negotiating trade agreements with Central America and the
Andeans), Canada, and other partners. In this context he
highlighted the meetings of the Pacific Arc group, which aims
to harmonize rules of origin among pro-trade Latin American
countries (REFS A and B).

4. (U) According to Sojo, cumulation is essential to
fostering integrated supply chains of sufficient economic
scale to compete in the global marketplace. During the
question and answer session, he was asked whether this accord
would help Mexico improve its performance vis-a-vis China.
Sojo noted the recent agreement between the Mexican and
Chinese governments that would lower Mexican barriers to
Chinese imports while maintaining protection for some Mexican
sectors through 2011 (REF C). He also said that Mexico,
together with the U.S., had been successful in using the WTO
to force China to abandon some of its unfair subsidies to

MEXICO 00001907 002.2 OF 002


exporters. He also pointed out that costs in China are
rising, naturally leading to a more level playing field and
making this a particularly promising time to improve Mexican
competitiveness.
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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