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Cablegate: Congressman Meeks Discusses Trade Accord and Labor

VZCZCXYZ0000
RR RUEHWEB

DE RUEHPE #2373/01 1651504
ZNR UUUUU ZZH
R 141504Z JUN 06
FM AMEMBASSY LIMA
TO RUEHC/SECSTATE WASHDC 1005
INFO RUEHBO/AMEMBASSY BOGOTA 3557
RUEHBU/AMEMBASSY BUENOS AIRES 2467
RUEHCV/AMEMBASSY CARACAS 9599
RUEHQT/AMEMBASSY QUITO 0460
RUEHLP/AMEMBASSY LA PAZ JUN SANTIAGO 0650
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RHEHAAA/NATIONAL SECURITY COUNCIL WASHINGTON DC

UNCLAS LIMA 002373

SIPDIS

SENSITIVE
SIPDIS

USTR FOR AUSTR EEISSENSTAT AND BHARMAN
DEPT FOR WHA/AND, EB/TPP, WHA/EPSC
COMMERCE FOR 4331/MAC/WH/MCAMERON

E.O. 12958: N/A
TAGS: ETRD ECON EINV PGOV KIPR PREL PE
SUBJECT: CONGRESSMAN MEEKS DISCUSSES TRADE ACCORD AND LABOR
ISSUES


1. (U) Summary: During his codel to Peru, Congressman
Gregory Meeks met with representatives from the business
community and labor organizations. The business leaders
laid out a good case for ratifying the accord, citing the
probable job creation in the formal sector. The labor
leaders said that they are not opposed to trade, but had
problems with the way the agreement had been negotiated and
with Peru's current labor regime. End Summary.

2. (U) Congressman Gregory Meeks visited Peru on May 26-28
to meet with Peruvian leaders to discuss the U.S.-Peru trade
agreement. His meetings with President Toledo, Prime
Minister Kuczynski and Afro-Peruvians are covered in
septels. Ambassador Struble, Congressman Meeks' Legislative
Director, Sophia King, and Emboffs also accompanied the
Congressman to the meetings.

3. (U) Congressman Meeks met with eight members of the
business community at the Ambassador's residence: Jose
Miguel Morales, President of the Confederacin Nacional de
Empresas Privadas (CONFIEP), George Schofield, General
Manager of the Sociedad Nacional de Industrias, Jos Pep
Chlimper, President & CEO of Corporacion Drokasa-Agrokasa,
Aldo Defilippi, Executive Director of the American Chamber
of Commerce, Ernesto Montoya, Legal Counsel of Nextel,
Fernando de la Flor, General Manager of McDonalds, Mariela
Alcalde, General Manager of FedEx, and Guillermo Ferreyros,
General Manager of Maple Gas.

Labor Standards - Business Perspective
--------------------------------------

4. (U) Congressman Meeks raised the criticism he had heard
in Washington that businesses were sub-contracting rather
than hiring permanent employees. The business
representatives responded that sub-contracting was a reality
of the global economy. They added that Peruvian law does
not permit sub-contracting the "core" business in most
industries. It is, however, allowed in sectors such as
farming, where the work is cyclical. These industries hire
subcontractors to cover peak labor demands.

5. (U) Congressman Meeks then raised the issue of
enforcement of labor laws, reporting the criticism that even
where there were adequate legal protections, the laws were
not being enforced. Several of the business representatives
responded that the reality was that Peruvian exporting
companies are being held to the highest international
standards by their customers. The U.S. companies are
demanding standards higher than those required under
Peruvian law. In effect, the U.S. clients were acting as
the enforcers of high standards.

6. (U) The Congressman pressed the group on the criticism he
had heard that workers were not being allowed to organize.
The businesspersons denied this, pointing out that there
already existed many large unions.

7. (SBU) If the agreement is not implemented and the ATPDEA
preferences expire, the Congressman then asked, what would
be the impact on the economy. Asparagus and mango farmer
Pepe Chlimper reported that there are 250,000 jobs directly
related to ATPDEA, and many of those jobs, particularly in
the textile and apparel industries, would be lost if the
preferences lapsed and the FTA was not in place. Mariela
Alcalde, the General Manager of FedEx in Peru, reported that
her company is already seeing a decline in shipments by
textile producers because of the uncertainty over which
tariff rate would apply in the near future.

Positive Impacts - More Jobs
----------------------------

8. (U) The businesspersons spoke at length about the
positive impact the PTPA would have on the economy. The
PTPA will create jobs in the formal sector, since only
companies in the formal sector can export. Moreover,

exporting jobs tend to pay more, and formal sector jobs
benefit from access to government services, such as social
security. Government revenues will increase since formal
sector businesses pay taxes.

9. (U) The Congressman closed the session by telling the
group that he had just met with a group of Afro-Peruvians,
and that Afro-Peruvians were being discriminated against.
He encouraged the business representatives to provide jobs
and training opportunities for them.

Labor Perspective - Secrecy and Sub-Contracting
--------------------------------------------- --

10. (U) Congressman Meeks met with Peruvian labor leaders to
discuss their concerns. Present were Secretary General Juan
Jose Gorritti of the General Confederation of Peruvian
Workers (CGTP), AFL-CIO Solidarity Center Representative
Oscar Muro, and Luis Valer, Vice President of the United
Confederation of Peruvian Workers (CUT-Peru). The CGTP is
the country's largest labor federation with 1.5 million
members.

11. (SBU) Juan Jose Gorritti led off the discussion and
spoke for the group when he described labor's disappointment
with the Toledo Government and labor's reluctance to support
the PTPA. He noted that labor conditions had improved
dramatically since the Fujimori dictatorship, but there had
not been much progress recently.

12. (SBU) Gorritti charged that under present conditions,
workers can be fired from private enterprises "without
reference to cause." According to Gorritti, this, in
addition to high levels of unemployment, makes union-
formation a difficult task. Gorritti also charged that the
millions of new jobs that the Toledo administration created
are not solid jobs with good benefits, but temporary work
that is highly vulnerable.

13. (SBU) Gorritti criticized the GOP's handling of the FTA
negotiations, which he claimed were conducted in secret.
Gorritti stressed that the agreement should be approved by
plebiscite. He questioned the GOP's right to conclude an
FTA with both a lame duck president and an unpopular lame
duck Congress.

14. (SBU) Oscar Muro of the AFL-CIO and Luis Valer of CUT-
Peru echoed Gorritti's complaints about both the GOP's
alleged lack of moral authority to conclude an FTA and the
scarcity of information for the populace. He cited the
booming agro-export sector where, he alleged, during an
inspection of 62 farms last year, only four fulfilled the
norms for labor. In addition, Muro complained about the
seasonal/rotating nature of the agricultural labor force, a
fact that allows employers to only gradually extend contract
time for employees, enabling them, he charged, to weed out
potential union organizers or anyone who would not accept
the low wages and precarious job stability under which they
are forced to work.

Comment - The Right Voices
--------------------------

15. (U) Congressman Gregory Meeks received a very good and
broad briefing on the PTPA, democracy and other issues from
some of the most important sectors. Based on information
gathered on his trip, the Congressman pledged to stimulate
the debate on the PTPA in Congress. He indicated his
willingness to encourage other Congresspersons to travel to
Peru to discuss the trade accord, noting that he would like
to return with representatives of the Congressional Black
Caucus during the July 4 recess. Post encourages these fact-
finding visits and looks forward to working with the U.S.
Congress to promote a clear understanding of how the PTPA
would benefit both the U.S. and Peru.

16. (U) This cable was not cleared by Congressman Meeks'
office.

STRUBLE

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