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Cablegate: Gop Postpones Push for Fta Until New U.S. Congress

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RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEAWJA/DEPT OF JUSTICE WASHINGTON DC
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DEPT FOR E, H, EB AND WHA
COMMERCE FOR 4331/MAC/WH/MCAMERON
USTR FOR EEISSENSTAT, BHARMAN AND JMCCARTHY

E.O. 12958: N/A
TAGS: ETRD ECON PGOV PE
SUBJECT: GOP POSTPONES PUSH FOR FTA UNTIL NEW U.S. CONGRESS

1. (SBU) SUMMARY. Prime Minister Jorge del Castillo
announced on November 27 that the GOP would no longer seek
ratification of the U.S.-Peru Trade Promotion Agreement
(PTPA) by the current U.S. Congress, choosing to wait until
early next year to engage the incoming Congress. Following
several weeks of internal debate and consultations with the
USG and the Congress, Del Castillo said that submitting the
legislation this year would run a high risk of having the
legislation voted down. Del Castillo made the announcement
after President Garcia had called a cabinet meeting, which
included Ambassador to the U.S. Felipe Ortiz de Zevallos and
PTPA Special Envoy Hernando de Soto, to discuss steps
forward. Plans for PM Del Castillo to lead a delegation of
seven ministers to Washington next week were skillfully
shelved. END SUMMARY.


DE SOTO: NOT JUST A TRADE AGREEMENT
------------------------------------
2. (SBU) Hernando de Soto noted that the Democrats had won
control of the House and Senate and that Peru needed to
accomodate their different "demands and perspectives". He
noted that the White House and Democrats in Congress
preferred that the PTPA be considered by the new Congress.
De Soto said he believed the PTPA was viewed in the U.S. as
not only a trade agreement, but in terms of geo-politics,
hemispheric security and support for free market economies.
He said he believed the Democrats appreciated his proposals
for the "TLC adentro" (the internal FTA), as de Soto
describes his ideas for allowing more Peruvians to benefit
from free trade. De Soto mentioned that his team's efforts
would resume in the first quarter of 2007, culminating in
March. Parenthetically, he said he had "indications" that
the ATPDEA legislation would be extended in the lame duck
session this year around December 4, but was awaiting
confirmation.

TRADE MINISTER: SEEKING FTAS WITH OTHERS
-----------------------------------------
3. (U) Trade Minister Mercedes Araoz noted that while
approval of the PTPA is extremely important for Peru, the GOP
is also engaged in an effort to broaden its global trading
relationships. She mentioned possible negotiations with
Canada and Korea as well as other countries in Asia,
including Australia and China. Ambassador Ortiz de Zevallos
cautioned against disappointment over the delay. He noted
that the PTPA was a process that had begun several years ago,
and that several steps were needed before the PTPA could be
approved. On the bright side, the postponement enables Peru
to keep advancing on complex implementation issues to avoid
future delays.

COMMENT
-------
4. (SBU) The scale of the Democratic victory in Congress and
the unlikelihood that the PTPA would be considered this year
had started a public blame game among many, including former
GOP officials. The Garcia Administration had felt growing
pressure to demonstrate it was doing all it could to ensure
swift ratification. Among other things, a series of
consultations in Lima and Washington led the GOP to
grudgingly accept the U.S. political realities, postpone the
government's high-profile cabinet trip to Washington, and
skillfully fashion a face-saving public response to
demonstrate to voters that it is in control of the issue.
STRUBLE

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