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P 291924Z AUG 08
FM AMEMBASSY LIMA
TO RUEHC/SECSTATE WASHDC PRIORITY 9255
INFO RUEHWH/WESTERN HEMISPHERIC AFFAIRS DIPL POSTS
RUCNDT/USMISSION USUN NEW YORK 0199

C O N F I D E N T I A L SECTION 01 OF 02 LIMA 001439 
 
SIPDIS 
 
E.O. 12958: DECL: 08/28/2018 
TAGS: ETRD ECON PREL EFTA UNGA PE
SUBJECT: EEB A/S SULLIVAN AND WHA PDAS KELLY PITCH TRADE & 
PROSPERITY INITIATIVE TO GOP 
 
REF: STATE 87631 
 
Classified By: Charge' d'Affairs James D. Nealon, reasons 1.4(b)&(d) 
 
SUMMARY 
------- 
 
¶1. (C)  A/S Sullivan and PDAS Kelly engaged the GOP's Foreign 
and Trade Ministers on the details of the Alliance for Growth 
& Prosperity (AGP) initiative in Lima on August 20-21.  The 
visit revealed some differences among our GOP interlocutors 
and moved Peru from questioning to problem-solving mode, but 
also highlighted several concrete GOP concerns.  One of these 
was the AGP's potential duplication of the GOP-supported Arc 
of the Pacific initiative.  Foreign Minister Garcia Belaunde 
also expressed concerns about creating an "exclusive" bloc 
that could further divide the region, and about jilting 
Ecuador and Brazil.  A/S Sullivan and PDAS Kelly sought to 
allay these concerns by stressing that the AGP complemented 
the Arc, offering to include GOP language in the communique, 
and underscoring the initiative's bipartisan and 
non-exclusive nature.  Both ministers said they would try to 
convince President Garcia to travel to New York for the 
September 24 meeting.  End Summary. 
 
DETAILED, FRANK DISCUSSIONS 
--------------------------- 
 
¶2. (C)  EEB A/S Dan Sullivan and WHA PDAS Craig Kelly 
discussed the Alliance for Growth and Prosperity (AGP) 
initiative (reftel) in separate meetings with Minister of 
Foreign Affairs Jose Antonio Garcia Belaunde, Minister of 
Trade and Tourism Mercedes Araoz, and Vice Minister of 
Foreign Affairs Gonzalo Gutierrez in Lima on August 20-21. 
The Peruvians had previously received reftel and previous 
demarches on the AGP, and Trade Minister Araoz had just 
returned from a meeting with Commerce Secretary Gutierrez on 
the margins of the America's Competitiveness Forum; so all 
three meetings were engaging, detailed and frank discussions 
on how to move the initiative forward.  Interestingly, the 
degree of enthusiasm and the specific concerns expressed in 
each meeting, described in sequential order below, were 
somewhat different. 
 
VICE FM WON OVER 
---------------- 
 
¶3. (C)  MFA Vice Minister Gonzalo Gutierrez, an early skeptic 
of AGP, listened carefully to the presentation and agreed 
that the AGP and the Arc of the Pacific (a Peru-led grouping 
of Latin American Pacific Coast nations that share a 
commitment to free trade, deepened commercial ties and 
expanded insertion into the global economy) could be mutually 
reinforcing.  A/S Sullivan and PDAS Kelly aso addressed VM 
Gutierrez's concerns about carryover in the next US 
Administration.  VM Gutierrez even suggested that the 
post-September 24 AGP ministerial be held in a Latin country 
(other than busy-with-APEC Peru). 
 
TRADE MINISTER ENTHUSIASTIC, 
STAFF WORRIED ABOUT ARC OVERLAP 
------------------------------- 
 
¶4. (C)  Trade Minister Araoz was very supportive of the AGP 
initiative.  Araoz said she had pitched the initiative to 
President Garcia on August 20, and that he was very 
interested but that the "only issue was timing" of the 
September 24 meeting.  She said she would follow up with the 
President.  Minister Araoz said President Garcia had asked 
her to write a letter to President Bush about both the AGP 
and the Millennium Challenge Account (MCA).  She was 
particularly interested in the development and assistance 
components of the AGP, especially for countries like Peru 
that are moving into middle-income range. 
 
¶5. (C)  Vice Trade Minister Eduardo Ferreyros and other staff 
were principally concerned over potential overlap and 
duplication of effort (given limited GOP staff) with the Arc 
of the Pacific, which will have its next meeting in Santiago 
in October.  In response, A/S Sullivan stressed that the USG 
supported the Arc.  He observed that the US Congress would 
not be ready politically for regional trade cumulation and 
rules of origin measures for some time, so the USG sees the 
broader AGP as complementary to the Arc.  He also invited 
President Garcia to lead the discussion of one of the five 
pillars during the September 24 meeting in New York. 
 
FM CONCERNED ABOUT ECUADOR, BRAZIL AND ARC 
------------------------------------------ 
 
¶6. (C)  Foreign Minister Garcia Belaunde was cautiously 
 
LIMA 00001439  002 OF 002 
 
 
supportive and made clear that he was not worried about 
carryover into the next US Administration nor Venezuela or 
Bolivia's reactions to the AGP.  However, he expressed the 
following inter-related concerns: 
 
-- That the AGP would exclude neighboring Ecuador, an Arc 
participant that had been helpful to Peru in bypassing 
Bolivian intransigence on US FTA-related trade issues in the 
Andean Community (CAN); 
 
-- That Brazil, an increasingly important partner for Peru, 
would see the AGP as divisive and exclusive; 
 
-- That the AGP would undo the Peru-led Arc of the Pacific; 
and 
 
-- that an FTA with the US not be the defining credential for 
membership, as it would project a negative "bloc" image. 
 
¶7. (C)  FM Garcia Belaunde said that, in the launching phase, 
it would be key to send a clear message that the AGP 
complements the Arc and that membership would be open to 
willing participants.  MFA officials told us later that FM 
Garcia Belaunde's explicit concerns about Brazil and the 
region were new to them, and asked for a readout of future 
US-Brazil discussions on AGP. 
 
PRESIDENT GARCIA TO NYC? 
------------------------ 
 
¶8. (C)  Minister Araoz seemed optimistic that President 
Garcia could be convinced to attend the leaders' meeting on 
September 24.  Minister Garcia Belaunde said he could "not 
commit the President," but would ask him to attend.  He noted 
that President Garcia has sought to distance himself from his 
disastrous first term not only on economic policy but also by 
traveling outside Peru as little as possible.  For example, 
President Garcia did not plan on attending any UN General 
Assemblies during his 5-year term.  While they make no 
guarantees, other MFA officials have suggested that an 
eventual call from President Bush to President Garcia could 
seal the deal. 
 
COMMENT 
------- 
 
¶9. (C)  The draft AGP documents and this series of high-level 
meetings helped move Peru from skepticism to constructive 
consideration of the AGP initiative.  For one, Peru has no 
beef with the themes, as spreading the benefits of trade-led 
growth to rural areas and small business is a top GOP 
priority.  While the Trade Minister and Vice Foreign Minister 
were supportive, we still need to work to persuade the 
Foreign Minister.  According to MFA contacts, the Minister 
wants to hear and absorb neighboring countries' reactions and 
concerns before taking the AGP plunge.  In that sense, 
keeping Peru in the loop on others' responses, and offering 
to include GOP language in the AGP text and communique, 
should help.  President Garcia's participation in the 
September 24 meeting remains in doubt, but we will continue 
to press for it.  End Comment. 
 
¶10. (U)  EEB Assistant Secretary Sullivan and WHA Principal 
Deputy Assistant Secretary Kelly cleared this cable. 
NEALON