This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS SECTION 01 OF 03 BRASILIA 001321 
 
SIPDIS 
 
SENSITIVE 
 
USTR FOR SCRONIN, KLEZNY 
 
E.O. 12958: N/A 
TAGS: ETRD BR FTAA
SUBJECT: ADVISOR DENIES AMORIM PROPOSING FTAA DELAY 
 
REF: BRASILIA 306 
 
SENSITIVE BUT UNCLASSIFIED, PLEASE TREAT ACCORDINGLY 
 
¶1. (SBU) Summary.  According to Antonio Simoes, Economic 
Advisor to Foreign Minister Amorim, local press inaccurately 
reported Amorim's April 23 remarks to the Brazilian Chamber 
of Deputies concerning the GoB's alleged intent to delay FTAA 
negotiations.  Simoes stressed to us that the GoB wants to 
continue negotiating with the United States within the FTAA; 
that it is not seeking an extension of the end of 2004 
deadline for negotiations; but that the GoB can be expected 
to raise the possibility of limited four plus one 
negotiations as a politically important supplement to the 
FTAA, during USTR Zoellick's trip to Brasilia May 27-28.  End 
Summary. 
 
¶2. (SBU) In an April 23 telcon, Antonio Simoes, Economic 
Advisor to Foreign Minister Amorim, alerted EconOff that 
Amorim had made remarks earlier that day to the Chamber of 
Deputies which would have implications for the impending 
visit by USTR Zoellick.  The next day, four major dailies ran 
articles reporting on Amorim's remarks.  While each was 
slightly different in detail, the central message conveyed 
was that Brazil wanted to slow down the FTAA negotiations and 
seek an extension of the January 2005 deadline for 
completion.  Headlines included "Brazil Going to Delay the 
FTAA" and the "Chancellor Disagrees with the U.S. on the 
FTAA."  In response to questions about public remarks here on 
April 22 by Treasury Secretary Snow concerning the U.S. 
position vis--vis negotiation of agricultural domestic 
support disciplines within the FTAA, Amorim's response 
generated a headline "Amorim Warns Against the Siren,s Song 
of The FTAA." 
 
¶3. (SBU) Simoes assured EconOff early April 24 that the press 
reports were incomplete and inaccurate.   Simoes insisted 
that the GoB is not seeking to delay the FTAA negotiations 
and/or to extend the deadline.  He explained that Amorim had 
simply said that immediately after taking office, President 
Lula had slowed down the negotiating pace in order for his 
new government to have time to conduct an evaluation of the 
negotiations -- not that this is the plan for the future. 
Furthermore, Amorim's remarks concerning the negotiation 
calendar, according to Simoes, referred solely to the 
timeframe for submission of offers, which the GoB felt had 
been too tight and needed to be extended; Amorim was not 
referring to the end date for negotiations. 
 
¶4. (SBU) According to Simoes, Amorim did not want to 
criticize Secretary Snow, but had to respond to questions 
raised by Deputies based on press reports that the Secretary 
had not only reiterated the USG position that "everything is 
on the table" but had in addition specifically asserted that 
the United States is willing to discuss reductions in 
domestic farm support within the FTAA.  Simoes said that 
Amorim knew the press reports were an inaccurate reflection 
of the U.S. position and needed to convey that to the 
Deputies.  This led to the Minister's warning not to be lured 
by the sirens' song of "everything is on the table" and to 
his criticism that Secretary Snow's declaration had "little 
substance" and "low credibility."   The Minister reportedly 
reassured Deputies that what matters is how the revised U.S. 
offer in July treats products of interest to Brazil. 
 
¶5. (SBU) Simoes wanted to draw our attention to Amorim's 
remarks that the GoB is studying the possibility of 
negotiating a more limited U.S.-Mercosul (or four-plus-one) 
trade agreement and that we should expect Amorim to raise 
this with USTR Zoellick during their discussions in late May. 
 Although qualifying that this is but one possibility that 
the GoB is exploring, Simoes opined that Zoellick should be 
in a position to respond to such an idea during the May 
talks.  He stressed that the GoB would not envision this 
negotiation supplanting the FTAA, but rather as supplementing 
it.  GoB thinking, according to Simoes, is that success in 
negotiating a more limited agreement with the United States 
would divert domestic attention from the FTAA, reduce the 
negative pressure associated with the FTAA, and provide the 
GoB with political space it needs to move forward on those 
negotiations.  (COMMENT: The Lula team has been kicking the 
idea of a U.S.-Mercosul agreement around since as early as 
last October, but has yet to act formally on it or provide 
details.  EconOff noted to Simoes that it may be difficult to 
obtain a substantive response lacking a more definitive 
description of what is envisioned.  END COMMENT.) 
¶6. (SBU) To provide context, Simoes described the GoB's 
difficult political situation regarding the FTAA.  First, 
groups that have promoted the negative perception surrounding 
the FTAA are, in the current administration, in positions to 
wield more political clout.  Simoes declined to identify 
individuals, but Samuel Pinheiro Guimaraes, the Secretary 
General within Itamaraty, is certainly in this camp.  Second, 
those trying to promote the FTAA negotiations within and 
outside the administration find little that they can 
definitively point to as a "win" for Brazil to counter FTAA 
opponents'claims that the FTAA is designed to benefit only 
the United States.  The well-known analysis goes like this: 
the current framework for negotiations includes the areas of 
interest to the United States -- services, investment, 
government procurement, intellectual property rights, to name 
some -- but, Brazil has been unable to include the issues of 
interest to it, namely disciplines on agricultural domestic 
support, and trade remedies. 
 
¶7. (SBU) Making things still worse, according to Simoes, the 
United States presented initial market access offers for 
goods which not only provide Mercosul with the worst tariff 
liberalization schedule, but, within that schedule, have 
their main products of interest in Basket D, the group with 
an as yet undefined timeline for tariff elimination.  The 
United States' differentiated offers have contributed to a 
hardening of anti-FTAA sentiment among those opposing 
Brazil's participation in the negotiations. 
 
¶8. (SBU) Simoes also noted that local press omitted to report 
on the severe criticism that Amorim received from a group of 
radical PT Deputies, led by Luciana Genro (Rio Grande do 
Sul), who attacked the government for continuing to negotiate 
the FTAA when 10 million Brazilians had already voted against 
it in a plebiscite last fall.  This same group of PT 
ideologues claimed to be forming a "parliamentary front" to 
push for a nation-wide referendum on continuing with FTAA 
negotiations.  As relayed by Simoes, Amorim stood up to these 
deputies, unequivocally arguing that it is in Brazil,s 
interests to negotiate the FTAA and that the government would 
continue that course. 
 
¶9. (SBU) Concerns similar to Simoes' regarding the political 
landscape for FTAA negotiations, were expressed by Brazil's 
new lead FTAA negotiator, Ambassador Carlos Simas Magalhaes, 
during a meeting with visiting Congressman English and his 
delegation later the same day.  At the outset of that 
meeting, Simas catalogued the usual litany of technical 
problems facing Brazil -- a new administration with a new 
team that has had the huge task of reevaluating in technical 
terms each area of the negotiations; the particular 
difficulties posed by investment and government procurement, 
since Brazil,s specialists have never negotiated market 
access in these areas previously; and so on. 
 
¶10. (SBU) By the end of the meeting, however, Simas suggested 
that technical difficulties can be overcome and that in the 
current Brazilian environment the main obstacles to the FTAA 
are mainly political.  He reminded the Congressman that the 
Lula government is leftist and has different sensitivities 
than the previous administration.  Echoing Simoes' concern 
over the negative political impact of what has been widely 
seen as inadequate U.S. offers, Simas wondered aloud why the 
United States could not have allowed other countries 
benefiting from preference programs or bilateral trade 
agreements to merely continue with those preferences during 
the FTAA transition period, while putting forward a single 
FTAA offer and saving Mercosul, and especially Brazil, from 
these political difficulties.  Simas, like Simoes, said the 
GoB is considering proposing a four-plus-one agreement with 
the United States, but that it would probably be limited in 
scope and leave aside the more contentious issues. 
COMMENT 
----------------- 
 
¶11.  (SBU) For some who have followed Brazil's attitude 
toward the FTAA negotiations over the years, the current host 
of GoB complaints and concerns seem familiar and could be 
dismissed as GoB positioning rather than a signal of a 
critical impasse.  However, the context in which the GoB, and 
in particular Itamaraty, are now formulating policy is 
dramatically different from the past.  While Lula has gained 
support for continuation within the FTAA negotiations from 
some groups traditionally opposed, such as the large labor 
union CUT, new elements of staunch opposition to the FTAA 
have now taken up residence within the GoB, rather than 
remaining principally in vocal opposition parties and NGOs. 
This is particularly evident in Itamaraty, whose internal 
struggles over FTAA policy have been the subject of several 
speculative press reports recently.   Post understands that 
for now, Ambassador Hugueney, a proponent of the FTAA, 
retains overall responsibility for the FTAA negotiations, 
despite articles reporting otherwise.  However, there is no 
guarantee he will remain for the long-term.  Septel will 
expand on Mission's take concerning FTAA status within GoB 
and options Washington may wish to consider in that light and 
in the run up to USTR Zoellick's visit. 
HRINAK