VZCZCXRO3373
PP RUEHCD RUEHGD RUEHHO RUEHMC RUEHNG RUEHNL RUEHRD RUEHRS RUEHTM
DE RUEHME #0764/01 0412159
ZNR UUUUU ZZH
P 102159Z FEB 06
FM AMEMBASSY MEXICO
TO RUEHC/SECSTATE WASHDC PRIORITY 8871
INFO RUEHXC/ALL US CONSULATES IN MEXICO COLLECTIVE
RUEHOT/AMEMBASSY OTTAWA 2166
RUCPDOC/DEPT OF COMMERCE WASHDC

UNCLAS SECTION 01 OF 02 MEXICO 000764 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
FOR EB/TPP, WHA/MEX, AND WHA/CAN 
COMERCE FOR NAFTA OFFICE/ARUDMAN 
PLEASE PASS USTR FOR JMELLE 
 
E.O. 12958: N/A 
TAGS: ETRD MX
SUBJECT: MEXICAN TRADE NEGOTIATOR ON NAFTA MINISTERIAL 
AGENDA 
 
 
Sensitive but unclassified, entire text. 
 
Summary 
------- 
 
¶1.  (SBU) Mexican trade negotiator Ken Smith Ramos told us 
February 2 that Mexico expected the upcoming proposed March 
NAFTA Ministerial would cover the relationship between NAFTA 
and the SPP, regulatory cooperation, development of a list of 
panelists as set out in NAFTA Chapter 20, increased 
flexibility rules of origin provisions, sectoral initiatives 
in areas including steel and textiles, and development of a a 
legal bridge between CAFTA and NAFTA to allow Central 
American content in Mexican goods bound for the U.S.  These 
more technical issues would likely complement a ministerial 
discussion of the WTO and the Doha Round, as well as NAFTA's 
future.  Smith noted Mexico's pleasure at recently resolving 
issues like bone-in beef, cement, and pork, and noted that 
these successes would help diffuse pressure on presidential 
candidates to raise NAFTA renegotiation as a campaign issue. 
End Summary. 
 
¶2.  (SBU) We met February 2 with Ken Smith Ramos, Director 
General for International Trade Negotiations at the 
Secretariat of the Economy, to pulse Mexican views on the 
 
SIPDIS 
agenda for the March 23 NAFTA ministerial in Acapulco, a 
snapshot of current trade issues, and a look ahead to his own 
future. 
 
NAFTA Ministerial 
----------------- 
 
¶3.  (SBU) On the NAFTA ministerial,  Ministers would 
certainly deal with "systemic issues" such as the WTO and 
Doha, as well as the future for the NAFTA relationship. 
Procedurally, Smith noted that Canada has suggested holding 
two NAFTA Deputy Ministers meetings per year to continue 
working through technical details.  Canada may also wish to 
make specific proposals on modification of NAFTA dispute 
resolution mechanisms that would not require textural changes. 
 
¶4.  (SBU) On the practical side, Smith suggested the 
Ministers would open with a discussion of "pending programs" 
like the SPP.   He was most focused on how various NAFTA 
groups relate to work being done under its auspices.   He 
noted that the GOM would try to push concepts of regulatory 
cooperation and mutual recognition.  Smith said that the 
Mexicans would seek to use the Committee on Standards Related 
Measures within the NAFTA context to push this idea.  He 
expected a document from the Department of Commerce shortly 
outlining specific projects.  He added that the National 
Bureau of Standards is working with COFEMER (Commission on 
Regulatory Improvement) in Mexico.  Smith understood the 
difficulties of making significant progress on mutual 
recognition with the U.S., given the complexity of regulatory 
structures on both sides. 
 
¶5.  (SBU) Smith suggested the ministers and their staffs 
could work on developing a list of panelists under Chapter 20 
of NAFTA. Article 2009 of the NAFTA calls for a consensus 
roster of persons acceptable to all member countries. 
Panelists must have expertise or experience in law, 
international trade, other matters covered by NAFTA or the 
resolution of disputes arising under international trade 
agreements, and will be chosen strictly on the basis of 
objectivity, reliability and sound judgment.   Currently 
there is no approved list of panelists.  Smith added that 
there were political issues to consider on all sides.  He 
added that both sides needed to advance in this area. 
 
¶6.  (SBU) On rules of origin, he suggested the ministers 
could discuss "packages" for providing increased flexibility 
on rules of origin for goods to be exported back to the U.S. 
 He offered that this would not provide the "big bang" result 
from the ministerial that Mexico and the U.S, were seeking, 
but would be welcome. 
 
¶7.  (SBU) On sectoral initiatives, Smith suggested that 
draft policy papers be drafted on strengthening various 
sectors including steel (putting together a newer steel 
strategy) and  textiles.   The papers would form the basis 
for a series of presidential recommendations, both offensive 
and defensive, within the region.  They could also deal with 
smuggling and transshipment problems. 
 
 
MEXICO 00000764  002 OF 002 
 
 
¶8.  (SBU) Ministers would also want to discuss a  "bridge" to 
join Mexico and CAFTA for the purpose of exports back to the 
U.S. (i.e. goods from Mexico to be exported to the US can 
have CAFTA content to make up rules of origin provision). 
Currently there is no legal mechanism to join the two 
agreements.  Smith suggested that there  would need to be 
some U.S. system to verify and authorize CAFTA content in 
Mexican goods exported to the U.S.  under NAFTA.  He added 
that the Mexican Senate would have to approve such a scheme, 
as it deals with NAFTA.  Furthermore, any Senate approval 
would be politically tough.  At the same time, Mexico would 
have to develop its own procedures with Central America. 
 
Agricultural Trade 
------------------ 
 
¶9.  (SBU) On other issues, Mexico's National Organization of 
Basic Grains Farmers (ANEC) had pressed Mexico to raise corn 
and beans exports to the U.S. with an eye to relief from the 
2008 border opening.  Agreement between both sides to put the 
issue into the existing NAFTA cooperation mechanism, 
according to Smith, would provide "armor plating" for NAFTA 
going into the 2008 final implementation, shifting away 
pressure that had come from political campaigns (AMLO) to 
stop short of opening the border in 2008.  He added that many 
on the U.S. side want to show progress, and that Mexico had 
gotten rid of pork as an issue and had recently promulgated a 
(albeit flawed) ruling to resolve the bone-in beef ban.  The 
long-standing anti-dumping case on cement had also been 
largely resolved. 
 
¶10.  (SBU) Sugar, however, remained "hard."  He had hoped for 
further access to the U.S. market, and was ready for further 
work, "hoping that the smoke cleared soon."  With movement on 
sugar, Smith was optimistic on further Mexican moves access 
for fructose (HFCS).  The window for action was closing 
quickly with the coming election.   With the election period 
approaching a continued stream of positive announcements 
would be helpful in moderating public opinion, and continued 
creativity on both sides could help avoid more serious 
problems. 
 
¶11.  (SBU) Still, he predicted that Mexican trade policy 
would remain relatively constant even with an AMLO victory. 
NAFTA had become part of Mexican political "fundamentals," 
and despite political rhetoric was unchangeable.    Smith did 
caution that both sides should work to ensure that trade 
questions do not become linked to other "border issues." 
Those that opposed full liberalization on the NAFTA schedule 
were not above using the current discontent over the 
Sensenbrenner legislation to support their anti-free trade 
positions.  Still, he remained optimistic that Economia could 
keep trade from becoming a political football in the run-up 
to July 2.   Successes in the trade area underscored this 
idea. 
 
The Future 
---------- 
 
¶12.  (SBU) As for his own future, given the different views 
of the candidates, Smith said that while his job was not in 
jeopardy, and despite the protection offered by the recently 
reformed civil service law, he would be unlikely to remain in 
place in an AMLO administration, though he was more sanguine 
about remaining in his position after a PRI or PAN win. 
 
 
Visit Mexico City's Classified Web Site at 
http://www.state.sgov.gov/p/wha/mexicocity 
 
KELLY