VZCZCXYZ0001
PP RUEHWEB

DE RUEHKG #1500/01 2122225
ZNY CCCCC ZZH
P 312225Z JUL 06
FM AMEMBASSY KINGSTON
TO RUEHC/SECSTATE WASHDC PRIORITY 3306
INFO RUCNCOM/EC CARICOM COLLECTIVE
RUEHCV/AMEMBASSY CARACAS 0433
RUEHDG/AMEMBASSY SANTO DOMINGO 5707
RUCPDOC/DEPT OF COMMERCE WASHDC

C O N F I D E N T I A L KINGSTON 001500 
 
SIPDIS 
 
SIPDIS 
 
STATE FOR WHA/CAR (BUDDEN), EB/TPP/BTA/EWH (LAMPRON) 
STATE PLEASE PASS FOR USTR 
 
E.O. 12958: DECL: 07/31/2016 
TAGS: ECIN ECON EINV PREL ETRD JM
SUBJECT: U.S.-CARICOM FREE TRADE AGREEMENT: JAMAICAN URGES 
U.S. TO MAKE MOVE NOW 
 
REF: KINGSTON 1482 
 
Classified By: CDA Hugh Neighbour, reasons 1.4 (b) and (d) 
 
¶1. (C) Summary:  According to a Jamaican official at the 
Caribbean Regional Negotiating Machinery (CRNM), there is 
tension within CARICOM regarding a Free Trade Agreement (FTA) 
with the U.S.  The larger economies appear to desire an FTA, 
but the smaller Organization of Eastern Caribbean States 
(OECS) countries are more reticent.  He said the CARICOM 
position at the upcoming U.S.-CARICOM Trade and Investment 
Council meeting in September will be informed by this 
tension, the expiration of Trade Promotion Authority and 
benefits under the Caribbean Basin Initiative scheduled for 
2007 and 2008, respectively, the precarious position of 
CARICOM's regional trade negotiator Ambassador Richard 
Bernal, and a general leftward ideological shift.  End 
summary. 
 
------- 
Context 
------- 
 
¶2. (SBU) Recent meetings with Lincoln Price (protect), 
Private Sector Liaison to the Caribbean Regional Negotiating 
Machinery (CRNM), and with Claudius Preville (protect), Trade 
Policy Advisor and Representative to the OECS at the CRNM, 
pointed to tensions within CARICOM countries regarding a Free 
Trade Agreement (FTA) with the U.S.  According to Price and 
Preville, the larger economies ) in particular Jamaica, 
Trinidad and Tobago, and Barbados ) appear to support an 
FTA, but the smaller OECS countries worry that the 
anticipated loss of tariffs would undermine their 
competitiveness and devastate their revenue base. 
 
¶3. (SBU) Price noted that USTR had told CRNM that the USG was 
unlikely to negotiate with a single country or with a 
sub-group.  He further worried that USTR was reticent about 
special and differential treatment, something that the OECS 
countries would certainly have on their agenda. 
 
¶4. (C) Price expected that FTA discussions would feature 
prominently at the U.S.-CARICOM Trade and Investment Council 
(TIC) meeting, tentatively scheduled for September.  He 
suggested that there were four main factors leading CRNM 
toward an aggressive push for an FTA: the impending expiry of 
Presidential Trade Promotion Authority (TPA); the 2008 expiry 
of benefits under the Caribbean Basin Initiative (CBI); the 
uncertain future of current CRNM Director General Ambassador 
Richard Bernal; and the perception among trade technocrats 
that a general ideological shift leftwards in the region may 
mitigate against an FTA in the future. 
 
-------------- 
TPA expiration 
-------------- 
 
¶5. (C) Both Price and Preville expressed surprise and dismay 
that TPA would expire in 2007, and wondered aloud if there 
was a possibility that the authority would be renewed. 
Preville doubted that there would be enough time to make any 
real progress on negotiations, and noted that even if they 
did, that progress will be undermined once TPA expires. 
 
---------------------------------------- 
Private Sector Fear Loss of CBI Benefits 
---------------------------------------- 
 
¶6. (C) Price noted that private sector groups in the larger 
CARICOM economies were particularly keen to pursue an FTA, as 
they are fearful that CBI preferences will be lost in 2008. 
Preville countered, however, that the private sector view in 
the OECS countries was that the services sector was already 
operating in a liberalized environment, and the smaller 
manufacturing industries needed the protective tariffs to 
stay competitive.  (Note: Preville is based in Castries, 
St.Lucia, but was in Kingston to participate in preparatory 
meetings for the CARICOM-EU Economic Partnership Agreement 
negotiations.  End note.) 
 
---------------- 
Goodbye, Bernal? 
---------------- 
 
¶7. (C) CARICOM's lead negotiator Ambassador Richard Bernal is 
in a precarious position, as his term expires in December. 
 
Bernal openly supported Dr. Peter Phillips in the People,s 
National Party (PNP) leadership election against the eventual 
winner, Prime Minister Portia Simpson Miller.  While Simpson 
Miller has not yet given any indication that she wishes to 
replace Bernal, if the PNP win impending elections (reftel), 
many expect widespread changes in the administration. 
 
¶8. (C) According to Preville, some OECS leaders are also 
frustrated with negotiations towards and Economic Partnership 
Agreement (EPA) with the European Union.  The perception is 
that Bernal has failed to realize the development and aid 
concessions that the region seeks.  As a result, Preville 
stated that if Simpson Miller did seek to replace Bernal, 
they may push to appoint a regional trade negotiator more 
closely aligned to the needs of the smaller states, and less 
supportive of an FTA of the kind favored by the U.S.  One 
name mentioned was that of Ambassador Errol Humphreys of 
Barbados. 
 
-------------------- 
The "Leftward Drift" 
-------------------- 
 
¶9. (C) Price opined that the region is "leaning leftwards." 
He stated that some in the CRNM had noticed that the tone of 
trade ministerials had shifted: rather than trade technocrats 
controlling the discussions with data and analysis, the 
emphasis was moving towards more ideological stances.  He 
speculated that CARICOM is also being pushed by declining USG 
foreign assistance, coupled with an increase from Venezuela. 
He claimed that the WTO internet gambling ruling against 
Antigua had likewise hardened the belief among some that 
there is no place in a globalized world for their smaller 
economies. 
 
------- 
Comment 
------- 
 
¶10. (C) Price (who has been a candid interlocutor of the U.S. 
Embassy for some time) ) strongly - and Preville ) 
guardedly ) support discussion, consultation, and 
exploration within the framework of the Trade and Investment 
Council.  They said that for the OECS countries, the 
deal-breaker could be an assistance package that the USG 
might offer, as well as the timeline for implementation for 
the FTA that we propose.  Both recognized that the U.S. 
market was of singular importance to the region.  The clear 
view of Price, in particular, was that the USG must make its 
intentions known.  With TPA likely to disappear and with the 
region allegedly moving closer to Chavez, if the USG desires 
an FTA, he believes that the time to act is right now.  End 
comment. 
 
NEIGHBOUR