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C O N F I D E N T I A L MONTEVIDEO 000774 
 
SIPDIS 
 
SIPDIS 
 
DEPT ALSO FOR A/S TSHANNON, WHA/BSC AND EB 
DEPT PASS USTR FOR EEISSENSTAT AND SCRONIN 
TREASURY FOR OASIA FOR DDOUGLAS 
COMMERCE FOR ITAITA/MAC/WBASTIAN 
NSC FOR DFISK AND DTOMLINSON 
SOUTHCOM FOR POLAD 
 
E.O. 12958: DECL: 08/22/2016 
TAGS: PREL ETRD PGOV ECON AORC UY
SUBJECT: PRESIDENT VAZQUEZ MOVES FORWARD ON US TRADE AGENDA 
 
REF: MONTEVIDEO 0746 AND PREVIOUS 
 
Classified By: Charge D'Affaires James D. Nealon 
for reasons 1.4 (B) and (D) 
 
¶1. (C) Summary: Since the August 7-10 visit of senior USTR 
officials to Uruguay (reftel), President Vazquez has been 
assiduously preparing his domestic constituency for deeper 
trade ties with the United States.  He has publicly stated 
that the feasibility of a Free Trade Agreement (FTA) could be 
decided at the next meeting of the Joint Commission for Trade 
and Investment (JCTI) in early October.  Meantime, he has 
provided his interlocutors with a sound, balanced and 
comprehensive paper that examines key issues on trade ties 
with the US, including impact on Mercosur.  The US trade 
"debate" taking place here is more ideological than economic 
and the main detractors predictably hail from hard-left and 
anti-US sectors.  However, Vazquez' recent engagement and 
information sharing has also allowed a wider audience to more 
thoughtfully examine the issue of an FTA and weigh the 
challenges it poses.  Still, the overall momentum in Uruguay 
is positive towards an FTA and Vazquez seems to be expending 
considerable political capital to make this happen.  Below 
are some salient highlights on the matter. 
 
THE PRESIDENT AS SOLE SPOKESMAN 
------------------------------- 
 
¶2. (SBU) Following a cabinet meeting on August 14, President 
Vazquez issued the following press release indicating that he 
will be the sole spokesperson on the issue of a trade deal 
with the U.S. 
 
(Unofficial translation)  "As a result of the controversies 
within the Administration, on negotiations to explore a 
possible agreement to expand trade with the United States, 
the President of the Republic resolves that of this date he, 
or in his absence the person designated by him will be the 
only spokesman on this subject.  Secondly, the President of 
the Republic will invite all Uruguayan political parties to 
discuss the issue in depth within their own organizations. 
For this purpose, the President of the Republic will call the 
highest authorities of the Frente Amplio, National Party, 
Colorado Party, Independent Party and the Civic Union to 
provide them with the information developed by the bilateral 
technical groups working on this issue.  At the same time, 
the President will invite the Ambassadors of the People's 
Republic of China and of the Republic of India to confer 
through them with their respective governments on the 
possibilities of setting up bilateral committees to study the 
mechanisms to improve trade between each one of these 
countries."  (Comment: It is widely believed that he issued 
this statement to silence Formin Reinaldo Gargano, the most 
outspoken critic of an FTA. End Comment.) 
 
¶3. (SBU) True to his word, Vazquez invited the opposition 
parties to the Suarez Residence on August 21 to share his 
thoughts on the sensitive issues surrounding an FTA and trade 
with the US.  He presented them with an 11-page paper 
entitled "Preliminary Evaluation of a Possible Agreement with 
the US."  Some of its highlights appear below; Embassy will 
transmit a full translated copy of this document when 
available. 
 
-- Of the six working groups, the Ministry of the Economy 
will head three (goods, services and government procurement.) 
 The Ministry of Industry (another ally) will manage 
Intellectual Property Rights, perhaps the most sensitive 
area. The MFA, under Reinaldo Gargano is tasked with 
institutional affairs and capacity building -- areas of less 
import. 
 
-- The document clearly spells out that a potential agreement 
should be framed as a comprehensive Free Trade Area. 
-- It leaves the door open for negotiating either a Free 
Trade Agreement (FTA) or another kind of agreement to deepen 
the trade relationship with the US. 
 
-- The largest benefits for Uruguay would stem from removing 
current US barriers on beef, dairy products, food stuffs, 
textiles and apparel. The GOU does not see an "invasion" of 
US products that could hurt its market. 
 
-- It reiterates the need to stay within Mercosur but 
indicates that "as long as Mercosur remains stagnant" and 
does not improve integration mechanisms, Uruguay's 
development strategy requires boosting exports through third 
country bilateral trade agreements and states, "In this 
respect, it is of paramount importance to seek a higher 
degree of flexibility in negotiation schemes within Mercosur 
with respect to other countries," and cites the Andean 
Community of Nations (CAN) as an example of this. 
 
-- It cites the FTA Uruguay has with Mexico as a precedent 
for a trade deal with the US. 
 
MORE ON MERCOSUR 
---------------- 
 
¶4. (U) Days earlier, the Brazilian embassy issued the 
following statement in the weekly "Busqueda" (Unofficial 
translation)  "The Embassy of Brazil is willing to express 
itself on this matter (Uruguay's bid to negotiate trade 
agreements outside the Mercosur bloc) with the clear 
understanding that it is not contradicting any Uruguayan 
official.  Uruguayan officials have the complete and 
sovereign right to seek what is most beneficial to their 
country.  In this regard, Brazil continues to seek regional 
integration and the strengthening of Mercosur and has 
demonstrated this through its many businesses in Uruguay. 
The Uruguayan government knows how to defend its own 
interests without compromising its international commitments, 
and without damaging Mercosur.  (This policy) has been 
reiterated by the highest authorities of Uruguay." 
 
¶5. (U) At a press conference on August 21 following the 
meetings with the political parties, Vazquez addressed this 
issue when he responded to a reporter's question and  said, 
"We'll see. In the next few days I'm going to try and have a 
conversation with, at least by telephone if not in person, 
President Lula, who you all know is the Pro Tempore President 
of Mercosur, to talk about these things. There already was an 
occasion in Brasilia at a meeting with the Presidents of 
Brazil and Argentina -- and you know that they expressed 
themselves publicly saying that they would not put obstacles 
in Uruguay's quest to improve its commercial relationship 
with the United States and other countries." 
 
COMMENT 
------- 
¶6. (C) The "FTA debate" remains the overwhelmingly dominant 
issue here, with the media portraying every nuance with 
front-page banner headlines.  Vazquez has taken a 
considerable political risk, alienating important sectors of 
his governing coalition, by clearly and publicly committing 
himself to "the deepest possible" trade agreement with the 
United States, which is his code for an FTA.  Two weeks ago, 
in the presence of senior USTR officials, he said that 
"sometimes, the train only comes by once."  He immediately 
launched a comprehensive public diplomacy campaign to build 
tri-partisan support for a trade deal.  He has now stated 
publicly that he will work the issue of compatibility with 
Mercosur with Lula, either by phone or in person, though 
Vazquez and various members of his inner circle have told us 
repeatedly that Uruguay already has the right to expand its 
trade with third parties.  Vazquez appears confident that he 
can deliver on his goal of reaching a trade agreement with 
the United States, and in fact he has half of the Frente 
Amplio and all of the opposition backing him.  He also 
appears confident that the United States will reciprocate by 
grasping his outstretched hand.  End Comment. 
Nealon