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DE RUEHBU #2292/01 2851035
ZNR UUUUU ZZH
R 121035Z OCT 06
FM AMEMBASSY BUENOS AIRES
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UNCLAS BUENOS AIRES 002292 
 
SIPDIS 
 
SIPDIS 
 
E FOR THOMAS PIERCE, WHA FOR WHA/BSC AND WHA/EPSC 
PASS NSC FOR JOSE CARDENAS 
PASS FED BOARD OF GOVERNORS FOR PATRICE ROBITAILLE 
EX-IM BANK FOR MICHELE WILKINS 
OPIC FOR GEORGE SCHULTZ AND RUTH ANN NICASTRI 
PASS USTR FOR SUE CRONIN AND MARY SULLIVAN 
TREASURY FOR ALICE FAIBISHENKO 
USDOC FOR 4322/ITA/MAC/OLAC/PEACHER 
US SOUTHCOM FOR POLAD 
 
E.O. 12958: N/A 
TAGS: ETRD ECON UR AR
SUBJECT: AUSTR EISSENSTAT VISIT TO ARGENTINA 
 
REF: A. BUENOS AIRES 2061 
 
     ¶B. MONTEVIDEO 943 
 
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SUMMARY 
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¶1. (SBU) Assistant United States Trade Representative Everett 
Eissenstat met October 4 with Foreign Ministry Secretary of 
International Economic Relations Chiaradia to review WTO, 
GSP, and regional trade issues, including the U.S. bilateral 
dialogue with Mercosur member Uruguay.  Chiaradia stressed 
common interests in re-energizing the WTO process, asking for 
U.S. movement on agriculture domestic support issues, and 
offering to engage in Geneva 
on non-agricultural market access (NAMA) issues.  He 
understood the administrative nature of our GSP 
review/renewal process and hoped that any program 
modifications would be "minimally disruptive" to bilateral 
trade.  Chiaradia said the GoA has been following Uruguay's 
domestic debate on the relative costs and benefits of 
Mercosur membership and noted Uruguay's dissatisfaction with 
internal Mercosur market distortions that have skewed 
industrial investment to its larger members.  He called 
Argentina sympathetic to Uruguay's industrial development 
concerns and its desire for a deeper bilateral trade dialogue 
with the U.S.  AUSTR Eissenstat explained that the U.S. had 
exchanged Bilateral Investment Treaty instruments of 
ratification with Uruguay and that the US is now moving to 
launch Trade and 
Investment Framework Agreement negotiations to deepen our 
U.S./GoU bilateral dialogue.  In response, Chiaradia 
suggested that Argentina and the U.S. consider revitalizing 
our own Bilateral Committee on Trade and Investment (last 
convened in the spring of 2004) as a vehicle to similarly 
deepen the U.S./GoA trade and investment dialogue. 
Eissenstat also met with the American Chamber of Commerce 
Executive Committee and separately with representatives of 
companies with intellectual property, patent and trademark 
concerns in 
Argentina).  Press coverage of the visit - based largely on 
an interview AUSTR Eissenstat held with local media at the 
Embassy - was generally balanced and positive.  END SUMMARY. 
 
------------------------ 
GoA VIEW - COMMON GROUND 
------------------------ 
 
¶2. (SBU) AUSTR Eissenstat, USTR Brazil and Southern Cone 
Director Sue Cronin and Department of Commerce Argentine Desk 
Officer Alex Peacher met October 4 with Foreign Ministry 
Secretary of Trade and International Economic Relations 
 
SIPDIS 
Alfredo Chiaradia and members of his trade team, including 
Under Secretary for Economic Integration Eduardo Sigal, Under 
Secretary for International Commerce Luis Kreckler, and 
 
SIPDIS 
Director of North American Affairs Vicente Espeche Gil. 
Discussions focused on WTO negotiations, with Chiaradia 
stressing common interests in re-energizing the WTO process, 
asking for U.S. movement on agriculture 
 
 
domestic support issues, and offering to engage in Geneva on 
non-agricultural market access (NAMA) issues.  Movement on 
the Doha Round, Eissenstat noted, might give some impetus to 
the U.S. Congress' renewal of Trade Promotion Authority. 
Chiaradia suggested Argentina could contribute 
"constructively" to the WTO dialogue on services, but 
indicated that could only happen after resolution of 
agricultural market access issues.  Eissenstat appreciated 
Chiaradia's offer to engage on NAMA and stressed the need to 
move rapidly together to revitalize broad Doha Round 
negotiations. 
 
¶3. (SBU) On GSP, Eissenstat noted the administrative, 
objective and transparent nature of the ongoing program 
renewal review.  He stressed that Argentine media's 
presumption that our GSP review is a punishment linked to 
Argentina's WTO negotiating stance is simply not the case. 
Chiaradia called the GSP review "legitimate" but expressed 
concern that its end result might be "too extreme."  If 
Washington rumors that the U.S. will ultimately alter 
treatment of over 80% of products that currently receive GSP 
benefits are true, Chiaradia said, it would not be a renewal 
but rather an entirely new GSP program.  Mentioning four 
different draft GSP renewal bills currently under 
consideration by the U.S. Congress, Chiaradia said the GoA 
favors a proposal by House Ways and Means Chairman Bill 
Thomas that "focuses on CNL waivers but does not alter the 
basics of the GSP program."  Chiaradia noted the GoA's 
"measured" response (ref A) to the Federal Register public 
comment request, said the Argentine "government is not going 
to be the one to raise the level of difficulty" in the GSP 
debate, and concluded that the GoA would be "comfortable" 
with a modified GSP program not "disruptive to overall 
trade."  He also indicated that the GoA would be willing to 
work with the U.S. to dampen domestic political fallout if an 
eventual GSP renewal decision is interpreted unfavorably by 
the Argentine public. 
 
¶4. (SBU) Chiaradia asked for a briefing on AUSTR Eissenstat's 
trade discussions in Uruguay earlier that week (ref B). 
Eissenstat noted U.S. efforts to expand our bilateral trade 
dialogue with all/all trade partners, including Uruguay.  He 
understood Argentina and Mercosur members' interest in these 
discussions and expressed U.S. support for all WTO-consistent 
regional economic integration initiatives, including 
Mercosur, making clear that our ongoing discussions with the 
GoU are in no way meant to undermine broader Mercosur 
integration efforts.  Chiaradia responded, "You're trying to 
improve your relationship with Uruguay; we're trying to do 
the same."  He noted that the GoA has been following 
Uruguay's domestic debate on the relative costs and benefits 
of Mercosur membership, adding that Uruguay has long 
expressed dissatisfaction with internal Mercosur market 
distortions that have skewed industrial investment to the 
common market's larger members.  He added that rules of 
origin and local content remain particularly sensitive issues 
in a Mercosur customs union that has yet to perfect its 
common external tariff, and cited as an example Mercosur 
member concern over Uruguay's attempt to import bicycle kits 
 
 
from China to assemble and market internally to Mercosur 
partners.  As the only member of the Mercosur bloc that sees 
itself both as a small member (relative to Brazil) and a 
large member (relative to Uruguay and Paraguay), Chiaradia 
called Argentina sympathetic to Uruguay's industrial 
development concerns and its desire to deepen its bilateral 
trade dialogue with the U.S.  He closed repeating that the 
U.S. and Argentina have similar objectives in enhancing 
bilateral dialogues with Uruguay. 
 
¶5. (SBU) AUSTR Eissenstat explained that the U.S. had 
exchanged Bilateral Investment Treaty instruments of 
ratification with Uruguay, that the treaty will enter into 
effect in 30 days, and that we are now moving to launch Trade 
and Investment Framework Agreement (TIFA) negotiations as a 
follow-on step in deepening our bilateral dialogue.  In 
response, Chiaradia suggested that Argentina and the U.S. 
consider revitalizing our own Bilateral Committee on Trade 
and Investment (BCTI - last convened in the spring of 2004) 
as a vehicle to continue and deepen today's dialogue. 
Eissenstat promised to discuss the idea with Deputy USTR 
Veroneau. 
 
--------------------------------------- 
PRIVATE SECTOR - TROUBLE ON THE HORIZON 
--------------------------------------- 
 
¶6. (SBU) During a follow-on lunch with American Chamber of 
Commerce's Executive Committee members, several expressed 
concern about the Kirchner administration's macroeconomic and 
micro-price control policies.  A number focused on limited 
electricity sector generating capacity as a likely near term 
constraint on growth.  One noted that an energy conference 
planned for the next day, where criticism of GoA energy 
sector policies would have received media attention, was 
canceled due to pressure from President Kirchner.  A 
representative of Exxon added "Every day we get calls from 
government officials, demanding price rollbacks and otherwise 
intervening in our market."  A representative of Cargill 
questioned how Argentina would maintain its primary fiscal 
surplus when global commodity prices inevitably fall, since 
such a high percentage of GoA revenue depended on export 
tariffs.  He also expressed doubt about the future of 
MERCOSUR, noting that "with the incorporation of Venezuela, 
the picture is much more messy." 
 
¶6. (SBU) AmCham Board members asked about U.S. TIFA 
negotiations with Uruguay, which Eissenstat explained were 
based on Uruguay's own interest and efforts to move forward 
on bilateral trade and investment opportunities.  In response 
to a question on why the U.S. has chosen to pursue bilateral 
agreements with Latin American nations rather than the 
hemispheric FTAA, Eissenstat explained that the U.S. 
continues to pursue all available multilateral, regional and 
bilateral opportunities to lower trade barriers and promote 
international commerce. 
 
¶7. (SBU) AUSTR Eissenstat later attended an Embassy-hosted 
reception with representatives of U.S. companies with patent, 
 
 
copyright and trademark intellectual property concerns.  He 
also provided a group interview to reporters from newspapers 
La Nacion, Clarin and Cronista Comercial.  Articles based on 
the interview on October 5 focused on WTO, Mercosur and GSP 
themes.  Transcripts have been forwarded to USTR and the 
Department. 
 
------- 
COMMENT 
------- 
 
¶8. (SBU) AUSTR Eissenstat's visit offered a worthwhile 
opportunity to re-engage with the GoA on bilateral and 
regional trade issues.  Chiaradia's remarks in our meeting 
were forthcoming and his offer to engage on NAMA issues 
welcome.  His comments on GSP and TPA made it clear that the 
GoA is closely following the political debate in Washington. 
AUSTR Eissenstat's description of his discussions in Uruguay 
and our steps to pursue TIFA (rather than full FTA) 
negotiations were an obvious relief to GoA trade officials, 
given the concern Chiaradia had earlier expressed (ref A) 
that Mercosur disciplines and integrity be maintained.  For 
their part, U.S. private sector representatives were hopeful 
that this renewed USTR engagement with the GoA and a U.S./GoU 
TIFA dialogue might together help encourage the GoA to seek 
to improve Argentine trade and investment disciplines. 
Continued high-level trade dialogue is all to the good, and 
post strongly supports a revitalization of the Bilateral 
Committee on Trade and Investment as a vehicle to re-engage 
the GoA on trade-related and investment climate concerns. 
 
¶9. (U) AUSTR Eissenstat has cleared this cable. 
MATERA