VZCZCXYZ0020
PP RUEHWEB

DE RUEHPE #0460/01 0471734
ZNR UUUUU ZZH
P 161734Z FEB 07
FM AMEMBASSY LIMA
TO RUEHC/SECSTATE WASHDC PRIORITY 4015
RUEHRC/USDA FAS WASHDC 1603

UNCLAS LIMA 000460 
 
SIPDIS 
 
USDA/OCRA/OFSO 
USTR FOR BENNETT HARMAN 
AMEMBASSY BOGOTA 
AMEMBASSY QUITO 
AMEMBASSY LA PAZ 
 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: EAGR EAID ETRD BEXPC PE SNAR
 
SUBJECT: SMALL FARMER GROUPS ALSO WANT TO RENEGOTIATE PTPA 
 
 
¶1.  (U) SUMMARY. With the U.S. Congress asking whether there should 
be enhancements to the labor provisions of the PTPA, a minority 
group of farm journalists, academics and small farmers have begun to 
call for the renegotiation of the PTPA.  Overall support among 
Peruvians for the PTPA remains strong, yet these groups, some of 
whom had been active opponents before the Peruvian Congress voted 
79-14 last June to approve the PTPA, argue that the delayed 
consideration of the PTPA by the U.S. Congress presents an 
opportunity to correct "mistakes" made in negotiating the agreement. 
Some have visited Members of the U.S. Congress and one of the 
organizations, Conveagro, has written an open letter to the 
Congress.  As PTPA ratification is delayed, the Peruvian government 
may see more vocal opposition to the current agreement from small 
farmers.    END SUMMARY. 
 
 
PERUVIAN AG INTERESTS ARGUE FOR ADDENDUMS TO PTPA 
--------------------------------------------- ---- 
¶2.  (U) Recent press articles in farm journals and in mainstream 
newspapers have begun urging the government to reconsider certain 
agricultural agreements in the PTPA.  With the PTPA's consideration 
delayed in the U.S. Congress, some agricultural leaders and 
academics believe that Peru has a second chance to correct its 
"mistakes" in negotiating the agricultural section of the PTPA. 
 
IF LABOR IS BEING LOOKED AT AGAIN, WHY NOT AGRICULTURE? 
--------------------------------------------- -- 
¶3.  (U) Many of those calling for renegotiation had actively opposed 
the PTPA during the Toledo Administration. This includes Luis 
Zuniga, the president of small farmers group Conveagro and a member 
of the President's APRA party, who lost his 2006 bid for a 
Congressional seat.   However, most critics of the agriculture 
chapter admit that the overall PTPA benefits to Peru are so great 
that they outweigh the agricultural drawbacks and that the country 
should stand behind the agreement so that it is enacted without 
delay.  Nevertheless, with the recent media focus here on the 
possible re-opening of the labor chapter in the PTPA, these contacts 
also argue that the agriculture chapter should also be reconsidered. 
 
 
COUNTERING U.S. SUBSIDIES 
------------------------- 
¶4.  (U) Those arguing for renegotiation believe that critical 
agricultural issues, such as excessive U.S. agricultural subsidies, 
need to be addressed via an addendum to the agreement or a side 
letter.  They argue that subsidized U.S. agricultural products will 
flood Peru's markets and ruin the Peruvian agricultural sector, and 
that free access to Peru's markets for competing U.S. products must 
be prevented.  Specifically, they are trying to enlist support for a 
side agreement or addendum that will allow protectionist measures to 
remain in place so long as the United States maintains agricultural 
subsidies.  Others have also argued for permanent safeguards for 
certain products, for delayed access to Peru's most sensitive 
markets, and for a revision of intellectual property agreements in 
the PTPA.  These strategies seek to protect Peruvian farmers, mostly 
small farmers - seen as the biggest losers in the PTPA - and 
insulate them from the perceived distortions created by U.S. 
agricultural subsidies. 
 
¶5.  (U) In a January 14 letter to the U.S. Congress, Conveagro 
raised a number of concerns regarding PTPA and argued that the 
agreement must be renegotiated to prevent "social conflicts" from 
arising, which could then force those adversely affected by the PTPA 
to migrate to the jungle regions and shift to coca production. 
Conveagro states that the majority of Peru is opposed to PTPA and 
that fairness dictates that the agreement be renegotiated to: 
prevent the reintroduction of agricultural subsidies as permitted in 
Article 2.16, delay tariff elimination until U.S. agricultural 
subsidies cease, allow the application of safeguards during the 
lifetime of PTPA as well as increase the number of sensitive 
products that may be protected via safeguards, and allow Peru to 
maintain its price band system. 
 
¶6.  (U) The Peruvian government has committed itself to pay 
compensation to farmers displaced by key U.S. exports of wheat, 
corn, and rice.  However, opponents of the PTPA believe that the 
promises of compensation for farmers will amount to little, if 
anything at all.  Contacts from the dairy sector as well as 
agricultural leaders that were opposed to the agriculture chapter 
during negotiations specifically noted that the proposed 
compensation amounts continue to decrease. 
 
¶7.  (SBU) Officials within the Ministry of Agriculture's 
Agricultural Planning Office have told us that compensation payments 
would involve only a slight increase from the payments currently 
being disbursed through SUNAT's (Peru's IRS) "formalization" program 
for the sensitive products of cotton, yellow corn, and wheat.  (The 
GOP is paying producers to keep records of sales and other 
transactions to assist them in better understanding the movement of 
specific crops and, more importantly, to tax their sales.)  The 
officials noted that while a few other crops might require 
compensation as well, the GOP could convert the expiring 
"formalization" payments into compensation and that it already had 
an effective payment infrastructure in place. 
 
COMMENT 
------- 
¶8.  (SBU) Many, if not most, of those calling for renegotiation, 
have opposed the PTPA from its inception.  The current criticisms 
may come as a result of uncertainty over compensation payments for 
certain sensitive commodities, which could counterbalance the 
potential adverse effects to Peruvian small farmers.  Our Ministry 
contacts have assured us that compensation will be available, yet 
many in the agricultural sector still fear that the payments will be 
inconsequential at best.  Nevertheless, the increasing calls for 
side letter agreements or addenda from the farm sector could still 
delay the implementation of the PTPA.  While it is unlikely that 
President Garcia will agree to pursue additional addendums, the 
agreement as a whole could face increased dissent domestically if 
calls for agricultural revisions increase and Congressional 
consideration of PTPA continues to be delayed.  Should this occur, 
the PTPA's chances for successful passage and implementation would 
be further endangered.  This prospect adds urgency to U.S. 
Congressional consideration of PTPA for the Garcia Administration, 
Peruvian exporters, and U.S. supporters of PTPA. 
STRUBLE