VZCZCXYZ0009
OO RUEHWEB

DE RUEHSO #0160 0591245
ZNR UUUUU ZZH
O 281245Z FEB 07
FM AMCONSUL SAO PAULO
TO RUEHC/SECSTATE WASHDC IMMEDIATE 6487
INFO RHEHNSC/NATIONAL SECURITY COUNCIL WASHDC IMMEDIATE
RUEHBR/AMEMBASSY BRASILIA PRIORITY 7591
RUEHRI/AMCONSUL RIO DE JANEIRO PRIORITY 7843
RUCPDOC/USDOC WASHDC 2724

UNCLAS SAO PAULO 000160 
 
SIPDIS 
 
SIPDIS 
 
STATE INR/R/MR; IIP/R/MR; WHA/PD 
 
DEPT PASS USTR 
 
USDOC 4322/MAC/OLAC/JAFEE 
 
E.O. 12958: N/A 
TAGS: KMDR OPRC OIIP ETRD BR
SUBJECT: MEDIA REACTION: WESTERN HEMISPHERE: MERCOSUL, BRAZIL AND 
URUGUAY-US FREE TRADE; SAO PAULO 
 
 
¶1. "Action In The Americas" 
 
The lead editorial in liberal, largest national circulation daily 
Folha de S. Paulo (2/28) commented: "Brazilian concessions during 
President Lula's visit to Uruguay are in the right direction, but 
should not be considered a solution for Mercosul's erosion.... 
Uruguay's threat of establishing a free-trade agreement with the US 
is a mere symptom of a larger crisis. Not only a symptom, but also a 
pretext because the chances of an agreement with the world's biggest 
economy have narrowed since the Democrats resumed control of the 
Congress.... The fact that Brazilian diplomacy has begun to act is 
good news. The concessions to Uruguay are relatively as modest as 
Uruguay's weight in the bloc is. What is of greatest interest to the 
companies in Mercosul's four founding members countries is that the 
region really works as a free-trade zone. It is up to Brazil to lead 
in taking institutional actions aimed at reinforcing and 
consolidating such an environment.... Brazil's responsibility, 
however, goes far beyond that. The nation's awakening to foreign 
trade has reduced the relative importance of Mercosul with regards 
to Brazilian imports and exports.... Brazil lacks a comprehensive 
initiative to make possible the opening of its market to 
manufactured goods. The attempt to unite South American nations as a 
tactic antagonistic to Washington's policy of establishing bilateral 
agreements in the region failed. The growth of trade in the Americas 
would have more chances of being realized with an agreement that 
involved the US." 
 
¶2. "Uruguay's Sorrows Persist" 
 
The lead editorial in center-right national circulation daily O 
Estado de S. Paulo (2/28) opined: "President Lula's visit to Uruguay 
has been presented by his administration as a success. Ten days 
before President Bush's visit to Montevideo, Lula would appear that 
he has convinced President Tabar Vzquez not to sign a free-trade 
agreement with the US. If that agreement were signed and ratified, 
Uruguay could not continue to be a member of Mercosul due to 
complete incompatibility with the bloc's norms.... President Vzquez 
is aware that his nation is not among the priorities of Brazil's 
foreign policy. And President Lula never concealed that Montevideo 
is not among his main concerns.... The agreements Lula signed in 
Montevideo would never compensate for the opportunities Uruguay 
would have with a privileged trade relationship with the US.... 
Uruguayans were not convinced by Lula's discourse. If they will not 
insist on a free-trade agreement with the US the reason for that is 
simple and realistic: the powers the Congress attributed to 
president Bush to negotiate trade agreements no longer exist." 
McMullen