VZCZCXRO2901
PP RUEHBI RUEHCI
DE RUEHCI #0129/01 1081024
ZNR UUUUU ZZH
P 181024Z APR 07
FM AMCONSUL KOLKATA
TO RUEHC/SECSTATE WASHDC PRIORITY 1512
INFO RHEHAAA/WHITE HOUSE WASHINGTON DC
RHEHAAA/NATIONAL SECURITY COUNCIL WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEHRC/DEPT OF AGRICULTURE USD FAS WASHINGTON DC
RUEHRC/DEPT OF AGRICULTURE WASHINGTON DC
RUCNDT/USMISSION USUN NEW YORK PRIORITY 0033
RUEHGV/USMISSION GENEVA PRIORITY 0039
RUEHNE/AMEMBASSY NEW DELHI PRIORITY 1430
RUEHCG/AMCONSUL CHENNAI 0629
RUEHBI/AMCONSUL MUMBAI 0623
RUEHKA/AMEMBASSY DHAKA PRIORITY 0403
RUEHGO/AMEMBASSY RANGOON 0262
RUEHKT/AMEMBASSY KATHMANDU 0409
RUEHIL/AMEMBASSY ISLAMABAD 0332
RUEHBUL/AMEMBASSY KABUL 0051
RUEHLM/AMEMBASSY COLOMBO 0169
RUEIDN/DNI WASHINGTON DC
RHMFIUU/CDR USPACOM HONOLULU HI
RUEHCI/AMCONSUL KOLKATA 1863

UNCLAS SECTION 01 OF 04 KOLKATA 000129 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
DEPT PASS TO USTR - DHARTWICK/CLILIENFELD/AADLER 
DEPT PASS TO TREASURY FOR OFFICE OF SOUTH ASIA - ABAUKOL 
USDOC FOR 4530/ITA/MAC/OSA/LDROKER/ASTERN 
 
E.O. 12958: N/A 
TAGS: ECON EINV EAGR ETRD PREL PGOV SOCI EAID IN
SUBJECT: USTR AMBASSADOR SCHWAB MEETS WEST BENGAL CHIEF MINISTER AND 
LOCAL FARMERS 
 
REF: A)  NEW DELHI 1771   B)  NEW DELHI 1774 
 
KOLKATA 00000129  001.2 OF 004 
 
 
¶1.   (SBU) Summary:   On April 14 U.S. Trade Representative 
(USTR) Ambassador Susan Schwab visited West Bengal (WB) to 
understand local views on India's trade interests and the 
conditions of its agricultural sector.  During her visit, Amb. 
Schwab met with WB Chief Minister (CM) Buddhadeb Bhattacharjee, 
visited a successful PepsiCo/Frito-Lay factory and interacted 
with farmers and villagers at a local agricultural center.  In 
his conversation with Amb. Schwab, CM Bhattacharjee quickly 
acknowledged the importance of globalization and the need to 
increase trade between the U.S. and India.  He believed that 
"protectionism would not work," and Ambassador Schwab encouraged 
the CM, who has a close relationship with PM Manmohan Singh, to 
send that message to officials in New Delhi.  At the Frito-Lay 
factory, Ambassador Schwab saw how U.S. investment has helped to 
provide stable incomes for local farmers and has enhanced 
agricultural productivity.  While at an agricultural center run 
by a local non-government organization (NGO) Ramakrishna 
Mission, Amb. Schwab learned about the condition of local 
farmers:  that the average farm is less than one acre in size 
and that farm incomes are marginal.  Amb. Schwab's visit allowed 
her to hear firsthand that state officials are more open to 
trade than the position put forward by Union Commerce and 
Industries Minister Kamal Nath and that potentially state 
leaders like CM Bhattacharjee can be used to encourage greater 
GOI flexibility on economic reform and trade negotiations.   End 
Summary. 
 
 
 
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---------------------------------- 
 
West Bengal Chief Minister Favorable to Trade and Commerce With 
the U.S. 
 
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---------------------------------- 
 
 
 
¶2.   (SBU) USTR Amb. Schwab led a delegation of USTR officials, 
including Deputy USTR Amb. Peter Allgeier and Assistant USTR 
Amb. Douglas Hartwick, to Kolkata, WB on April 14 for a one-day 
visit to better understand local perspectives on trade 
relations.   WB has one of the fastest growing state economies 
in India and is a leading agricultural producer.  It is governed 
by the Communist Party of India (Marxist), which supports the 
national ruling United Progressive Alliance (UPA) from outside 
the coalition, giving the CPM a significant degree of influence 
over national policies.  The state's role in agriculture, a key 
issue in trade negotiations with India, and the high profile of 
pro-economic reform, CM Bhattacharjee provided an excellent 
opportunity to convey a pro-trade agenda that will hopefully 
resonate at the national level. 
 
 
 
¶3.  (SBU) Amb. Schwab spoke with CM Bhattacharjee at his offices 
for almost an hour, and he was very positive about the need for 
promoting greater Indo-U.S. trade.  The CM noted that 
"globalization is a must" and that no country should avoid the 
process as "protectionism would not work."  He believed that 
developing countries required a level playing field to compete 
and added that this was a key issue for trade relations. 
However, India should be responsive to expanding trade. 
Bhattacharjee noted that the CPM opposed strategic cooperation 
with the U.S. and questioned the civil nuclear agreement but 
 
KOLKATA 00000129  002.2 OF 004 
 
 
that close commercial relations would be beneficial.  He knew 
that Amb. Schwab was to visit a Frito-Lay factory and described 
it as a success and added that many U.S. IT companies were also 
present in WB, such as IBM, Apple and Cognizant.  The CM 
mentioned that WB was interested in the potential to export 
mangoes and other fruit as well as leather goods.  The CM 
commented that he was considering traveling to the U.S. but that 
he wanted to have specific business agreements to sign should he 
go.  He was anxious to have Dow Chemical and Boeing Aircraft 
establish a business presence in WB.   He was also pursing 
educational cooperation with Berkeley University and the 
Massachusetts Institute of Technology (MIT). 
 
 
 
¶4.   (SBU) Amb. Schwab asked for CM Bhattacharjee's views on the 
agriculture sector in India and the fact that almost 600 million 
people are dependent on agriculture, and yet it contributes just 
approximately a quarter of the Gross Domestic Product (GDP). 
Bhattacharjee said some effort needs to be made to help the 
farmers, citing farmer suicides in Maharastra and Andhra 
Pradesh.  Amb. Schawb noted that Minister Nath was reluctant to 
open India's agriculture market.  CM Bhattacharjee saw only 
three products that were problematic:  cotton, sugar and ground 
nuts; crops which WB and many other states did not produce to a 
large extent, which meant that there was room for "give and 
take" in discussions on agriculture.  Amb. Schwab asked CM 
Bhattacharjee to convey that message to Minister Nath and to the 
Prime Minister.  CM Bhattacharjee commented that Finance 
Minister Chidambaram and PM Singh would push reforms forward and 
hopefully bring some flexibility to the trade negotiations. 
 
 
 
¶5.  (SBU) Turning to financial services, Ambassador Schwab noted 
that permitting greater FDI in this sector would benefit India's 
ability to generate funds to step up much needed investment in 
infrastructure.  "West Bengal itself would benefit 
significantly," she stated.  The Chief Minister listened 
intently but responded simply that financial sector reforms were 
proceeding although somewhat slowly. 
 
 
 
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Frito-Lay Improves Farmers' Incomes and Lives 
 
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¶6.  (U) Following the meeting with the Chief Minister, Amb. 
Schwab and delegation visited PepsiCo's Frito-Lay factory, 
located in Howrah district, about 20 km from Kolkata.  The 
factory has been successful in addressing the fundamental 
problem of creating efficiencies of scale, in a state where the 
average farm is only about an acre in size.  Frito-Lay organized 
cooperatives with local farmers and through formal contracts has 
guaranteed incomes.  PepsiCo officials led by Operations 
Director Samiran Das briefed Amb. Schwab about the factory and 
its experience.  The delegation then took a tour of the 
facilities and spoke with farmers who supply potatoes to the 
factory.  Amb. Schwab was briefed on the contractual agreement 
between the farmers' groups and the company and how such 
contracts have resulted in greater returns compared to earlier, 
when they had to sell the harvest to middlemen at fluctuating 
prices.  Starting with 140 farmers and 700 acres in 2003, 
 
KOLKATA 00000129  003.2 OF 004 
 
 
Frito-Lay is now working with 4,000 farmers including 1,700 
under 10 cooperatives and 13,000 plots totaling 2,100 acres. 
Farm practices have improved, with inputs and guidance from 
Frito-Lay, helping the farmers to increase the productivity and 
the quality of their potatoes. 
 
 
 
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Ramakrishna Mission Agriculture Center Provides a Window on 
Farmers' Lives 
 
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------------------------------------- 
 
 
 
¶7.   (U)  To better understand the plight of the average farmer 
and village family and to demonstrate her interest in their 
well-being to local press covering the event, Amb. Schwab 
visited a 20-acre agricultural center located in Arapanch 
village, about 30 km south of Kolkata in South 24 Parganas 
district.  The NGO Ramakrishna Mission runs the center to 
provide agricultural and vocational training, as well as basic 
public health and education assistance.  In 2004, Mission 
India's Public Affairs Office provided USD 54,000 for model 
agricultural projects.  Amb. Schwab spoke with the farmers, met 
women's self help groups and pre-school children.  The farmers 
explained to Amb. Schwab that the average farm size around 
Arapanch is about half an acre.  These farms usually have to 
support 4-5 people.   The village is located on the outer fringe 
of the Sunderbans delta and suffers from brackish water.  As a 
result, Arapanch and its surrounding areas are usually 
water-stressed, yielding just a single rice crop a year.  The 
center educates local farmers about sustainable farming 
technology, water harvesting, and multi-cropping.  Due to the 
training, Arapanch fields now produce sunflower, pulses and 
vegetable along with its traditional rice crop.  Multi-cropping 
has helped to increase the farmers' meager incomes of 
approximately USD 150 per month and has given them greater 
security by allowing for cultivation throughout the year. 
 
 
 
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Indian State Leaders Can Carry the U.S. Trade Message 
 
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¶8.  (SBU) Comment:  CM Bhattacharjee's desire for more trade 
with the U.S. and his view that trade negotiations between India 
and the U.S. required more "give and take" reflected a greater 
flexibility and positive disposition than evidenced by the GOI 
position typically put forward by Minister Nath.  Given 
Bhattacharjee is a leading figure in the often anti-U.S. CPM and 
a member of the party's Politburo, his receptive views on trade 
with the U.S. further underlines the rigidity of the GOI trade 
position.  In addition, disputes over specific crops subsidies, 
such as on sugar or cotton, do not resonate with all states in 
India.  Bhattacharjee intimated in his comments to Amb. Schawb 
that he did not see why differences over cotton for example 
 
KOLKATA 00000129  004.2 OF 004 
 
 
should block future trade negotiations.  The interaction with CM 
Bhattacharjee highlighted the potential value in engaging with 
state-level leaders, who take a more practical position on trade 
matters, and to have them lobby the GOI leadership to moderate 
its position on future trade negotiations.  State leaders may 
help to carry a message to the GOI that their constituencies 
would suffer, if trade negotiations in the World Trade 
Organization's (WTO) Doha round failed. 
 
 
 
¶9.  (U)  This cable was cleared by Ambassador Schwab's 
delegation.JARDINE