VZCZCXYZ0000
OO RUEHWEB

DE RUEHBU #1445/01 2071407
ZNR UUUUU ZZH
O 261407Z JUL 07
FM AMEMBASSY BUENOS AIRES
TO RUEHC/SECSTATE WASHDC IMMEDIATE 8744
INFO RUEHGV/USMISSION GENEVA IMMEDIATE 0646
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUCPDOC/USDOC WASHINGTON DC
RUEHRC/DEPT OF AGRICULTURE USD FAS WASHINGTON DC
RUEHC/DEPT OF LABOR WASHINGTON DC
RHMFIUU/HQ USSOUTHCOM MIAMI FL
RUEHAC/AMEMBASSY ASUNCION 6398
RUEHMN/AMEMASSY MONTEVIDEO 6610
RUEHSG/AMEMBASSY SANTIAGO 0620
RUEHBR/AMEMBASSY BRASILIA 6260
RUEHLP/AMEMBASSY LA PAZ AUG CARACAS 1373
RUEHSO/AMCONSUL SAO PAULO 3440
RUEHRI/AMCONSUL RIO DE JANEIRO 2281

UNCLAS BUENOS AIRES 001445 
 
SIPDIS 
 
SIPDIS 
SENSITIVE 
 
GENEVA PASS TO USG WTO DELEGATION 
EEB FOR DAS CHRIS MOORE 
EEB/TPP/MTA FOR BILL CRAFT AND CHEVER VOLTMER 
PASS NSC FOR DPRICE, MSMART 
PASS USTR FOR KATHERINE DUCKWORTH AND MARY SULLIVAN 
PASS FED BOARD OF GOVERNORS FOR PATRICE ROBITAILLE 
TREASURY FOR NLEE AND LTRAN 
USDOC FOR 4322/ITA/MAC/OLAC/PEACHER 
US SOUTHCOM FOR POLAD 
 
E.O. 12958: N/A 
TAGS: ETRD WTRO PREL AR
SUBJECT: ARGENTINA: DOHA NAMA TEXT UNACCEPTABLE AS BASIS FOR 
NEGOTIATON 
 
Ref:  BUENOS AIRES 1363 
 
------- 
Summary 
------- 
 
¶1. (SBU) The GoA views the current Doha Non-Agricultural Market 
Access (NAMA) Modalities text presented by NAMA Committee Chair 
Stevenson wholly "unacceptable as a basis for negotiations" 
according to senior Argentine trade officials.  They argue it fails 
to reflect the views of the NAMA 11, a developing economy group that 
includes Argentina, Brazil and India.  The GoA plans to make this 
point firmly during July 26-27 discussions in Geneva.  A key Foreign 
Ministry official offered that a way to move forward in Geneva would 
be to have WTO Director General Lamy publicly "takes note" of NAMA 
11 concerns expressed during the negotiating session, pledge to have 
them incorporated into a revised text, and declare that current 
negotiations will remain open in "permanent session" pending further 
discussion of a revised NAMA Modalities text in September. 
 
¶2. (SBU) Our GoA Foreign Ministry interlocutors contrast the 
unacceptable NAMA Modalities text with the Agriculture Modalities 
text which they say fairly represents all views.  The NAMA 11's 
Swiss 35 coefficient proposal would, according to the GoA, result in 
a maximum Mercosur bound rates of 17% and a decrease in applied 
rates for 25% of Argentine tariff lines that account for 37% of 
Argentine import value.  The Foreign Ministry emphasized that, while 
the NAMA text's 19 - 23 Swiss coefficient is politically 
unacceptable to Argentina's domestic constituencies ("The President 
would fire me," declared the Foreign Ministry's top trade official), 
the NAMA 11's Swiss 35 counter-proposal should not be taken as a 
final take-it-or-leave it option.  Rather it should be acknowledged 
and appreciated in Geneva for the significant impact it will have on 
currently applied Argentine tariffs.  Separately, the EU Ambassador 
said he thinks the Argentines could probably live with a Swiss 30 
coefficient but they will not accept the 19 - 23 range in the 
current text.  End Summary 
 
 
--------------------------------------------- - 
NAMA Modalities Text Excludes NAMA 11 Concerns 
--------------------------------------------- - 
 
¶3. (SBU) Ambassador and Econ Counselor met July 25 with Nestor 
Stancanelli, Ambassador and Director of the Foreign Ministry's 
International Economic Negotiations Directorate, and with Minister 
Luis Niscovolos, Director of Multilateral Economic Negotiations to 
follow-up on Argentina's position in upcoming Geneva Doha talks this 
week.  This conversation followed the Ambassador's July 24 phone 
conversation with Deputy Foreign Minister Roberto Garcia Moritan 
urging cooperation in Geneva.  According to Stancanelli, the NAMA 
Modalities draft has been presented by NAMA Committee Chair 
Stevenson as a "final outcome" fait accompli rather than as a 
starting point for further negotiations, wholly disregarding ongoing 
discussion with NAMA 11 members.  The NAMA 11 represents the larget 
single developing country group in terms of consolidated trade and 
GDP, Stancanelli said, and their voice must be acknowledged. 
 
¶4. (SBU) Stancanelli called Stevenson neither a fair nor a helpful 
NAMA Committee chair/interlocutor for tabling this one-sided text, 
adding that this is also the WTO Secretariat's thinking expressed 
during private discussions in Geneva last week.  The current NAMA 
Modalities text, he said, stands in stark contrast to the 
Agricultural Modalities text:  While there remains "much to change 
and correct" in the Agriculture text, especially vis a vis the EU's 
positions, Stancanelli commended this text as reflecting input from 
all of WTO members and so is a basis to keep negotiating. 
 
------------------------------------------- 
NAMA 11 Proposal "Ambitious and Aggressive" 
------------------------------------------- 
 
¶5. (SBU) The NAMA Chair's proposed 19 - 23 Swiss coefficient ceiling 
ignores NAMA country realities and sensitivities, Stancanelli said. 
The NAMA 11's Swiss 35 coefficient counter-proposal will result in a 
46.7% cut in overall NAMA bound rates and a slightly larger 48% cut 
in bound rates for Mercosur members.  Beyond mere water cuts, the 
Swiss 35 proposal would eventually result in a maximum Mercosur 
bound rates of 17% and a decrease in applied rates for 25% of 
Argentine tariff lines that account for 37% of Argentine import 
value. 
 
¶6. (SBU) Stancanelli emphasized that the Swiss 35 proposal should 
not be taken as a final take-it-or-leave it option, but rather 
should be appreciated for the significant impact it will have on 
currently applied Argentine tariffs.  He added that U.S. foreign 
direct investors in Argentina (e.g. the auto sector's Ford and GM) 
have optimized regional production to benefit from Mercosur common 
external tariff and would be hurt by NAMA tariff cuts, along with 
Argentine industry.  The common threat to Argentine and U.S. 
interests here, he offered, comes from China and others, with 
Chinese imports to Argentina up 45% over the last year alone. 
 
¶7. (SBU) On Paragraph 7 developing country flexibilities, 
Stancanelli said Argentina would opt for the second option which 
allows for the outright exclusion of a percentage of tariff lines 
whose total value does not exceed a fixed percentage of 
non-agricultural imports.  He called the 5% of tariff lines and 5% 
of total value of non-agricultural imports in the NAMA Modalities 
text wholly inadequate to protect sensitive Argentine production of 
automobiles, textiles, toys, footwear and some chemical and 
petrochemical products.  Together, he said, these account for a 
substantially higher percentage of tariff lines and roughly 13-15% 
of the volume of Argentina's trade. 
 
--------------------------------------------- --------- 
Domestic Political Context: Swiss 19 - 23 "Impossible" 
--------------------------------------------- --------- 
 
¶8. (SBU) While the Hong Kong Declaration's Para 24 requires 
"comparable levels of ambition" in agricultural and NAMA tariff 
cuts, Stancanelli said, proposed agricultural cuts, with so many 
non-transparent conditions/exceptions, are hardly comparable to 
proposed NAMA reduction levels.  It is important for developed 
country interlocutors to understand, he said, that that the NAMA 
Chair's proposed Swiss 19 coefficient implies a 60% cut in Argentine 
bound rates - a level politically impossible to accommodate today in 
Argentina.  In contrast, the net 46.7% cut in overall NAMA bound 
rates implied by the NAMA 11's Swiss 35 proposal is doable in a 
domestic political context.  This considerable drop in NAMA tariffs 
should be celebrated -- not attacked -- by developed country WTO 
members, Stancanelli concluded, and at a minimum this point of view 
must be reflected in the NAMA text in order to move forward. 
Stancanelli admitted that there remains some differences on Geneva 
negotiating tactics among NAMA 11 members, but emphasized again that 
it is "impossible" for Argentina to accept the current NAMA draft 
text as a basis for negotiations. 
 
------------ 
Way Forward? 
------------ 
 
¶9. (SBU) Argentina wants negotiations to continue, Stancanelli said, 
and wants to avoid a drama in Geneva talks this week.  However, it 
will have to state at the meeting that the current NAMA language is 
"unacceptable as a basis for negotiations."  There is no/no GoA 
flexibility on this, he emphasized. While not all NAMA 11 members 
will take such a hard-line position, he said, Argentina assuredly 
will.  He reasoned that, if the NAMA Modalities document is accepted 
as it stands, the nature of WTO negotiations will give it both 
weight and inertia that will make it difficult to significantly 
modify in future discussions. 
 
¶10. (SBU) Stancanelli offered that a way forward would be to have 
Director General Lamy publicly "takes note" of NAMA 11 concerns 
expressed during the session, pledge to have them incorporated into 
a revised draft NAMA Modalities text, and declare that the current 
session will remain open in "permanent session" pending further 
discussion of a revised NAMA Modalities draft in September. 
 
--------------------- 
EU Ambassador's Views 
--------------------- 
 
¶11. (SBU) Ambassador spoke separately with the EC Ambassador who 
noted that, in an upcoming lunch of all EU ambassadors with Deputy 
Foreign Minister Garcia Moritan, they would press for Argentina to 
accept the NAMA text as a basis for negotiation and point out that 
Argentina has a lot to lose if the agricultural text does not move 
forward because NAMA is stuck.  However, the EC ambassador was not 
optimistic.  He said the GoA could probably live with a Swiss 30 
coefficient eventually, but will likely not accept the range in the 
current text.  He concluded that newly appointed GoA Economy 
Minister Peirano will likely not be helpful; he is in the camp of 
those who believe strongly in protecting local industry. 
 
------------------------------- 
Trade Under-Secretary Chiaradia 
------------------------------- 
 
¶12. (SBU) MFA Undersecretary Alfredo Chiaradia (Assistant 
Secretary-equivalent) called Ambassador the morning of July 26 on 
 
SIPDIS 
his return to the country.  He said regarding the NAMA text "there 
are some things we cannot go beyond politically."  "While Lamy and 
Mandelson may want an agreement at all costs, Argentina can't be as 
flexible.  If I were to go the President with an accord that 
includes higher than 50% (NAMA) tariff cuts, I would be fired," he 
concluded.  "We want an agreement, but it needs to be reasonable." 
 
¶13. (U) To see more Buenos Aires reporting, visit our classified 
website at:  http://www.state.sgov.gov/p/wha/buenosaires.< /a> 
 
 
WAYNE