VZCZCXRO4277
PP RUEHCD RUEHGD RUEHHO RUEHMC RUEHNG RUEHNL RUEHRD RUEHRS RUEHTM
DE RUEHME #1333/01 1231835
ZNR UUUUU ZZH
P 021835Z MAY 08
FM AMEMBASSY MEXICO
TO RUEHC/SECSTATE WASHDC PRIORITY 1681
INFO RUEHXC/ALL US CONSULATES IN MEXICO COLLECTIVE PRIORITY
RUEHBO/AMEMBASSY BOGOTA PRIORITY 4051
RUEHGT/AMEMBASSY GUATEMALA PRIORITY 3691
RUEHPE/AMEMBASSY LIMA PRIORITY 1548
RUEHMU/AMEMBASSY MANAGUA PRIORITY 1025
RUEHZP/AMEMBASSY PANAMA PRIORITY 2311
RUEHQT/AMEMBASSY QUITO PRIORITY 1366
RUEHSJ/AMEMBASSY SAN JOSE PRIORITY 1822
RUEHSN/AMEMBASSY SAN SALVADOR PRIORITY 2580
RUEHSG/AMEMBASSY SANTIAGO PRIORITY 0623
RUEHDG/AMEMBASSY SANTO DOMINGO PRIORITY 0764
RUEHTG/AMEMBASSY TEGUCIGALPA PRIORITY 1778
RULSDMK/DEPT OF TRANSPORTATION WASHINGTON DC PRIORITY
RUEATRS/DEPT OF TREASURY WASHINGTON DC PRIORITY
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC PRIORITY
RUEAHLA/DEPT OF HOMELAND SECURITY PRIORITY
RUEHRC/DEPT OF AGRICULTURE WASHINGTON DC PRIORITY
RHEHNSC/NSC WASHINGTON DC PRIORITY

UNCLAS SECTION 01 OF 03 MEXICO 001333 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR A/S SHANNON AND A/S SULLIVAN 
STATE FOR WHA/MEX, WHA/EPSC, EB/TPP 
USDOC FOR A/S BOHIGIAN 
USDOC FOR 4320/ITA/MAC/WH/ONAFTA/GERI WORD 
TREASURY FOR IA (LUYEN TRAN, RACHEL JARPE) 
DHS FOR CBP/PSO/MARTINEZ_FONTS 
NSC FOR RICHARD MILES, DAN FISK 
STATE PASS TO USTR (EISSENSTAT/MELLE) 
STATE PASS TO FEDERAL RESERVE (ANDREA RAFFO) 
STATE PASS TO GSA/PEPPLER 
 
E.O. 12958: N/A 
TAGS: ETRD ECON PBTS KTEX EAGR MX
SUBJECT: MEXICO EAGER FOR TANGIBLE PROGRESS ON AGP AND 
BORDER FACILITATION BEFORE JANUARY 2009 
 
REF: (A) 08 SECSTATE 41895 (B) 07 MEXICO 6186 
 
Summary 
-------- 
 
¶1. (SBU) Top Mexican trade officials are anxious to register 
concrete progress on the Alliance for Growth and Prosperity 
(AGP) and the Joint Border Facilitation Working Group (BFWG) 
before the end of President Bush's second term.  They also 
want to institutionalize these sorts of cooperative 
structures, including the Security and Prosperity Partnership 
(SPP), as much as possible to ensure that they survive the 
transition to the next U.S. Administration.  In the meantime, 
Mexico recently hosted a meeting of the Pacific Arc Forum in 
Cancun at which the eleven participating Latin countries 
agreed to advance their efforts on cumulation of origin among 
common free trade partners and examine possibilities of 
convergence in other areas.  Mexico was disappointed by the 
failure of the Dominican Republic to pass legislation needed 
for implementation of the CAFTA-DR textile cumulation 
mechanism in time for an announcement in New Orleans, and 
asked for the U.S. re-consider its position on this issue. 
End summary. 
 
¶2. (U) On April 29 Econ MinCouns and EconOff met with Beatriz 
Leycegui, Under Secretary of International Trade Negotiations 
for the Ministry of Economy, Juan Carlos Baker, her Director 
General for NAFTA, and Roberto Zapata, her Director General 
for Multilateral Affairs.  In addition to delivering 
demarches on the U.S. WTO re-manufacturing initiative and 
U.S. priorities for APEC 2008 (Mexican responses to these 
will be reported separately), we discussed at length Mexican 
views on various initiatives aimed at greater bilateral and 
hemispheric economic integration. 
 
Shrinking Window of Opportunity with U.S.? 
------------------------------------------ 
 
¶3. (SBU) Leycegui and her colleagues expressed great interest 
in the ongoing U.S. election campaign and noted the beating 
that trade in general and NAFTA in particular have taken in 
the Democratic primary.  Leycegui asserted that this was why 
it was so important to strengthen the institutional framework 
for promoting greater economic integration in the few months 
remaining before the next President takes office.  Econ 
MinCouns noted the commitment expressed by Secretaries Rice, 
Espinosa, and Bernier at their April 8 meeting in Washington 
to support the AGP (REF A).  Leycegui agreed that the U.S. 
and Mexico are natural AGP partners, but noted that, while 
the State Department seemed enthusiastic, USTR naturally had 
passage of the pending Colombia, Panama and Korea FTAs at the 
top of its list of priorities.  Nonetheless, she proposed 
selecting one or two easily-accomplished AGP proposals, like 
the idea for English language training raised during the 
November 2007 visit of Assistant Secretaries Sullivan and 
Lowery (REF B), and making a serious effort to achieve 
concrete progress that would give some legitimacy to the AGP 
that might help it survive the transition to the next U.S. 
administration.  Leycegui emphasized that Mexico stood ready 
to support concrete AGP proposals from the U.S. side.  She 
also planned to call Commerce A/S Bohigian soon to discuss 
 
MEXICO 00001333  002 OF 003 
 
 
doing something similar on the BFWG, i.e., picking one or two 
specific projects that the two sides could make visible 
progress on before January 2009 in order to demonstrate the 
value of this group to the next occupant of the White House. 
Leycegui also proposed more joint tours of the border during 
that same time-frame.  She noted that, from the Mexican 
perspective, border facilitation had been one of the two 
major "prosperity pillar" commitments coming out of the April 
North American Leaders' Summit held in New Orleans.  The 
other was regulatory cooperation in the automotive and 
agri-business sectors.  With regard to the latter, she said 
U.S. and Mexican agriculture were complementary, with the 
U.S. specializing in grains and Mexico in fresh fruits and 
vegetables.  Both were extremely competitive in their 
respective areas, and thus it made sense to harmonize our 
sanitary and phyto-sanitary measures to improve our ability 
to export world-wide. 
 
Moving Ahead with Pacific Arc 
----------------------------- 
 
¶4. (SBU) Leycegui reported that the third meeting of the 
Pacific Arc Forum (PAF, a.k.a. Pacific Basin Initiative 
Forum) that took place in Cancun April 13-14 on the fringes 
of the World Economic Forum was a success.  The eleven 
participating economies were Colombia, Chile, Costa Rica, 
Ecuador, El Salvador, Guatemala, Honduras, Mexico, Nicaragua, 
Panama, and Peru.  She said that the group was still working 
on establishing cumulation of origin amongst common free 
trade partners with the ongoing assistance of the 
Inter-American Development Bank, and indicated that there was 
the possibility that formal negotiations on this topic could 
commence as early as the next PAF meeting, which Chile has 
agreed to host.  She said the group was also discussing 
convergence in other free trade disciplines.  Asked about 
chances for achieving real results, Leycegui said the PAF 
does not require the approval of all its members for moving 
on any particular initiative.  Rather, those interested in 
forging ahead are free to do so, with others reserving the 
right to join up later.  She said that Mexico, Colombia, Peru 
and Chile were at present the most gung-ho, and that 
hopefully they would be able to produce substantial results 
in integrating their FTAs that others, especially the U.S., 
would be able to dock onto once their respective domestic 
politics allowed. 
 
Disappointed on Textiles Cumulation 
----------------------------------- 
 
¶5. (SBU) A major disappointment for  Mexico at New Orleans 
was the failure of the lower house of the Dominican 
Republic's legislature to approve the amendment to its trade 
laws that would have permitted the activation of the textile 
cumulation provisions in the U.S. and Mexican FTAs with the 
Centrals/DomRep.  Mexico had been hoping to annouce at the 
Leaders' Summit the entry into force of these provisions, 
which would have permitted the duty-free export to the U.S. 
market of Centrals/DomRep apparel that made use of Mexican 
textile inputs, and vice versa.  According to Leycegui, the 
Dominican Republic determined that it could extract 
additional concessions from the U.S. that would take some 
 
MEXICO 00001333  003 OF 003 
 
 
time to work out.  She asked that the USG re-consider the 
possibility of allowing the textile cumulation provisions to 
take effect for the Central American partners that have 
already made the necessary amendments to their laws. 
Econoffs commented that the USG position on this point had 
been made abundantly clear last year, but promised to pass 
the Mexican request back to Washington. 
 
Comment 
------- 
 
¶6. (SBU) Mexico's top economic officials are firmly convinced 
that greater economic integration with their neighbors, both 
to the north and the south, is essential to their country's 
ability to compete in the global marketplace.  They see the 
AGP as a promising vehicle for advancing that agenda on the 
broadest hemispheric scale, but are worried that unless 
clearly positive results are produced before a new President 
occupies the White House, the initiative will at best lose 
steam and could evaporate altogether.  The same concerns 
apply to the BFWG, and more broadly to the SPP.  Uncertain of 
whether they will be able to make progress in the near-term 
with their most important trading partner, the Mexicans seem 
serious about trying to harmonize their various free trade 
agreements with other Latin countries via the Pacific Arc 
Forum, with the hope that when the U.S. decides it is ready 
to join such an undertaking, there will already be something 
substantial in place for it to dock on to.  The jury remains 
out on Mexico's optimism that it can achieve significant 
trade convergences with its Latin partners.  Even in Mexico 
such proposals could face considerable political resistance. 
But there is no doubt about the Calderon Administration's 
commitment to making the attempt.  End comment. 
Visit Mexico City's Classified Web Site at 
http://www.state.sgov.gov/p/wha/mexicocity and the North American 
Partnership Blog at http://www.intelink.gov/communities/state/nap / 
BARCLAY