Cablegate: Peru Pursues Vigorous Fta Implementation Strategy

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DE RUEHPE #3887/01 3601218
ZNR UUUUU ZZH
R 261218Z DEC 07
FM AMEMBASSY LIMA
TO RUEHC/SECSTATE WASHDC 7572
INFO RUEHBO/AMEMBASSY BOGOTA 5379
RUEHQT/AMEMBASSY QUITO 1648
RUEHLP/AMEMBASSY LA PAZ DEC SANTIAGO 1664
RUEHBR/AMEMBASSY BRASILIA 7702
RUEHBU/AMEMBASSY BUENOS AIRES 3226
RUEHCV/AMEMBASSY CARACAS 0988
RUEHME/AMEMBASSY MEXICO 3594
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RHEHAAA/NATIONAL SECURITY COUNCIL WASHINGTON DC
RUEHRC/DEPT OF AGRICULTURE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASH DC

UNCLAS LIMA 003887

SIPDIS

SIPDIS

TREASURY FOR MMALLOY
COMMERCE FOR 4331/MAC/WH/MCAMERON
USTR FOR BHARMAN AND MCARRILLO

E.O. 12958: N/A
TAGS: ETRD ECON EFIN PGOV EAGR USTR PE

SUBJECT: PERU PURSUES VIGOROUS FTA IMPLEMENTATION STRATEGY

Summary
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1. The Peruvian Congress approved a law by 54-38 that would
delegate to the Executive branch the authority to legislate by
decree on the diverse issues related to the implementation of the
U.S.-Peru Trade Promotion Agreement (PTPA). This action is intended
to speed implementation in order to meet the government's self
imposed six month deadline. In recent public remarks, President
Garcia warned the business community that Peru's population would
not continue supporting free trade if its benefits were not
apparent. End Summary.

New Law Delegates Authority to Executive Branch
--------------------------------------------- --
2. On December 12, 2007, President Alan Garcia forwarded a letter
to the President of the Congress, Luis Gonzales Posada, seeking
Congressional consideration for legislation that delegates authority
to the Executive branch for legislative items related to PTPA
implementation. Debate in Congress centered on the wisdom and
utility of delegating legislative authority to the Executive branch.
Those opposed claimed Congress was (once again) abdicating its
central responsibility for making laws; those in favor underscored
the short timetable for PTPA implementation and the fact that
lawmakers would soon be on recess and not reconvene until March
2008. After a three hour debate December 14, Congress voted by
54-38 to support the measure. The breakdown of those voting in
favor: 5 Fujimoristas (all others were absent); 29 APRA; 13 Unidad
Nacional; 3 from Grupo Especial; and 2 from Alianza Parlamentaria.

Legislation
-----------
3. The legislation, published December 20 in El Peruano, the
official gazette, contains two key articles. Article One delegates
to the Executive branch the authority to legislate on all matters
pertaining to the implementation of the PTPA. Article Two
establishes a time frame of 180 calendar days to legislate over a
broader group of issues that are ancillary to the PTPA, but
essential if the agreement is going to be effective. These are:
- Trade facilitation;
- Improvement of the regulatory framework, institutional strength,
and administrative simplification/government modernization;
- Improvement in the administration of justice on trade issues and
administrative disputes;
- Private investment promotion;
- Technical innovation promotion, quality improvement, and capacity
building;
- Employment and SME promotion; and
- Institutional strengthening of environmental capacities.

4. The content of all of the legislative modifications are supposed
to comply with the GOP's PTPA commitments and its related annex.
The law is slated to enter into force on January 1, 2008.

5. Delegating legislative authority for PTPA implementation to the
Executive branch should enable the government to execute the needed
legislative norms quickly. The other projects, while not
technically linked to the PTPA, are intended to help strengthen
institutions, competitiveness, regulatory capabilities, and
hopefully boost both investment and exports. Garcia also proposed
that Congress consider approving an Environment Ministry, something
that would be useful in implementing the PTPA's important
environmental provisions, including on forestry.

Garcia Warns that People Need to See Trade Benefits
--------------------------------------------- ------
6. Echoing the remarks he made after the signing ceremony in
Washington, in numerous events around Lima this past week, President
Garcia emphasized that the PTPA was a great opportunity for Peru and
congratulated all those involved in negotiating and securing its
approval. These included, to the surprise of many, former President
Toledo and key members of his cabinet who had worked on the
agreement. While citing strong public support (67%) for the PTPA,
Garcia cautioned that the public would ned to see evidence that the
PTPA could bring benefits to all social and economic classes, not
just business groups. Garcia noted it would be the responsibility
of both the public and private sector to educate the population on
the benefits of the PTPA, and to ensure that these were as
widespread as possible. In this sense, Garcia said, he wanted to
inject a note of urgency and realism into the current mood of
celebration.
MCKINLEY

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