Honduras' Reaction to July Framework: Cautiously

UNCLAS TEGUCIGALPA 002314

SIPDIS

SENSITIVE

STATE FOR WHA/CEN, WHA/EPSC, AND EB
STATE PASS USTR

E.O. 12958: N/A
TAGS: ETRD ECON EAGR PGOV HO WTO
SUBJECT: Honduras' Reaction to July Framework: Cautiously
Positive

REF: A) State 168991

B) Tegucigalpa 778
C) Tegucigalpa 1567
D) Montevideo 1459


1. (U) Summary: GOH trade officials are reasonably satisfied
with the WTO July Framework, regarding it as an agreement
that recognizes Honduras' key interests but nonetheless
defers most difficult decisions for future negotiation.
Honduras will support the candidacy of Perez de Castillo of
Uruguay for the position of next WTO Director General. End
Summary.


2. (U) Speaking with EconOff on October 12, Director of
Trade Policy Melvin Redondo spoke favorably of the
negotiating framework adopted by the WTO General Council on
August 1 (ref A). He specifically cited the successful
efforts of the G-33, of which Honduras is a member, to
establish recognition in the framework of two key issues.
First, the framework (in paragraph 42) calls for the
establishment of a Special Safeguard Mechanism for use by
developing countries. Second, the framework (in paragraph
41) allows developing countries to designate certain
products as Special Products eligible for more flexible
treatment, based on criteria including rural development
needs. (Note: As reported in reftels B and C, and as
evidenced by Honduras' strategy in the CAFTA negotiations,
the securing of special treatment for sensitive products is
one of Honduras' top priorities in any trade agreement, due
to the domestic political sensitivities attached to
agricultural products such as maize, rice, poultry and dairy
products. End note.)


3. (U) Redondo tempered his enthusiasm, however, by saying
that the framework is only a basic guide for future
negotiations, and that most of the difficult decisions still
lie ahead. The July framework, for example, does not
address one of Honduras' outstanding concerns, that of
establishing a tariff-reduction formula that will not
discriminate against countries such as Honduras that already
have low bound tariff rates. Still, given the failure of
talks at Cancun, Redondo views the July framework as a
positive step.


4. (SBU) Regarding the selection of a successor to WTO
Director General Supachai, Redondo confirmed that Honduras
supports the candidacy of Ambassador Carlos Perez de
Castillo of Uruguay (ref D). Redondo had heard press
reports that Brazil was putting forth a rival candidate, but
did not know the Brazilian candidate's name or anything
about him. Redondo said that he believes Perez de Castillo
has the support of the other Central American countries as
well, as they have worked with him in the past and are
comfortable and familiar with him.

Pierce