GOC LAYS GROUNDWORK FOR FURTHER DELAYS IN THE FTA

C O N F I D E N T I A L SECTION 01 OF 02 BOGOTA 006013

SIPDIS

DEPT PLS PASS USTR BHARMAN AND RVARGO

E.O. 12958: DECL: 06/21/2015
TAGS: ETRD EAGR CO FTA
SUBJECT: GOC LAYS GROUNDWORK FOR FURTHER DELAYS IN THE FTA

Classified By: DCM Milton K. Drucker, reasons 1.4 (b) and (d)


1. (C) Summary: Colombian Trade Minister Botero is
preparing the domestic audience for further delays in the
FTA. In public comments, Botero stated that the negotiations
were at their darkest and later reversed the GOC,s
long-standing public line by stating that he could not
guarantee that the negotiations would end this year. This
follows the refusal of key agriculture and industrial groups
to back the latest GOC agricultural offers. Privately, both
GOC officials and industrial groups have told the Embassy
that support for the agreement is waning and falling victim
to the Colombian electoral season. While the GOC hopes that
its latest offers will reanimate the FTA negotiations,
officials fear (rightly) that the offers fall short of the
USG,s bottom line. End Summary.

Darkest before the dawn
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2. (U) Speaking at the opening of a graphics trade fair,
Trade Minister Botero surprised the audience by stating that
the FTA negotiations were &in the darkest night8 and we
hoped that &we will see the dawn.8 Botero reversed the
GOC,s contention that the negotiations would conclude later
this year, stating that given current conditions, the
government could not guarantee that the negotiations would
close this year. The President of the Trade Association
Council (Consejo Gremial),Luis Carlos Villegas, agreed with
the Minister, stating that the negotiations were at their
most critical juncture. Ex-President Samper, at the 5th
Meeting of Ibero-American Ex-presidents also criticized the
agreement, adding that it went far beyond mere trade and as
such demanded too much of the poorer countries of Latin
America.

The ag offer
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3. (C) The controversy surrounding the GOC,s intention of
presenting new agriculture offers to the USG set off this
latest series of statements. According to FTA lead
negotiator Hernando Jose Gomez, with the new offer Colombia
now has proposals on the table for all agricultural products.
This latest offer, to be sent June 23, has been condemned by
most agricultural trade groups as being too aggressive
because the USG offered to phase out only 3 percent of trade
within five years or less and Colombia's export priorities
all face tariff phase outs of over 10 years. Opposition has
been particularly fierce from groups currently enjoying
protection from the Andean price bands. These same groups
prompted a previous controversy that almost forced the GOC to
not attend the Guayaquil FTA round earlier this month. These
groups oppose any opening of the agricultural sector, even in
areas such as wheat and soy where imports fill over 90% of
the demand. Given the situation, both industrial and
agricultural groups, who helped the GOC design the new
proposals, have told the GOC they will not officially support
the new proposals.


4. (SBU) The GOC negotiators and several agricultural groups
have broadly outlined the new proposals. The offers still
feature permanent safeguards on key products (fifteen
products according to the main agricultural trade group);
less than current market access; and higher duties than
currently applied. In other words, the US exporters would
have less access than they currently enjoy without an FTA.


5. (C) The GOC is also very concerned about pressure from
rice producers, whose march on Bogota from their main
production areas was called off on June 21 after the
Agriculture minister agreed to a series of incentives aimed
at ensuring that all national production would be purchased.
The GOC blamed the delay in sending its complete agricultural
offers on this latest problem with rice growers. According
to chief FTA negotiator Hernando Jose Gomez, the GOC had
originally intended to send the offers June 20, but could not
do so until the situation with the rice growers was resolved
and the march called off.

Comment
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6. (C) The Embassy, echoing statements made by USTR
officials, has been clear in telling the GOC that they need
to stop negotiating in the press. The trade minister's
latest comments and the public assertions that the USG agreed
to respond to the newest agricultural offer within a week
indicate the GOC is still not ready to put forward offers
that the U.S. can use as a basis for negotiation. This is
either because the GOC cannot get out of a tactical mode, or
because they are convinced that the U.S. cannot respond
completely with CAFTA not yet approved by the U.S. Congress.
The GOC may be afraid that any concession would, in the long
term, prove to have been unwise. Then too, the domestic
battle between winners and losers under an FTA has not been
joined.


7. (C) The winners (some agricultural interests and most
industries) have found it convenient to duck the shots of
conservative agricultural interests. As they come to realize
that without an agricultural settlement there is neither an
FTA, nor ATPDEA, their good-natured acceptance of
conservative agricultural jingoists may shift markedly. This
is unlikely before CAFTA is approved, however. End Comment.
WOOD