CODEL RENZI MEETS PANAMANIAN PRESIDENT MARTIN

C O N F I D E N T I A L SECTION 01 OF 02 PANAMA 000779

SIPDIS

DEPARTMENT FOR WHA/CEN
DEPARTMENT PASS USTR FOR AMB. ALLGEIER/RVARGO/AMALITO
SOUTHCOM ALSO FOR POLAD
VANCOUVER FOR CG ARREAGA

E.O. 12958: DECL: 04/06/2015
TAGS: PGOV ETRD PREL EPET PM VZ POL CHIEF
SUBJECT: CODEL RENZI MEETS PANAMANIAN PRESIDENT MARTIN
TORRIJOS, DISCUSSES FREE TRADE AGREEMENT, VENEZUELAN
PIPELINE DEAL

Classified By: Ambassador Linda E. Watt for reasons 1.4 (b) and (d).

Torrijos: "I Need Help on Rice"
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1. (C) In a cordial April 1 meeting with President Martin
Torrijos and Vice President Lewis, Rep. Rick Renzi
(R-Arizona) said that the USG must get Panamanian government
(GOP) concessions on Canal procurement and the right of U.S.
citizens to engage in retail trade to bring the bilateral
Free Trade Agreement talks to conclusion. Renzi added that
the USG must have a "landing zone" on four remaining
agricultural issues (pork, poultry, sugar, and rice) but was
confident that negotiators could hammer out a deal if
procurement and retail trade are resolved. If Panama agrees
with that approach, Renzi said, Minister of Commerce and
Industry (MICI) Alejandro "Andy" Ferrer can confirm it with a
phone call to Acting USTR Peter Allgeier or AUSTR Regina
Vargo. After that, Renzi said, USTR will schedule a final
round. In reply, Torrijos quipped that on rice he needs "an
airport, not a landing zone" and remarked that the two sides
"are not that close" on the four ag issues. (Later in a
pull-aside, Renzi reported that Torrijos claimed to have "no
wiggle room on rice" and needs "help" at the talks on that
issue. Farmers are financing labor groups opposed to the
GOP's forthcoming proposals to reform Panama's social
security system, Torrijos claimed.)

Washington Has Taken Note
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2. (C) Renzi told Torrijos that Washington has noticed his
leadership and that U.S. policy makers regard him as a
quality leader and a solid friend, whose momentum toward
better government is working for stability in Panama and the
region.

Retail Trade "Tough"
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3. (C) Vice MICI Minister Paredes also commented on the FTA
talks at the dinner hosted by Vice President/Foreign Minister
Samuel Lewis following the Renzi-Torrijos meeting, implying
that Panama plans to use its leverage on Canal procurement
and retail trade to extract U.S. concessions on pork,
poultry, sugar, and rice. Paredes claimed that the two sides
had agreed on all procurement issues except the Canal.
Panama is willing to discuss opening retail trade to U.S.
investors, Paredes said, but described the issue as "tough"
for Panama because concluding it will require a
constitutional amendment. Paredes discounted suggestions of
finding a "fix" for the problem, saying investors need to
come in "through the front door." (Note: In Panama
constitutional changes must be approved by two successive
legislatures, meaning the earliest an amendment could be
passed would be 2009.) Paredes predicted that Panamanian
negotiators would go to the next FTA round with the mind-set
to close the deal in two or three days at the most.

Torrijos Does Not Yield on Venezuela Pipeline
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4. (C) Further to his one-on-one April 1 pull-aside with
Torrijos, Renzi reported that he pressed Torrijos to
reconsider the GOP's receptivity to proposals to modify an
existing trans-Isthmus pipeline in western Panama to carry
Venezuelan oil to a Pacific port, presumably for sale to
China. Torrijos did not yield, explaining that the project
would produce much-needed cash for Panama. Further, Panama
would be able to control the flow of oil. Torrijos claimed
that if Panama refused the project, Venezuela would build it
through Colombia.

Comment
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5. (C) MICI Minister Ferrer will have "full authority" to
conclude the FTA at the next round (eight rounds have been
held since 2004),as various GOP officials, including
Paredes, have assured us. Unfortunately Ferrer was out of
Panama on April 1 (he was in East Asia concluding a bilateral
FTA with Singapore) and could not comment on Rep. Renzi's
proposals. If the key to scheduling a new and final FTA
round lies in confirming Panama's willingness to accede to
U.S. requests on Canal procurement and retail trade, while
splitting the difference on ag issues, as Renzi told
Torrijos, Paredes, and FM Lewis, we did not hear a clear
endorsement of that approach from the Panamanians on April 1.
On Venezuela, Renzi was disappointed that Torrijos hung
tough on continuing discussions of the pipeline project.


6. (U) Codel Renzi did not have the opportunity to clear
this message.

WATT