NEW TRADE MINISTER SOUNDS REASONABLE

C O N F I D E N T I A L SECTION 01 OF 02 QUITO 001047

SIPDIS

DEPT PLEASE PASS TO USTR BENNETT HARMAN

E.O. 12958: DECL: 05/06/2015
TAGS: ETRD PGOV EINV ECON PINR EC
SUBJECT: NEW TRADE MINISTER SOUNDS REASONABLE


Classified By: Ambassador Kristie A. Kenney, Reason 1.4 (b),(d)


1. (SBU) Summary: In separate meetings with the Ambassador
and AID, Ecuador's new Minister for Trade Oswaldo Molestina
said he wanted an FTA with the USG, but was most concerned
about the agricultural negotiations. He said that he
intended to keep lead FTA negotiator Cristian Espinosa on
board, but would add an "adjunct lead negotiator" to handle
the "political aspects" of the negotiations. He also asked
for a short (2-3 week) postponement of the June FTA round
scheduled for Ecuador, but has not yet sought or received
approval from his Andean counterparts for the postponement.
Molestina said he looked forward to working with us. Our
first impression is that Molestina could be someone we could
work with, but others in the Palacio administration could
eventually hold back Ecuador from concluding an FTA in the
near term. End Summary.

Molestina Wants an FTA
--------------


2. (SBU) Newly appointed Minister of Trade Oswaldo Molestina
told the Ambassador on May 3 that he wants to continue
negotiating a free trade agreement (FTA) with the USG. He
said his greatest concern was with the agricultural
negotiations. Molestina was also looking for USG support in
postponing the June round in Ecuador. He wanted to move the
starting date from June 1 to June 20, in order for him and
his team to get up to speed on the status of the
negotiations. Noting his experience in private international
law, he mentioned that even he felt inadequately informed
about the FTA process when he was living in Guayaquil, prior
to his ministerial appointment. Thus, he needed some time to
familiarize himself with all of the issues and get his team
in place. The Ambassador agreed to contact USTR on the GOE's
behalf. (Note: USTR later said it could live with a
postponement to June 13, but the GOE would have to convince
the Peruvians and Colombians to agree to the postponement.
Molestina has a meeting with the Colombian Trade Minister on
May 6. End note.)


3. (SBU) To maintain the continuity of the negotiations,
Molestina said he would keep Cristian Espinosa as Ecuador's
lead trade negotiator. However, he would add an adjunct
negotiator to handle the "political aspects" of the
negotiations. He was short on details of what that would
entail, but said one of the political negotiator's tasks
would be to work with the Ecuadorian Congress on the FTA.
(Note: In a follow up meeting May 5 with Molestina's (and
former Trade Minister Baki's) advisor Diego Ramirez, he noted
that the adjunct political negotiator is unlikely to actively
participate in negotiations but will focus more on selling
any agreement to the public and the Ecuadorian and US
Congresses. End note.)


4. (SBU) The Ambassador applauded Molestina's decision to
retain Espinosa and agreed that it was important for the
Ministry to adequately inform its congress on FTA
developments. She noted that Ecuador had much to gain from
an FTA. The Ambassador also suggested that the Minister
appoint a commercial dispute czar to address pending disputes
in an expeditious fashion. Molestina eagerly took the
suggestion and mentioned the possibility of forming a
permanent unit for businesses and others to go to when
commercial disputes arose.

Molestina Wants to Work with US
--------------


5. (SBU) In a separate May 3 meeting, AID explained its
programs in Ecuador, including its trade capacity building
(TCB) efforts. Molestina listened attentively during the
hour-long meeting and said he hoped to continue the working
relationship. Espinosa, who was also present at the meeting,
also praised AID's TCB efforts.


6. (SBU) Molestina said he is a conservationist, very
interested in preserving the Galapagos, where he owns a home
on Santa Cruz Island. He said he convinced President Palacio
to appoint an "ecologist" as the new Governor of the
Galapagos. Molestina expressed concern about the
politization of the Galapagos National Park management. The
Ambassador agreed with him and offered to work together to
protect the islands.


7. (C) Chief FTA negotiator Cristian Espinosa, in a candid
conversation with a local embassy employee on May 5,
expressed concern about the lack of communication with the
Minister. He said the negotiating team was ready to keep to
the original dates for the Guayaquil round. He also was
concerned about the attitude of Colombia and Peru, which, he
said, were actively lobbying in Washington for Ecuador's
exclusion from the negotiations. He said that the new
government had not yet made any changes in the negotiating
instructions.

Comment and Bio
--------------


7. (C) Molestina said a lot of the right things in his
initial meeting with the Ambassador. Ramirez (a close
Embassy contact) also said that he has been impressed by
Molestina's practical approach to his new job. Molestina's
desire to appoint an adjunct "political" lead negotiator
could unnecessarily complicate FTA negotiations that have
already gone on for longer than originally scheduled. Still,
the new administration was wise to keep Cristian Espinosa in
place and had to, for political reasons, insert its own
person into the process. That said, Espinosa's statements
are cause for some concern.


8. (C) What we do not yet know is how much interference
Molestina and the negotiation team will receive from others
in the Palacio administration, including Palacio himself, who
seem to be less sanguine about an FTA. It is also too early
to tell whether Molestina will have much clout in the Palacio
administration. His willingness to appoint an adjunct
political lead negotiator to sell any FTA seems to indicate
that he might be too willing to let others take the lead.

Bio
---


9. (U) Molestina (age 59) has a JD and Masters Degree in
International Law. He was Comptroller General (1988-1998),
the Governor of Guayas Province (Democratic Left - ID party,
1990-1992) and a Congressman until 2003. In Congress, he was
the President of the International Affairs Committee. He was
also Ecuador's representative to the UN General Assembly in

1977.


10. (U) Molestina is a member of the Association of Ganaderos
(cattlemen) of Guayas and the Galapagos. He reportedly was
recently divorced from the sister of PRIAN party leader,
perennial presidential candidate and banana magnate Alvaro
Noboa. They have two sons. He speaks English well and likes
to sail and play volleyball.
KENNEY