GOE REPLACES FTA NEGOTIATION TEAM

UNCLAS QUITO 001096

SIPDIS

DEPT PASS USTR BENNETT HARMAN

E.O. 12958: N/A
TAGS: ETRD PGOV EINV PREL ECON EC
SUBJECT: GOE REPLACES FTA NEGOTIATION TEAM

REF: QUITO 1047


1. (U) Summary. President Palacio issued an Executive Decree
May 12 making wholesale changes to the GOE FTA negotiation
team. Trade Minister Oswaldo Molestina has been named lead
negotiator, though former lead negotiator Cristian Espinosa
has been kept on as Under Secretary for Foreign Trade and
Integration in the Ministry. It is unclear what, if any,
role Espinosa will continue to play in the negotiations or
how these changes will affect the GOE's capacity to continue
with the negotiations. The other most notable addition to
the negotiating team is President of the Quito Chamber of
Commerce Blasco Penaherrera, a vocal opponent of former
President Gutierrez, but also a strong proponent of the FTA
and IPR protections.

Changing Horses Past Midstream
--------------


2. (U) Despite assurances from Trade Minister Oswaldo
Molestina that the GOE planned to keep the team largely the
same (reftel) and confirming rumors to the contrary out of
Guayaquil (septel),President Palacio issued an Executive
Decree on May 11 (made public May 12) changing his free trade
agreement (FTA) negotiating team. The new lead negotiator is
Trade Minister Molestina, who lacks experience in trade
negotiations. Molestina will lead the team in its meetings
next week in Bogota with their Andean counterparts in
preparation for the June 6-10 negotiation round in Guayaquil.
Quito Chamber of Commerce President Blasco Penaherrera Solah
is replacing Mauricio Pinto, who resigned last month under
President Gutierrez. Penaherrera was a vocal opponent of
President Gutierrez and one of the leaders who called for his
ouster. However, as President of the Quito Chamber,
Penaherrera was a strong supporter of the FTA and
intellectual property rights (IPR) protections.


3. (U) Other new faces on the negotiation team are Francisco
Alarcon Fernandez Salvador, Vinicio Baquero Ordonez,
Francisco Pena Valle and Raul Lopez Paredes. Palacio also
appointed Dr. Eduardo Armendariz as Under Secretary for
Small, Medium and Micro Enterprises and Artesania, Susana
Gonzalez Rosado as Regional Under Secretary for the Coastal
Region, Santiago Malo as Southern Region Under Secretary and
Cristobal Mariscal as Under Secretary for Fishery Resources.


4. (SBU) Guayaquil Chamber of Industries President Alberto
Dassum (protect) told Econ Counselor May 12 that he tried
several times to talk Palacio out of making the changes.
Dassum said that Palacio had a personal grudge against
Espinosa ever since the Cartagena round of negotiations that
Palacio had attended as Vice President. Palacio had been
pushing Espinosa on IPR issues (likely on pharmaceuticals and
patent protections) and had not liked how Espinosa had
handled the situation.

Comment
--------------


4. (SBU) We are trying to ascertain what, if any, role former
lead negotiator Espinosa will play in the negotiations. We
are also trying to learn more about the new negotiators and
their trade negotiation experience, to determine how steep
their learning curve will be and how the new team might
change negotiating positions and strategies. It is clear
that, by joining the negotiations at this late stage, they
will have a lot of catching up to do. Their meetings next
week in Bogota with their Colombian and Peruvian counterparts
will give us a good indication of how prepared they are to
conclude an FTA and how much leeway their counterparts will
be willing to grant the new team.
CHACON