MINISTER OF AGRICULTURE ON FTA, EU BANANA TARIFF

UNCLAS SECTION 01 OF 02 QUITO 002938 SIPDIS PASS TO USDA/FAS/FAA/BAILEY, USDA/FAS/ITP/MACKE/BERTSCH, LIMA REGIONAL AGATT, USTR/HARMAN/LATIMER E.O. 12958: N/A TAGS: EAGR ETRD ECON EAID EC FTA SUBJECT: MINISTER OF AGRICULTURE ON FTA, EU BANANA TARIFF AND WEATHER EMERGENCY ¶1. SUMMARY: In a December 15 courtesy call on Minister of Agriculture Pablo Rizzo, Ambassador Jewell stressed that Ecuador would need to improve its agricultural proposals in the FTA negotiations. Rizzo stated that Ecuador wants to sign an FTA with the United States but is still looking for exceptions on a number of agricultural products. Rizzo also requested U.S. assistance of $4 million to counter the effects of the recent drought and freezes. Finally, Rizzo voiced concern that the EU continues to call for high tariffs on bananas. End Summary. ¶2. On December 15, Ambassador Jewell paid a courtesy call on Ecuadorian Minister of Agriculture Pablo Rizzo. The current emergency in the agricultural sector, the European Union (EU) banana tariff issue and the status of the FTA agriculture negotiations were the main points of the cordial conversation. On the EU banana tariff issue, Rizzo expressed dismay with the results of negotiations during the Hong Kong WTO meetings. Rizzo indicated that Ecuador is willing to sign an FTA with the United States, but that some agricultural products should be excluded. The Ambassador said that Ecuador should improve its agricultural proposal before negotiations continue in 2006. In addition, Rizzo explained about the current agricultural sector emergency and requested assistance from the United States. The meeting also included Vice Minister of Agriculture Hernan Chiriboga, Advisor to the Minister, Marco Uzca, and USDA Agricultural Specialist, Rene Alarcon. EU BANANA TARIFF -------------- ¶3. Minister Rizzo began the meeting with Ambassador Jewell by expressing the Government of Ecuador's (GOE) gratitude to the United States for its continued support to Ecuador's position in its debate with the EU regarding bananas. Rizzo expressed dismay with the EU offer of 176 euros per ton. He doubted that the issue would be resolved at the WTO Ministerial meeting in Hong Kong and indicated that the Ecuadorian Minister of Trade, Jorge Illingworth, would need to have further negotiations with the EU. The Ambassador sympathized with the Ecuadorian's problem with the EU, citing the U.S. battle over export subsidies. AGRICULTURE AND THE FTA -------------- - ¶4. (U) Rizzo said that Ecuador is willing to sign an FTA with the United States, but with certain exclusions. Although he recognized that the conclusion of Peru's negotiation with the United States would limit Ecuador's margin of negotiation, he maintained that the agricultural sectors of Ecuador and Peru are different. Rizzo stated that Peru is a net agricultural importer and therefore would be in a position to open its markets for products that are too sensitive for Ecuador such as rice, dairy and beef. (Comment: Ecuador's favorable balance of agricultural trade is based on its sales of bananas, seafood and flowers. Their argument for exceptions is based on maintaining protectionist policies for the agricultural sector. End Comment.) Rizzo said that one of his concerns in case Ecuador does not sign the agreement is a possible increase in smuggling of products from Peru into Ecuador. Rizzo also asked about the USG,s response to the last offer made by Ecuador on agriculture. ¶5. (U) The Ambassador said that Colombia had recently made an improved offer to USTR, which was being reviewed. She said that it is unlikely that negotiations would move forward with the terms of Ecuador's last offer and that it would be advisable for Ecuador to deliver an improved offer before setting a date for new negotiations in 2006. DECLARATION OF EMERGENCY IN THE AGRICULTURAL SECTOR -------------- -------------- ¶6. (U) Following a request by the Ministry of Agriculture (MAG),the GOE declared a state of emergency for the agricultural sector of Ecuador due to recent weather problems. Emergency relief funds of approximately $30 million will be made available to farmers in both the coastal and sierra regions. Drought conditions in the coastal areas have caused the death of approximately 2,000 head of cattle in the past few weeks and delays in the planting season of crops such as rice and corn. At the same time, the lowest temperatures in 25 years in the central highlands caused crop freezes that destroyed nearly 20,000 hectares of crops, mostly fruits, vegetables and flowers. Minister Rizzo requested $4 million worth of U.S. assistance for irrigation projects to relieve the drought situation on the coast. The Ambassador responded that current assistance funds are limited and that it would be difficult to finance such a large amount of money, but promised to look into the matter. JEWELL