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05SANJOSE1713 2005-07-28 22:30:00 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy San Jose
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					  UNCLAS SECTION 01 OF 02 SAN JOSE 001713 




E.O. 12958: N/A

REF: (A) SAN JOSE 01587

(B) SAN JOSE 01636
(C )SAN JOSE 01693
(D) SAN JOSE 01455

1. (U) Summary. After passage of the CAFTA-DR implementing
legislation in the late evening hours (in Costa Rica) by
the U.S. House of Representatives, GOCR officials, private
business persons, and labor leaders offered their
reactions. Local media coverage of the ratification
process in the U.S. has been intense, and the approval in
the U.S. made front-page headlines in almost all of the
major national daily newspapers. At this time, it appears
that approval in the U.S. did not change the overall
opinions of these Costa Ricans, but it has brought
increased focus on CAFTA-DR and a sense of urgency to some
regarding the need to start formal discussions of this
issue in the Legislative Assembly. End Summary.

2. (U) Local media have been following the U.S. House of
Representatives' vote closely. As an example of the high
profile of this event, the vote was carried live on CNN en
espanol on cable systems. Daily newspapers, "La Nacion,"
"La Republica," and "La Prensa Libre" made the CAFTA-DR
issue front-page news, and interviews of key CAFTA-DR
personalities filled the airwaves offering their reactions
to the approval in the U.S. Congress.

3. (U) Minister of Foreign Trade (COMEX) Manuel Gonazalez
was quoted as stating that "the approval of CAFTA yesterday
fills us with optimism. However, Costa Rica will continue
its process of analysis on its own timetable." These
statements are consistent with his and President Pacheco's
previous lukewarm and conflicting comments about the
ratification process in Costa Rica (Refs A and B). COMEX
is the governmental organization that negotiated CAFTA-DR
and is responsible for production and implementation of the
complementary agenda for CAFTA-DR (Ref C).

4. (U) Oscar Arias, former president of Costa Rica and
front runner in the next presidential election, stated that
he is very happy with the vote in the U.S. and that "it is
an opportunity to boost development, to increase investment
that will create employment opportunities.". He goes on to
state that he hopes that the current administration will
decide to send CAFTA-DR to the Legislative Assembly. He
added that to not do so would have a negative effect on the

5. (U) Gerardo Gonzalez, President of the 57-member
Legislative Assembly, told the press that he would like the
President to send CAFTA-DR to the Assembly as soon as
possible to allow discussions to begin on this important
issue. He stated that "the country is falling behind . and
it is urgent that we start discussion [of CAFTA-DR] in the
Assembly." He added that he is against the President's
condition of requiring approval of the Fiscal Reform (tax
increase) bill prior to sending CAFTA-DR to the Assembly
for ratification (Ref D). Gonzalez is opposed to the
Fiscal Reform bill in its current form because special tax
treatment that some Assembly members have proposed in over
1000 amendments to the bill.

6. (U) Those opposed to CAFTA-DR tried to minimize the
approval vote of the U.S. Congress. Albino Vargas,
President of the approximately 15,000-member National
Association of Private and Public Employees (ANEP),
continued to voice his opposition to the agreement and
stated that approval in the U.S. did not change his or the
organization's stance on CAFTA-DR, and that it has nothing
to do with ANEP's labor agenda. He stated that
"independently of what the U.S. decides, the struggle of
those in Costa Rica who oppose CAFTA-DR continues
unaltered. There is a large part of the citizenry that
will take to the streets when CAFTA-DR is sent to the

7. (U) In a discussion with Poloff, Rodrigo Aguilar,
president of the 90,000-member labor union federation Rerum
Novarum, expressed his disappointment that CAFTA-DR was
passed by the House of Representatives, but holds out hope
that Pacheco's Commission of Eminent Persons will return a
negative recommendation (Ref B). He acknowledged that
Pacheco will come under increasing pressure from commercial
interests to present the treaty but believes Pacheco will
wait for the Commission's report, which will be available
no sooner than September 17, 2005. Aguilar reconfirmed his
labor organization's determination to participate, if not
organize, anti-CAFTA-DR demonstrations upon its
presentation to the Legislative Assembly. When asked
whether he had considered possible uses for labor
enforcement funds attached by the U.S. Senate, he admitted
he had not thought of this, but agreed it could have
positive impact.

8. (U) In "Al Dia," Epsy Campbell, head of the left-
leaning Citizens' Action Party (PAC) Assembly members,
expressed that "we will do everything possible to ensure
that [CAFTA-DR] is not approved in Costa Rica.". She
believes that the country deserves something better and
acknowledges that increased pressure will come to pass
CAFTA-DR, not only from the U.S., but also from the local
business sector.

9. (U) Many local business representatives see the
approval in the U.S. as a very positive sign, and
acknowledge that there is now a sense of urgency in the
ratification process in Costa Rica. Miguel Schyfter, owner
of a clothing manufacturing company, stated that "we must
hasten the [ratification] process because there are
thousands of textile workers who will see their jobs move
to other Central American countries if investment
conditions are not clarified [via implementation of CAFTA-
DR] in Costa Rica." Bart De Lange, an exporter of
ornamental plants, stated that "investment in Costa Rican
business is paralyzed because of the delay with the
ratification process of CAFTA-DR. Ratification in the U.S.
puts us up against the clock." Other business
representatives said that every day that passes without
CAFTA-DR in effect is a lost opportunity to take advantage
of the benefits of the trade agreement.

10. (U) Luis Guillermo Solis, a noted political analyst,
stated that "the approval of CAFTA-DR in the U.S. has
increased the pressure to start the discussions in Costa
Rica. However, the current political setting for this
discussion is not the best. It would be irresponsible to
discuss this issue in the middle of an electoral campaign."
He implies that, since the entire Assembly and
Administration will change, this issue should be left to
the next Legislative Assembly and Administration which will
take office in May 2006.




11. (SBU) The process of passage of the implementing
legislation by the U.S. House of Representatives has not
yet had a noticeable effect on the GOCR. President Pacheco
has painted himself into a corner by publicly and
repeatedly stating that he will not send CAFTA-DR to the
Assembly until (1) the Commission of Eminent Persons
delivers its report to the President; and (2) the Assembly
passes the Fiscal Reform bill. The former task will not be
completed, at the earliest, until mid-September, and it is
doubtful that the latter task will ever be completed in his
administration. The one thing that is certain is that
President Pacheco's administration will have to live with
more pressure from those favoring CAFTA-DR and those