CODEL BLUNT URGES PROMPT RATIFICATION OF CAFTA-DR

UNCLAS SECTION 01 OF 03 SAN JOSE 002908

SIPDIS

SENSITIVE

E.O. 12958: N/A
TAGS: OREP PREL ETRD CS
SUBJECT: CODEL BLUNT URGES PROMPT RATIFICATION OF CAFTA-DR


Summary
--------------

1. (SBU) In a meeting with Costa Rican legislators on
December 19, the members of CODEL Blunt delivered a two-fold
message: the United States will not renegotiate CAFTA-DR on a
bilateral basis with Costa Rica; and the benefits Costa Rica
now receives under the Caribbean Basin Initiative (CBI) will
fall away whether Costa Rica ratifies CAFTA-DR or not. The
CODEL also met with members of the GOCR cabinet and the
president of the central bank, and were hosted for dinner by
the American Chamber of Commerce. The visit received wide
and favorable press coverage. Embassy is following up on the
visit with activities to hasten ratification of CAFTA-DR in
Costa Rica. End Summary.

Meeting with Counterparts
--------------

2. (U) CODEL Blunt arrived in Costa Rica early in the
afternoon of December 19. Members of the CODEL were:
Roy Blunt (R-MO); Solomon Ortiz (D-TX); Mark Foley (R-FL);
Ruben Hinojosa (D-TX); Gregory Meeks (D-NY); Dennis Moore
(D-KS); and Mike Conaway (R-TX).


3. (U) The CODEL's first meeting was at the Legislative
Assembly and with the members of the International Relations
and Trade Committee, which is now holding hearings on
CAFTA-DR. Rolando Lacle, president of the committee,
presided. With him were Laura Chinchilla, Luis Ramirez,
Federico Malavassi, Bernal Jimenez, Ruth Montoya, Juan Jose
Vargas, Mario Calderon, Gerardo Vargas, Carlos Salazar, and
Epsy Campbell.


4. (U) Representative Blunt opened the discussion by noting
that the delegation of four Democrats and three Republicans
all voted in favor of CAFTA-DR, but only after a hard-fought
and vigorous debate in Congress. In the end, a majority of
Congress recognized the importance of strengthening the bonds
with our neighbors through increased and freer trade.

Costa Rican Concerns
--------------

5. (U) Laura Chinchilla, vice presidential candidate in the
February 6, 2006, elections, said that Costa Rica wants to
compete and export, not receive aid. She said that her
party, the National Liberation Party (PLN),wants to ratify
CAFTA-DR as quickly as possible, but that the administration
has been obstructing discussion of the treaty.


6. (U) Luis Ramirez, also of the PLN, raised two questions
for the U.S. Congressmen: how much longer will the United
States subsidize its farmers, and why not negotiate a
bilateral free trade agreement between the United States and
Costa Rica?


7. (U) Federico Malavassi of the Libertarian Movement Party
said that his party not only supports CAFTA-DR, but wishes
that the treaty had gone further to eliminate trade barriers
in the region and with the United States. He said he was
disappointed that Costa Rica was so slow in ratifying an
agreement that was so obviously beneficial.


8. (U) PLN legislator Bernal Jimenez asked whether in the
future it would be possible to renegotiate some aspects of
CAFTA-DR.


9. (U) Ruth Montoya of the Citizens' Action Party (PAC),
which opposes CAFTA-DR, noted that President Bush, according
to President Pacheco, said that Costa Rica should "take its
time" in ratifying CAFTA-DR. She said her party was not
against free trade, per se, citing its support for the free
trade agreement with Canada, but is against CAFTA-DR.


10. (U) Juan Jose Vargas, who recently founded a new party
and is now a minor candidate for president, complained that
CAFTA-DR is surrounded by ignorance, divisiveness,
propaganda, and lies. He said there had been a total lack of
transparency during negotiations and that the
telecommunications and insurance sectors became subjects of
negotiations only at the last minute and under extreme
pressure. He said maintaining social peace is more important
than free trade.


11. (U) Mario Calderon said that his Social Christian Unity
Party (PUSC) supports CAFTA-DR but is troubled by the
question of U.S. subsidies.


12. (U) Gerardo Vargas of PAC said that CAFTA-DR will hurt
small business in Costa Rica, especially farmers, and put at
risk the nation's "food security." If CAFTA-DR passes, he
said, Costa Rica will be at the mercy of U.S. farmers. He
urged renegotiation of the treaty and the continuation of CBI
benefits for Costa Rica.

CODEL Responds
--------------

13. (U) Representative Blunt said that the U.S. Congress's
vote on CAFTA-DR was its most important foreign policy vote
for the hemisphere in more than a decade. The idea was to
replace a temporary, unilateral concession (CBI) with a
permanent, negotiated, mutually-binding agreement (CAFTA-DR).
CBI will not last, he said, and if Costa Rica rejects
CAFTA-DR, the United States will not then negotiate a
separate bilateral agreement with Costa Rica.


14. (U) Representative Ortiz said that his vote in favor of
CAFTA-DR was influenced by his border district's positive
experience with NAFTA. He said that before NAFTA,
unemployment in his district was 22 percent; today it is 6
percent. He noted that people are always afraid of change.


15. (U) Representative Foley said that there was a lot of
pressure on him in his sugar-growing district to vote against
CAFTA-DR. But he was persuaded by President Bush to think
about how important trade and economic development were to
ensure peace and stability in Central America. He said Costa
Rica must ratify CAFTA-DR now and not gamble on some
theoretical future, better agreement. He said, "Free trade
agreements in the United States will not get easier to pass,
but only harder." He said it is important for politicians to
put their country's interests above their own political
self-interest as he had done.


16. (U) Representative Hinojosa, like Ortiz from a Texas
border district, said that employment in his district
improved dramatically with the implementation of NAFTA; there
are more and better jobs. He said it was not realistic for
Costa Rica to hope for a new, separate, bilateral treaty; it
will not happen, he said. Costa Rica had to get on the train
now because it is leaving the station.


17. (U) Representative Moore said that trade not only brings
economic benefits, but also helps consolidate democracy. He
said that CBI is a temporary measure and will not be extended
for Costa Rica. He said that former President Carter's
letter which characterized CAFTA-DR as an opportunity to help
fledging democracies was influential in his decision to vote
in favor of the agreement.


18. (U) Representative Meeks said that Costa Rica, because
of the level of education of its people, stood to benefit
more from CAFTA-DR than any other country. He said
renegotiation of the treaty was out of the question and that
CBI benefits will be phased out. He reminded the Costa Rican
legislators that in negotiations neither side gets what it
considers to be the perfect result. He said they should
trade "short-term pain for long-term gain;" the question is
whether their children will be better off with or without
CAFTA-DR. Meeks said it is clear that while CAFTA-DR will
not solve all of Costa Rica's economic problems, "it is a
giant step in the right direction."


19. (U) Representative Conaway urged the Costa Rican
legislators to consider what is in the best interest of their
country as a whole and to "push back" against special
interest groups. He said there must be no illusions that
CAFTA-DR will be renegotiated or that CBI will go on forever.
He noted that the U.S. Congress voted the night before to
eliminate subsidies across the board in 2007.

Press Conference
--------------

20. (U) In a press conference immediately following the
roundtable discussion with Costa Rican legislators,
Representative Blunt reiterated that the United States wanted
Costa Rica to be a part of CAFTA-DR, but that the Costa
Ricans would have to make their own decision in that regard.
Representative Meeks said that Costa Rica will benefit from
CAFTA-DR and noted that several Caribbean countries also want
a free trade agreement with the United States.
Representative Hinojosa stressed the benefits of NAFTA in his
district where in the last 12 years unemployment dropped from
22 percent to 8 percent, despite population growth during
that period of 48 percent.

Evening Events
--------------

21. (U) In the evening the CODEL attended a reception at the
Ambassador's residence and met with Ministry of the Economy
Gilberto Barrantes, Acting Minister of Foreign Trade Doris
Osterlof, Vice Minister of Foreign Affairs Marco Vinicio
Vargas, adviser to the Economic Council Pedro Quiros, and
Central Bank President Francisco de Paula Gutierrez.
Following the reception, the Costa Rican-American Chamber Of
Commerce (AmCham) hosted the CODEL for dinner. The CODEL
departed the morning of December 20 for El Salvador.

Press Coverage
--------------

22. (U) The CODEL's principal message was featured in the
headlines of articles in Costa Rica's December 20 daily
newspapers, as follows. La Nacion: Congressmen reaffirm that
CAFTA renegotiation is improbable. La Republica: U.S.
Congressmen indicate that bilateral renegotiation is not an
option. La Prensa Libre: U.S. Congressmen say, "CAFTA cannot
be renegotiated." Al Dia: No to renegotiation. Both La
Nacion and La Republica had long articles on December 21
pointing out the dire consequences for Costa Rican exports if
CBI were to be terminated.


23. (U) On December 21, several commentators noted that the
CODEL took the wind out of the sails of CAFTA-DR's main
opponent in Costa Rica, PAC presidential candidate Otton
Solis, who has been claiming that the treaty can and must be
renegotiated. Solis himself, however, was undaunted, saying
that regardless of what the CODEL members said, CAFTA-DR can
be modified to protect small and medium-sized businesses in
Costa Rica. Solis's companion on the ticket as candidate for
vice president, Epsy Campbell, told the press that the U.S.
representatives were trying to put undue pressure on Costa
Rica, but in fact they had nothing new to say. (Campbell
arrived late at the roundtable with the CODEL and did not
speak.)


24. (U) At the same time that the CODEL members were meeting
with their Costa Rican counterparts, USTR released its 12/19
statement regarding CAFTA-DR's entry into force. What
particularly attracted the attention of the Costa Rican press
was the part of the statement noting "a seamless transition"
between CBI and CAFTA-DR and that existing preferences would
continue to be enjoyed only "during a brief transition
period." The statement undercut a main argument of CAFTA-DR
opponents in Costa Rica, namely that CAFTA-DR was unnecessary
because Costa Rica already had, and would continue to have,
CBI.

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

25. (SBU) The USTR statement along with the comments of the
CODEL members made crystal clear what the Embassy has been
telling the GOCR, the legislature, and the press all along --
CBI is not forever, and CAFTA-DR will not be renegotiated
with Costa Rica. We know that two thirds of the legislature
and two thirds of the population support CAFTA-DR. The
problem here has been a feckless and indecisive president who
refused to send CAFTA-DR to the legislature until late
October, thus starting a process of ratification that
normally takes at least six months. Embassy plans to follow
up the very successful CODEL and USTR announcement with a
concerted push to get the legislature to act quickly. The
first step will be an exclusive interview of the Ambassador
with La Nacion, Costa Rica's leading daily newspaper.


26. (U) This cable was not cleared by the CODEL.
LANGDALE