CAFTA-DR RATIFICATION AND IMPLEMENTATION TIMELINE

UNCLAS SECTION 01 OF 02 SAN JOSE 002942

SIPDIS

WHA/CEN
EB FOR WCRAFT, BMANOGUE
EB/CIP FOR WAYALA
E FOR DEDWARDS
WHA FOR WMIELE
WHA/EPSC FOR KURS, LGUMBINER
STATE PASS TO USTR FOR RVARGO, NMOORJANI, AMALITO

E.O. 12958: N/A
TAGS: ETRD ECPS ECON PREL PGOV SOCI CS
SUBJECT: CAFTA-DR RATIFICATION AND IMPLEMENTATION TIMELINE



1. (SBU) SUMMARY: The debate about the Central America-
Dominican Republic-United States Free Trade Agreement
(CAFTA-DR) started in the unicameral 57-member legislature
(the Assembly) on December 6, 2005 after long delays in the
Costa Rican administration's decision to send the agreement
to the Assembly. Since then, the twice-weekly sessions
held by the responsible legislative Committee have been
interrupted by logistical and political problems. Despite
extending its working sessions past the usual mid-December
break for the holidays, the Assembly's International
Relations and Trade Committee which is responsible for
reviewing CAFTA-DR has made little progress and will not
reconvene until after the February 5, 2006 presidential and
legislative elections. The key question is whether or not
the lame-duck legislators on the International Relations
and Trade Committee can complete their hearings and send
the agreement to the floor for a first vote prior to the
end their terms on May 1, 2006. If not, the new
legislature will have to review the work already done, thus
further delaying the ratification process. End Summary.

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CAFTA-DR RATIFICATION - A LONG ROW TO HOE
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2. (SBU) Costa Rica is the only CAFTA-DR signatory country
not to have ratified the treaty. Fourteen months after
signing CAFTA-DR and after much public debate over whether
or not the agreement would benefit the poor, President
Pacheco on October 21, 2005 finally sent the agreement to
the Assembly to start the relatively long ratification
process. Delays in printing and distributing the more than
3,000-page document pushed the official start date for
Assembly discussions to December 6, 2005. The Assembly's
International Relations and Trade Committee then began to
hold hearings, but as of December 22 the Committee had not
even completed interviewing the first of 30 people who are
scheduled to be summoned.


3. (SBU) Soon after the Committee's discussions began,
their work was halted because of inadequate facilities in
which the debate could be held. The rooms normally used for
such hearings were deemed to be too small and insecure to
allow the public to safely observe the proceedings. This
resulted in several missed sessions and the inability of the
Committee to progress in its work. Supporters of CAFTA-DR
alleged lack of support by Gerardo Gonzalez, the President
of the Asembly and a member of President Pacheco's Social
Christian Unity Party (PUSC). Comment: President Pacheco
has washed his hands of the CAFTA-DR issue, refusing to
lobby any legislators and repeatedly saying that CAFTA-DR is
now in the hands of the Assembly. This is not entirely true
because his administration has yet to submit the all-
important CAFTA-DR implementing legislation which would
comply with the requirements to better protect intellectual
property, and facilitate the phased opening of the
telecommunications and insurance industries. End Comment.


4. (SBU) The few hearings that have been conducted have
been heated with anti-CAFTA-DR deputies on the Committee
verbally attacking the Vice Minister of Foreign Trade, Doris
Osterlof, and accusing the negotiators (not one of whom
still works for the GOCR) of "betraying" the country and
alleging a lack of transparency in the negotiation process.
Comment: Much of this is for show since six of the nine
members of the Committee will vote in favor of CAFTA-DR.
However three members of the committee are vice presidential
candidates and one is a presidential candidate which means
the hearings so far have been more about campaign slogans
than debates about the merits of the agreement. End
Comment.


5. (U) Due to the legislative recess from December 23, 2005
through the February 5 elections, a completion of the
Committee's work is expected no sooner than the end April
2006 just before the new deputies take office on May 1,

2006. (Note: The new Administration takes office on May 8,

2006. End Note.) After the Committee has sent its
recommendation to the plenary, two separate votes by the
entire Assembly are required to pass the agreement, between
which the Constitutional Court will review CAFTA-DR for any
constitutional issues. We think there is little likelihood
that the second vote could occur during the first half of
2006, but it is probable during the second half of 2006.
The President would then sign the bill approving CAFTA-DR
and publish it in the official gazette, two to four weeks
after which CAFTA-DR would be considered officially
ratified.

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RATIFICATION IS NOT IMPLEMENTATION
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6. (SBU) Unlike the path taken by the USG and U.S.
Congress, the Assembly will approve CAFTA-DR separately from
the legislation that will actually implement the agreement.
To date, the implementing legislation has not yet been sent
to the Assembly and passing these bills could be more
difficult than passing CAFTA-DR itself. Of all the CAFTA-DR
countries, Costa Rica clearly has the most work to do in
drafting, debating, passing, and implementing this
complementary legislation. These bills should effect the
phased opening of the telecommunications and insurance
markets to competition - markets that are currently legally
monopolized by the state-owned Costa Rican Institutes of
Electricity (ICE) and Insurance (INS),respectively.
(Comment: The other CAFTA-DR countries also pass
implementing legislation separate from the vote on the
agreement itself. We are now seeing how difficult the
implementation issue is with several of these countries that
have already ratified the agreement and are now trying
fulfill their commitments before entry into force. Costa
Rica is not only the farthest behind on ratification, it is
equally far behind in preparing the implementing
legislation. End Comment.)

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COMMENT
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7. (SBU) The lack of progress in the International
Relations and Trade Committee during the few short weeks of
hearings, coupled with the Administration's reluctance to
fully back CAFTA-DR, does not bode well for voting the
agreement out of committee prior to the new Assembly members
taking office on May 1, 2006. If CAFTA-DR is not voted out
of committee during the lame duck session, it means that the
ratification process will take that much longer to complete,
possibly extending the ratification well into the second
half of 2006. Even after approving CAFTA-DR, the real work
of debating and passing the implementing legislation will
remain and could well delay the implementation of the
agreement beyond the end of 2006.
FRISBIE