Congressional Staffers Visit Honduras, Question

UNCLAS SECTION 01 OF 04 TEGUCIGALPA 000765

SIPDIS

SENSITIVE

STATE FOR WHA/CEN, WHA/EPSC, EB/TPP, DRL/IL, AND INR/IAA
STATE FOR H
STATE PASS USTR
STATE PASS AID FOR LAC/CAM
DOL FOR ILAB
GUATEMALA FOR AGATT SHUETE
TREASURY FOR DDOUGLASS

E.O. 12958: N/A
TAGS: ETRD ECON PGOV ELAB EAGR HO
SUBJECT: Congressional Staffers Visit Honduras, Question
CAFTA-DR's Impact on the Poor



1. (SBU) Summary: Five U.S. Congressional staffers,
representing House Democrats, visited Honduras in late
March, on a trip aimed at building support for CAFTA-DR
among undecided U.S. Congressmen. The visit, which was
organized by the GOH and funded by the Honduran private
sector, involved visits to a textile factory (maquila) and
various agricultural projects, as well as a meeting with
Ambassador Palmer and the country team. The staffers'
concerns centered on the impact that CAFTA-DR would have for
poor and vulnerable Hondurans, especially farmers. Post is
convinced that, at the conclusion of their visit, the
staffers left much better informed about and more
comfortable with CAFTA-DR and the benefits it could bring to
both the U.S. and Honduras. End summary.

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GOH-Hosted Visits Aim to Build CAFTA-DR Support
-------------- --


2. (SBU) From March 28 - April 1, five U.S. Congressional
staffers visited Honduras on a trip aimed at building
support for CAFTA-DR among undecided U.S. Congressmen. The
visit was organized by the GOH, with funding provided by the
Honduran Manufacturers' Association (AHM) and the GOH
Foundation for Investment and Export Development (FIDE).
This was the second such visit in the past two months and is
a key part of the GOH's strategy to promote U.S.
Congressional approval of CAFTA-DR. The Honduran Embassy in
Washington has compiled a list of undecided Congressmen and
will continue to invite staffers of these Congressmen to
Honduras until CAFTA-DR comes to a vote in Washington.


3. (SBU) Post continues to fully support such visits.
EconOffs accompanied the delegation for two of its four days
of fact-finding, and Post arranged a country team briefing
and a meeting with the Ambassador for the delegation. The
informal setting fostered a frank exchange of views,
allowing Post officers to identify and address the staffers'
core concerns.


4. (SBU) The five staffers on this visit represented the
following Congressmen:
- Congressman Ron Kind (D-WI)
- Congressman Chris Van Hollen (D-MD)
- Congressman David Price (D-NC)
- Congressman Charles Gonzalez (D-TX)
- Congressman Mark Udall (D-CO).
All five of these Congressmen have supported the recent FTAs
with Chile, Singapore, Australia, and Morocco (with the
single exception that Congressman Kind did not vote on the
Australia FTA). However, they also all opposed TPA (Trade
Promotion Authority) in 2001 (except for Congressman Van
Hollen, who was not in office at the time).


5. (SBU) The staffers' four-day visit began in the northern
industrial region of the country where they visited a
textile factory, met with municipal officials from the town
of Villanueva (near San Pedro Sula),visited successful
projects of a women's micro-lending organization, and met
with representatives of FIDE and the AHM. They then
traveled to the agricultural Comayagua valley and the Pan-
American School for Agriculture at Zamorano to discuss
agricultural issues, visit agricultural diversification
projects, and meet Honduran farmers who are successfully
producing high-value agricultural goods for export. In
Tegucigalpa, they met with Ambassador Palmer and country
team members and had dinner with Minister of Trade and
Industry Norman Garcia, Minister of Labor German Leitzelar,
and Minister of Natural Resources and the Environment
Patricia Panting. Finally, they visited the Mayan ruins at
Copan to observe one of Honduras' most successful tourist
attractions. EconOffs accompanied the staffers on the
agricultural visits and during their time in Tegucigalpa.

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Views and concerns of the staffers
--------------


6. (SBU) None of the staffers on the trip at any point
expressed concerns about the commercial benefits of the
agreement for the United States, nor did they at any time
explicitly raise the concern that CAFTA-DR could cause jobs
to move from the United States to Central America. Instead,
their concerns were focused on the negative effects that
CAFTA-DR may have on vulnerable Central Americans,
especially farmers, and the sense that the U.S. is
"rewarding" countries with inadequate protection of labor
rights and environmental standards, while not doing enough
to demand improved protection of those rights.

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Staffers Note Strong Opposition from U.S. Labor
-------------- --


7. (SBU) Several staffers stressed that the Congressmen they
work for are "New Democrats" who normally support free trade
agreements. However, strong opposition from labor unions in
the U.S. has forced them to consider voting against CAFTA-
DR. One staffer recounted a meeting with a major U.S. labor
union in which the union officials suggested that, if the
Congressman votes for CAFTA-DR, the union will support and
finance a candidate to run against him in the 2006
Democratic primary election. Another staffer told a similar
story, saying that a human rights organization in his
district (which is opposed to CAFTA-DR because, in its view,
the violation of labor rights in the CAFTA-DR countries is a
human rights issue) has said that they will run television
spots denouncing the Congressman's support for CAFTA-DR if
that's what it takes to convince him to oppose the
agreement.

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"Does CAFTA-DR really have teeth?"
--------------


8. (SBU) The concern over protection of labor rights was
also reflected in the staffers' interest in CAFTA-DR's
dispute settlement mechanisms. While the staffers knew a
fair amount about the agreement, they seemed to still lack a
clear understanding of exactly what "teeth" the agreement
has in case of violations. In the meeting with the country
team, one staffer expressed frustration that he had "never
gotten a straight answer" to the question of how CAFTA-DR
will allow the U.S. to push for greater enforcement of labor
laws in the region. EconChief responded with a detailed,
step-by-step explanation of CAFTA-DR's dispute settlement
procedures, a description that all the staffers followed
with close interest.


9. (SBU) Some were still skeptical. One staffer asked for
clarification that, for the monetary assessments of CAFTA-DR
to be applied, the actual government of a CAFTA-DR Party
would have to bring an action - an action could not be
brought by an NGO, for example. (In Post's understanding,
this is correct.) He then argued that, in practice, this
greatly weakens the dispute settlement mechanism, as other
political concerns in the bilateral relationship might well
override the trade issue in question. For example, he said,
it is hard to believe that the USG would bring an action
against a CAFTA-DR country if the USG were simultaneously
pressing that country on a major foreign policy issue such
as support for the Global War on Terror.


10. (SBU) Other staffers questioned the very approach of
entering into a trade agreement with countries which have
significant enforcement problems. If everyone acknowledges
that Central American countries currently do an incomplete
job of enforcing their labor laws, one asked, "Why reward
them with increased market access now? Why not wait until
they have solved the problem and grant them market access in
return for real accomplishments in the future?" LabAtt
reiterated a point made frequently by Honduran Minister of
Labor German Leitzelar: namely, that Honduras has labor
problems with or without CAFTA-DR but that CAFTA-DR (through
increased investment and opportunities for greater economic
growth) would give Honduras a chance to improve the labor
situation, whereas the defeat of CAFTA-DR would leave
Honduras with the same labor problems it has now. The
staffer said there was much merit to that statement. LabAtt
also emphasized DOL-funded technical assistance projects and
noted that CAFTA-DR has already generated and increased the
international focus on effective application of existing
labor laws in Central America.

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Concern for Honduran Farmers
--------------


11. (SBU) Several staffers also expressed concerns over the
impact that CAFTA-DR would have on poor Honduran farmers.
While visiting agricultural diversification projects near
Comayagua, one staffer spoke directly in Spanish with the
farmers to elicit their views and to explain his
Congressman's concerns that CAFTA-DR would lead to increased
presence in the region of large agribusinesses which would
put small farmers out of business.


12. (SBU) The farmers he spoke to acknowledged that these
concerns are valid but also pointed to the agricultural
programs in which they were participating as sufficient to
counter that threat. So long as these programs exist to
provide small farmers with financing and technology and to
pool production from many small farms together to fill large
orders, small and medium-sized farmers can indeed compete
very successfully, the farmers said. (The staffers were
visiting projects which do exactly that: a jalapeno pepper
processing and packaging plant which buys from many small
farmers and exports to the United States and a USG-funded
and supported packaging plant currently being used to
prepare mangoes, cucumbers, onions, and other vegetables for
export.)


13. (SBU) This staffer also questioned CAFTA-DR's ability to
prevent large corporations from appropriating technologies,
such as seed varieties, from small farmers and patenting
them for their own use, leaving the small farmers having to
pay royalties for their own innovations - an apparent
reference to Article 15.1.5, in which the Parties agree to
provide patent protection for plant varieties, which
currently cannot be patented under Honduran law. (After the
visit, EconOffs received more information about these
provisions of CAFTA-DR from USPTO and have passed this
information on to the staffer.)


14. (SBU) At the visit to the Pan-American School for
Agriculture at Zamorano, the rector, Dr. Kenneth Hoadley,
delivered a presentation which focused on rural poverty
alleviation in Honduras and the two scenarios that, in his
view, poor Honduran farmers currently face. In the first
scenario, as agricultural technology continues to raise
efficiency in other parts of the world, farmers who remain
protected from competition will fall further and further
behind and will remain small-scale, subsistence farmers,
poor indefinitely. In the second scenario, increased trade
and increased diversification into value-added agriculture
and agro-industry offer opportunities outside of subsistence
agriculture. CAFTA-DR implementation, if coupled with trade
capacity building programs and appropriate transitional
assistance for these comparatively uncompetitive farmers,
should help make the second scenario a reality. The
staffers responded very positively to this presentation, and
several requested copies to share with their members.

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Countering the Myth that "CAFTA-DR is bad for Central
America"
-------------- --------------


15. (SBU) Comment: While one staffer did acknowledge that he
has met with agricultural groups that are in favor of CAFTA-
DR, the issue of what commercial benefits the agreement
could bring the U.S. seems to be playing a very small role
in the decisions of these particular Congressmen. Instead,
the staffers were far more concerned over the impact of the
agreement in Central America. U.S. NGOs, which are opposed
to CAFTA-DR, are obviously having some success in getting
out the message that "CAFTA-DR will be bad for ordinary
Central Americans." Fortunately, visits like this one,
organized by the GOH and supported by Post, can work to
counter that message by bringing staffers into contact with
the very people who stand to benefit from greater economic
opportunities that CAFTA-DR will bring and by letting those
people speak for themselves. End comment.

Palmer