COLOMBIANS HOPE TO CLOSE USATPA NEGOTIATIONS ASAP

C O N F I D E N T I A L SECTION 01 OF 02 BOGOTA 000576

SIPDIS

DEPT PLA PASS USTR EEISSENSTAT AND BHARMON; WHA FOR A/AS
SHANNON; EB FOR A/S WAYNE

E.O. 12958: DECL: 01/20/2015
TAGS: ETRD ECIN EAGR CO FTA
SUBJECT: COLOMBIANS HOPE TO CLOSE USATPA NEGOTIATIONS ASAP

Classified By: Ambassador William B. Wood, reasons 1.4 (b) and (d)


1. (C) Summary: The Ambassador met with Trade Minister
Botero and Chief Trade negotiator Gomez on January 20 to urge
rapid Colombian movement toward agreement of a final text.
Botero and Gomez indicated a clear determination to reach
agreement, but more than any other time, indicated concern
over the reaction of key sectors supporting Uribe in this
election year. Botero laid out Colombia,s red lines (used
clothing, liquor tax harmonization, sugar and rice TRQ,s and
SPS) and explained their impact on key political
constituencies, such as rice and sugar growers, coffee
growers and cattle farmers. The Ambassador pressed the GOC to
be more realistic in their expectations and not risk
practical and workable solutions by pursuing unrealistic
expectations. End Summary.


2. (C) The key non-agricultural issues raised were used
clothing and liquor tax harmonization. Botero reiterated
that while the GOC had flexibility on other non-agricultural
issues, the GOC could not sign an agreement prior to the
upcoming elections that included either item.


3. (C) Used clothing: if they agree to its import while Peru
maintained a prohibition, it would be impossible to obtain
congressional approval for the agreement. The GOC also
cannot accept using WTO legal means to regulate the trade -
it,s a prohibition or nothing.


4. (C) Liquor tax: Although the said they were prepared to
advance on more equitable distribution, they could not
harmonize the taxes, as they would face a rebellion among
local governors. A previous reform took three years and
despite an Andean ruling to change the tax, the Congress had
refused to do so. Botero suggested challenging the tax at
the WTO, not attacking directly through the agreement.


5. (C) On agriculture, the GOC accepted that nothing could
be excluded, but would prefer a sugar for rice technical
exclusion. The underscored a clear link between rice and
sugar: they could trade off one group against the other
domestically, but could not face the opposition of both.
Their preference would be to seek more flexibility on rice
(basically trading off the sugar sector for more protection
of rice) because of its greater electoral impact. A
Peru-size rice TRQ with little increase in sugar would doom
the agreement in Congress.


6. (C) Rice: It was clear this was the GOC,s most
sensitive issue. The GOC could accept a rice TRQ in the
40-45,000 MT range, but not one as large as Peru,s as
Colombia has traditionally been more closed to rice than
Peru. Moreover, rice is grown throughout the country and
this has considerable Congressional importance. The GOC
believes its rice would be competitive against US rice, save
for US domestic supports. The Ambassador and Agatt
countered strongly that if rice was so sensitive, there were
WTO-consistent mechanisms that the GOC could use.


7. (C) Sugar: The GOC could contain the damage if they
received a relatively small increase in the sugar quota, so
long as they were able to export ethanol. Another option
would be to broaden the country-specific quotas offered into
an Andean quota that any of the three countries could fill,
since Peru and Ecuador are not significant sugar exporters
and regularly have their quotas re-allocated to others.
Also, the quota the GOC provided for high fructose corn syrup
would need to be proportionate to the access given by the US
for sugar. The GOC is also concerned about the mechanism to
administer the sugar quota; they prefer to maintain the
current system using eligibility certificates rather than a
first come, first serve methodology.


8. (C) Corn: The GOC needs some type of mechanism to assure
that domestic production was purchased. The GOC was willing
to explore WTO legal alternative mechanisms such as an
auction system, but the GOC could not open the market and not
have some way of ensuring a domestic market for the
400-500,000 MT produced locally.


9. (C) Coffee: Colombia can accept the CAFTA rules, but
does not want to open the door to non-U.S. origin coffee from
Asia. They have also offered a quota to take care of U.S.
roasters and distributors, including Starbucks. 500,000
families depend on coffee production in Colombia making the
coffee federation a major electoral player. The GOC also
wants some type of side agreement to strengthen trademark
protection for Colombian coffee.


10. (C) SPS: Colombia persists on demanding a level of
consultation that they don,t need. Embassy noted that
Colombia has the best phyto-sanitary relationship with us in
the hemisphere, thanks to the APHIS, Center of Excellence
here. Embassy also recalled that they had rejected
assistance - training and consultations - offered outside the
treaty that could have already resolved a number of practical
problems. We urged them to trim back their proposal for
consultations to what they needed, and what we were likely to
be able to give.


11. (SBU) Botero and Gomez said that Ecuador may fear an
agreement, but fears being out of it even more. President
Palacio is unpredictable on intellectual property, and seems
unwilling to listen to practical arguments regarding data
protection. The Colombians got the Ecuadorians to agree to a
joint IP meeting to try to control them, but if Ecuador
refuses to move forward, Colombia will do so without them.

12. (C) Comment. This was the first meeting with Botero and
Gomez in almost two years of negotiations where they focused
on the political element. The Colombians want to close, and
this is the closest they have ever come to spelling out their
bottom line. The political calculus presented by Botero is
on the mark. The GOC needs key sectors -- cattlemen, rice
and sugar growers, textile manufacturers -- to pass this
agreement and to advance in an electoral year. They want the
deal and have crafted a path they believe gives the US
improved access to important sectors while also providing
them political cover and support. They are willing to offer
the U.S. agricultural access equal to the Peru agreement, as
long as some fine tuning is possible to reflect the different
reality in Colombia. If we push beyond the red lines listed,
we risk harming our strongest ally in a region in turmoil.
We also risk losing a USD 5 billion export market that is
growing by 20 percent a year to Mercosur, who has a limited
FTA with Colombia that affects our key export products. End
Comment.
WOOD