CLOCK TICKING ON CAFTA IPR REFORMS IN NICARAGUA

UNCLAS MANAGUA 000256

SIPDIS

SENSITIVE
SIPDIS

DEPARTMENT FOR WHA/CEN, WHA/EPSC, EB
DEPARTMENT PASS TO COMMERCE, TREASURY, USTR, USAID

E.O. 12958: N/A
TAGS: ETRD NU
SUBJECT: CLOCK TICKING ON CAFTA IPR REFORMS IN NICARAGUA

REF: MANAGUA 0026


1. (SBU) Summary: Minister of Trade Alejandro Arguello told
Econoffs on February 1 that he expects a tough fight on the
IPR portion of a legislative package that must be approved in
the National Assembly before CAFTA-DR enters into force.
Arguello indicated that the IPR reforms will likely motivate
the Sandinista Party (FSLN) to orchestrate parliamentary
delays and street protests. He reported close cooperation
with CAFTA Committee Chair Carlos Noguera on strategies to
line up a 47 vote majority in favor of the required
legislative reforms. Noguera echoed that cooperation in a
February 1 meeting with Econoffs, and suggested that the
greatest impediment to March 1 entry into force was not FSLN
opposition but a tight timeframe. He recommended that the
GON put all its political and technical muscle into
convincing pro-CAFTA legislators to accept and support the
introduction of the CAFTA package as an emergency measure,
bypassing committee debate. The Trade Ministry and the
Embassy have coordinated closely with local artists and
businesses to create and launch a home grown defense of
Nicaraguan culture through a anti-piracy campaign scheduled
to be launched the week of February 6. At the request of
Minister Arguello, the Embassy will maintain a low profile on
IPR issues throughout debate of the CAFTA reforms, so as not
to encourage bad actors with worse intentions. End Summary.


2. (SBU) The GON is preparing for a potentially tough fight
to push required IPR legislative reforms through the National
Assembly prior to February 16, so that Nicaragua can enter
CAFTA-DR into force on March 1, 2006. Minister of
Development, Industry and Trade (MIFIC) Alejandro Arguello
called Econoff on February 1 to request Embassy assistance in
urging quick review and return of the IPR reforms. (Note:
The Minister's request came a short time before USTR informed
the GON that they had reviewed the text and had no further
comment, and invited the Nicaraguan CAFTA negotiators to
Washington on February 6 to review the full CAFTA
implementation package, including regulations. The GON
accepted the invitation.) The 26 page IPR text calls for
specific changes in Nicaragua's penal code, establishing a
jail sentence of 1 to 2 years for unauthorized use of
intellectual property, and a 2 to 3 year sentence for illegal
use and reproduction of patented software and computer
programs. Industrial property rights are accorded the same
protections. Code reforms also include provisions for the
confiscation and destruction of machinery used for illegal
reproductions. Currently, the penal code only permits the
confiscation and destruction of pirated materials. (Comment:
Nicaraguan police took custody of 13,000 CDs and DVDs during
a January 2006 raid, and the three pirates reportedly
protested violations of their human rights at an empty
National Assembly within hours of the raid.)


3. (SBU) Arguello expressed concern about possible street
protests and parliamentary delays against IPR reforms, all
orchestrated by the Sandinista Party (FSLN). His concern
about the political (and illegal commercial) sensitivities
associated with IPR protections is such that he asked Post to
cancel the involvement of USPTO and industry representatives
in a MIFIC/INCAE CAFTA program scheduled for February 6 and

7. He asked for a low profile on IPR from the Embassy. In a
separate conversation, Sandinista Party dissident Herty
Lewites reinforced the struggle ahead, telling Ambassador
Trivelli on February 1 that aside from his personal support
for CAFTA-DR, he expects that the IPR reforms will be a
tougher sell in the National Assembly than was CAFTA
ratification itself.


4. (SBU) On a positive note, Arguello expressed satisfaction
over a January 31 commitment from CAFTA
Committee Chair Carlos Noguera to enlist the votes of 41
Liberal Constitutional Party (PLC) members. He added that
he expects to repeat the GON strategy from September and
October 2005, arriving at a 47 vote majority by adding to
the PLC foundation votes from minority parties, including the
Pro-Bolanos Azul y Blanco (Blue and White) bloc, the
Camino Cristiano (Christian Way) bloc and the
Pro-Montealegre National Liberal Alliance - Conservative
Party (ALN-PC).


5. (SBU) A healthy degree of cooperation on IPR reforms
between National Assembly CAFTA Committee Chair Carlos
Noguera and MIFIC was evident during Noguera's February 1
meeting with Econoffs. Noguera opined that the greatest
enemy to the reforms is time. The Assembly is fully
occupied this week with organizing the structure of
committees, and Assembly leadership will not meet to set the
agenda for plenary debate until next week. He added
that Assembly's normal procedure is to schedule committee
hearings and plenary sessions on alternating weeks, with
most business taking place Tuesday through Thursday.
He did not hold out much hope for the passage of the
legislative package prior to February 16 if the normal
legislative route is taken, pointing to the complications
of committee debate and the likely need to send penal code
reforms on anti-corruption through the Justice Committee.
Noguera reiterated his January 31 recommendation to
Minister Arguello that President Bolanos enlist the
political leadership of the Assembly to accept the CAFTA
reform package as an emergency measure, which would allow
the reforms to bypass committee review and go directly to
the plenary. He suggested that such a legislative strategy
would have to be prepped with a forceful political pitch
backed by technical arguments to CAFTA allies within the
PLC, Azul y Blanco, Camino Cristiano and ALN-PC. Noguera
emphasized that Arguello himself and his best technical
experts will need to be involved in the effort to expedite
passage of the CAFTA reforms.


6. (SBU) Noguera discounted resistance from economic
interests as a major impediment to the IPR legislation,
claiming that it would be difficult for even the FSLN to
publicly support pirated sales. He recommended that the
GON include in the legislative strategy involvement of
Nicaraguan artists whose interests have been harmed by
pirates. (Note: During the discussion, Noguera was holding
a draft copy of the IPR and anti-corruption changes that
Arguello had shared with him on January 31. While he
displayed a good general command of the issues, Noguera
acknowledged that he had not yet read the text.) Econoffs
reiterated the importance of passing the legislative
package without modifications.


7. (SBU) Comment: Avoiding the antibodies that will attack
should the IPR legislation be perceived as a purely US
interest, Post will continue to work behind the scenes,
pushing for expeditious legislative approval of the CAFTA
reforms. Post is quietly facilitating an ongoing publicity
campaign in support of intellectual property rights.
Participants include Nicaraguan artists, video and music
production companies, concert production companies and
local cinemas. Through close collaboration with MIFIC and
the Embassy, the ad hoc group decided to organize local
Nicaraguan musicians to demonstrate the negative impact of
piracy on Nicaraguan culture and arts. The Nicaraguan
Copyright and Patent Society (NICAUTOR) accepted a leadership
role in producing a compact disc of songs by the
most popular Nicaraguan artists, interspersed with messages
to oppose pirating and support the new IPR law. Pro-IPR
artwork is featured on the label. The production has been
funded, in part, by a $2,000 USAID grant. CDs will be
distributed to National Assembly deputies, media and
university students. The CDs will be complemented with a
music video to be featured on cable TV and in local movie
theaters. The campaign will be launched the week of
February 6 with a press conference featuring famous
Nicaraguan musicians. Given the sensitivities involved, Post
is not advertising its role in the campaign. End Comment.
TRIVELLI