Identifier
Created
Classification
Origin
06PANAMA233
2006-02-08 02:11:00
CONFIDENTIAL
Embassy Panama
Cable title:  

FTA: GOP WRESTLES WITH POLITICAL STAKES AND

Tags:  EAGR ECON ETRD PREL PGOV PM 
pdf how-to read a cable
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TO RUEHC/SECSTATE WASHDC IMMEDIATE 7332
INFO RUEHZA/WHA CENTRAL AMERICAN COLLECTIVE PRIORITY
RUEHBO/AMEMBASSY BOGOTA PRIORITY 2159
RUEHBR/AMEMBASSY BRASILIA PRIORITY 0263
RUEHCV/AMEMBASSY CARACAS PRIORITY 0933
RUEHLP/AMEMBASSY LA PAZ FEB 0210
RUEHPE/AMEMBASSY LIMA PRIORITY 0597
RUEHSG/AMEMBASSY SANTIAGO PRIORITY 0178
RUEAIIA/CIA WASHDC PRIORITY
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RUEATRS/DEPT OF TREASURY WASH DC PRIORITY
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C O N F I D E N T I A L PANAMA 000233

SIPDIS

SIPDIS

DEPT FOR WHA/CEN - SCHIFFER
ALSO FOR WHA/EPSC - URS AND GUMBINER
ALSO FOR EB/TPP/BTA - LAMPRON
STATE PASS USTR - SCHWAB, CROWDER, LATIMER, FEDCHOK, AND
MALITO
ALSO PASS USDA/FAS/ITP - SPITZER
USDOC/MAC FOR GAISFORD

E.O. 12958: DECL: 02/08/2016
TAGS: EAGR ECON ETRD PREL PGOV PM
SUBJECT: FTA: GOP WRESTLES WITH POLITICAL STAKES AND
TECHNICAL SOLUTIONS

REF: PANAMA 0147 AND PREVIOUS

Classified By: Ambassador William A. Eaton for Reasons 1.5
(b and d)

C O N F I D E N T I A L PANAMA 000233

SIPDIS

SIPDIS

DEPT FOR WHA/CEN - SCHIFFER
ALSO FOR WHA/EPSC - URS AND GUMBINER
ALSO FOR EB/TPP/BTA - LAMPRON
STATE PASS USTR - SCHWAB, CROWDER, LATIMER, FEDCHOK, AND
MALITO
ALSO PASS USDA/FAS/ITP - SPITZER
USDOC/MAC FOR GAISFORD

E.O. 12958: DECL: 02/08/2016
TAGS: EAGR ECON ETRD PREL PGOV PM
SUBJECT: FTA: GOP WRESTLES WITH POLITICAL STAKES AND
TECHNICAL SOLUTIONS

REF: PANAMA 0147 AND PREVIOUS

Classified By: Ambassador William A. Eaton for Reasons 1.5
(b and d)


1. (C) Summary: President Martin Torrijos told visiting U.S.
Representative Sander Levin on Jan. 26 that he is committed
to resolving USG concerns on sanitary and phytosanitary (SPS)
issues and to concluding a free trade agreement (FTA) with
the U.S. Public support for the FTA has slipped dramatically
over USTR's controversial proposed "SPS side letter." The
GOP faces intense political pressure to resist signing a side
letter. Left-leaning members of Torrijos' ruling PRD party
have pilloried Vice President/Foreign Minister Samuel Lewis
Navarro (SLN) and Trade Minister Alejandro Ferrer for having
"nothing" to show for promoting close ties with the U.S.
They are also pressing Torrijos to put the FTA on ice
indefinitely and to turn to Venezuela's Hugo Chavez for help
in lessening Panama's energy woes. The GOP is anxious to
find a "face-saving" way out. By February 28, Torrijos
expects to decree the creation of an autonomous,
science-based SPS entity. The GOP also is forming a
technical team to visit the U.S. for purposes of making an
equivalency determination. The Embassy continues to stress
the importance of focusing on solving the technical issues on
SPS and we are working with pro-FTA allies to boost flagging
public support for free trade. End Summary.

Torrijos Stresses Commitment to Free Trade & Fixing SPS
-------------- --------------


2. (C) President Martin Torrijos told visiting U.S.
Representative Sander Levin on January 26 that the GOP will
continue to support free trade despite trends to the contrary
elsewhere in the region because it is key to tackling
Panama's persistent poverty, continued high rates of
unemployment, and wide income disparities. Torrijos said he

is still anxious to reach agreement with the U.S. He
acknowledged Panama's abuse of sanitary and phytosanitary
(SPS) measures to restrict agricultural imports. Torrijos
stressed his commitment to addressing the concerns of the
U.S. and other trading partners regarding the GOP's history
of arbitrary import licensing practices. He said that by
February 28, he will issue a decree to create a new,
autonomous, science-based entity to address plant and animal
health. Torrijos said that this is part of the GOP's move to
modernize the government and to promote increased
transparency. He said the GOP sees its self-interest in
doing so, not because it wants to placate the U.S. or other
trading partners.


3. (C) Torrijos and First Vice President/Foreign Minister
Samuel Lewis Navarro (SLN) said they were surprised at how
the controversy that erupted over USTR's proposed "side
letter" on SPS prompted a "180 degree change" in public
attitudes on the FTA. Torrijos said his personal popularity
fell by 10 points following the GOP's failure to close a deal
at the Jan. 10-13 round of negotiations. (Comment: He
neglected to mention that the growing unhappiness of
Panamanians over rising energy prices likely figures his
popularity polls. End comment.) Former Agriculture Minister
Laurentino Cortizo, whose noisy Jan. 10 resignation over the
issue sparked considerable controversy in Panama, accused the
U.S. of strong-arming the GOP in a unilateral move to weaken
Panama's plant and animal health regime. This rallied
Panama's anti-free traders around the banner of "sovereignty"
and public health. As a result, Torrijos said, he is under
intense political pressure to resist signing a side letter,
even as the GOP seeks to solve the underlying issues
scientifically.

GOP Reformers Face Hostile Fire, Seek Face-Saving Out
-------------- --------------


4. (C) Immediately following the Torrijos-Levin meeting,
Trade Minister Alejandro Ferrer pulled Econ Chief aside to
share his distress over the growing flack that he and SLN are
taking from left-leaning members of Torrijos' ruling PRD
party. Ferrer (who is not a PRD member) said that Housing
Minister Balbina Herrera and other "old guard" PRD members
pilloried him and SLN during a heated 5-1/2 hour meeting on
January 25. In blasting the two for pushing the Torrijos
administration closer to the U.S., they complained that "this
is what they (the U.S.) do to us" and that "this is what you
have to show for it?" Ferrer said old-guard PRDistas pushed
hard to put the FTA indefinitely on ice, ostensibly to push
the GOP's planned referendum on the Panama Canal expansion to
front of Torrijos' agenda. He said they also pushed for the
GOP to turn to Venezuela's Hugo Chavez to get help, for
example, on Panama's energy woes.


5. (C) Noting that GOP polls showed public support for the
FTA dropping from 52% to 32%, Ferrer seemed desperate to
regain the initiative (if not his credibility) and to
re-establish some forward momentum on the deal. He
emphasized that he and new Agriculture Minister Guillermo
Salazar remained committed to fixing Panama's SPS
administration once and for all. He also said that the GOP
is assembling its team of technical experts to visit the U.S.
as soon as possible to conduct the analysis it needs for any
determination of SPS equivalency.


6. (C) Ferrer appealed for greater USG understating of the
GOP's need for a "face-saving" solution and for cooperation
to explore possible ways forward. He suggested that, in
connection with the visit of GOP technical staff for
equivalency purposes, technicians from both sides might
review together the main technical sticking points in the SPS
side letter, with a view to clearing up any
"misunderstandings" and to identify specific actions and
provisions that must be spelled out in the letter. Ferrer
said he was still perplexed by USTR's resistance to closing
the deal, but leaving itself an out to ditch the it if the
GOP does not deliver on equivalency within the 90-days "fast
track" notification period.

FAO Notes SPS "Deficiencies;" GOP Moves on New Entity
-------------- --------------


7. (U) On Feb. 1, the UN Food and Agriculture Organization
briefed the GOP and the press on the "deficiencies" it sees
with Panama's SPS administration. The FAO's comments
received wide media play and helped to reinforce the concerns
of the U.S. and others.


8. (SBU) Also on Feb. 1, Chief FTA Negotiation Estif Aparicio
passed Econ Chief an initial, 28-page draft of the GOP's
proposed "decree law" to create a "National Agricultural
Health and Food Safety Authority" (with the Spanish acronym
"ANSASA") to administer SPS functions. Under the
"extraordinary powers" granted by Panama's National Assembly
to President Torrijos, the president has until February 28 to
legislate by decree on this issue (among nine others). The
draft represents an ambitious, albeit imperfect, proposal to
create an autonomous entity within the Executive branch, with
its own budget, that houses existing functions pulled from
the Ministries of Agriculture and Health. The draft decree
stipulates that ANSASA would follow the WTO's SPS accord, the
OIE's animal health codes, the Codex Alimentarius, and the
Convention on Biodiversity's Cartagena Protocol on biosafety.


9. (U) As currently proposed, ANSASA would be overseen by an
8-member Board of Directors chaired by the Agriculture
Minister and including the Health Minister, Trade Minister,
the Minister of Economy and Finance, the ANSASA
Administrator, and representatives of three private sector
chambers. It would also have a 15-member "Consultative
Technical Council" composed of the ANSASA Deputy
Administrator, the national Directors of various plant and
animal health offices and labs, the Deans of the University
of Panama's agricultural and veterinary schools, and three
private sector representatives.


10. (SBU) On Feb. 3, Econ Chief provided the GOP with Post's
initial reactions, including concerns that the private sector
in ANSASA's governing structures could undermine the entity's
objectivity and credibility. As the draft also excludes any
mention of "equivalency," the decree, as drafted, would not
explicitly empower ANSASA to make or grant equivalency
determinations. Trade Ministry staff appeared receptive to
our concerns and said they were already revising the draft in
response to similar comments provided by the FAO. However,
it remains to be seen whether the GOP was sufficiently
"locked in" with this proposal or whether it will ultimately
fix the draft decree's weaknesses. Post has not yet received
a revised draft, nor has the GOP promulgated the decree.

FTA Proponents Seek to Recover Lost Ground
--------------


11. (SBU) Free trade advocates have been in a funk in recent
weeks owing to the GOP's inability to either close or sell
the FTA. They are also unhappy at the public's gullible
acceptance of misinformation proffered by Cortizo and the
agricultural sector's mercantilist factions. Despite the
pro-FTA tilt of most editorial commentary, mainstream and
tabloid press regurgitation of allegations about USG aims has
made it almost conventional wisdom that the U.S. wants to
"weaken" Panama's SPS regime or that we have violated
Panamanian sovereignty. Leaders of a "National Pro-FTA
Coalition" formed by Panama's top business chambers gathered
January 31 at a dinner hosted by the Ambassador to seek ways
to take concerted action reverse the ebbing tide of public
support for the FTA. The Ambassador continues to be
outspoken on the issue, including appearances before major
business groups and a highly visible Jan 25-26 visit to
Panama's agricultural heartland, Chiriqui Province. The
Embassy will continue to work with pro-FTA allies to boost
public support for free trade and to refute baseless charges
against the USG.

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


12. (C) The GOP touts this FTA with the U.S. - its largest
trading partner - as a high priority. President Torrijos and
his administration would be judged harshly if the GOP
ultimately fails to conclude an agreement, whatever the
reasons.
EATON