ECONOMIC MINISTER TELLS AMBASSADOR SPS SYSTEM NOT

C O N F I D E N T I A L SAN SALVADOR 000065

SIPDIS

E.O. 12958: DECL: 01/08/2016
TAGS: ETRD PREL ES CAFTA
SUBJECT: ECONOMIC MINISTER TELLS AMBASSADOR SPS SYSTEM NOT
READY FOR FEB. 1 CAFTA IMPLEMENTATION

REF: 2005 SAN SALVADOR 3567

Classified By: Ambassador H. Douglas Barclay. Reasons 1.4 (B) and (D)


1. (C) Salvadoran Minister of Economy Yolanda de Gavidia,
accompanied by Ambassador to the United States Rene Leon,
told Ambassador Barclay in a January 6 meeting that El
Salvador would not be ready by February 1 to recognize U.S.
sanitary and phytosanitary standards (SPS) systems as
equivalent to Salvadoran SPS systems. De Gavidia said that
December 15 legislative changes, not yet signed into law
because of an FMLN procedural delay, give them the legal
authority to recognize the U.S. SPS systems. The regulatory
framework to put the law into effect, drafted by the Ministry
of Agriculture and Livestock (MAG) and being reviewed by the
Ministry of Economy, is also nearly finished. However, that
framework only sets out the procedures to follow to recognize
the U.S. system and does not specifically recognize it as
equivalent. The Minister said implementation--and eventual
recognition--would require additional time. Leon suggested
that in five months they could complete the process and
suggested that his government could commit to that
time-frame. On tariff-rate quota administration, de Gavidia
was more positive and said her Ministry had submitted a
proposal to USTR on Thursday and that they were waiting for
comment.


2. (C) Leon explained to the Ambassador that El Salvador
could not simply declare the U.S. SPS systems equivalent
without first understanding it and having in place a
regulatory framework to accept U.S. inspections in the course
of actual trade. Domestic agricultural interests--concerned
for example, about the impact of certain strains of avian
influenza, would expect the government to demonstrate that it
followed due process in finding SPS systems equivalence.
Leon emphasized that the government was not looking to use
SPS as a non tariff barrier and was willing to help the USG
meet a political commitment. Minister de Gavidia added that
El Salvador was willing to help the USG meet a commitment it
made with its Congress to get CAFTA passed, but that
implementing the regulations to find equivalence would take
time. She said the government was prepared to provide MAG
with $2 million in supplemental funding to move along the
process. She also noted some concern that the USG was
requiring SPS systems equivalence only in terms of Salvadoran
recognition of the U.S. system, not the other way around.


3. (C) Leon outlined the political implications of linking
CAFTA implementation to SPS systems equivalence. On the
domestic front, the communist-dominated FMLN would claim that
this last minute renegotiation demonstrated that Saca's cozy
relationship with the United States had borne no fruit. He
cautioned that this issue would deadlock debate in the Costa
Rican Legislative Assembly and that other countries would
also face serious issues in tying SPS systems equivalency to
CAFTA implementation. He also pointed to the chilling effect
it would have on efforts to secure a hemispheric free trade
agreement. Finally, he pointed to the economic costs
associated with waiting to implement in terms of lost
opportunity.


4. (C) Minister de Gavidia indicated she would communicate
these concerns directly with USTR as soon as possible.
Barclay