Identifier
Created
Classification
Origin
07TEGUCIGALPA1311
2007-08-02 22:29:00
CONFIDENTIAL
Embassy Tegucigalpa
Cable title:  

INDUSTRY AND COMMERCE VICE-MINISTER ROSA MEETING

Tags:  ECON EIND EINV ETRD ETTC PGOV PREL HO 
pdf how-to read a cable
VZCZCXYZ0003
PP RUEHWEB

DE RUEHTG #1311 2142229
ZNY CCCCC ZZH
P 022229Z AUG 07
FM AMEMBASSY TEGUCIGALPA
TO RUEHC/SECSTATE WASHDC PRIORITY 6498
INFO RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC
C O N F I D E N T I A L TEGUCIGALPA 001311 

SIPDIS

SIPDIS

STATE FOR WHA/CEN ELIA TELLO AND WHA/EPSC LISA MARTILOTTA
AND COMMERCE FOR ITA DESK OFFICER MARK SIEGELMAN AND
TREASURY FOR CENTRAL AMERICA DESK OFFICER SARA GRAY

E.O. 12958: DECL: 08/02/2017
TAGS: ECON EIND EINV ETRD ETTC PGOV PREL HO
SUBJECT: INDUSTRY AND COMMERCE VICE-MINISTER ROSA MEETING
WITH AMBASSADOR ON SOCKS

Classified By: AMB CHARLES FORD. REASONS 1.4(b) AND (d)

C O N F I D E N T I A L TEGUCIGALPA 001311

SIPDIS

SIPDIS

STATE FOR WHA/CEN ELIA TELLO AND WHA/EPSC LISA MARTILOTTA
AND COMMERCE FOR ITA DESK OFFICER MARK SIEGELMAN AND
TREASURY FOR CENTRAL AMERICA DESK OFFICER SARA GRAY

E.O. 12958: DECL: 08/02/2017
TAGS: ECON EIND EINV ETRD ETTC PGOV PREL HO
SUBJECT: INDUSTRY AND COMMERCE VICE-MINISTER ROSA MEETING
WITH AMBASSADOR ON SOCKS

Classified By: AMB CHARLES FORD. REASONS 1.4(b) AND (d)


1. (C) Summary. Ambassador and EconOff met with Industry and
Commerce Vice-Minister Jorge "Coque" Rosa and Official
CAFTA-DR negotiator Melvin Redondo on August 2, 2007,
regarding the potential imposition of safeguards on the sock
industry. The GOH does not believe that the USG has a
legitimate rationale to institute safeguards at this time and
also worries about the political fallout in Honduras of a
trade spat with the United States at this time of strong
national debate about the foreign policy direction of the
Zelaya administration. Ironically, this concern about the
US-Honduras relationship may make this the best time for the
USG to push for a negotiated settlement. End summary.


2. (C) Vice-Minister Rosa started the meeting by blaming the
press for the woes of CAFTA-DR in Honduras, saying that all
the papers talk about is "blood and judicial insecurity" and
that Honduras should be making more progress than it is.
After the Ambassador pointed to weaknesses in Honduras's
macroeconomic program and lack of structural economic reforms
as more likely causes of Honduras's problems, Rosa argued
that Honduras is not a threat to investment.


3. (C) Redondo then attacked the economic case for safeguards
in the sock industry, saying that current circumstances do
not warrant such action. He stated that the sock industry in
the US has been decreasing for 10-15 years, and that other
countries such as China, Korea, and Honduras have filled the
void. In his opinion, initiating safeguards on Honduras would
not revitalize the US sock industry; production would just
shift to other countries such as China and Pakistan, whose
growth has been much more rapid than that of Honduras. He
said further that safeguards would restrict US sellers of
thread, of which Honduras is the largest consumer. According
to Redondo, exports to Honduras for outward processing have
increased significantly even as US domestic production has
declined, and there is a high degree of US content in
Honduran hosiery. Safeguards would force Honduras to make use
of foreign yarns instead. In total, according to Redondo's
statistics, Honduras's yearly output has increased by 2.4
million dollars per year since 2001. This represented only
0.72 percent of the US hosiery market in 2006 and cannot be
seen as causing serious damage.


4. (C) In addition, Redondo felt that the implementation of
safeguards would require amendments to CAFTA-DR and regional
compensation for its members. He said that decreased demand
for US textiles could be further compounded by the
application of the CAFTA-DR mutual concessions provision.


5. (C) Vice-Minister Rosa then switched to political
arguments against the safeguards. The implementation of
safeguards, he said, would be portrayed by some domestic
political actors as an action against President "Mel" Zelaya
for his relationship with President Hugo Chavez of Venezuela
and President Daniel Ortega of Nicaragua. He said that
safeguards could badly affect President Zelaya politically
and that there would be further regional repercussions. In
particular, Redondo said, safeguards would cause the Costa
Ricans to vote "no" in the their upcoming October 7
referendum on CAFTA-DR.


6. (C) The Ambassador ended the meeting by promising to
report the GOH's arguments against safeguards to Washington
and by suggesting that the GOH work through its Ambassador in
the US to continue to press its case. However, the Ambassador
was also clear that there was very little time left to argue
this issue and that therefore the GOH's options would appear
to be either to work with USTR to come to a negotiated
settlement or to accept the imposition of safeguards and
negotiate a solution in the public arena.


7. (C) Comment. Rosa and Redondo seemed disappointed yet
accepting of the Ambassador's analysis and recommendations.
Given the GOH's concern about its relationship with the US
and its own political image, now appears to be an opportune
moment to push for a negotiated solution. End comment.
FORD