Identifier
Created
Classification
Origin
08QUITO787
2008-08-25 21:41:00
CONFIDENTIAL
Embassy Quito
Cable title:  

ECUADOR ON CAN-EU TALKS AND ITS NEIGHBORS' FTAS

Tags:  ETRD KIPR ECON PREL PGOV EC 
pdf how-to read a cable
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DE RUEHQT #0787/01 2382141
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P 252141Z AUG 08
FM AMEMBASSY QUITO
TO RUEHC/SECSTATE WASHDC PRIORITY 9297
INFO RUEHBO/AMEMBASSY BOGOTA 7711
RUEHCV/AMEMBASSY CARACAS 3153
RUEHLP/AMEMBASSY LA PAZ AUG LIMA 2769
RUEHGL/AMCONSUL GUAYAQUIL 3760
C O N F I D E N T I A L QUITO 000787 

SIPDIS

TREASURY FOR MEWENS
USTIR FOR BENNETT HARMAN

E.O. 12958: DECL: 08/26/2018
TAGS: ETRD KIPR ECON PREL PGOV EC
SUBJECT: ECUADOR ON CAN-EU TALKS AND ITS NEIGHBORS' FTAS

REF: STATE 84489

Classified By: Ambassador Heather Hodeges, Reasons 1.4 (b) and (d).

C O N F I D E N T I A L QUITO 000787

SIPDIS

TREASURY FOR MEWENS
USTIR FOR BENNETT HARMAN

E.O. 12958: DECL: 08/26/2018
TAGS: ETRD KIPR ECON PREL PGOV EC
SUBJECT: ECUADOR ON CAN-EU TALKS AND ITS NEIGHBORS' FTAS

REF: STATE 84489

Classified By: Ambassador Heather Hodeges, Reasons 1.4 (b) and (d).


1. (C) Summary. Ecuador supported an Andean Community (CAN)
waiver so that Peru could implement its free trade agreement
with the U.S. after President Correa determined that Ecuador
would not impede its neighbors' FTAs. Ecuador is frustrated
with Bolivia's intransigence in the CAN, both its opposition
to Peru's waiver request and its blocking a common CAN
position for trade talks with the European Union. The GOE as
a whole has not established its position on the CAN-EU talks,
but the Foreign Ministry would like Ecuador to join Colombia
and Peru in pursuing a free trade agreement with the EU. End
summary.


2. (C) Econoffs met on August 18 with Mentor Villagomez,
Under Secretary for Commercial Affairs at the Foreign
Ministry, to review the status of the stalled trade
negotiations between the Andean Community (CAN) and European
Union (EU),per reftel. In a wide-ranging discussion,
Villagomez provided insights into the GOE's views of free
trade agreements signed by its regional partners, internal
GOE decision-making, its frustration with Bolivia's
recalcitrance on regional trade issues, and possible ways
forward for the CAN-EU discussions.


3. (SBU) Villagomez reported that he had returned from CAN
discussions in Lima the week before that had addressed two
issues: first, a Peruvian request for a waiver to the CAN
IPR agreement so it could implement the U.S.-Peru Trade
Promotion Agreement, and second, the CAN's position towards
the EU.

Ecuador Won't Block FTAs
--------------


4. (C) Villagomez said that on the first issue, Ecuador and
Colombia supported Peru's request, while Bolivia voted
against it. He added that before the CAN meeting, Ecuador's
position on this matter was decided by President Correa, who
instructed that Ecuador should not take a position that would
impede free trade agreements signed by its regional partners.


Frustration with Bolivia

--------------


5. (C) Villagomez said that in voting against Peru's
request, which addressed the CAN's rules on patentability of
genetic and biological resources, Bolivia argued that "you
can't patent life." Villagomez opined that Bolivia really
didn't understand the issue on which it was being asked to
vote, noting that important issues related to the
patentability of biological resources and traditional
knowledge are being addressed in the WTO.

Bolivia Blocks CAN Position on the EU Talks
--------------


6. (C) Villagomez continued that the intra-CAN discussions
to establish a common position towards the EU followed the
difficult debate on Peru's IPR request, which established a
negative environment for the subsequent discussions. He said
that on one issue, the speed at which the services sectors
would be opened, Ecuador sought a go-slow approach while Peru
and Colombia are willing to open their services sectors
immediately. He argued that Ecuador's approach should have
been appealing to Bolivia, but it was unwilling to even
accept Ecuador's proposal.


7. (C) Villagomez suggested that Bolivia also obstructed any
intra-CAN position on IPR or the EU's sustainable development
model, which would include requirements for labor and
environmental protection. He added that Ecuador also opposes
the EU's labor and environmental proposals in the context of
a free trade agreement, since they require adherence and
compliance with a number of international conventions.
However, Ecuador is willing to look for ways to work with the
EU proposal.


8. (C) Villagomez said that currently the CAN is blocked
from going forward as a group with its EU negotiations. The
next step is a CAN ministerial meeting the week of September
1, but since Bolivia indicated that it does not have any
flexibility in its position, he does not expect any progress
at that meeting towards a common CAN position.

Options Going Forward
--------------


9. (C) In spite of his frustration with the Bolivian stance,
Villagomez outlined two options for the EU/CAN talks to go
forward. One option would be for the CAN as a whole to
continue to negotiate as a group, with some countries
(Boliva, and perhaps Ecuador) opting out of the trade pillar
but participating in the political and cooperation pillars.
This option would allow the laggard(s) to opt into the trade
pillar at a later date.


10. (C) The second option would be for individual Andean
countries to pursue "bilateral" free trade agreements with
the EU. According to Villagomez, the EU still prefers to
negotiate with the CAN as a bloc, but had recently indicated
it is willing to pursue agreements with individual countries.
Villagomez opined that if Peru and Colombia pursued such an
approach, Ecuador would not object, citing the Presidential
decision not to block others' FTAs (para 4).

Ecuador's Position Still Undefined
--------------


11. (C) Villagomez said that Ecuador would define its policy
towards the EU talks by the end of August. He said that he
will propose to Ecuador's Council on Foreign Trade (COMEXI)
that Ecuador join Colombia and Peru under either option )
either join the trade pillar in a comprehensive EU-CAN
agreement, or seek a bilateral trade agreement.


12. (C) Counting up possible votes in COMEXI, Villagomez
said that he expects both the Ministry of Industries and
Ministry of Agriculture to join the Foreign Ministry. He
said that in the past he could also count on support from the
Ministry of Finance, but with recent changes at that Ministry
he was not certain. However, if Finance supports the MFA
proposal, the four votes would give the MFA proposal a
majority. (Note: Villagomez did not identify possible
opposition, but Pedro Paez, the Coordinating Minister for
Economic Policy and President of COMEXI, opposes some
provisions that the EU requires in its trade agreement. The
other member of the council is the Ministry of Tourism.
Private sector chambers had participated on the COMEXI board,
but were removed in July following a court decision.)

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


13. (C) Villagomez was clearly frustrated with Bolivia's
intransigence. While Ecuador sees itself as a bridge between
Colombia and Peru on the one side, and Bolivia on the other,
Villagomez said that Ecuador's trade interests are more
closely allied with Colombia and Peru. It was clear that he
(and presumably the MFA) wants to move forward with free
trade talks with the EU, although there is opposition within
the GOE. While Villagomez outlined a strategy focused on the
COMEXI, we expect that President Correa will make any final
decision on whether Ecuador goes forward with trade talks
with the EU.


14. (C) Correa's decision to support Peru's request for a
CAN waiver so it can implement its FTA with the U.S. provides
a bit of insight into his thought process. He does not favor
an FTA between Ecuador and the U.S., but he does not want to
stand in the way of a Peru-U.S. FTA.
Hodges