SCENESETTER FOR AUSTR EISSENSTAT'S VISIT TO COSTA RICA:

UNCLAS SAN JOSE 000541

SENSITIVE

SIPDIS

DEPT FOR WHA/CEN, WHA/EPSC, WHA/PPC AND EEB;
PLEASE PASS TO USTR:AMALITO/DOLIVER

E.O. 12958: N/A
TAGS: CS ECON ETRD PGOV PREL
SUBJECT: SCENESETTER FOR AUSTR EISSENSTAT'S VISIT TO COSTA RICA:
GOCR READY FOR FINAL LEGISLATIVE PUSH?

REF: A. SAN JOSE 410


B. SAN JOSE 508 and previous (NOTAL)


1. (SBU) SUMMARY: Embassy San Jose warmly welcomes AUSTR Everett
Eissenstat and his team. The Arias administration seems prepared
for a final political push on the remaining CAFTA-DR legislation,
and sees the AUSTR visit as an essential component of that push.
GOCR officials evince confidence about completing all
CAFTA-related bills and regulations in time to meet the October 1
certification deadline, but they know the road ahead is steep.
Although eight of 13 CAFTA-related bills have been completed, the
five remaining touch on controversial intellectual property (IP),
insurance and biodiversity issues. The GOCR's best case scenarios
project completion of the final legislation in August-September,
well after the informal mid-July legislative deadline suggested
during Eissenstat's April visit (Ref A). The four CAFTA-related
telecommunications regulations are currently undergoing final
review, and are expected to be completed in August. We agree that
the time is right for the AUSTR visit. The Arias administration is
convening all the leaders of its pro-CAFTA legislative coalition, plus
key private sector representatives for a (long overdue) pep talk. (SEE
REVISED SCHEDULE, PARA 9.) The legislators know that Costa Ricans from
across the political spectrum want to close the CAFTA chapter and move
on to other important issues. As from the start of this long and
winding road, success continues to depend on the GOCR sustaining its
political discipline and focus. END SUMMARY.

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THE POLITICAL PUSH
--------------


2. (SBU) The GOCR views this AUSTR visit as primarily political, and
part of a broader concerted effort to energize the legislature. On
June 19, Minister of the Presidency Rodrigo Arias described the other
components of this "push" to the Ambassador. Arias will convene the
entire PLN party faction on June 23 to get them in line. There
will be no legislative travel (and perhaps no recess) until the
CAFTA work is completed. On June 25, Arias is to meet with
"moderate" legislators from the opposition PAC party, including new
faction leader Francisco Molina, to agree on a way forward.
Arias does not expect any PAC member to support CAFTA, but he believes
a small group can be persuaded not to stand in the way. Arias is
also counting on help from ex-PAC member Andrea Morales (who left
her party and declared herself an independent on June 13). The
embattled Morales chairs the Juridical Committee, which is working
on the remaining IPR bill. With all 38 votes in the pro-CAFTA
coalition required to keep the final bills moving, and with
fissures periodically appearing in that coalition, Arias is looking
for a little wiggle room, in the form of one or two more votes to
guarantee quorum, approve extra sessions, and make better use of the
legislature's crowded calendar.


3. (SBU) The Ministry of Foreign Trade (COMEX) views the AUSTR visit as
an opportunity to reiterate directly to legislators the CAFTA
certification requirements, and to make very clear what is required for
CAFTA compliance. COMEX staff tells us that they do not see Eissenstat
as stepping in "between" the GOCR and the legislature. Instead, they
view AUSTR's message as reinforcing their own, i.e., that the
legislative details COMEX is insisting upon are in fact necessary for
the implementing legislation to be CAFTA-compliant. COMEX does not
expect (or want) AUSTR to be drawn into a detailed discussion of
technical details (although time is built into the visit schedule for
separate staff-level discussions, see below). In addition, COMEX hopes
the AUSTR visit will spark a positive dialogue with the pro-CAFTA
coalition, which will generate "creative" solutions to pending issues.

--------------
THE LAGGING LEGISLATION
--------------


4. (SBU) Since AUSTR Eissenstat's last visit, progress has been spotty.
Four bills (The Budapest Treaty, The International Agreement on
Trademark Rights, the UPOV Convention bill, and the bill opening the
telecommunications sector) have been signed into law. The latter is
still pending publication in the official gazette, the last step in
implementation. The remaining five bills have been challenging, more
often because of problems within the pro-CAFTA G38 coalition than from
opposition without. The five-member Libertarian Party (ML) and one
member of the Social-Christian Unity Party (PUSC) have been the most
troublesome in the last two months, blocking quorum, opposing fast
track rules and questioning substantive details (such as in IPR
penalties). The GOCR believes it has overcome these obstacles and that
all 38 members of its coalition (perhaps aided by a few moderate
members of the opposition) are finally ready to move on.


5. (SBU) The following is a June 20 snapshot of the remaining
legislation. The GOCR is counting on the August extraordinary
session of the legislature to wrap up the remaining legislation,
although it appears likely that at least one bill may not be fully
approved (second vote) until early September:

-- IPR enforcement: The Second Plenary Commission is completing IPR
penalty revisions (in Article 52) requested by the Constitutional
Chamber (Sala IV) of the Supreme Court. The GOCR is aiming for a first
vote on the corrected bill the week of June 23. If the corrected bill
is sent to the Sala IV for review (as is expected) final approval would
not take place before August;

-- IPR catch-all bill ("number 12"): Under debate in the Juridical
Committee. The GOCR is aiming for Committee approval by the end of
June, and a first plenary vote in July. Fast Track status was
approved, which will limit debate, but the GOCR will need 38 votes to
approve the extra sessions required to move quickly. With the expected
30-day Sala IV review, the GOCR is aiming for final approval in August
or September. GOCR officials acknowledge that the long delay caused by
the ML party's stubborn debate about, and microscopic review of, this
bill will likely make it the last to be approved. One of the articles
in the IPR enforcement bill opposed by the Sala IV (Article 71) was
moved to this legislation;

-- Insurance bill: Was to emerge from completed Sala IV review on June
7, but returned on June 4, instead, to "clarify" why some documents
were missing from the package submitted to the Court. This technically
requires another full 30-day Sala IV review. GOCR officials see this
as a blatantly political maneuver by one of the two anti-CAFTA
magistrates in the Sala IV. The original package has been corrected
and re-submitted, and GOCR officials believe the Sala IV will not take
another 30 days to issue a ruling. They are hopeful for final approval
in late July or August;

-- Telecom modernization bill: Under Sala IV review. Should return to
the legislature in early July, with the GOCR aiming for final approval
in late July or August; and,


-- Amendments bill: Voted out of committee on June 13, but some text
was missing. The bill may have to be corrected in plenary debate.
Fast Track status was approved, but 38 votes will be needed to schedule
the extra sessions required. GOCR aiming for plenary debate to begin
in early July, followed by Sala IV review (by early August) and final
approval later in August.

--------------
REMAINING ISSUES (AND REGULATIONS)
--------------


6. (SBU) While all the pending legislation is urgent at this point,
three specific issues are being cited with particular concern:
biodiversity, IPR data protection, and insurance. The following is our
understanding at this point, but USTR would likely have more details:

-- COMEX believes the biodiversity concerns are held by only a few
legislators, and can be overcome by AUSTR "clarifying" the USG
position. Revised legislative language may not be required;

-- The IPR data protection issues can be resolved by more technical
staff-level discussion, according to COMEX; (On that issue, Fedefarma
contacts tell us that there is no new health bill before the
legislature. The bill that was on the agenda was pulled some months
ago by the Health Ministry for further review);

-- On insurance, the GOCR believes a legislative solution (which has
been rejected as too politically difficult by GOCR officials, pro-CAFTA
legislators and the private sector) is off the table, and that another
mechanism (such as a side letter) can be found to resolve the national
guarantee issue; and

-- On IPR penalties, Minister Arias and other GOCR leaders are
confident the penalty regime worked out in recent discussions with USTR
has satisfied concerns about that issue.


7. (SBU) The four telecommunications regulations which are also part o
CAFTA implementation are currently going through an internal final
review. The four regulations are: 1) Access and Interconnection, 2)
General Communications, 3) Competition, and 4) Access and Universal
Service. The three entiies charged with writing the regulations are
the Ministry of Environment, Energy and Telecommunications (MINAET);
the regulatory authority ARESE, through its future telecommunications
superintendency SUTEL; and COMEX. (Note that SUTEL will be established
under the telecom modernization bill when it becomes law.) The final
versions of these regulations will go through a public audience and


review process and are expected to be published in August.

--------------
COMMENT
--------------


8. (SBU) The GOCR knows what it needs to do in order to pass the
remaining CAFTA legislation and seems re-committed to doing it. The
GOCR, the pro-CAFTA coalition and even the opposition are all tired of
CAFTA and eager to get on with other business before the
pre-2010 election maneuvering (which has already begun) dominates
domestic politics next year. As recently as one week ago, key PLN
legislators and legislature staff were not optimistic that all CAFTA
bills could be completed even by September. We have seen this
despondency-determination cycle before, however, in the sense of drift
last November which was replaced by a sense of purpose in the
legislature from December-March. The GOCR needs to light that
sort of fire again. The highest levels of the government remain
completely seized by CAFTA. The President spoke of little else
when the Ambassador called on him June 12, for example. CAFTA is
the Arias administration's top priority, and is closely identified
with the President himself. The Arias brothers know that if they
can't follow through on this, they may not be able to follow through
with other essential pending initiatives on domestic security or
energy. AUSTR Eissenstat's visit thus comes at an opportune moment.
The Ambassador recommends that the three-fold message should be: no
renegotiation; no second extension; and a warning that Costa Rica, once
the region's CAFTA leader, is now falling further and further behind.
These familiar themes bear repeating over and over again here. END
COMMENT.

--------------
VISIT SCHEDULE (REVISED)
--------------


9. (SBU) The following is the schedule as of 1500 local on June 23. It
has been revised from earlier versions, to split the meetings with
legislators into three sessions. A more detailed version was emailed
to USTR and will be available to AUSTR and team upon arrival. COMEX
will provide interpretation for all events involving AUSTR:

TUESDAY, JUNE 24

0900-1000: MEETING WITH GOCR EXECUTIVE BRANCH AND SOME LEADERS OF THE
G38 PRO-CAFTA COALITION, President's Office
(Ministers Arias and Ruiz will lead the GOCR side.)

The strongest CAFTA supporters in the legislature will be included
(from the President's PLN party and the PUSC party).

This session would "frame the day's objectives," according to COMEX.
Because the GOCR's closest allies are participating, COMEX believes
that "nothing should be held back" with this group, and that this
session should be/can be more candid that the later sessions with other
party members. COMEX also believes these legislators will ask what
happens if the implementing legislation is not done in time.

1030-1230: MEETING WITH OTHER LEADERS FROM G38 PRO-CAFTA COALITION,
CHATEAU RESTAURANT, SAN PEDRO
(Minister Ruiz, Amb. Duenas, VM Thompson, and VM Pacheco will lead the
GOCR side.)

In the first segment, the AUSTR and GOCR teams will meet with
independent, but pro-CAFTA legislators. In the second segment, the
AUSTR and GOCR teams will meet with members of the pro-CAFTA (but more
problematic) ML party.

These sessions are not to "substitute" for the "lobbying" work COMEX
must do (according to COMEX staff),but they afford an opportunity to
better "explain" the USG position. The discussion will focus on how to
move ahead and complete the legislative work in time. Legislators may
seek to explain why the process is so uniquely slow in Costa Rica, but
our focus should be to look forward, not backward.

1230-1430:QWORKING LUNCH, CHATEAU RESTAURANT

150O-1530: OVERVIEW OF PENDING REGULATORY ISSUES (at COMEX)
(Ministers Ruiz, Dobles, Amb, Duenas and VM Thompson lead GOCR side.)

1530-1630:QWRAP-UP MEETING WITH GOCR EXECUTIVE BRANCH
(Ministers Ruiz, Amb. Duenas and VM Thompson lead GOCR side.)

This session should agree on next steps and a way ahead.

1900-2100:QRECEPTION HOSTED BY AMBASSADOR CIANCHETTE (Ambassador's

Residence)

Note that the morning of June 25 has been left open for possible
follow-on meetings before AUSTR departs. USTR team remains until June
26 for possible follow-up technical meetings. COMEX reconfirmed on
June 23 that follow-on meetings may be scheduled as a result of the
June 24 sessions.


CIANCHETTE