CAFTA IMPLEMENTATION SNAPSHOT AS OF JANUARY 29

UNCLAS SAN JOSE 000066

SIPDIS

SENSITIVE
SIPDIS

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

E.O. 12958: N/A
TAGS: CS ECON ETRD PGOV PINR PREL
SUBJECT: CAFTA IMPLEMENTATION SNAPSHOT AS OF JANUARY 29

REF: A. SAN JOSE 00031

B. 07 SAN JOSE 2070


1. (SBU) SUMMARY: Focused on completing CAFTA implementing
legislation, pro-CAFTA National Assembly (Asamblea) party
leaders are hopeful regarding the passage of the legislation
by the first vote before March 1. Yet, the odds are slim
given the realities of the Costa Rican legislative process
coupled with a constitutional review of many of the remaining
eight bills. The prospect and method of requesting an
extension heavily weighs over the CAFTA debate. Accordingly,
there is speculation by government and business leaders of
whether Costa Rica should even request an extension. The
argument consists of three points: (1) Costa Rica can deposit
notice with the OAS acknowledging a "work-in-progress"; (2)
pressure must be maintained on the Asamblea; and (3) the GOCR
can sidestep the perceived unpleasant process of negotiating
extension agreements with its CAFTA partners, specifically
Nicaragua. Though interesting discourse, Post consistently
expresses the position that March 1 signifies the completion
of the legislation and USTR certification. Costa Rican
speculation highlights the need to delineate a USG position
with an explanation of the USG role at the time of an
extension request. END SUMMARY.

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LEGISLATION MOVING: IS FAST TRACK FAST ENOUGH?
============================================= ==


2. (SBU) With fast track rules in place, the pro-CAFTA G38
coalition continues to move forward on the implementing
legislation. Faction chiefs Mayi Antillon (PLN),Lorena
Vasquez (PUSC) and Luis Antonio Barrantes (ML) are all
hopeful; they expect the Asamblea to approve (by first vote)
as many as six items of legislation by the end of February.
The G38 leaders attribute their progress to three factors:
(a) a general sense, even in the anti-CAFTA legislators, that
the Asamblea (and the nation) need to get beyond CAFTA to
other key initiatives, (b) the new public relations campaign
against the opposition PAC party and its renowned
obstructionist tactics, and (c) the fast track rules
themselves, which limit the number of sessions for debate,
even when hundreds of amendments are on the table. With fast
track, Antillon notes, the legislators can see the light at
the end of the tunnel. Despite the optimism of recent weeks,
several renegade G-38 legislators appear to be using their
CAFTA support as a bargaining chip in exchange for GOCR
backing of "home-district" projects. As for PAC, the PUSC
and ML are gleefully taking credit for an inspired PR stunt,
in which they held an impromptu press conference on January 8
featuring a wheelbarrow stacked high with amendments offered
by the PAC-led opposition. Coupled with a GOCR-organized,
private sector-funded media campaign to get CAFTA done, the
PAC has been less problematic, according to Vasquez.

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LATEST SCORECARD
================


3. (SBU) Even with this new "dynamism," progress is still
slow. Since our last scorecard (Ref B),two bills (the UPOV
law and Budapest Treaty) have passed their first plenary
reading and been transmitted to the Supreme Court's
Constitutional Chamber (Sala IV) for review. (On the former,
PAC members exercised their right to ask for this review,
which was not required in this case, illustrating that they
have not given up, yet.) A second bill (opening the
insurance sector) moved from committee to the Plenary. The
tally as of January 29:

To be introduced: 1
In Committee 0
In Plenary debate 5
In Mini-Plenary debate 2
Under Sala IV Review 2
Fully approved 2

Of the seven bills in the plenary and mini-plenary, five have
fast track status.


4. (SBU) Legislation in the mini-plenary has a "special" fast
track status which means this legislation is expected to move
through the Asamblea faster than legislation in the plenary.
As for the bill yet to be introduced (an amendment to the
copyright law),it has been purposely held back in order to
add amendments, if necessary, for IPR issues that may be
undermined in other CAFTA related IPR legislation currently
tracking through the Asamblea, according to COMEX
representatives in Washington.

==============================
MARCH, NO; APRIL OR MAY, MAYBE
==============================


5. (SBU) The G38 optimism remains tempered, however. None of
the faction leaders see all the CAFTA legislation being
completed by March 1. All three tell us that April or May is
more likely, considering that the PAC probably will send
every item to the Sala IV for review, adding as much as
30-days to the timetable. Vasquez acknowledges some weakness
within her own PUSC faction, where one legislator -- more
loyal to the party's anti-CAFTA leadership than to the
pro-CAFTA PUSC caucus in the Asamblea -- has missed sessions
(and blocked quorums) in pursuit of his own agenda. She,
Antillon and Barrantes agree that the hard core opposition
may heat up when universities resume classes in February.
The G38 leaders also expect the political maneuvering (now
underway) for the Asamblea's internal elections May 1 may
also slow progress on legislation. Antillon has already
announced that she will not run again to lead the PLN bloc.
Vasquez and Barrantes may stay on, however.

=============================
THE "PARTIAL CREDIT" SCENARIO
=============================


6. (SBU) Meanwhile, the Arias administration is apparently
mulling over next steps. In a private conversation with the
DCM on January 17, President Arias wondered aloud if Costa
Rica could deposit its instrument of ratification with the
OAS prior to March 1, as a commitment to CAFTA
implementation, while continuing to push ahead on the
legislation. In similar fashion, businessman Carlos Denton
opined in La Republica on January 23 that the Asamblea should
just continue to work without a GOCR request for an extension
since this would avoid brokering extension agreements with
the CAFTA countries while maintaining pressure on the
Asamblea. Besides, he wrote, Costa Rica is already a part of
CAFTA.

===========================
WHEN TO ASK...NOW OR LATER?
===========================


7. (SBU) In the Ambassador's farewell call on January 21,
Minister of Finance Guillermo Zuniga asked for an explanation
of what would happen if the implementing legislation was not
passed and for advice on talking to partner countries. The
Ambassador quickly pointed out that Costa Rica was not in
CAFTA and it was late. But, the USG wanted Costa Rica in
CAFTA hence, the more legislative progress the better. He
then described how CAFTA was similar to a partnership, and
therefore Costa Rica should talk to a representative of the
partnership, not to individual partners. Whether the issue
is the extension or with whom to negotiate the extension, the
Ambassador's concluding advice was consistent: call USTR.
The common theme connecting the President's thinking,
Denton's opinion, the Finance Minister's questions, and COMEX
Minister Ruiz's extension questions to the Ambassador in
early January (Ref A) is when, and then how, to proceed with
an extension request. Clearly, the GOCR is gripped with when
to make the formal extension request as it hedges the timing
of such a request against legislative momentum and progress.


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COMMENT:
========


8. (SBU) Although USTR will ultimately have to make the
determination, it appears that Arias, and Denton's "partial
credit" approach falls short of certifiable compliance.
Their musings are all the more reason we should be ready,
when the EIF extension request comes, to delineate the USG
position and explain the USG role. As for the Asamblea, if
the G38 discipline continues to hold, then the legislators
will have accomplished more since December (albeit too late
to meet the EIF target) than the previous legislature did in
four years. We hope their experience will provide important
lessons in more effective governance, but any wisdom gained
may be short-lived. Once the implementing legislation has
been completed, we expect the G38's unity will begin to
fracture, as all parties start their open jockeying on other
priority legislative issues, for party leadership (elections
on May 1),and for the 2010 national elections.

BRENNAN