CODEL HOYER EXPRESSES SUPPORT FOR PANAMA FTA;

UNCLAS PANAMA 000341

SENSITIVE
SIPDIS

WHSC PLEASE PASS TO USTR

E.O. 12958: N/A
TAGS: ECON EFTA ELAB ETRD OREP OVIP PGOV PM PREL
SNAR
SUBJECT: CODEL HOYER EXPRESSES SUPPORT FOR PANAMA FTA;
LAUDS CLOSE RELATIONSHIP

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SUMMARY
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1. (SBU) On April 5, the members of Codel Hoyer met with
President Martin Torrijos and selected members of his
government to discuss continuation of what Majority Leader
Hoyer described as an &extraordinarily close8 bilateral
relationship, to thank President Torrijos for the cooperation
that enhanced this relationship and shepherded accelerated
economic growth and better governance before he leaves office
on July 1, and to chart out next steps for passage of the
U.S.- Panama FTA in Congress. The no coat-no tie, Palm
Sunday meeting at the President's Quarry Heights guest house,
as opposed to the more formal setting of the Palacio de las
Garzas, appeared to reflect the warm relationship enjoyed by
this government and members of the delegation, a comfortable
majority of whom voiced support for the FTA. &I want to get
this done,8 emphasized the Majority Leader. End Summary.


2. (SBU) U.S participants included Ambassador Stephenson,
Majority Leader Steny Hoyer (D-MD),Rep. Roy Blunt (R-MO),
Rep. Lucille Roybal-Allard (D-CA),Rep. Gregory Meeks (D-NY),
Rep. Elijah Cummings (D-MD),Rep. Adrian Smith (R-NE),Rep.
Gerry Connolly (D-VA),Rep. Debbie Wasserman-Schultz (D-FL),
Rep. Aaron Schock (R-lL),and Rep. Norman Dicks (D-WA).
Panamanian participants included President Martin Torrijos,
First Vice President and Foreign Minister Samuel Lewis
Navarro, Minister of Commerce and Industries Gisela de
Porras, and Panama's Ambassador to the United States,
Frederick Humbert. The Palm Sunday, no coat-no tie,
meeting took place at the President's rustically elegant
Quarry Heights guest house, the former residence of the
Southcom Commander.

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NEXT STEPS ON FTA
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3. (SBU) The fate of U.S.-Panama Free Trade Agreement, signed
in June 2007, emerged as President Torrijos emphasized the
need to work together to arrange the timing and sequencing of
his push for labor and tax haven reforms desired by members
of Congress. He and First Vice President Lewis explained that
in order to successfully pass necessary measures in the
National Assembly, they first needed an announcement that the
FTA would be submitted to Congress. However, &time is
short,8 stressed Torrijos, who will leave office on June 30.
(Note: his pro-labor Democratic Revolutionary Party also
controls the National Assembly; but the May 3 election places
every national and local elective seat in contention.) Both
Torrijos and Lewis noted that legislation would not pass if
perceived by the Panamanian public as an &imposition8 by
the United States.


4. (SBU) Next, Lewis detailed the specific choreography: an
Obama Administration announcement that the FTA would be
submitted to Congress followed by legislation on labor *
including changing the minimum number of persons necessary to
form a union from 40 to 20* and immobilization of bearer
shares, the anonymous instruments that facilitate tax evasion
and money laundering. (Comment: Immobilization (regulation)
of the shares would be a key advance in Panama,s financial
transparency; without this measure, a Tax Information
Exchange Agreement would have limited effectiveness, as no
mechanism would exist to determine the beneficial owners of
anonymous bearer shares.) Lewis predicted that lame-duck
National Assembly action could be completed by the end of
May. In response, Majority Leader (ML) Hoyer noted that a
National Assembly vote on the labor and bearer shares issues
would be &critical8 after an announcement by President
Obama. &I want to get this done,8 the ML continued.
However, he cautioned that a vote in the U.S. Congress might
not be possible until after President Torrijos leaves office.

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BUILDING ON AN EXCELLENT RELATIONSHIP
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5. (SBU) Participants spent the larger part of the meeting
praising and requesting suggestions for improving the overall

bilateral relationship. Majority Leader Hoyer struck this
theme in his opening remarks, emphasizing that the United
States and Panama enjoy an &extraordinarily close
relationship,8 and that &while the FTA is an important part
of our partnership, our partnership goes beyond the FTA.8
President Torrijos echoed this sentiment, expressing
appreciation for Rep Dicks, remark that the transfer of the
Canal was &the right thing to do.8 He also noted that
strong relationship between U.S. and Panamanian
infrastructure and the breadth of the bilateral relationship
that included efforts such as English for Life, a Panamanian
program to increase English education in Panama,s primary
schools. Rep. Blunt thanked Torrijos for his commitment to
capitalism and democracy, his fight against corruption, and
his critical role in fighting against drug trafficking.


6. (SBU) Turning to the theme of Panama,s brisk economic
growth, Rep. Blunt stated that, &I don't know if any other
country in the world has changed as much as yours in the past
five years, and you don't get credit.8 Hoyer, commenting on
the multitude of building cranes, designated Panama as
&Dubai West.8 Rep. Dicks noted Seattle-based Stevedoring
Services of America's concession to run Panama,s largest
single port, Manzanillo International Terminal (MIT),a half-
billion dollar investment. He also expressed gratitude at
Copa Airlines, recent purchase of 13 Boeing 737 aircraft.
Perhaps the most emblematic remark was made by Rep. Schock
who noted that there are more Caterpillar D-11 bulldozers in
Panama than in any other country in the world. Schock
represents Caterpillar's headquarters in Peoria. (Note:
Caterpillar recently broke ground on a $30 million training
center in the former Howard AB and its equipment is widely
used on Canal and infrastructure projects.)

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SHARED SECURITY CONCERNS
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7. (SBU) In response to questions by the Representatives,
President Torrijos and his ministers discussed security and
law enforcement concerns. He noted the capture of 400 kilos
of cocaine the day before, stating, &the more drugs we stop,
the less that gets into our country.8 VP Lewis added that
&today we are not just transit, we are victims.8 He
elaborated that drug traffickers now pay distributors with
drugs, rather than cash, and that this practice has caused
local crime rates to increase. Rep. Cummings expressed his
concern about the devastating impact of drugs on cities such
as Baltimore and praised Panama,s cooperation. Torrijos,
responding to Rep. Cummings' query on what other assistance
would be helpful, touted Panama,s high amount of drug
seizures and efforts at regional cooperation, but lamented 35
recent drug-related assassinations in Panama. He also asked
for more intelligence sharing, a few radar installations, and
more Coast Guard presence.


8. (SBU) Rep. Roybal-Allard also discussed the value of the
Coast Guard mission, noting that she is on the appropriations
subcommittee the funds that organization. She focused her
remarks on the value of youth programs to prevent gang
activities and noted a strong correlation between funding
alternative venues for vulnerable youth and a decrease in
gang presence. President Torrijos embraced this topic,
listing several youth initiatives of his government,
including 180,000 scholarships, $90 million spent on sports
facilities, and the purchase of 40,000 laptops for schools.
Ambassador Stephenson stressed robust USG cooperation with
Panama in this area by leveraging after school programs of
organization such as the Kiwanas, Rotarians, and Lions Clubs.


9. (SBU) Torrijos commented on the increasing sophistication
of gangs, although noting that they are less a problem in
Panama than in the rest of Central America. The President
linked his crackdown on pirated CDs as a way to cut off gang
revenues, and ML Hoyer noted the necessity of &following the
money.8

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PANAMA - "A REAL ECONOMY"
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10. (SBU) Following the money lead to renewed conversation on
tax havens. Torrijos explained, "We are a services economy,
but a real economy. ... There is not a building here with 120
companies. ... Banks here lend money for big projects, and
finance trade through the Colon Free Zone distribution
center.8 Torrijos also stated that Panama needed a &level
playing field on this issue8 and a transition period. Lewis
stated that the GOP was looking at ways to regulate bearer
shares, and Minister of Commerce and Industries Porras added
that her government aimed to ensure that lawyers know the
identity of the beneficial owners of the shares.


11. (SBU) Other topics included Panama,s implementation of
an accusatory system of justice, raised by ML Hoyer.
President Torrijos replied that this change may take longer
than expected to implement. Rep. Wasserman-Schultz expressed
gratitude for Panama,s abstention on two anti- Israel
resolutions in the UN, but also requested that Panama abstain
on a third resolution on Palestinian rights. VP Lewis noted
that Panama examines all resolutions on a case-by-case basis
and would like to see resolutions on this topic combined or
eliminated, rather than simply rolling over every year.


12. (SBU) The visit of Codel Hoyer also included a tour of
the Miraflores Locks at the Panama Canal, a briefing on the
$5.25 billion Canal expansion project by Administrator
Alberto Aleman, and a dinner hosted by President Torrijos
that included the majority of Torrijo,s cabinet. During
toasts at dinner, Rep. Blunt mentioned that although he and
his friend of many years, ML Hoyer, rarely voted the same way
on most issues, they both would vote for passage of the
U.S.-Panama FTA.


STEPHENSON