AMBASSADOR MEETING WITH MINISTER OF INDUSTRIES AND

C O N F I D E N T I A L QUITO 000373

SIPDIS

E.O. 12958: DECL 05/21/2019
TAGS: ETRD ECON EC
SUBJECT: AMBASSADOR MEETING WITH MINISTER OF INDUSTRIES AND
PRODUCTIVITY

REFTEL: a) Quito 344, b) Quito 60

Classified by: Ambassador Heather Hodges, Reasons 1.4 (b) and (d).


1. (C) Summary: The Ambassador made an introductory call on
Industries and Productivity Minister Xavier Abad on May 13. The
Minister discussed the Ministry's infrastructure development plans
and focused on ways to advance the bilateral commercial relationship,
including a possible trade cooperation agreement. End Summary.


2. (U) On May 13, the Ambassador, Commercial Attache', and
Commercial Specialist had an introductory meeting with Minister of
Industries and Productivity Xavier Abad and Under Secretary for
Industrial Productivity Andres Robalino. The meeting was
characterized by a very friendly and cooperative tone, with the
Minister expressing his desire to work with the Embassy to build a
solid bilateral commercial relationship.


3. (U) The Minister opened by discussing potential areas for
bilateral cooperation. The Government of Ecuador (GOE) is proceeding
with investments in infrastructure development and renovation
focusing on roads, ports (Posorja, Manta, and Puerto Bolivar, which
supplement and at times are competition for Ecuador's main port of
Guayaquil),and internet connectivity. The GOE is working to attract
foreign direct investment, and Minister Abad mentioned the opening of
U.S. firm Rainbow's air purifier assembly plant near Quito and Avon's
recent decision to begin domestic production of cosmetics as examples
of recent U.S. investment.


4. (SBU) In discussing the world economic situation and its effects
in Ecuador, Minister Abad emphasized that de-dollarization is not
being considered by the GOE. He mentioned that the balance of
payments "safeguard" measures (reftel b) were taken specifically to
protect dollarization and that dollarization was key to achieving the
GOE's goal of a sustainable economy.


5. (C) In discussing the GOE's trade policy and foreign direct
investment, Abad hinted at interest among certain members of the GOE
in pursuing a trade cooperation agreement with the United States.
(Note: This apparently would be an Ecuadorian version on a free
trade agreement; however he did not mention any details.) He
specifically noted that the Ministry of Foreign Affairs has the lead
on such matters.


6. (C) Comment. The Minister, who occasionally worked with the
Embassy in his previous capacity as President of the Cuenca Chamber
of Industries, appeared to be sending signals on a more cooperative
relationship ahead. It is worth noting that while Minister Abad's
signals are positive, he is not the lead on foreign trade matters.
Abad is the second minister to hint at some sort of alternative trade
agreement with the United States (reftel a); although he did not go
into details, a senior MFA official subsequently briefed Embassy
officials on the GOE vision (septel). Abad's focus on infrastructure
investment is interesting, since the GOE supposedly is cutting back
on infrastructure spending because of weak oil revenues, but his
comments are in keeping with the GOE's practice of suggesting that
fiscal problems will not be a constraint on priority projects.

HODGES