ECUADORIAN GOVERNMENT SPLIT ON CAN-EU TALKS

C O N F I D E N T I A L QUITO 000400 SIPDIS USTR FOR BENNETT HARMAN USDOC 4332/MGAISFORD E.O. 12958: DECL: 06/02/2019 TAGS: ETRD ECON EC SUBJECT: ECUADORIAN GOVERNMENT SPLIT ON CAN-EU TALKS REFTEL A: Quito 390 B: 08 Quito 1... id: 209577 date: 6/1/2009 21:33 refid: 09QUITO400 origin: Embassy Quito classification: CONFIDENTIAL destination: 08QUITO1126|09QUITO390 header: VZCZCXYZ0000 RR RUEHWEB DE RUEHQT #0400 1522133 ZNY CCCCC ZZH R 012133Z JUN 09 FM AMEMBASSY QUITO TO RUEHC/SECSTATE WASHDC 0419 INFO RUEHBO/AMEMBASSY BOGOTA 8162 RUEHCV/AMEMBASSY CARACAS 3561 RUEHLP/AMEMBASSY LA PAZ JUN LIMA 3219 RUEHBS/USEU BRUSSELS RUEHGL/AMCONSUL GUAYAQUIL 4344 -------------- header ends -------------- C O N F I D E N T I A L QUITO 000400 SIPDIS USTR FOR BENNETT HARMAN USDOC 4332/MGAISFORD E.O. 12958: DECL: 06/02/2019 TAGS: ETRD ECON EC SUBJECT: ECUADORIAN GOVERNMENT SPLIT ON CAN-EU TALKS REFTEL A: Quito 390 B: 08 Quito 1126 Classified by: Ambassador Heather Hodges, Reasons 1.4 (b) and (d). ¶1. (C) Summary. Ecuador's trade talks with the European Union have stalled. The GOE says it needs modifications so the agreement will comply with its new constitution, but trade officials say the Cabinet is split on supporting an agreement and is waiting for the President to make a decision. End Summary. ¶2. (C) When trade talks between the Andean Community (CAN) bloc and the European Union (EU) broke up in November 2008, Ecuador decided to follow the lead of Colombia and Peru and negotiate bilaterally with the EU (reftel b). Since then, the GOE has participated in and made progress in negotiating rounds, along with its neighbors. Now, however, Ecuador's talks have stalled. The country has said that it does not expect to complete negotiations until the end of the year, although Colombia and Peru are aiming to wrap up talks this summer. The GOE has claimed it needs modifications to the agreement to comply with Ecuador's new constitution. ¶3. (C) Econoff met with the MFA's Cristian Espinosa (Assistant to the Vice Minister for Trade) and Mireya Munoz (Director for International Trade) May 15. They noted that the negotiations were at a standstill. Although only a few issues remained, a political push was needed to close the talks. They believed that the remaining issues could be resolved to Ecuador's satisfaction, including bananas, on which Espinosa thought they could reach agreement (he said that the current EU offer on bananas was "much better, but still not good enough"). ¶4. (C) Espinosa said that President Correa would decide whether and how to go forward. He speculated about whose advice the President would take in regard to the EU agreement. Within the GOE, he noted that Foreign Minister Falconi and Coordinating Minister for Economic Policy Borja both oppose the trade agreement with the EU, while Production Minister Susana Cabeza de Vaca supported it (note: she has since resigned her position). Minister Cely, who will take over as Production Minister, would likely support the agreement, Espinosa said. ¶5. (C) Another problem in the talks was the status of the non-commercial portions of the agreement. Initially, the EU proposed three pillars to the agreement - commercial, political dialogue, and cooperation (assistance). However, once negotiations en bloc broke up last November, the EU claimed it did not have the authority to negotiate the non-commercial pillars bilaterally (its mandate only allowed for regional negotiation of these areas). Espinosa was concerned that without these non-commercial additions to make the agreement more than solely trade, Correa would not support an agreement with the EU (in his May 23 radio address, Correa blasted the agreement for becoming too commercial and too much like a free trade agreement). ¶6. (C) On May 20, the Foreign Ministry's new Under Secretary for Trade told us that the GOE plans to present modified proposals for cooperation and political dialogue to the EU. She implied that Ecuador might also seek certain provisions in the commercial agreement to incorporate "sovereignty." On May 29, the EU Mission Charge told us that Ecuador had suggested renaming the accord a "trade agreement for development," and that the EU was considering (at Ecuador's request) including a cooperation article in the commercial agreement and an MOU on political dialogue on the side. The EU was waiting to see Ecuador's proposals for these, but the Charge implied that the EU would not be open to significant changes to its standard language. ¶7. (C) Comment: The argument that Ecuador must delay talks in order to negotiate modifications to comply with its new constitution may in part be a stalling tactic until there is clearer guidance within the GOE on whether Ecuador will move forward with a trade agreement with the EU. The key cabinet players are split and as usual are deferring any real decision to President Correa. Even if Correa approves the idea of proceeding with a trade agreement, presumably dressed up with some sort of political/cooperation cover, it is not clear if the EU will be willing to negotiate under the terms and limitations that Ecuador may seek. At the same time, the GOE has been hinting about adjusting its commercial relationship with the U.S. (reftel a). The approach it is taking with the EU is likely an indication of what the GOE will request of the U.S. HODGES =======================CABLE ENDS============================