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
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classification: CONFIDENTIAL
destination: 08QUITO1126|09QUITO390
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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

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