AMBASSADOR'S FAREWELL CALL ON PHILIPPINE

C O N F I D E N T I A L MANILA 000009 SIPDIS STATE PASS TO USDA FAS E.O. 12958: DECL: 01/04/2020 TAGS: EAGR EAID ECON ETRD PREL RP SUBJECT: AMBASSADOR'S FAREWELL CALL ON PHILIPPINE AGRICULTURE SECRETARY ARTHUR YAP Classified By: Ambassador Kristie A. Kenney, reason: 1.4 (b) and (d). SUMMARY -------------- ¶1. (SBU) In her December 23 farewell call, the Ambassador and Philippine Agriculture Secretary Arthur Yap highlighted strong U.S. - Philippine collaboration throughout 2009, especially joint efforts to transition former combatants in Mindanao to peaceful agricultural projects, and a series of high-level visits between the two countries. Discussion of agricultural trade issues was mostly positive, as several high-level decisions served to retain or open markets for U.S. exporters. Yap also expressed his interest in resolving the Quedancor/GE Money Bank issue, making the general comment during the meeting that there would be "no scandals on my watch" before completing his tenure. If permitted, he will serve through the end of the Arroyo Administration concurrent with his campaign for a national congressional seat. END SUMMARY. AGRICULTURAL TRADE MOVES HIGH ON AGENDA -------------- ¶2. (SBU) The Ambassador raised several important agricultural trade issues with Philippine Department of Agriculture (DA) Secretary Arthur Yap in her December 23 farewell call. She thanked Yap for his efforts to postpone the reworking of the minimum access volume (MAV) issue, which had been perceived as detrimental to U.S. pork exporters. The Ambassador commended Yap and his department for their work to make the Philippines the only country in the world completely open to U.S. beef products as of October 2009, when the DA lifted its ban on U.S. meat and bone meal. (Note: The ban had been imposed since 2000 due to bovine spongiform encephalopathy concerns.) She also thanked Yap for his decision to import goats and sheep from the United States instead of traditional livestock source countries Australia and New Zealand, as part of the Philippine livestock upgrade program. ¶3. (SBU) Ambassador Kenney expressed concern that the market for U.S. vegetable imports was being squeezed by the DA's August decision to remove supermarkets, hypermarkets, and grocery stores from its list of permissible "high-end markets" for imported vegetables. Yap expressed his general view that U.S. vegetables should be allowed into supermarkets and that they do not compete with local produce, most of ;which is sold in informal farmers' markets targeting Filipinos from the lower economic strata. Yap promised to review the matter, and both agreed to continue dialogue on the issue. QUEDANCOR DEFAULT AND GE MONEY BANK -------------- ¶4. (SBU) Secretary Yap explained to the Ambassador that the Department of Agriculture continues to work with others in the Administration to restructure defaulted Quedancor bonds held by GE Money Bank. Noting that the issue is complicated with many legal ramifications, Yap emphasized that the Philippine Government's economic team will not "run away" from the issue. He reiterated what we have heard from other cabinet officials - there is a commitment to resolve the issue in order to avoid frightening away investors. The Ambassador responded that the Embassy would continue to stay in touch and engage on this issue until resolution. HIGH-LEVEL AND SUSTAINED COLLABORATION ON AGRICULTURE ISSUES -------------- -------------- ¶5. (SBU) Highlighting strong collaboration between the United States and the Philippines on agriculture issues, the Ambassador and Secretary Yap discussed the many high-level visits in 2009, including those to the Philippines by the U.S. Secretary of Agriculture Tom Vilsack, U.S. Secretary of State Hillary Clinton, and U.S. Secretary of Defense Robert Gates. On the Philippine side, the July visit by President Macapagal-Arroyo was highlighted by a call on President Obama. During the same trip, Secretary Yap had a productive meeting with Secretary Vilsack, which laid the groundwork for his visit to the Philippines in October. ¶6. (SBU) On another positive note, the Ambassador and Secretary Yap shared views on the importance of their joint agriculture efforts in Mindanao, especially the mariculture work that has supported former combatants in their transition toward peaceful and sustainable livelihoods. YAP EXPECTED TO REMAIN ACTIVE IN NATIONAL POLITICS -------------- -------------- ¶7. (C) Ambassador Kenney briefed Yap on President Obama's nomination of her successor, Harry K. Thomas, Jr., noting his skills and experience as a diplomat. Yap expressed his intention to remain Agriculture Secretary for as long as legally possible, preferably through the end of the Arroyo Administration. Yap has announced his candidacy for a seat in the Philippine House of Representatives, running from his home district in Bohol. Despite these long-term plans, however, he assured the Ambassador that the "Department of Agriculture will make sure our work goes well till the last day." COMMENT -------------- ¶8. (C) Secretary Yap has been a proactive member of the Arroyo cabinet, supporting several agriculture trade policies that were considered to be favorable to U.S. exporters. Several non-tariff trade barriers remain, however, including restrictions on the import of fresh vegetables. This issue was also raised privately and publicly by U.S. Secretary of Agriculture Vilsack in his October 2009 visit to the Philippines. KENNEY