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Cablegate: Das Madison Urges Cafta Implementation, Discusses

VZCZCXYZ0001
PP RUEHWEB

DE RUEHSJ #0288/01 1091447
ZNY CCCCC ZZH
P 181447Z APR 08
FM AMEMBASSY SAN JOSE
TO RUEHC/SECSTATE WASHDC PRIORITY 9606
INFO RUEHZA/WHA CENTRAL AMERICAN COLLECTIVE
RUEABND/DRUG ENFORCEMENT ADMIN HQ WASHINGTON DC
RUEKJCS/SECDEF WASHDC
RHMFISS/CDR USSOUTHCOM MIAMI FL

C O N F I D E N T I A L SAN JOSE 000288

SIPDIS

SIPDIS

DEPT FOR WHA DAS MADISON, WHA/CEN, WHA/PPC AND EEB
PLEASE PASS TO USTR AMALITO/DOLIVER

E.O. 12958: DECL: 04/04/2018
TAGS: ECON ETRD PGOV PREL SNAR CS
SUBJECT: DAS MADISON URGES CAFTA IMPLEMENTATION, DISCUSSES
SECURITY REFORM

REF: A. SAN JOSE 238
B. STATE 26799
C. STATE 30767
D. SAN JOSE 263

Classified By: CDA Peter M. Brennan for reason 1.4 (d).

1. (SBU) SUMMARY. WHA DAS Kirsten Madison visited Costa Rica
March 31-April 3 to urge the GOCR to quickly pass CAFTA
implementation laws and address growing domestic security
problems. President Oscar Arias said he expected the CAFTA
legislation would be passed in the next three months and he
pledged to continue to push CAFTA as a top priority. In
meetings with pro-CAFTA legislators and the Ministry of
Foreign Trade (COMEX), Madison said the U.S. appreciated the
hard work done thus far, but the extended October 1
entry-in-force deadline was solid and represented "one last
opportunity" for Costa Rica. In her meeting with Vice
Minister for Public Security Gerardo Lascarez, Madison
praised the outstanding USG-GOCR counternarcotics
cooperation. She also briefed Lascarez on the Merida
Initiative and underscored the need to confront
narcotraffickers, terrorists and transnational criminals at
every opportunity. DAS Madison completed the visit with a
visit to Sardimar, a seafood processing and canning company
which currently enjoys CBTPA preferences and would benefit
from CAFTA's permanent preferences, and a stop at the future
site of the new Costa Rican Coast Guard station (DoD-funded)
in Caldera. END SUMMARY.

==========================================
MEETING WITH PRESIDENT ARIAS AND FM STAGNO
==========================================

2. (C) With President Arias and FonMin Bruno Stagno on April
1, DAS Madison discussed CAFTA, security including the Merida
Initiative, Cuban migrant resettlement (Refs. A & C), the
FARC, Public Security Minister Berrocal's resignation (Ref
D), and Costa Rica's relationship with the region. Arias
underscored that:

-- CAFTA implementation laws should be passed in the next
three months and that the leading opposition party, PAC, had
shown a new attitude to move the agenda along;

-- security was the "number one concern" of the Costa Rican
people; Stagno asked that Costa Rica not be "left
out" of the Merida Initiative;

-- there was no list of Costa Rican politicians associated
with the FARC, despite ex-Minister of Public Security
Berrocal's assertions; and

-- regarding any connections between the FARC and Costa
Rica, he was sending VP Laura Chinchilla, Stagno, and
Attorney General Francisco Dall'anese to Bogota to consult
with authorities there. (NOTE: The three visited Bogota on
April 4-5.)

3. (C) Stagno told Madison that he was concerned about the
possible membership of Cuba in the Rio Group, which he
believed could diminish the importance of the OAS. According
to Stagno, during the March 17 OAS meeting that addressed the
FARC crisis between Ecuador and Colombia, Brazil had
expressed an interest to engage with Caribbean countries.
Stagno emphasized that this could only mean that Brazil and
other countries had expressed support for Cuba to join the
Rio Group, including Panama and Chile. Opening the Rio Group
to Cuba, Stagno said, could marginalize OAS solidarity on
Cuba.

4. (C) On security issues, Stagno said Central America
suffered the terrible consequences of being wedged between
Mexican and Colombian drug trafficking. Stagno said Costa
Rica would be grateful if Merida could become a reality. He
added that security in Costa Rica continued to be affected by
the aftermath of the 1980s-era Nicaraguan conflict due to the
large number of weapons in the country. He said the GOCR was
also concerned about the huge resettlement of Colombian
refugees around 2000-2002. Finally, Stagno said the
possibility of Maras migrating south to Nicaragua and Costa
Rica was a great cause for concern.

=======================================
TRADE: THE DEVILISH DETAILS OF CAFTA
=======================================


5. (SBU) DAS Madison met with Vice Minister Amparo Pacheco of
the Ministry of Foreign Trade (COMEX) on the status of CAFTA
implementation. While praising COMEX's hard work on
ratifying CAFTA and its ongoing work with USTR and the
National Assembly, Madison underscored to COMEX the necessity
of finishing CAFTA implementation before the October 1
deadline. Pacheco and COMEX Director Gabriela Castro
highlighted the challenges of working with the National
Assembly on CAFTA, specifically the acute sensitivity of some
legislators to "CAFTA plus," that is, any bill which permits
greater latitude than what is required by CAFTA.

6. (SBU) On the USTR-COMEX dialogue, Pacheco and Castro noted
that intellectual property (IP) continued to be a
controversial issue. However, the April 9 and 11 meetings
with USTR in Washington could provide an opportunity for
progress. On insurance, the GOCR,s support remained firm
for a government guarantee for state insurance entity INS,
but both officials reasoned that the execution of such a
guarantee was highly unlikely. Also, COMEX was uncertain
about the concept of a private guarantee fund as an offset to
the government guarantee of INS. On the topic of
regulations, COMEX was cautiously confident about timely
completion.

7. (SBU) COMMENT: Three days after this meeting, the Supreme
Court's Constitutional Chamber returned one of
the CAFTA-related IP bills to the National Assembly for
modification. The Chamber argued that proposed IPR violation
penalties were "an infringement of the principles of
reasonable and proportional penalties" while the proposed
confiscation of counterfeit products from purchasers was a
violation of private property rights. The ruling may
complicate the COMEX-USTR dialogue. END COMMENT.

=================
TRADE: EU STATUS
=================

8. (SBU) DAS Madison asked about the status of the Central
American trade negotiations with the EU and what
effects, if any, those had on COMEX's complicated and
sometimes delicate CAFTA-related work. Pacheco made clear
that CAFTA was the number priority for COMEX. She explained
that EU talks were focused on political, cooperative, and
trade relations and thus were different in character from the
CAFTA discussions.

========================================
TRADE IN PRACTICE AND CAFTA CONSEQUENCES
========================================

9. (U) The seafood processing and packing company Sardimar
hosted DAS Madison for a presentation and factory tour at its
facility near Caldera on April 2. With a primary business of
tuna processing and canning, Sardimar employs 1400 people
(and 6000 indirectly) in a modern facility that was
constructed in 2002 at a cost of USD 80 million. The
Sardimar product is marketed in 26 countries (primarily in
the Americas and Europe) under multiple brand names which
serve distinct market segments at varying price points.

10. (U) In the presence of local media and one of the
Diputadas from the Puntarenas region, Company President Tomas
Gilmore presented a compelling story of innovation in plant
operations, market strategy, and corporate responsibility,
stressing that the successes of this Costa Rican owned
company and its business strategy are directly linked to
trade preferences granted under CBTPA. Though enthusiastic
about the firm's accomplishments in Costa Rica, Gilmore had
no doubts that he would have to move a significant proportion
of the company's operations to El Salvador in the event that
CAFTA is not implemented and CBTPA is not renewed. In such a
scenario, the local economy of Caldera and nearby Puntarenas
would suffer a major employment and economic setback.
Gilmore estimated that Sardimar's current tariff of 4.6
percent would jump to over 30 percent if CAFTA were not
implemented by October 1.

=================================
SECURITY: THE PRIVATE SECTOR VIEW
=================================

11. (U) During DAS Madison's breakfast with AmCham members,
she thanked the organization for its active support of CAFTA

during the 2007 referendum and its continuing CAFTA support
during the implementation process. Security issues weighed
heavier on AmCham's mind, however. The members expressed
concern about the deteriorating domestic security situation
in general for Costa Rica, and in particular for their
employees. They questioned on what the Merida Initiative
would mean for Costa Rica and what, if anything, AmCham could
do. DAS Madison noted that U.S. companies might have some
valuable insights for the U.S. Congress on the consequences
that security realities in Central America have for U.S.
investors.

12. (U) Michael Borg, AmCham president, said the unrest over
security was "just the beginning," and that the threat of
transnational crime in Costa Rica could scare away future
investors. Carlos Denton of CID-Gallup told us that the
Maras were beginning to infiltrate Nicaragua and were trying
to recruit in Costa Rica, with their main goal in Costa Rica
being linkages with local gangs. Borg and the AmCham team
agreed that the best way to approach the GOCR on their
security concerns would be to frame it in terms of caring for
their employees and their families.

============================================= ===========
SECURITY: THE VIEW FROM THE MINISTRY (AND IN THE FIELD)
============================================= ===========

13. (SBU) Due to former Minister of Public Security Fernando
Berrocal's resignation the day before her arrival, DAS
Madison met with Vice Minister Gerardo Lascarez, whose
portfolio includes counternarcotics. Madison briefed
Lascarez on the Merida Initiative (Ref B) and thanked him for
GOCR's record-breaking year of drug seizures for 2007.
Madison emphasized Merida's regional approach and that all of
Central America needed to work together to deny
narcotraffickers and criminals easy transit through the zone.
Lascarez appreciated the briefing and any assistance the
U.S. could provide.

14. (U) With media in tow, DAS Madison also visited the site
of the future Costa Rican Coast Guard (SNGC) station in
Caldera, approximately 20 miles from the current station in
Puntarenas on the Pacific Coast. Martin Arias, SNGC
Director, showed Madison the blueprints for the new station,
to be funded largely by $1.25 million in DoD/SOUTHCOM Section
1004 funds. (Announcement of the USG contribution was
reported in the media and circulated in a SNGC press
release.) The new station will include an operations center
and barracks, maintenance facility, dry dock, expanded pier,
and classrooms for the new coast guard academy. The Caldera
facility will eventually house at least four of the six main
patrol boats the SNGC operates, including their 105-foot
vessel.

15. (U) DAS Madison has cleared this cable.
HENIFIN

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