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Cablegate: "We Had an Agreement" -- Ecuador Frustrated Eu

VZCZCXYZ0022
PP RUEHWEB

DE RUEHQT #0768 2341520
ZNR UUUUU ZZH
P 211520Z AUG 08
FM AMEMBASSY QUITO
TO RUEHC/SECSTATE WASHDC PRIORITY 9274
INFO RUEHBO/AMEMBASSY BOGOTA 7699
RUEHBR/AMEMBASSY BRASILIA 3963
RUEHLP/AMEMBASSY LA PAZ AUG LIMA 2759
RUEHSJ/AMEMBASSY SAN JOSE 1340
RUEHGT/AMEMBASSY GUATEMALA 1030
RUEHTG/AMEMBASSY TEGUCIGALPA 0533
RUEHME/AMEMBASSY MEXICO 1793
RUEHZP/AMEMBASSY PANAMA 0950
RUEHBS/USEU BRUSSELS
RUEHGL/AMCONSUL GUAYAQUIL 3748

UNCLAS QUITO 000768

SENSITIVE
SIPDIS

USTR FOR MARK MOWREY, BENNETT HARMAN

E.O. 12958: N/A
TAGS: ETRD ECON EC
SUBJECT: "WE HAD AN AGREEMENT" -- ECUADOR FRUSTRATED EU
PULLED OUT OF BANANA DEAL

1. (SBU) Summary. Ecuador and other Latin American banana
producers had reached an agreement with the European Union which
would have reduced EU tariffs on Latin bananas. However, the EU
withdrew the offer after WTO Doha Round negotiations reached an
impasse, even though the Latins believed that they had a stand-alone
agreement. Ecuador will resume its WTO case against the EU,
although it is willing to continue discussions with the EU, provided
the terms of the aborted agreement remain the same. End summary.

2. (SBU) Econcouns met with Mentor Villagomez, Under Secretary for
Commercial Affairs at the Foreign Ministry, on August 18 to review
Ecuador's reaction to the EU's withdrawal from a negotiated
agreement that would have reduced its tariffs on Latin American
bananas and ended Ecuador's longstanding WTO dispute. Villagomez
said, "We had an agreement" which was supposed to be stand-alone,
and expressed frustration that the EU pulled out after the impasse
in the WTO Doha Round talks at the end of July.

3. (SBU) Villagomez provided a copy of the aborted agreement, which
called for the EU to lower its bound tariff on bananas to 148
euros/ton in 2009, and steadily lower the tariff until it reached
114 euros/ton in 2016. The agreement would have also settled a
series of pending banana disputes between the Latins and the EU. As
drafted, the agreement was to have been signed by Brazil, Colombia,
Costa Rica, Ecuador, Guatemala, Honduras, Mexico, Nicaragua, Panama,
Peru, and Venezuela. A copy of the document has been forwarded to
EEB/ATP, WHA/EPSC, and USTR.

4. (SBU) Villagomez said that it had been difficult for the Latins
to reach a position on the agreement, suggesting that there had been
disagreement between them. He added that Colombia had already
accepted the agreement, which lowered the Latins' negotiating room,
and that he had been criticized by some Ecuadorian producers for
accepting the agreement. However, he continued, it would have been
a good agreement.

5. (SBU) Looking forward, Villagomez said that it is possible that
the EU and the Latins would revive efforts to establish an agreement
in September, but if so, the agreement would have to be the one that
had already been agreed. Any effort to delay or reduce the tariff
reductions would not be acceptable. Meanwhile, Ecuador would
proceed with the WTO legal process, and the next step would be for
the WTO Dispute Settlement Body to accept the panel report that
ruled in favor of Ecuador. Villagomez said that the EU had asked
that Ecuador withhold pursuing legal remedies, but he told the EU
that given the latest setback Ecuador cannot afford further delays.

Hodges

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