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Cablegate: Launch of U.S.-Ecuador Bilateral Dialogue

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DE RUEHQT #1128/01 3431645
ZNR UUUUU ZZH
P 081645Z DEC 08
FM AMEMBASSY QUITO
TO RUEHC/SECSTATE WASHDC PRIORITY 9715
RHEFHLC/DEPT OF HOMELAND SECURITY WASHINGTON DC PRIORITY
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY
RHEHNSC/NSC WASHDC 2243
RUEHRC/USDA FAS WASHDC 0613
RUCPDOC/DEPT OF COMMERCE WASHDC
INFO RUEHBO/AMEMBASSY BOGOTA PRIORITY 7870
RUEHCV/AMEMBASSY CARACAS PRIORITY 3297
RUEHLP/AMEMBASSY LA PAZ DEC 1322
RUEHPE/AMEMBASSY LIMA PRIORITY 2935
RUEHGL/AMCONSUL GUAYAQUIL PRIORITY 3957

UNCLAS QUITO 001128

SENSITIVE
SIPDIS

AID for AA/LAC Jose Cardenas and Tully Cornick
State pass USTR for Bennett Harman
NSC for John Herrmann and Bob King
Commerce for Lisa Martilotta
USDA for Amy Slusher
Treasury for Office of the Americas Luyen Tran

E.O. 12958: N/A
TAGS: PREL ETRD EINV ECON KJUS SNAR SMIG EC
SUBJECT: LAUNCH OF U.S.-ECUADOR BILATERAL DIALOGUE

REFTEL A: QUITO 696
B: STATE 101841
C: QUITO 1100

1. (U) Summary: A U.S. delegation led by WHA DAS Christopher
McMullen met with Ecuadorian officials in Quito November 24 to
launch the U.S.-Ecuador Bilateral Dialogue, a forum to address
issues of interest to both sides and to highlight and build on
existing cooperation and positive engagement (ref A). The initial
Dialogue meeting addressed: the financial sector; investment;
customs; sanitary and phytosanitary (SPS) issues; sustainable
development; combating narcotrafficking and money laundering;
trafficking in persons; and migration issues. The delegation heads
also met with Foreign Minister Maria Isabel Salvador, who endorsed
and supported the process. A follow-on meeting was agreed for
Washington in the second quarter of the calendar year, to be
preceded by the establishment of working groups on various issues to
be determined. End Summary.

2. (SBU) Led by State Department's Deputy Assistant Secretary
McMullen, the U.S delegation met with MFA officials November 24 to
launch officially the Dialogue. USAID Deputy Assistant
Administrator for Latin America and the Caribbean Tully Cornick,
USDA, DHS, and Commerce also participated. The Ecuadorian
delegation, led by Under Secretary for Bilateral Relations Carlos
Jativa, included representatives from trade, consular, competition,
security, agriculture, justice, migration, customs and antinarcotics
offices and agencies. Jativa welcomed the Dialogue as a way to
strengthen the bonds between the U.S. and Ecuador. Many Ecuadorian
agencies thanked the U.S. side for assistance and praised current
cooperation under the four pillars of the Dialogue: Human
Development and Poverty Reduction, Trade and Investment, Cooperation
and Technical Assistance, and Immigration Issues.

Human Development and Poverty Reduction
---------------------------------------

3. (U) The Ecuadorians presented detailed information on Plan
Ecuador (Ecuador's development plan for its northern region
bordering Colombia), and the GOE's priority interests in the region.
Plan Ecuador's four key sectors for investment include housing,
water and sewage systems, production chains, and improvement of
education. DAS McMullen commented that USAID has worked very
closely with the GOE on this plan, investing over $80 million since
2001, and will continue this positive cooperation.

4. (SBU) An official from Ecuador's Coordinating Ministry of
Economic Policy stressed the importance of Ecuador's need for
balanced internal development, improved competitiveness and
production, and an improved financial structure. He asked for U.S.
cooperation in sharing best practices and lessons learned on: the
Community Reinvestment Act (to offer credit to microentrepreneurs);
financial regulators like Fannie Mae and Freddie Mac; designing a
social security system and unemployment insurance; working with the
Federal Reserve Bank of Atlanta to inventory monetary instruments in
circulation; and cooperation and technical assistance from the
Securities Exchange Commission to design a new securities market.

5. (U) The U.S. delegation responded that the USG could share its
experiences, invited the GOE to participate in preparing for the
Summit of the Americas, which could include a discussion on the
financial sector, and suggested that experiences from the G-20
process could be applied regionally. USAID noted that Ecuador has
one of the fastest growing micro-finance systems in the region, with
interesting lessons to be shared. The GOE welcomed the invitation
to engage.

Facilitation of Trade and Investment
------------------------------------

6. (U) The Ecuadorians complained about Ecuador's growing non-oil
deficit, and noted that Ecuador's exports are far too concentrated
(the top ten exports account for 91.51% of total exports). They
stressed the need to diversify exports, and asked for USG assistance
to define a basket of products to diversify into, and USG
cooperation in facilitating U.S. market access through training,
research and development, marketing, and assistance in complying
with SPS rules. The U.S. side expanded on the Pathways to
Prosperity in the Americas initiative (ref B), a forum to help trade
benefits reach all levels of society, and noted the upcoming
Ministerial in Panama in December. Although Pathways initially
included only Latin American FTA partners with the U.S., it is being
expanded to include others in the region. The Ecuadorians expressed
interest in participating in the Ministerial as observers, and were
encouraged to reach out to Panama about the meeting.

7. (U) The Ecuadorians want greater participation of small and
medium sized enterprises (SMEs) in trade. USAID highlighted its
on-going program with private Ecuadorian banks that guarantee loans
to SMEs in Ecuador, and has already offered technical assistance so
that the GOE could replicate this guarantee fund in publicly
controlled banks. The GOE noted that a draft antimonopoly law was
completed and would soon be sent to Ecuador's interim legislative
body for approval. USAID applauded the effort for bringing
protection to consumers while allowing for competition, and offered
technical assistance on the law.

8. (SBU) On customs issues, the Ecuadorians pointed to preventing
drug smuggling and stronger port controls as key issues. They were
interested in technical assistance for incoming passenger controls
(such as identifying risk profiles), and for controlling land
frontiers. They also emphasized Ecuador's likely inability to
comply with 100% container scanning by 2012. The DHS Immigration
and Customs Enforcement (ICE) official proposed working together
with Ecuador to identify equipment and provide training necessary
for Ecuador to meet the 100% scanning requirements. The USG side
also offered additional training and technical assistance in setting
up Ecuador's Trade Transparency Unit, which would allow Ecuador to
compare trade data and thus help identify corruption, tariff fraud,
and money laundering schemes. GOE officials noted President
Correa's plan to institute an electronic signature system to
facilitate trade and enhance transparency.

9. (SBU) A Ministry of Agriculture representative mentioned the GOE
desire to develop its livestock program further through Ecuador's
National Development Plan, stressing the need for training and
technology transfer to ensure benefits reach small producers. He
asked for USG assistance in developing eco-seals (certifications of
environmentally friendly processes) for products, while cautioning
that eco-seals would need to not increase transaction costs or
otherwise harm competitiveness, and would need to help small
producers. On the U.S. interest in market access for U.S. beef,
Ecuador's sanitary service, SESA, stated that the Andean Community
(CAN) was reviewing its rules on mad cow disease and that there
"could be commercial opportunities in this area soon." The
Ecuadorians noted that President Correa signed an "agro-quality"
law, creating an agency that will look at SPS and agricultural
issues simultaneously.

10. (SBU) The MFA detailed GOE efforts to promote its "10 star
sectors" identified for investment, noting a focus on non-oil and
non-traditional sectors. These included fruit and vegetable
processing, flowers, fish and aquaculture, forestry, biofuels,
tourism, and transport and logistics, among others. The Ecuadorians
asked for U.S. support to bolster the 10 sectors, particularly in
special promotional activities such as road shows and information
exchange (in a separate Heads of Delegation meeting, biofuels were
highlighted as an important area for cooperation). USAID praised
joint work in this endeavor. USAID funded the initial studies that
led to Correa adopting these "10 star sectors" as his national
economic growth strategy.

Investment Issues
-----------------

11. (SBU) USG officials stressed that investment disputes of U.S.
companies have contributed to a negative image of Ecuador's
investment climate in Washington. The U.S. side urged Ecuador to
look at foreign investment as an indispensable development tool, and
to treat foreign investors transparently and under stable rules.
The Ecuadorian side agreed that it wanted to improve its image and
emphasized that disputes would be resolved by law. GOE officials
noted that the government was designing a new investment law that
would provide a new legal framework for investment, based on
constitutional reforms covering investment ethics and investor
rights.

Cooperation and Technical Assistance
------------------------------------

12. (U) Risk management for natural disasters is an important area
of cooperation between the U.S. and Ecuador, and USAID is involved
in long standing programs with Ecuador. The Embassy's military
group has also provided strategic assistance in disaster response.
The Ecuadorians noted that they were working on building a new
national disaster relief system.

13. (SBU) Anti-narcotrafficking is another area where the GOE and
USG have extensive, successful cooperation. The Ecuadorians noted
the GOE was working on a draft drug control plan, which President
Correa was to sign at the end of December, and a draft law on the
management of seized assets. They asked for continued USG
assistance on antinarcotics initiatives, while calling for amounts
to be increased. In particular, they asked for assistance with
investigating the possibility of an asset seizure fund (to see if
they could share in the proceeds of the sale in the U.S. of seized
assets of Ecuadorian drug criminals). The U.S. side agreed to
investigate this further. The U.S. side also commented on the need
for an antiterrorism financing law so that Ecuador's Financial
Intelligence Unit would be eligible for international certification
and attendant access to information held by other certified units.

14. (SBU) The Ecuadorians noted the necessity of updating the
bilateral treaty on prisoner exchange and stressed the importance of
judicial assistance. The U.S. side noted that the USG has sought to
improve communication to facilitate the extradition process, such as
by holding digital video conferences, and agreed to investigate the
prisoner exchange issue.

Immigration Issues
------------------

15. (U) The Ecuadorians noted that, due to the importance of
migration issues in the current government, the Secretariat of
Migration would soon become a full Ministry, and explained their
program to assist Ecuadorian immigrants who return voluntarily.
They proposed a dialogue and information exchange focused on
assisting Ecuadorian immigrants in the U.S. (such as assistance with
language and job training).

16. (SBU) Officials from both the USG and GOE noted difficulties in
consular notification in both countries and the importance of
continued police training. DHS/ICE officers proposed establishing
an Electronic Travel Document System with the GOE that would allow
for a shorter detention period for Ecuadorian nationals detained by
U.S. authorities. DHS/ICE also expressed openness to sharing
information on detention and deportation processes.

17. (SBU) The GOE would like to promote the developmental impact of
remittances, noting the importance of remittances from the U.S. To
improve remittances services and lower transaction costs, the
Ecuadorians proposed an exchange of information on remittances, a
bilateral remittance document with qualitative and quantitative
information, and meetings with remittance agencies. USAID noted
that as a result of its programs, it had already connected 4,000
outlets in the U.S. with over 120 credit union offices in Ecuador.
USAID will work with Ecuadorian counterparts to further explore
areas of mutual interest on remittances.

18. (SBU) The MFA noted good cooperation with the U.S. and the
GOE's ongoing efforts against Trafficking in Persons (TIP), and that
Ecuador had moved from Tier 3 to Tier 2 in the State Department's
TIP report in 2005. DAS McMullen noted that the GOE's policy on
visa-free tourism had caused a sharp rise in Chinese migration,
abuses of migrants, and greater susceptibility to terrorist acts,
and offered technical assistance in migration controls. The
Ecuadorians responded that the GOE was implementing a travel
document requirement for Chinese effective December 1 (ref C).
McMullen cautioned about the need to check whether other countries
were taking advantage of the current policy.

Next Steps
----------

19. (U) The two sides agreed to hold the next meeting of the
Dialogue in Washington in 2009, most likely in May. Working groups
for each pillar will be formed to begin addressing pending issues,
and will report their results to the Dialogue plenary in 2009.

Comment
-------

20. (SBU) The Dialogue meeting created a formal opportunity to
engage the Correa government, show how U.S. policies support many
key GOE objectives, and establish a framework for future
cooperation. A joint USG-GOE press statement praised the Dialogue
for demonstrating the respect, friendship, and cooperation between
the two countries, and for working to jointly develop priority
areas. Media coverage of the talks was positive. GOE
representatives at the meeting appeared eager and enthusiastic about
potential collaboration in many areas.

21. (U) The U.S. delegation approved this cable.

CHRITTON

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