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Cablegate: Costa Rica: Signals of More Flexibility On Cafta-Dr

This record is a partial extract of the original cable. The full text of the original cable is not available.

C O N F I D E N T I A L SAN JOSE 002105

SIPDIS

WHA/CEN
EB FOR WCRAFT, BMANOGUE
E FOR DEDWARDS
WHA FOR WMIELE
WHA/EPSC FOR KURS, LGUMBINER
H FOR JHAGAN
STATE PASS TO USTR FOR RVARGO, NMOORJANI, AMALITO

E.O. 12958: DECL: 09/09/2015
TAGS: ETRD ECPS ECON PREL PGOV SOCI CS
SUBJECT: COSTA RICA: SIGNALS OF MORE FLEXIBILITY ON CAFTA-DR

REF: A. (A) SAN JOSE 02090

B. (B) SAN JOSE 02047

Classified By: Charge Russell Frisbie, reasons 1.4(b) and (d)

1. (C) Summary. After attending a meeting on September 8,
2005 with various business representatives who are in favor
of the United States-Central American-Dominican Republic Free
Trade Agreement (CAFTA-DR), President Pacheco and Minister of
Foreign Trade (COMEX) Manuel Gonzalez have alluded to
delinking fiscal reform and CAFTA-DR. Also on September 8,
Foreign Minister Tovar told Charge that President Pacheco had
said he would send CAFTA-DR to the Assembly later this month,
after he receives the report from the Commission of Eminent
Persons on September 16, 2005 (Refs A and B). End Summary.


2. (U) On September 8, 2005, President Pacheco met with
representatives of the National Proactive Alliance (APRONAC),
a group of pro-CAFTA-DR business persons, solidarity leaders,
workers, and professionals. Reportedly, the purpose of the
meeting was for APRONAC members to express their concerns and
to urge Pacheco to send the agreement to the Assembly. Mario
Montero, executive director of the Chamber of the Food
Products Industry, said that during the meeting Pacheco told
them that he realizes that groups that are against CAFTA-DR
are blocking fiscal reform and that he will not play that
game.

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3. (U) The president of APRONAC Franco Pacheco said that
we left the meeting satisfied because the President assured
us that he believes in CAFTA-DR and that it is an opportunity
for the country. He further stated that ... in this
meeting the President told us that he no longer is
conditioning the sending of CAFTA-DR to the Assembly on the
approval of the fiscal reform bill... He added that the
President is only waiting on the report from the Commission
of Eminent Persons.

4. (C) On September 8, during a courtesy call on Foreign
Minister Tovar by Charge, Tovar said that President Pacheco
had told him earlier in the day that he had decided to delink
CAFTA-DR and fiscal reform and send CAFTA-DR to the Assembly
in September so that the ratification process could begin.

5. (U) Foreign Trade Minister Manuel Gonzalez told the press
that fiscal reform is an Administration priority, but that
does not mean that CAFTA-DR is not also a high priority. He
added that everything has its limits and one cannot continue
to ignore concrete proposals such as CAFTA-DR. To not have
either fiscal reform or CAFTA-DR is to be punished twice.
Fiscal reform is out of our (the Administration,s) control
but CAFTA-DR is not. We will send it to the Assembly at the
right time, and I expect it will be soon, Gonzalez added.
He stated the President will receive the report from the
Commission of Eminent Persons on September 16 and will reveal
its contents on September 20.

6. (SBU) Gonzalez also recognized the need to move on the
complementary agenda, which was presented to the Assembly
last week and consists of legislation approving three loans
to fund projects that will improve rural roads and
customs-clearing systems, and fund competitiveness
initiatives for small- and medium-size businesses. The
Administration is also working on the implementation
legislation to open the insurance and telecommunications
industries, as is required under CAFTA-DR. The Law to
Strengthen and Modernize the Costa Rican Institute of
Electricity (ICE) was also mentioned as a priority, but that
legislative project appears stalled (septel).

-------
COMMENT
-------

7. (C) The GOCR has not explicitly delinked submission of
CAFTA-DR to the legislature from the President's self-imposed
requirement that the Assembly first pass the fiscal reform
bill. However, the statements made by President Pacheco and
Minister Gonzalez following the APRONAC meeting, as well as
Minister Tovar's comment to Charge, indicate a change in
President Pacheco's thinking. If true, this is a positive
development that should advance CAFTA-DR ratification in
Costa Rica.
FRISBIE

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