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Cablegate: Supreme Court Ruling Delays Cafta Implementation

VZCZCXYZ0000
OO RUEHWEB

DE RUEHSJ #0745/01 2562349
ZNR UUUUU ZZH
O 122349Z SEP 08
FM AMEMBASSY SAN JOSE
TO RUEHC/SECSTATE WASHDC IMMEDIATE 0103
INFO RUEHZA/WHA CENTRAL AMERICAN COLLECTIVE PRIORITY
RUEHDG/AMEMBASSY SANTO DOMINGO PRIORITY 1594
RHEHNSC/NSC WASHDC PRIORITY

UNCLAS SAN JOSE 000745

SENSITIVE
SIPDIS

DEPT FOR WHA, WHA/CEN, WHA/EPSC AND EEB; PLEASE PASS TO
USTR:AMALITO AND DOLIVER

E.O. 12958: N/A
TAGS: CS ECON ETRD PGOV PINR PREL
SUBJECT: SUPREME COURT RULING DELAYS CAFTA IMPLEMENTATION
PAST OCTOBER 1

REF: SAN JOSE 634 AND PREVIOUS

1. (SBU) SUMMARY: The Costa Rican Supreme Court has thrown
up one more obstacle to CAFTA, ruling that one section of the
final CAFTA implementation bill (on IPR and biodiversity
issues) was unconstitutional. The Constitutional Chamber
(Sala IV) held that the GOCR should have consulted with Costa
Rica,s indigenous communities, in compliance with the ILO
Convention 169, about CAFTA-generated changes in the existing
biodiversity law that could affect those communities. The
Sala IV,s action shocked the GOCR, pro-CAFTA legislators and
the private sector. While a definitive prognosis awaits
publication of the full Sala ruling (expected on September
16), VP Chinchilla told is September 12 that meeting the
October 1 EIF deadline was now completely out of the
question, even under the best case scenario. She said the
GOCR will need another 1-3 months to correct and re-approve
the IPR bill. Chinchilla and COMEX VM Pacheco did not ask us
explicitly for an EIF extension (nor did we even hint at
one), but they made clear that the GOCR was already laying
the groundwork, and had received positive signals thus far
from other CAFTA members. They also stressed that the Arias
administration, its pro-CAFTA allies in the legislature and
the private sector had been re-galvanized into action by the
Sala ruling, and were determined to wrap up this law and all
the pending technical issues as quickly as possible. COMEX
Minister Ruiz is to call DUSTR Vereneau on September 15 to
discuss the issue. END SUMMARY.

-------------------------
Sala Surprise Attack
-------------------------

2. (U) On September 11, the Sala IV (Constitutional Court)
ruled 4-3 that one section of the final CAFTA implementation
bill (on IPR and biodiversity issues) was unconstitutional.
The majority opinion, written by Supreme Court President Luis
Paulino Mora, held that the GOCR should have consulted with
Costa Rica,s indigenous communities, in compliance with the
ILO Convention 169, about CAFTA-generated changes in the
existing biodiversity law that could affect those
communities. The Sala also ruled that proposed changes in
the law had not been publicized adequately. Details on the
Sala,s decision are pending release of the full ruling,
expected on September 16.

3. (U) NOTE: The relevant portion of Article 6 of the 1989
ILO convention, which is also known as the Indigenous and
Tribal Peoples Convention, states that "governments shall
consult the peoples concerned, through appropriate procedures
and in particular through their representative institutions,
whenever consideration is given to legislative or
administrative measures which may affect them directly."
This issue had not been raised in the Sala IV,s majority
opinions on other CAFTA legislation. END NOTE.

4. (SBU) The Sala IV,s action shocked the GOCR, pro-CAFTA
legislators and the private sector, and generated a series of
emergency meetings convened by VP Laura Chinchilla (acting
for President Arias who was still in Europe). In an evening
press conference, a stunned-looking Chinchilla indicated that
the GOCR respected the Court,s decision, but now doubted
that Costa Rica could implement CAFTA in time for the October
1 entry-into-force deadline. She added that she would
"explore the possibility" of extending the deadline in a
meeting with the Embassy on September 12. The press
conference was followed by media releases on September 11 and
12 noting that the Sala,s decision placed full
implementation by October 1 in jeopardy, but underscoring the
GOCR,s determination to do all it could do to complete CAFTA
as quickly as possible.

-------------------------------------------
GOCR Will Not Make the Deadline
------------------------------------------

5. (SBU) Meeting with the DCM and Emboffs on September 12,
Chinchilla and COMEX Vice Minister Amparo Pacheco reiterated
that they had no advance notice of the somewhat puzzling Sala
IV decision. The good news: the Court had found only
procedural problems, which were less difficult to correct.
Court President Mora himself had assured Chinchilla that the
correction process should be "manageable". The bad news:
meeting the October 1 EIF deadline was now completely out of
the question, even under the best case scenario. Chinchilla
(who had been in contact with President Arias, COMEX Minister

Ruiz and the other senior officials traveling in Europe)
predicted it would take "another 1-3 months" to address the
problems identified by the Court.

6. (SBU) According to Chinchilla, in the best case scenario,
the Sala would provide its full ruling to the legislature
ASAP; she had asked the Court to do so by September 16. The
Constitutional Consultation Committee would then take action,
hopefully agreeing to strip out the problematic text and
sending the modified bill for approval by a plenary vote.
Given debate rules and the possibility of majority and
minority reports issued by the committee, even this "fast"
scenario could take a few weeks, and Chinchilla stressed that
any changes to the law would have to be accepted by USTR as
well. She added that the highly legalistic pro-CAFTA
Libertarian Movement (ML) party could be as problematic in
thi scenario as the PAC-led opposition.

7. (SBU) n a worst case scenario, the law might have to be
more extensively modified, which would take more tme, and/or
the opposition might press for anothe 30-day Sala IV review.
If indigenous consultatons could not be handled in parallel
(and separaely from the CAFTA bill itself), then additionaltime would be required before the bill was complete. If
comprehensive community-by-community consutations were
required, the GOCR could find itsel holding the equivalent
of a "mini-referendum" o CAFTA with the indigenous people.
The GOCR wantd to avoid this at all costs: such a lengthy
dela could invite new attacks from the small, but stil
vocal, anti-CAFTA minority. Chinchilla and Paceco seemed
reasonably confident, however, that tis "worse-worst" case
option would not be needed, pending analysis of the Sala
IV,s full ruling.

--------------------------------------------- --------
Laying Groundwork for a Second Extension
--------------------------------------------- -------

8. (SBU) Chinchilla and Pacheco did not ask us explicitly
for an EIF extension (nor did we even hint at one), but they
made clear that the GOCR was already laying the groundwork.
Minister Ruiz and the Costa Rican Embassy in Washington had
begun informal consultations with the other CAFTA members.
The signals about a later entry for Costa Rica were positive
thus far, according to Pacheco. Echoing the earlier media
releases, Chinchilla and Pacheco made clear that the Arias
administration, its pro-CAFTA allies in the legislature and
the private sector had been re-galvanized into action by the
Sala ruling, and were determined to make the required
corrections to this last law, plus resolve the pending
technical issues on IPR, insurance and telecom, as quickly as
possible. Chinchilla acknowledged that "everything" had to
be completed before CAFTA could enter into force for Costa
Rica. She added that Minister Ruiz would call DUSTR
Vereneau on September 15 to discuss these issues further.

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

9. (SBU) This ruling was clearly a surprising blow to the
GOCR, which as recently as September 10 had been laying out a
(very optimistic) timetable to complete all legislation and
regulations by September 23. But, there are some silver
linings. The pro-CAFTA forces are energized and believe they
can bring this to resolution. The GOCR is doing its own
heavy lifting to prepare the other CAFTA partners to permit
later EIF by Costa Rica. Under these circumstances, although
they are not ideal, we recommend that President Arias be
included in the September 24 AGP summit as planned. Being
in a room full of counterparts who have long since completed
their FTAs with the United States, and hearing a strong
pro-trade message from POTUS can only help.

10. (SBU) Later, we (and the Arias administration, no doubt)
will examine more closely why the Sala made this decision,
and why President Mora (who acknowledged to the Ambassador
recently the need to get CAFTA done) authored it.
Interestingly, Sala IV President Ana Virginia Calzada, a
biodiversity expert who had ruled (in the minority) against
some of the earlier CAFTA bills, and who was judged most
likely of all the magistrates to have voted no on this bill,
ruled in favor this time. Finally, for those keeping score,
the legislature approved one additional bill since our last
report (Reftel), bringing the total approved to 12, with nine
of those actually signed into law.

CIANCHETTE

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