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### Viewing cable 08SANJOSE823, COSTA RICA STAGGERS INTO SECOND CAFTA EXTENSION

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Reference ID | Created | Released | Classification | Origin
--- | --- | --- | --- | ---
08SANJOSE823 | 2008-10-15 22:10 | 2011-03-02 16:04 | CONFIDENTIAL | Embassy San Jose
Appears in these articles: http://www.nacion.com/2011-03-02/Investigacion.aspx

`

    VZCZCXYZ0001
    OO RUEHWEB

    DE RUEHSJ #0823/01 2892243
    ZNY CCCCC ZZH
    O 152243Z OCT 08
    FM AMEMBASSY SAN JOSE
    TO RUEHC/SECSTATE WASHDC IMMEDIATE 0187
    INFO RUEHZA/WHA CENTRAL AMERICAN COLLECTIVE IMMEDIATE
    RUEHDG/AMEMBASSY SANTO DOMINGO IMMEDIATE 1602
    RHEHNSC/NSC WASHDC IMMEDIATE

` `

    C O N F I D E N T I A L SAN JOSE 000823

    SIPDIS

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

    E.O. 12958: DECL: 10/15/2018
    TAGS: CS ECON ETRD PGOV PINR PREL
    SUBJECT: COSTA RICA STAGGERS INTO SECOND CAFTA EXTENSION

    REF: A. A) SAN JOSE 745
         ¶B. B) SAN JOSE 774

    Classified By: POL/ECON Counselor David E. Henifin per 1.4 (d)

    =======
    SUMMARY
    =======

    ¶1. (SBU) Implementing CAFTA continues to challenge the GOCR.
    The Constitutional Court's September 11 ruling that a portion
    of the 13th CAFTA bill was unconstitutional (Reftels), plus
    lingering technical issues in intellectual property (IP),
    triggered a second entry-into-force (EIF) extension request
    to Costa Rica,s CAFTA partners.  The partners granted the
    extension on September 30, specifying a new EIF date of
    January 1.  Also on September 30, President Arias asked
    visiting Commerce Secretary Carlos Gutierrez to deliver a
    proposal to USTR requesting EIF for the GOCR as soon as the
    13th bill has been modified per the Court,s ruling and
    signed into law, regardless of the status of other
    outstanding issues.  (This echoed Arias's request in a letter
    to POTUS on September 19.)

    ¶2. (SBU) Even with this latest extension, the GOCR has its
    work cut out for it.  The 13th law likely faces another,
    opposition-driven review by the Constitutional Court.  The
    four outstanding IP issues may require a new, 14th CAFTA
    bill. Also, the Arias administration must finalize
    CAFTA-related regulations, and launch a special intellectual
    property rights (IPR) enforcement office.  Even under the
    best case scenario (in which a 14th law is not required), the
    GOCR may not complete all its remaining CAFTA tasks before
    January 1.  END SUMMARY.

    =========================
    INTO A SECOND OVERTIME . . .
    =========================

    ¶3. (SBU) Further to Ref B, during the third week of
    September, Foreign Trade (COMEX) Minister Marco Vinicio Ruiz
    formally requested an EIF extension from USTR.  USTR and
    partner CAFTA countries agreed to an extension until January
    1, 2009, with Washington-based COMs signing the prerequisite
    letter on September 30.  (Nicaragua required special
    attention and did not sign until 19:45 Washington time).
    According to USTR, the GOCR expressed "a great political
    need" for a formalized extension process, no doubt a) to keep
    the pressure on the weary Arias administration and its
    fraying pro-CAFTA coalition in the legislature and b) to
    avoid buttressing the long-held view of the anti-CAFTA
    opposition that an EIF extension was never technically
    required (thus leaving time to renegotiate to "soften" some
    of the alleged impacts of CAFTA).

    ===========================
    . . . WHILE FIGHTING ON THREE FRONTS
    ===========================

    ¶4. (U) The GOCR clearly needs the extra time, first to
    respond to the controversial Constitutional Court decision.
    The Court found one section of the 13th bill (the IPR
    catch-all bill) to be unconstitutional because the GOCR did
    not consult with Costa Rica,s indigenous communities, in
    compliance with ILO Convention 169, regarding CAFTA-generated
    changes in the existing biodiversity law that could affect
    those communities.

    ¶5. (SBU) The national legislature is to begin debate the week
    of October 13 on a modified bill, which stripped out the
    section the Court found objectionable.  This should de-couple
    the indigenous consultation issue from CAFTA EIF.  However,
    the PAC-led opposition, emboldened by the latest delay and
    seeing one last opportunity to block CAFTA, has already
    called for a Court review of the "fixed" law.  The GOCR hopes
    the bill will be approved in first reading and passed to the
    Court for action by the week of October 20.

    ¶6.  (SBU) VM Roberto Thompson, who is managing the process
    for the Presidencia, was cautiously optimistic when we met
    with him on October 14.  The Constitutional Court has given
    informal signals that it will complete its review well before
    the 30 days allotted, and will not raise new concerns about
    the modified law.

    ¶7. (SBU) Thompson acknowledged, however, that some potential
    roadblocks remain.  The national Human Rights Ombudswoman, a
    well-known CAFTA opponent, has the right to ask for
    Constitutional Court review of any law and is apparently
    mulling this over for the 13th CAFTA bill.  Also, the
    behavior of the Court, despite the GOCR,s optimism, cannot
    be guaranteed in advance. With erstwhile pro-CAFTA allies in
    the Libertarian Party join the PAC in stubbornly decrying the
    incorrect procedures used by the GOCR to correct the 13th
    law, their vote is not 100 percent assured, either.  Even
    with those risks, Thompson predicted the bill should be
    reviewed by the Court, approved by the legislature in second
    reading, and signed into law in November, at the latest.

    =================
    ATTACK ON THE PAC
    =================

    ¶8. (SBU) In anticipation of the second Court review, the
    worried private sector resumed its media campaign against the
    PAC for once again delaying CAFTA implementation and ignoring
    the will of the people as expressed by the 2007 referendum
    ratifying CAFTA.  AmCham contacts told us they wanted PAC to
    "pay the full political cost" for the continued delays, and
    they hoped the ads would moderate that party,s
    obstructionism, as a similar campaign did earlier this year.
    Six different ads ran on TV and radio the week of October 6,
    accompanied by full page newspaper ads.  3500 textile workers
    also petitioned the GOCR to implement CAFTA quickly to
    protect their jobs.

    ¶9. (U) The ads seem to have found their mark.  In a press
    conference on October 14, PAC leader Otton Solis furiously
    insisted that the GOCR, and not his party, should be blamed
    for any CAFTA delays, and alleged (outrageously) that "dirty
    narcotrafficking money" had funded the ads against his party.
     In addition, the pro-CAFTA coalition is hoping the campaign
    may also remind the court of the political fallout that would
    ensue if CAFTA EIF were blocked.

    =========================
    SECOND FRONT: TECHNICAL ISSUES, . . .
    =========================

    ¶10. (SBU) In addition, the GOCR must address four remaining
    IP issues, which although seemingly small, are legally
    material and thus essential to CAFTA compliance.  The IP
    enforcement bill (signed into law in August) is missing one
    word ("performance") which effects the definition of
    criminality.  In the trouble-plagued IPR catch-all bill,
    there are three instances where a word was added which
    materially changed the meaning and harmed copyright and data
    protection IP concepts.  USTR believes a new 14th "technical
    corrections" bill is the only way to make these necessary
    changes.

    ¶11.  (SBU) Under other circumstances in other FTA
    negotiations, such a seemingly simple piece of legislation
    would be an easy fix, but the political and institutional
    situation is different in Costa Rica at this time.  GOCR
    officials, including Legislature President Francisco Pacheco,
    VM Amparo Pacheco (COMEX) and VM Thompson (Presidencia), as
    well as key private sector contacts, are confident they can
    squeeze "one more vote" out of the cumbersome, 38-seat
    pro-CAFTA coalition, but that,s it.  This last vote would be
    to approve the "fixed" 13th bill, assuming the Constitutional
    Court finds no new problems.  (Any item of legislation must
    be approved by two plenary votes in Costa Rica to become
    law.)

    =========================
    . . . AND ONE LAW TOO MANY?
    =========================

    ¶12. (SBU) Our contacts are highly pessimistic about the
    prospects of new CAFTA-related legislation, however.  A
    technical corrections bill would not be introduced until
    December, they tell us, once the annual budget is approved
    (since this takes precedence over all other legislative
    action in November) and once the executive branch can again
    set the legislative agenda (it can do so in the
    December-April extraordinary session). Given the deep-seated
    CAFTA fatigue in the legislature, swift action on this last
    bill is not assured.  As Thompson explained, 38 votes would
    again be needed to limit debate on such a bill, otherwise
    discussion could be endless.

    ¶13. (SBU) Our interlocutors also worry that any new
    CAFTA-related bill risks giving more ammunition to the
    anti-CAFTA opposition.  PAC party leader (and presidential
    candidate) Solis, in a letter passed to the Embassy during
    Secretary Gutierrez's visit, has already called for the IPR
    catch-all bill to be removed from the CAFTA implementation
    package entirely (which is a non-starter), alleging that the
    USG used delays in the implementation process to "place new
    demands "on Costa Rica.  Solis also insisted (again) that
    CAFTA be re-negotiated with Costa Rica.

    ¶14. (SBU) Introducing a new, 14th bill does risk making the
    USG the issue, since it would fuel Solis,s and other CAFTA
    opponents' arguments that the USG added one more CAFTA
    requirement "at the last minute."  With the early political
    maneuvering in full swing for the 2009-2010 election
    campaign, and with the Arias administration down in the polls
    and feeling against the ropes, GOCR officials and pro-CAFTA
    legislators fear that even technical corrections legislation
    would be a bill too far.  Best case: completing work on such
    a bill probably would delay EIF into the new year.

    ========================
    THE "SIDE LETTER" GAMBIT
    ========================

    ¶15. (SBU) Given the GOCR,s strong aversion to introducing
    and processing another CAFTA bill, Arias used Commerce
    Secretary Gutierrez,s visit to propose an alternate course
    of action, which, if accepted, would permit Costa Rica,s
    CAFTA EIF on January 1 (or as soon as the 13th bill becomes
    law), regardless of progress on the other issues.  The GOCR
    would pledge to complete any remaining issues as soon as
    possible after January 1, in a side letter signed by
    President Arias himself, if that were necessary.  In the
    GOCR,s (accurate) calculus, EIF would make Solis,s and the
    opposition,s arguments moot.

    ========================
    THIRD FRONT: IPR ENFORCEMENT
    ========================

    ¶16. (SBU) The GOCR's third front is fulfilling the handshake
    agreement with USTR to create a special enforcement office
    (SEO) to enforce IP law and prosecute IP crimes.  As
    explained to Ambassador Cianchette and DCM Brennan in early
    August by COMEX Minister Ruiz, the GOCR,s Fiscal General,
    Francisco Dall'Anese, must request the authorization of the
    funds for the SEO from the Corte Plena, the full 22-member
    Supreme Court.

    ¶17.  (SBU) Since then, the Arias administration and President
    of the Supreme Court Luis Paulino Mora have acknowledged to
    us the importance of launching the SEO, and Dall'Anese and
    then-Minister of Justice Laura Chinchilla exchanged letters
    on the topic.  Progress has been slow, however. The Fiscal
    General's most recent letter named a prosecutor, a location
    of the office, and responsibilities by citing articles from
    IP law, but the SEO does not yet have a budget, office or
    staff.

    ¶18. (SBU) We are continuing our pressure, enlisting a number
    of private sector allies and lower-level GOCR officials who
    well understand the need for, and importance of, effective
    IPR enforcement, not only for CAFTA, but also for TRIPS and
    Special 301 compliance.  Thompson told us October 14 that he
    would push again for a proper budget and staff for the new
    SEO.

    =======================
    REGULATIONS MOVING, AT LEAST
    =======================

    ¶19. (SBU) The Costa Rican Embassy in Washington has provided
    one piece of good news, at least.  The GOCR will soon
    finalize the remaining CAFTA-related regulations on
    telecommunications, and the new regulatory body, SUTEL,
    should staff its board by October 31.

    =======
    COMMENT
    =======

    ¶20. (SBU) We provide this context as an explanation, not an
    excuse.  Renewed GOCR leadership and private sector pressure
    should keep CAFTA from derailing in Costa Rica at the last
    minute.  Although more grouchy than inspirational, President
    Arias has been slightly more vocal recently in pressing PAC
    and the anti-CAFTA opposition to respect the will of the
    people and get CAFTA done.

    ¶21. (SBU) The latest extension is not all bad.  Although due
    mostly to the Court,s rejection of the 13th bill, it has
    given both sides more time to work out the final thorny
    technical issues, and it has avoided the politically
    problematic scenario of the GOCR seeming to have completed
    all its EIF work by the earlier October 1 deadline, only to
    have the USG appear to "deny" CAFTA compliance certification
    because of a few outstanding issues.

    ¶22. (C) Leadership, pressure and time may not be enough to
    ensure Costa Rica,s CAFTA EIF, however.  Although the USG
    has shown considerable flexibility through this long and
    torturous saga, a little more may be required, in particular
    given CAFTA's importance to USG policy in the region in
    general, and on trade, in particular.  If Arias's proposal is
    not accepted, for example, and a 14th CAFTA bill is required,
    then we do not expect to see Costa Rican EIF until early
    2009, and perhaps later.  This might give PAC leader Solis
    and other CAFTA opponents the last chance they seek to push
    Costa Rica's EIF into the next U.S. administration, during
    which they still believe they may be able to "get a better
    deal" on CAFTA for Costa Rica. Such a notion may be totally
    misguided, but combined with a tired, deflated Arias
    administration and the many "veto points" built into the
    hyper-legalistic Costa Rican political system, Solis and the
    anti-CAFTA forces still have weapons to deploy.

    CIANCHETTE

`