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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