US embassy cable - 05TEGUCIGALPA765

UNCLAS SECTION 01 OF 04 TEGUCIGALPA 000765 
 
SIPDIS 
 
SENSITIVE 
 
STATE FOR WHA/CEN, WHA/EPSC, EB/TPP, DRL/IL, AND INR/IAA 
STATE FOR H 
STATE PASS USTR 
STATE PASS AID FOR LAC/CAM 
DOL FOR ILAB 
GUATEMALA FOR AGATT SHUETE 
TREASURY FOR DDOUGLASS 
 
E.O. 12958: N/A 
TAGS: ETRD, ECON, PGOV, ELAB, EAGR, HO 
SUBJECT: Congressional Staffers Visit Honduras, Question 
CAFTA-DR's Impact on the Poor 
 
 
1. (SBU) Summary: Five U.S. Congressional staffers, 
representing House Democrats, visited Honduras in late 
March, on a trip aimed at building support for CAFTA-DR 
among undecided U.S. Congressmen.  The visit, which was 
organized by the GOH and funded by the Honduran private 
sector, involved visits to a textile factory (maquila) and 
various agricultural projects, as well as a meeting with 
Ambassador Palmer and the country team.  The staffers' 
concerns centered on the impact that CAFTA-DR would have for 
poor and vulnerable Hondurans, especially farmers.  Post is 
convinced that, at the conclusion of their visit, the 
staffers left much better informed about and more 
comfortable with CAFTA-DR and the benefits it could bring to 
both the U.S. and Honduras.  End summary. 
 
--------------------------------------------- -- 
GOH-Hosted Visits Aim to Build CAFTA-DR Support 
--------------------------------------------- -- 
 
2. (SBU) From March 28 - April 1, five U.S. Congressional 
staffers visited Honduras on a trip aimed at building 
support for CAFTA-DR among undecided U.S. Congressmen.  The 
visit was organized by the GOH, with funding provided by the 
Honduran Manufacturers' Association (AHM) and the GOH 
Foundation for Investment and Export Development (FIDE). 
This was the second such visit in the past two months and is 
a key part of the GOH's strategy to promote U.S. 
Congressional approval of CAFTA-DR.  The Honduran Embassy in 
Washington has compiled a list of undecided Congressmen and 
will continue to invite staffers of these Congressmen to 
Honduras until CAFTA-DR comes to a vote in Washington. 
 
3. (SBU) Post continues to fully support such visits. 
EconOffs accompanied the delegation for two of its four days 
of fact-finding, and Post arranged a country team briefing 
and a meeting with the Ambassador for the delegation.  The 
informal setting fostered a frank exchange of views, 
allowing Post officers to identify and address the staffers' 
core concerns. 
 
4. (SBU) The five staffers on this visit represented the 
following Congressmen: 
 - Congressman Ron Kind (D-WI) 
 - Congressman Chris Van Hollen (D-MD) 
 - Congressman David Price (D-NC) 
 - Congressman Charles Gonzalez (D-TX) 
 - Congressman Mark Udall (D-CO). 
All five of these Congressmen have supported the recent FTAs 
with Chile, Singapore, Australia, and Morocco (with the 
single exception that Congressman Kind did not vote on the 
Australia FTA).  However, they also all opposed TPA (Trade 
Promotion Authority) in 2001 (except for Congressman Van 
Hollen, who was not in office at the time). 
 
5. (SBU) The staffers' four-day visit began in the northern 
industrial region of the country where they visited a 
textile factory, met with municipal officials from the town 
of Villanueva (near San Pedro Sula), visited successful 
projects of a women's micro-lending organization, and met 
with representatives of FIDE and the AHM.  They then 
traveled to the agricultural Comayagua valley and the Pan- 
American School for Agriculture at Zamorano to discuss 
agricultural issues, visit agricultural diversification 
projects, and meet Honduran farmers who are successfully 
producing high-value agricultural goods for export.  In 
Tegucigalpa, they met with Ambassador Palmer and country 
team members and had dinner with Minister of Trade and 
Industry Norman Garcia, Minister of Labor German Leitzelar, 
and Minister of Natural Resources and the Environment 
Patricia Panting.  Finally, they visited the Mayan ruins at 
Copan to observe one of Honduras' most successful tourist 
attractions.  EconOffs accompanied the staffers on the 
agricultural visits and during their time in Tegucigalpa. 
 
---------------------------------- 
Views and concerns of the staffers 
---------------------------------- 
 
6. (SBU) None of the staffers on the trip at any point 
expressed concerns about the commercial benefits of the 
agreement for the United States, nor did they at any time 
explicitly raise the concern that CAFTA-DR could cause jobs 
to move from the United States to Central America.  Instead, 
their concerns were focused on the negative effects that 
CAFTA-DR may have on vulnerable Central Americans, 
especially farmers, and the sense that the U.S. is 
"rewarding" countries with inadequate protection of labor 
rights and environmental standards, while not doing enough 
to demand improved protection of those rights. 
 
--------------------------------------------- -- 
Staffers Note Strong Opposition from U.S. Labor 
--------------------------------------------- -- 
 
7. (SBU) Several staffers stressed that the Congressmen they 
work for are "New Democrats" who normally support free trade 
agreements.  However, strong opposition from labor unions in 
the U.S. has forced them to consider voting against CAFTA- 
DR.  One staffer recounted a meeting with a major U.S. labor 
union in which the union officials suggested that, if the 
Congressman votes for CAFTA-DR, the union will support and 
finance a candidate to run against him in the 2006 
Democratic primary election.  Another staffer told a similar 
story, saying that a human rights organization in his 
district (which is opposed to CAFTA-DR because, in its view, 
the violation of labor rights in the CAFTA-DR countries is a 
human rights issue) has said that they will run television 
spots denouncing the Congressman's support for CAFTA-DR if 
that's what it takes to convince him to oppose the 
agreement. 
 
---------------------------------- 
"Does CAFTA-DR really have teeth?" 
---------------------------------- 
 
8. (SBU) The concern over protection of labor rights was 
also reflected in the staffers' interest in CAFTA-DR's 
dispute settlement mechanisms.  While the staffers knew a 
fair amount about the agreement, they seemed to still lack a 
clear understanding of exactly what "teeth" the agreement 
has in case of violations.  In the meeting with the country 
team, one staffer expressed frustration that he had "never 
gotten a straight answer" to the question of how CAFTA-DR 
will allow the U.S. to push for greater enforcement of labor 
laws in the region.  EconChief responded with a detailed, 
step-by-step explanation of CAFTA-DR's dispute settlement 
procedures, a description that all the staffers followed 
with close interest. 
 
9. (SBU) Some were still skeptical.  One staffer asked for 
clarification that, for the monetary assessments of CAFTA-DR 
to be applied, the actual government of a CAFTA-DR Party 
would have to bring an action - an action could not be 
brought by an NGO, for example.  (In Post's understanding, 
this is correct.)  He then argued that, in practice, this 
greatly weakens the dispute settlement mechanism, as other 
political concerns in the bilateral relationship might well 
override the trade issue in question.  For example, he said, 
it is hard to believe that the USG would bring an action 
against a CAFTA-DR country if the USG were simultaneously 
pressing that country on a major foreign policy issue such 
as support for the Global War on Terror. 
 
10. (SBU) Other staffers questioned the very approach of 
entering into a trade agreement with countries which have 
significant enforcement problems.  If everyone acknowledges 
that Central American countries currently do an incomplete 
job of enforcing their labor laws, one asked, "Why reward 
them with increased market access now?  Why not wait until 
they have solved the problem and grant them market access in 
return for real accomplishments in the future?"  LabAtt 
reiterated a point made frequently by Honduran Minister of 
Labor German Leitzelar: namely, that Honduras has labor 
problems with or without CAFTA-DR but that CAFTA-DR (through 
increased investment and opportunities for greater economic 
growth) would give Honduras a chance to improve the labor 
situation, whereas the defeat of CAFTA-DR would leave 
Honduras with the same labor problems it has now.  The 
staffer said there was much merit to that statement.  LabAtt 
also emphasized DOL-funded technical assistance projects and 
noted that CAFTA-DR has already generated and increased the 
international focus on effective application of existing 
labor laws in Central America. 
 
---------------------------- 
Concern for Honduran Farmers 
---------------------------- 
 
11. (SBU) Several staffers also expressed concerns over the 
impact that CAFTA-DR would have on poor Honduran farmers. 
While visiting agricultural diversification projects near 
Comayagua, one staffer spoke directly in Spanish with the 
farmers to elicit their views and to explain his 
Congressman's concerns that CAFTA-DR would lead to increased 
presence in the region of large agribusinesses which would 
put small farmers out of business. 
 
12. (SBU) The farmers he spoke to acknowledged that these 
concerns are valid but also pointed to the agricultural 
programs in which they were participating as sufficient to 
counter that threat.  So long as these programs exist to 
provide small farmers with financing and technology and to 
pool production from many small farms together to fill large 
orders, small and medium-sized farmers can indeed compete 
very successfully, the farmers said.  (The staffers were 
visiting projects which do exactly that: a jalapeno pepper 
processing and packaging plant which buys from many small 
farmers and exports to the United States and a USG-funded 
and supported packaging plant currently being used to 
prepare mangoes, cucumbers, onions, and other vegetables for 
export.) 
 
13. (SBU) This staffer also questioned CAFTA-DR's ability to 
prevent large corporations from appropriating technologies, 
such as seed varieties, from small farmers and patenting 
them for their own use, leaving the small farmers having to 
pay royalties for their own innovations - an apparent 
reference to Article 15.1.5, in which the Parties agree to 
provide patent protection for plant varieties, which 
currently cannot be patented under Honduran law.  (After the 
visit, EconOffs received more information about these 
provisions of CAFTA-DR from USPTO and have passed this 
information on to the staffer.) 
 
14. (SBU) At the visit to the Pan-American School for 
Agriculture at Zamorano, the rector, Dr. Kenneth Hoadley, 
delivered a presentation which focused on rural poverty 
alleviation in Honduras and the two scenarios that, in his 
view, poor Honduran farmers currently face.  In the first 
scenario, as agricultural technology continues to raise 
efficiency in other parts of the world, farmers who remain 
protected from competition will fall further and further 
behind and will remain small-scale, subsistence farmers, 
poor indefinitely.  In the second scenario, increased trade 
and increased diversification into value-added agriculture 
and agro-industry offer opportunities outside of subsistence 
agriculture.  CAFTA-DR implementation, if coupled with trade 
capacity building programs and appropriate transitional 
assistance for these comparatively uncompetitive farmers, 
should help make the second scenario a reality.  The 
staffers responded very positively to this presentation, and 
several requested copies to share with their members. 
 
--------------------------------------------- -------- 
Countering the Myth that "CAFTA-DR is bad for Central 
America" 
--------------------------------------------- -------- 
 
15. (SBU) Comment: While one staffer did acknowledge that he 
has met with agricultural groups that are in favor of CAFTA- 
DR, the issue of what commercial benefits the agreement 
could bring the U.S. seems to be playing a very small role 
in the decisions of these particular Congressmen.  Instead, 
the staffers were far more concerned over the impact of the 
agreement in Central America.  U.S. NGOs, which are opposed 
to CAFTA-DR, are obviously having some success in getting 
out the message that "CAFTA-DR will be bad for ordinary 
Central Americans."  Fortunately, visits like this one, 
organized by the GOH and supported by Post, can work to 
counter that message by bringing staffers into contact with 
the very people who stand to benefit from greater economic 
opportunities that CAFTA-DR will bring and by letting those 
people speak for themselves.  End comment. 
 
Palmer