US embassy cable - 05QUITO1047

C O N F I D E N T I A L SECTION 01 OF 02 QUITO 001047 
 
SIPDIS 
 
DEPT PLEASE PASS TO USTR BENNETT HARMAN 
 
E.O. 12958: DECL: 05/06/2015 
TAGS: ETRD, PGOV, EINV, ECON, PINR, EC 
SUBJECT: NEW TRADE MINISTER SOUNDS REASONABLE 
 
 
Classified By: Ambassador Kristie A. Kenney, Reason 1.4 (b), (d) 
 
1. (SBU) Summary:  In separate meetings with the Ambassador 
and AID, Ecuador's new Minister for Trade Oswaldo Molestina 
said he wanted an FTA with the USG, but was most concerned 
about the agricultural negotiations.  He said that he 
intended to keep lead FTA negotiator Cristian Espinosa on 
board, but would add an "adjunct lead negotiator" to handle 
the "political aspects" of the negotiations.  He also asked 
for a short (2-3 week) postponement of the June FTA round 
scheduled for Ecuador, but has not yet sought or received 
approval from his Andean counterparts for the postponement. 
Molestina said he looked forward to working with us.  Our 
first impression is that Molestina could be someone we could 
work with, but others in the Palacio administration could 
eventually hold back Ecuador from concluding an FTA in the 
near term.  End Summary. 
 
Molestina Wants an FTA 
---------------------- 
 
2. (SBU) Newly appointed Minister of Trade Oswaldo Molestina 
told the Ambassador on May 3 that he wants to continue 
negotiating a free trade agreement (FTA) with the USG.  He 
said his greatest concern was with the agricultural 
negotiations.  Molestina was also looking for USG support in 
postponing the June round in Ecuador.  He wanted to move the 
starting date from June 1 to June 20, in order for him and 
his team to get up to speed on the status of the 
negotiations.  Noting his experience in private international 
law, he mentioned that even he felt inadequately informed 
about the FTA process when he was living in Guayaquil, prior 
to his ministerial appointment.  Thus, he needed some time to 
familiarize himself with all of the issues and get his team 
in place.  The Ambassador agreed to contact USTR on the GOE's 
behalf.  (Note:  USTR later said it could live with a 
postponement to June 13, but the GOE would have to convince 
the Peruvians and Colombians to agree to the postponement. 
Molestina has a meeting with the Colombian Trade Minister on 
May 6.  End note.) 
 
3. (SBU) To maintain the continuity of the negotiations, 
Molestina said he would keep Cristian Espinosa as Ecuador's 
lead trade negotiator.  However, he would add an adjunct 
negotiator to handle the "political aspects" of the 
negotiations.  He was short on details of what that would 
entail, but said one of the political negotiator's tasks 
would be to work with the Ecuadorian Congress on the FTA. 
(Note: In a follow up meeting May 5 with Molestina's (and 
former Trade Minister Baki's) advisor Diego Ramirez, he noted 
that the adjunct political negotiator is unlikely to actively 
participate in negotiations but will focus more on selling 
any agreement to the public and the Ecuadorian and US 
Congresses. End note.) 
 
4. (SBU) The Ambassador applauded Molestina's decision to 
retain Espinosa and agreed that it was important for the 
Ministry to adequately inform its congress on FTA 
developments.  She noted that Ecuador had much to gain from 
an FTA.  The Ambassador also suggested that the Minister 
appoint a commercial dispute czar to address pending disputes 
in an expeditious fashion.  Molestina eagerly took the 
suggestion and mentioned the possibility of forming a 
permanent unit for businesses and others to go to when 
commercial disputes arose. 
 
Molestina Wants to Work with US 
------------------------------- 
 
5. (SBU) In a separate May 3 meeting, AID explained its 
programs in Ecuador, including its trade capacity building 
(TCB) efforts.  Molestina listened attentively during the 
hour-long meeting and said he hoped to continue the working 
relationship.  Espinosa, who was also present at the meeting, 
also praised AID's TCB efforts. 
 
6. (SBU) Molestina said he is a conservationist, very 
interested in preserving the Galapagos, where he owns a home 
on Santa Cruz Island.  He said he convinced President Palacio 
to appoint an "ecologist" as the new Governor of the 
Galapagos.  Molestina expressed concern about the 
politization of the Galapagos National Park management.  The 
Ambassador agreed with him and offered to work together to 
protect the islands. 
 
7. (C) Chief FTA negotiator Cristian Espinosa, in a candid 
conversation with a local embassy employee on May 5, 
expressed concern about the lack of communication with the 
Minister.  He said the negotiating team was ready to keep to 
the original dates for the Guayaquil round.  He also was 
concerned about the attitude of Colombia and Peru, which, he 
said, were actively lobbying in Washington for Ecuador's 
exclusion from the negotiations.  He said that the new 
government had not yet made any changes in the negotiating 
instructions. 
 
Comment and Bio 
--------------- 
 
7. (C) Molestina said a lot of the right things in his 
initial meeting with the Ambassador.  Ramirez (a close 
Embassy contact) also said that he has been impressed by 
Molestina's practical approach to his new job.  Molestina's 
desire to appoint an adjunct "political" lead negotiator 
could unnecessarily complicate FTA negotiations that have 
already gone on for longer than originally scheduled.  Still, 
the new administration was wise to keep Cristian Espinosa in 
place and had to, for political reasons, insert its own 
person into the process.  That said, Espinosa's statements 
are cause for some concern. 
 
8. (C) What we do not yet know is how much interference 
Molestina and the negotiation team will receive from others 
in the Palacio administration, including Palacio himself, who 
seem to be less sanguine about an FTA.  It is also too early 
to tell whether Molestina will have much clout in the Palacio 
administration.  His willingness to appoint an adjunct 
political lead negotiator to sell any FTA seems to indicate 
that he might be too willing to let others take the lead. 
 
Bio 
--- 
 
9. (U) Molestina (age 59) has a JD and Masters Degree in 
International Law.  He was Comptroller General (1988-1998), 
the Governor of Guayas Province (Democratic Left - ID party, 
1990-1992) and a Congressman until 2003.  In Congress, he was 
the President of the International Affairs Committee.  He was 
also Ecuador's representative to the UN General Assembly in 
1977. 
 
10. (U) Molestina is a member of the Association of Ganaderos 
(cattlemen) of Guayas and the Galapagos.  He reportedly was 
recently divorced from the sister of PRIAN party leader, 
perennial presidential candidate and banana magnate Alvaro 
Noboa.  They have two sons.  He speaks English well and likes 
to sail and play volleyball. 
KENNEY