US embassy cable - 05BOGOTA5222

C O N F I D E N T I A L SECTION 01 OF 02 BOGOTA 005222 
 
SIPDIS 
 
DEPT PLS PAS USTR RVARGO AMB JOHNSON AND PALGEIER, NSC FOR 
SHANNON, USDA FOR UNDERSECRETARY PENN AND FAS ADMINISTRATOR 
TERPSTRA, USDOC FOR ITA/MAC/DAS WBASTIAN; DEPT FOR ACTING 
UNDERSECRETARY WAYNE AND WHA AS NORIEGA FROM AMBASSADOR WOOD 
 
E.O. 12958: DECL: 05/27/2015 
TAGS: ETRD, EAGR, CO, FTA 
SUBJECT: AGRICULTURE IN THE FTA RAPIDLY REACHING THE 
BREAKING POINT IN COLOMBIA: PROCESS PROBLEMS 
 
Classified By: Ambassador William B. Wood, reasons 1.4 (b) and (d) 
 
1.  (C)  Unwillingness to provide a date for agricultural 
bilats and to exchange informal agricultural offers have 
brought the FTA negotiations to a crisis point here.  The GOC 
is seriously considering dropping out of the upcoming 
Guayaquil FTA round (see septel).  I recognize that we may 
not be able to reach agreement on the toughest agricultural 
issues at this time given that the offers on the table cover 
only a limited percentage of actual trade.  But right now we 
are risking possible gains on substance over an argument on 
procedure.  We can do better. 
 
2.  (C) A new Colombian agricultural offer on grains 
submitted May 6 sparked a crisis that deeply eroded support 
for the FTA and for the President himself, despite the fact 
that the offer was only a marginal improvement over its 
predecessor.  The pressure was so great that the President 
considered pulling back the offer in mid-May, and was only 
talked out of it at the last minute by Agriculture Minister 
Arias, Trade Minister Botero and Colombian ambassador to the 
U.S. Moreno.   In exchange, Agriculture Minister Arias 
announced publicly that the GOC would not present any further 
offers until the U.S. responded.  Both Ministers and the lead 
trade negotiator have told me that they know they need to 
offer considerably better access on items of interest to the 
U.S. and that such access would eventually be set at current 
levels and allow for growth.  Ministers Arias and Botero 
claimed to me they can not get to those substantially 
improved offers without U.S. support on the process issues of 
a date for the meetings and the methodology for exchanging 
offers.  According to both Botero and Arias, the GOC cannot 
pay the political cost of sending new offers without some 
U.S. assurances that they will receive improved 
counter-offers. 
 
3. (C)  We are fully in election season here, and the last 
two nationwide polls show a small decline in support for 
President Uribe.  His numbers have dropped almost ten points 
across the board from the seventies to the sixties. 
Reelection remains up in the air, and Uribe's support in 
Congress is becoming more complicated as we move toward 
congressional elections in March and Presidential elections 
in May while Uribe tries to push a tough domestic agenda. 
The President can ill afford to lose the support of 
agricultural groups at this time.  Unless politically 
powerful agricultural groups that support the agreement see 
US movement, the government risks losing their support.  The 
Trade and Agricultural ministers told me they need a positive 
sign from the US to keep support from those parts of the 
agricultural sector who are favorably disposed to an FTA. 
Such movement would allow the GOC to be forthcoming on issues 
of concern, such as access to grains and dismantling of the 
price bands, as they can build a winning coalition to counter 
those in the sector that oppose an FTA. 
 
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Why We Should Care 
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4. (C) 
 
--  Colombia is the biggest agricultural market for the U.S. 
in Central and South America and demand for U.S. agricultural 
products has been growing.  But, the Andean-Mercosur FTA has 
given Brazil and Argentina a competitive advantage (already 
eroding US sales in wheat) and failure of the FTA would cede 
this market to Mercosur. 
 
--  Concluding an FTA is complicated by groups that oppose 
the agreement for ideological (and economic) reasons and 
actively seek to undermine it.  If we are more flexible on 
the procedures for the negotiation (see septel), our 
flexibility could translate into important gains in substance 
in a growing agricultural market. 
 
--  If the GOC were to pull out of the Guayaquil round as the 
trade groups suggest, it could send support for an FTA with 
the U.S. into a tailspin.  Given Uribe,s close 
identification with trade liberalization, it would further 
erode his support.  Moreover it would strengthen exactly 
those groups we find least helpful in pressing forward on 
economic modernization. 
 
--  Chavez would claim a big victory as well and his siren 
call to a different kind of trading arrangement would seem 
more appealing to many Colombians who now are set on a an 
FTA.  (Venezuela is Colombia,s second largest trading 
partner after the U.S.) 
 
--  Failure to conclude an FTA would also damage our efforts 
to move Colombia to a higher economic growth path with 
implications for our overall counter narcotics efforts. 
 
--  The FTA would contain important new protections for U.S. 
investors and would give U.S. manufacturers and service 
providers significant additional access to Colombian markets. 
 
--  The negotiatiors have come a long way in the area of 
intellectual property, dealing with tough issues, such as 
indigenous knowledge, in a manner satisfactory to the U.S. 
Although these negotiations are not concluded, they are, in 
effect, captive to the agricultural negotiations. 
 
5.  (C)  I am not suggesting that we should conclude an FTA 
on political grounds, but it would be unfortunate to fail to 
complete negotiations over arguments on process (giving the 
Colombians a date for bilaterals as we have done for Ecuador 
and Peru or agreeing to informal exchanges of offers).  If we 
decide against an FTA with Colombia, it should be for reasons 
important enough to merit such a decision. 
WOOD