US embassy cable - 05SANJOSE1940

UNCLAS SAN JOSE 001940 
 
SIPDIS 
 
SENSITIVE 
 
WHA/CEN 
EB FOR WCRAFT, BLAMPRON 
E FOR DEDWARDS 
WHA/EPSC FOR KURS, LGUMBINER 
STATE PASS TO USTR FOR RVARGO, CPADILLA, AMALITO 
 
E.O. 12958: N/A 
TAGS: ETRD, ECPS, ECON, PREL, PGOV, SOCI, CS 
SUBJECT: COSTA RICA AND ASIA TRADE ISSUES IN THE MEDIA 
 
 
1.  (U) Summary.  In the midst of President Pacheco's 12- 
day trip to Taiwan and Japan, issues surrounding trade 
between Costa Rica and several Asian countries have been 
recent topics in the local press.  While in Taipei, 
President Pacheco discussed his intentions to pursue a free 
trade agreement (FTA) with Taiwan.  (Several months ago, 
Minister of Foreign Trade (COMEX) Manuel Gonzalez announced 
Costa Rica's intentions to pursue free trade talks with 
Japan.)  While in Tokyo, Japanese business representatives 
urged passage of the United States-Central American- 
Dominican Republic free trade agreement (CAFTA-DR). 
Despite not having official relations with China and being 
one of only two dozen nations to officially recognize 
Taiwan, trade with China is growing rapidly.  End Summary. 
 
2.  (U) According to an August 17, 2005, article in "La 
Republica," Costa Rican exports to Taiwan have grown from 
USD 9.9 million in 2000 to USD 38.4 million in 2003, but 
decreased slightly last year to USD 34.8 million.  Pacheco 
stated that starting free trade negotiations with Taiwan is 
a strategic decision to penetrate Asian markets.  Costa 
Rican business people have criticized this decision and 
stated that greater attention should be placed on the more 
important markets of the U.S. and European Union (EU). 
These critics said that Pacheco's decision regarding an FTA 
with Taiwan shows a lack of vision and knowledge by the 
current administration.  "This is not the time to try to 
start negotiations with Taiwan when we cannot even move 
forward on the free trade agreement with the U.S.," said 
Sergio Navas, Executive Vice President of the Costa Rican 
Chamber of Exporters. 
 
3.  (U) Press coverage has also been given to trade with 
China.  The aforementioned "La Republica" article revealed 
that Costa Rican exports to China have grown from USD 30.1 
million in 2000 to USD 300.1 million in 2004 (almost nine 
times the exports to Taiwan in 2004). "In the trade aspect, 
the potential of China is enormous and is more attractive," 
said Mayi Antillon, Vice President of the Industry Chamber. 
Critics of President Pacheco state that "giving priority to 
an agreement with Taiwan would show a lack of clarity in 
the administration's trade policy."  A similar article 
covering the growth in exports to China appeared in the 
August 18, 2005 "La Prensa Libre." 
 
4.  (U) An August 19, 2005 "La Republica" article revealed 
that Japanese business representatives stated that approval 
of CAFTA-DR would be seen as progress in the process of 
regional economic integration, and is considered essential 
in attracting increased investment to Central America.  The 
business representatives assured that CAFTA-DR will bring 
new economic opportunities to the region. 
 
5.  (SBU)  Comment.  Costa Rica has a long history of 
diplomatic ties with Taiwan.  President Pacheco's 
announcement to pursue an FTA with Taiwan may be more 
public relations than anything else.  In addition, Minister 
Gonzalez, who has been working on finishing FTAs including 
CAFTA-DR that were started by his predecessor, may be 
motivated by his desire to make his mark in the FTA arena. 
COMEX has its hands full with implementing the recently 
approved FTA with the 12-Caribbean nation group CARICOM, 
and working on the numerous issues related to CAFTA-DR 
ratification.  The recent announcements of intentions to 
pursue FTAs with Taiwan, the EU, and Japan are lofty goals 
but may not reflect COMEX's current capabilities, 
especially given the departure of many key personnel over 
the last year. 
FRISBIE