US embassy cable - 05SANSALVADOR2873

UNCLAS SECTION 01 OF 02 SAN SALVADOR 002873 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ETRD, PREL, ES, CAFTA 
SUBJECT: COMMERCE SECRETARY GUTIERREZ MEETS WITH CENTAM 
PRESIDENTS ON CAFTA-DR 
 
 
1.  (U) Summary: On October 20, Secretary of Commerce Carlos 
Gutierrez met with Presidents Saca (El Salvador), Bolanos 
(Nicaragua), Berger (Guatemala), and Maduro (Honduras) to 
review CAFTA-DR implementation.  The Secretary expressed the 
USG's full commitment to CAFTA as a model for political and 
economic development and growth, and asked the presidents to 
do everything in their power to comply with the CAFTA-DR 
commitments so that President Bush could certify to Congress 
that the signatories have met all the legislative and 
administrative requirements.  Gutierrez emphasized that the 
goal is for CAFTA-DR to be in effect by January 1, 2006. 
Gutierrez also emphasized the need to create an attractive 
climate for international investors by improving legal 
frameworks for investors and protecting intellectual 
property.  Presidents Saca and Bolanos pledged to be in 
CAFTA-DR compliance by January 1, 2006. End Summary. 
 
2.  (U) On October 20, Commerce Secretary Carlos Gutierrez 
held a one and one-half hour meeting in San Salvador with 
Presidents Saca (El Salvador), Bolanos (Nicaragua), Berger 
(Guatemala), and Maduro (Honduras) to review preparations for 
the proposed January 1, 2006 CAFTA-DR implementation. 
Presidents Pacheco (Costa Rica) and Fernandez (Dominican 
Republic) did not attend the meeting, but were represented by 
their Foreign Ministers.  The meeting, hosted by President 
Saca, was held during Secretary Gutierrez' two day visit to 
El Salvador.  The U.S. delegation at the meeting included the 
administrator of the Small Business Administration (SBA), the 
chairman of OPIC, the U.S. Director at the Inter-American 
Development Bank (IDB), and the TDA director. President Saca 
opened discussions by characterizing CAFTA-DR as "a 
privileged relationship" between the Latin American 
signatories and the United States, and added that this 
relationship contributed greatly to the stability of the 
region.  Saca said that CAFTA-DR is a model for economic 
growth, sustainable development, and democratization. 
However, CAFTA-DR also presents major challenges to each of 
the countries as they address the changes that the agreement 
will bring.  Saca emphasized that each of the signatories 
present must make a commitment to implement all needed 
changes, including legislation, to be eligible by January 1, 
2006. 
 
3.  (U) President Bolanos, who presided the meeting in his 
role as rotating head of the Central American Integration 
System (SICA), began by thanking all his Central American 
neighbors for their support in preventing the loss of 
democratic, constitutional order in Nicaragua, and emphasized 
that SICA played a vital role in support of his government. 
Bolanos further announced that, On October 19, the Nicaraguan 
National Assembly passed legislation suspending, through 
2007, constitutional reforms which would have undermined 
Nicaraguan democracy.  Bolanos affirmed that all the Central 
American countries are undertaking substantial reforms in 
each country, and are working together "as brothers." 
Through CAFTA-DR, Bolanos continued, we hope to become an 
important export platform to reach the large U.S. market, and 
also a region which attracts substantial investment capital. 
Our adherence to CAFTA-DR will allow us to better insert 
ourselves in the global economy.  Bolanos averred that the 
Central American countries are moving apace to establish a 
regional customs union, are making progress in improving 
workers' rights, but still have a ways to go to improve the 
judicial sector.  Bolanos said he was especially concerned 
over weaknesses in rule of law and the judicial system, 
especially in Nicaragua.  He noted his concern about the high 
cost of oil, and will be hosting a Central American 
Conference on energy October 28.  Bolanos closed by stating 
that, now that the Nicaraguan National Assembly finally 
passed CAFTA-DR, Nicaragua must move fast to pass 
accompanying legislation before January 1.  Bolanos then 
assured the group that Nicaragua would meet all conditions so 
that President Bush could certify compliance before January 
1, 2006. 
 
4.  (U) President Maduro added that all his Central American 
counterparts had felt threatened by the domestic political 
threats in Nicaragua against President Bolanos, recognized 
how vigorously and valiantly Bolanos had responded to those 
threats, and asked for a round of applause for Bolanos from 
the delegations.  President Berger opined that, in this 
"great project," there cannot be losers among sectors, and 
that we must think creatively of ways to support the medium 
and small businesses (PYMES) as well as the agricultural 
sector. 
 
5.  (U) Secretary Gutierrez thanked President Saca for 
hosting the meeting and the presidents for traveling from 
their countries, and explained that his delegation included 
not only public sector officials, but key business people. 
He added that 19 company executives were part of the 
delegation, and that all were ready to do business, invest, 
and look for long-term business partnerships.  We feel 
passionately that CAFTA-DR will help strengthen democracy and 
lead to economic development and job creation.  This 
endeavor, however, requires continuity, because it is a 
project whose impact will be felt in five, ten, fifteen 
years, and beyond.  Gutierrez opined that Central America has 
the opportunity to lead the way for all other countries in 
the hemisphere, and the Central American countries are 
assuming a real leadership role. However, Gutierrez added, to 
be able to start on January 1, 2006, President Bush has to 
certify that the accords reached through CAFTA have been 
complied with by each of the signatories.  In that regard, 
Gutierrez asked that each country do its utmost between now 
and December to comply with pending items that will allow 
President Bush to certify.  Secretary Gutierrez then asked 
the directors of the EX-IM Bank, U.S. Trade and Development 
Agency, Small Business Administration, and OPIC, and the U.S. 
Executive Director at IDB to make presentations about the 
roles of each of their organizations in promoting CAFTA-DR 
goals and objectives.  Each official reiterated that CAFTA-DR 
was a top priority for each of their agencies, and provided 
concrete examples of projects being financed in CAFTA-DR 
countries.  Secretary Gutierrez promised to follow-up with a 
detailed written 
presentation from each agency to the presidents.  Gutierrez 
stressed three key points: (1) we need to walk the fine line 
between safe and secure borders without impeding the free 
flow of trade.  In that regard, he cited his visit the day 
before to Puerto Cortez, Honduras, which he called a model 
for effectively maintaining this fine balance; (2) the 
unification of customs processes must be accomplished and is 
a key mutual agenda item; (3), and each of the CAFTA-DR 
signatories must create the right conditions to attract 
investors.  Investors, he added, are very concerned over lack 
of clarity in the legal system and their ability to protect 
their investments, and are especially concerned about 
intellectual property rights protection.  Investor 
confidence, he continued, is a worldwide problem, and, if the 
CAFTA signatories created the right investment climate, their 
countries could attract investors from other geographic 
regions.  The Secretary concluded by asking each of the 
presidents to do everything possible to help President Bush 
be able to certify CAFTA-DR before Congress. Presidents Saca 
and Bolanos stated that their countries would meet all 
necessary conditions for certification before January 1, 2006. 
 
6.  (U) This message was cleared by Secretary Gutierrez's 
delegation prior to departure. 
Barclay