VZCZCXYZ0001
PP RUEHWEB

DE RUEHSJ #0288/01 1091447
ZNY CCCCC ZZH
P 181447Z APR 08
FM AMEMBASSY SAN JOSE
TO RUEHC/SECSTATE WASHDC PRIORITY 9606
INFO RUEHZA/WHA CENTRAL AMERICAN COLLECTIVE
RUEABND/DRUG ENFORCEMENT ADMIN HQ WASHINGTON DC
RUEKJCS/SECDEF WASHDC
RHMFISS/CDR USSOUTHCOM MIAMI FL

C O N F I D E N T I A L SAN JOSE 000288 
 
SIPDIS 
 
SIPDIS 
 
DEPT FOR WHA DAS MADISON, WHA/CEN, WHA/PPC AND EEB 
PLEASE PASS TO USTR AMALITO/DOLIVER 
 
E.O. 12958: DECL: 04/04/2018 
TAGS: ECON ETRD PGOV PREL SNAR CS
SUBJECT: DAS MADISON URGES CAFTA IMPLEMENTATION, DISCUSSES 
SECURITY REFORM 
 
REF: A. SAN JOSE 238 
     ¶B. STATE 26799 
     ¶C. STATE 30767 
     ¶D. SAN JOSE 263 
 
Classified By: CDA Peter M. Brennan for reason 1.4 (d). 
 
¶1. (SBU) SUMMARY.  WHA DAS Kirsten Madison visited Costa Rica 
March 31-April 3 to urge the GOCR to quickly pass CAFTA 
implementation laws and address growing domestic security 
problems.  President Oscar Arias said he expected the CAFTA 
legislation would be passed in the next three months and he 
pledged to continue to push CAFTA as a top priority.  In 
meetings with pro-CAFTA legislators and the Ministry of 
Foreign Trade (COMEX), Madison said the U.S. appreciated the 
hard work done thus far, but the extended October 1 
entry-in-force deadline was solid and represented "one last 
opportunity" for Costa Rica.  In her meeting with Vice 
Minister for Public Security Gerardo Lascarez, Madison 
praised the outstanding USG-GOCR counternarcotics 
cooperation. She also briefed Lascarez on the Merida 
Initiative and underscored the need to confront 
narcotraffickers, terrorists and transnational criminals at 
every opportunity.  DAS Madison completed the visit with a 
visit to Sardimar, a seafood processing and canning company 
which currently enjoys CBTPA preferences and would benefit 
from CAFTA's permanent preferences, and a stop at the future 
site of the new Costa Rican Coast Guard station (DoD-funded) 
in Caldera.  END SUMMARY. 
 
========================================== 
MEETING WITH PRESIDENT ARIAS AND FM STAGNO 
========================================== 
 
¶2. (C) With President Arias and FonMin Bruno Stagno on April 
1, DAS Madison discussed CAFTA, security including the Merida 
Initiative, Cuban migrant resettlement (Refs. A & C), the 
FARC, Public Security Minister Berrocal's resignation (Ref 
D), and Costa Rica's relationship with the region.  Arias 
underscored that: 
 
 -- CAFTA implementation laws should be passed in the next 
three months and that the leading opposition party, PAC, had 
shown a new attitude to move the agenda along; 
 
 -- security was the "number one concern" of the Costa Rican 
people; Stagno asked that Costa Rica not be "left 
out" of the Merida Initiative; 
 
 -- there was no list of Costa Rican politicians associated 
with the FARC, despite ex-Minister of Public Security 
Berrocal's assertions; and 
 
 -- regarding any connections between the FARC and Costa 
Rica, he was sending VP Laura Chinchilla, Stagno, and 
Attorney General Francisco Dall'anese to Bogota to consult 
with authorities there.  (NOTE:  The three visited Bogota on 
April 4-5.) 
 
¶3. (C) Stagno told Madison that he was concerned about the 
possible membership of Cuba in the Rio Group, which he 
believed could diminish the importance of the OAS.  According 
to Stagno, during the March 17 OAS meeting that addressed the 
FARC crisis between Ecuador and Colombia, Brazil had 
expressed an interest to engage with Caribbean countries. 
Stagno emphasized that this could only mean that Brazil and 
other countries had expressed support for Cuba to join the 
Rio Group, including Panama and Chile.  Opening the Rio Group 
to Cuba, Stagno said, could marginalize OAS solidarity on 
Cuba. 
 
¶4. (C) On security issues, Stagno said Central America 
suffered the terrible consequences of being wedged between 
Mexican and Colombian drug trafficking.  Stagno said Costa 
Rica would be grateful if Merida could become a reality.  He 
added that security in Costa Rica continued to be affected by 
the aftermath of the 1980s-era Nicaraguan conflict due to the 
large number of weapons in the country.  He said the GOCR was 
also concerned about the huge resettlement of Colombian 
refugees around 2000-2002.  Finally, Stagno said the 
possibility of Maras migrating south to Nicaragua and Costa 
Rica was a great cause for concern. 
 
======================================= 
TRADE: THE DEVILISH DETAILS OF CAFTA 
======================================= 
 
 
¶5. (SBU) DAS Madison met with Vice Minister Amparo Pacheco of 
the Ministry of Foreign Trade (COMEX) on the status of CAFTA 
implementation.  While praising COMEX's hard work on 
ratifying CAFTA and its ongoing work with USTR and the 
National Assembly, Madison underscored to COMEX the necessity 
of finishing CAFTA implementation before the  October 1 
deadline.  Pacheco and COMEX Director Gabriela Castro 
highlighted the challenges of working with the National 
Assembly on CAFTA, specifically the acute sensitivity of some 
legislators to "CAFTA plus," that is, any bill which permits 
greater latitude than what is required by CAFTA. 
 
¶6. (SBU) On the USTR-COMEX dialogue, Pacheco and Castro noted 
that intellectual property (IP) continued to be a 
controversial issue.  However, the April 9 and 11 meetings 
with USTR in Washington could provide an opportunity for 
progress.  On insurance, the GOCR,s support remained firm 
for a government guarantee for state insurance entity INS, 
but both officials reasoned that the execution of such a 
guarantee was highly unlikely.  Also, COMEX was uncertain 
about the concept of a private guarantee fund as an offset to 
the government guarantee of INS.  On the topic of 
regulations, COMEX was cautiously confident about timely 
completion. 
 
¶7.  (SBU) COMMENT: Three days after this meeting, the Supreme 
Court's Constitutional Chamber returned one of 
the CAFTA-related IP bills to the National Assembly for 
modification.  The Chamber argued that proposed IPR violation 
penalties were "an infringement of the principles of 
reasonable and proportional penalties" while the proposed 
confiscation of counterfeit products from purchasers was a 
violation of private property rights.  The ruling may 
complicate the COMEX-USTR dialogue.  END COMMENT. 
 
================= 
TRADE: EU STATUS 
================= 
 
¶8. (SBU) DAS Madison asked about the status of the Central 
American trade negotiations with the EU and what 
effects, if any, those had on COMEX's complicated and 
sometimes delicate CAFTA-related work.  Pacheco made clear 
that CAFTA was the number priority for COMEX.  She explained 
that EU talks were focused on political, cooperative, and 
trade relations and thus were different in character from the 
CAFTA discussions. 
 
======================================== 
TRADE IN PRACTICE AND CAFTA CONSEQUENCES 
======================================== 
 
¶9. (U) The seafood processing and packing company Sardimar 
hosted DAS Madison for a presentation and factory tour at its 
facility near Caldera on April 2.  With a primary business of 
tuna processing and canning, Sardimar employs 1400 people 
(and 6000 indirectly) in a modern facility that was 
constructed in 2002 at a cost of USD 80 million.  The 
Sardimar product is marketed in 26 countries (primarily in 
the Americas and Europe) under multiple brand names which 
serve distinct market segments at varying price points. 
 
¶10. (U) In the presence of local media and one of the 
Diputadas from the Puntarenas region, Company President Tomas 
Gilmore presented a compelling story of innovation in plant 
operations, market strategy, and corporate responsibility, 
stressing that the successes of this Costa Rican owned 
company and its business strategy are directly linked to 
trade preferences granted under CBTPA.  Though enthusiastic 
about the firm's accomplishments in Costa Rica, Gilmore had 
no doubts that he would have to move a significant proportion 
of the company's operations to El Salvador in the event that 
CAFTA is not implemented and CBTPA is not renewed.  In such a 
scenario, the local economy of Caldera and nearby Puntarenas 
would suffer a major employment and economic setback. 
Gilmore estimated that Sardimar's current tariff of 4.6 
percent would jump to over 30 percent if CAFTA were not 
implemented by October 1. 
 
================================= 
SECURITY: THE PRIVATE SECTOR VIEW 
================================= 
 
¶11. (U) During DAS Madison's breakfast with AmCham members, 
she thanked the organization for its active support of CAFTA 
 
during the 2007 referendum and its continuing CAFTA support 
during the implementation process.  Security issues weighed 
heavier on AmCham's mind, however.  The members expressed 
concern about the deteriorating domestic security situation 
in general for Costa Rica, and in particular for their 
employees.  They questioned on what the Merida Initiative 
would mean for Costa Rica and what, if anything, AmCham could 
do.  DAS Madison noted that U.S. companies might have some 
valuable insights for the U.S. Congress on the consequences 
that security realities in Central America have for U.S. 
investors. 
 
¶12. (U) Michael Borg, AmCham president, said the unrest over 
security was "just the beginning," and that the threat of 
transnational crime in Costa Rica could scare away future 
investors.  Carlos Denton of CID-Gallup told us that the 
Maras were beginning to infiltrate Nicaragua and were trying 
to recruit in Costa Rica, with their main goal in Costa Rica 
being linkages with local gangs.  Borg and the AmCham team 
agreed that the best way to approach the GOCR on their 
security concerns would be to frame it in terms of caring for 
their employees and their families. 
 
============================================= =========== 
SECURITY:  THE VIEW FROM THE MINISTRY (AND IN THE FIELD) 
============================================= =========== 
 
¶13. (SBU) Due to former Minister of Public Security Fernando 
Berrocal's resignation the day before her arrival, DAS 
Madison met with Vice Minister Gerardo Lascarez, whose 
portfolio includes counternarcotics.  Madison briefed 
Lascarez on the Merida Initiative (Ref B) and thanked him for 
GOCR's record-breaking year of drug seizures for 2007. 
Madison emphasized Merida's regional approach and that all of 
Central America needed to work together to deny 
narcotraffickers and criminals easy transit through the zone. 
 Lascarez appreciated the briefing and any assistance the 
U.S. could provide. 
 
¶14. (U) With media in tow, DAS Madison also visited the site 
of the future Costa Rican Coast Guard (SNGC) station in 
Caldera, approximately 20 miles from the current station in 
Puntarenas on the Pacific Coast.  Martin Arias, SNGC 
Director, showed Madison the blueprints for the new station, 
to be funded largely by $1.25 million in DoD/SOUTHCOM Section 
1004 funds.  (Announcement of the USG contribution was 
reported in the media and circulated in a SNGC press 
release.)  The new station will include an operations center 
and barracks, maintenance facility, dry dock, expanded pier, 
and classrooms for the new coast guard academy.  The Caldera 
facility will eventually house at least four of the six main 
patrol boats the SNGC operates, including their 105-foot 
vessel. 
 
¶15. (U) DAS Madison has cleared this cable. 
HENIFIN