This record is a partial extract of the original cable. The full text of the original cable is not available.

C O N F I D E N T I A L SECTION 01 OF 02 PANAMA 000648 
 
SIPDIS 
 
 
USTR PLS PASS TO RVARGO AND JWOLFE 
STATE FOR WHA FOR DFISK, DLINDWALL, JWAGNER, JBRIGHAM 
USDOC4332/ITA/MAC/WH/OLAC/WBASTIAN, MGAISFORD 
TREASURY FOR JJENKINS 
 
 
E.O. 12958: DECL: 03/19/2014 
TAGS: ETRD PM ECONOMIC AFFAIRS
SUBJECT: U.S.-PANAMA FTA NEGOTIATIONS - THOUGHTS ON TIMING 
AND ISSUES 
 
 
REF: A. BOWEN/GASH TELCON 3/5 
     ¶B. BOWEN/WOLFE TELCON 3/16 
     ¶C. PANAMA 452 
     ¶D. PANAMA 492 
 
 
Classified By: Economic Chief Andrew N. Bowen, for reason 1.5(d) 
 
 
¶1. (C)  Summary: Minister of Commerce and Industry Joaquin 
Jacome and VM for Trade Romel Adames will be traveling to 
Washington next week for the March 23 TPSC Panama hearing at 
USTR and to press for moving forward expeditiously with FTA 
negotiations.  The upcoming November U.S. elections and the 
political environment regarding FTAs have not been lost on 
them. Both will press for holding a negotiating round or 
meeting in April -- before the May 2 national elections -- 
and concluding the negotiations before the Moscoso 
Administration leaves office on September 1 or shortly 
thereafter.  Their expectations are that the agreement will 
have aspects of both the CAFTA and Singapore FTAs.  Post sees 
no down-side with holding an April negotiating round or 
meeting, schedules permitting.  Presidential candidates 
support an FTA with the United States (three of the four very 
strongly), and we believe they will want discussions to move 
forward provided the winner's representatives have "a place 
at the table"(read: are consulted closely).  The Panamanians 
view the FTA as a vehicle to eliminate uncertainty related to 
unilateral benefits such as CBI, improve market access for 
goods and services (e.g. sugar, banking, and maritime), but 
most importantly, to attract investment (or not lose 
investment to CAFTA).  Showing his talent for one-liners, 
Adames told Econ Chief, this (U.S. investment) will represent 
the return of the U.S. without the military bases.  Both 
Jacome and Adames also argue that the FTA will reinforce 
stability and strengthen democratic forces for the long-term 
in a country where the U.S. still has strategic interests. 
End Summary. 
 
 
¶2.  (C) During a wide-ranging conversation with ECON Chief, 
on March 8, VM Adames, Panama's Chief Negotiator, shared his 
thoughts on the upcoming bilateral FTA negotiations with the 
United States. (Note: the Panamanians are studying the CAFTA, 
Chile, and Singapore texts.) Like his bosses, President 
Moscoso and Minister Jacome, Adames would like to make as 
much progress as possible on the bilateral before the Moscoso 
Administration leaves office September 1.  He has argued that 
starting the negotiations in April before the May 2 national 
elections would send the right signal that this is a "state 
project rather than a political one (Ref C)." (Comment: While 
this is most likely to gain pre-electoral political 
advantage, we see no down-side with holding a first round or 
meeting prior to May 2.  President Moscoso told Codel Weller 
in February that she would like to see the negotiations 
concluded before leaving office, even if she didn't sign (Ref 
C). Clearly the Panamanians have one eye on the U.S. November 
elections and the expiration in 2005 of TPA.  End Comment.) 
 
 
¶3. (C) For Adames, the FTA represents a vehicle to lock in 
the status quo or better (CBI, GSP), improve market access 
for Panama in niche areas (e.g., banking, maritime, and 
sugar), and most importantly to attract "good U.S. 
investment."  Adames also expressed concern that investment 
might now be diverted to "CAFTA low wages -- our China", and 
the uncertainty of the EU's counter-drug driven GSP program. 
He said that he has met with representatives from the 
sensitive sectors (rice, dairy, pork, and professional 
services) and forewarned that he will "have to make tough 
decisions."  He noted that Panama exports very little to the 
United States (approximately $301 million in 2003) and that 
Panama must compete in niches -- banking, maritime, sugar, 
etc.  He quipped that Panama may not initially be looking to 
give as much on agriculture since Costa Rica didn't give much 
to the U.S. on services, "only around the edges."  Another 
defensive interest for Panama will be treatment of the Colon 
Free Trade Zone. One area that he believes Panama can be 
forthcoming is government procurement, and coverage of the 
Panama Canal, given the probable decision to move forward 
next year on a multi-billion dollar expansion project. 
 
 
¶4.  (C) Adames proved very adept at making the larger 
strategic arguments about the importance of this FTA.  For 
Panama he believes that by attracting "good U.S. investment," 
and "consolidating the U.S. way of doing things" the 
agreement will help create greater stability, and strengthen 
democratic forces for the long-term (i.e., mitigate against 
future leftist-populist tendencies).  He declared that this 
would mark "the return of the U.S. without the bases."  With 
an obvious allusion to the Canal and Panama's strategic 
location, he said that if things go bad in some countries in 
the hemisphere "no problem" but "if things go bad here, 
you're affected." 
 
 
¶5.  (C)  Comment:  The Panamanians have been doing their 
homework and with the assistance of the U.S. law firms Arnold 
and Porter and Sandler,Travis & Rosenberg, appear prepared to 
begin negotiations.  Adames is a strong proponent of this FTA 
and also a strong believer in the benefits of trade 
liberalization.  He obviously believes that if the U.S. can 
accommodate Panama's interest in selected "niche" areas that 
this can be a very high-standard agreement; he also 
recognizes Panama doesn't have much leverage.  With respect 
to the presidential candidates, all three (Torrijos-PRD and 
current front-runner),  Aleman-Arnulfista, and Martinelli - 
CD) strongly support the FTA with the United States.  Endara 
(Solidarity) also supports an FTA; however, he and he and his 
advisors have shown that they may be more sensitive to 
Panama's rural agricultural interests. 
WATT