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 SAN JOSE 000127 
 
SIPDIS 
 
SIPDIS 
 
E.O. 12958: DECL: 01/17/2016 
TAGS: PREL MASS ETRD EAID CS KICC
SUBJECT: COSTA RICA SEEKS TO AVOID CONSEQUENCES OF NOT 
SIGNING AN ARTICLE 98 AGREEMENT 
 
REF: 05 SAN JOSE 2717 
 
Classified By: Ambassador Mark Langdale for reasons 1.4 (b) and (d) 
 
Summary 
-------- 
¶1.  (C) President Pacheco on January 11 convoked his 
ministers of foreign affairs, foreign trade, and labor and 
the Costa Rican Ambassador to the U.S. to discuss with 
Ambassador and Polcouns the ramifications of the Nethercutt 
Amendment for Costa Rica.  The GOCR officials were 
specifically concerned about the effect the loss of U.S. 
funding for trade capacity-building will have on 
implementation of the U.S.-Central American-Dominican 
Republic Free Trade Agreement (CAFTA-DR).  They wanted to 
explore the possibility of a waiver from the prohibition in 
the Nethercutt Amendment or of using "creative accounting" to 
get around the law.  Ambassador responded that neither 
proposal would work.  Rather, he said, the GOCR and USG 
needed to focus on how to come together to sign an Article 98 
agreement.  End Summary. 
 
Loss of ESF for Labor Programs 
------------------------------ 
¶2.  (C) Labor Minister Fernando Trejos phoned Polcouns on 
December 13 in a panic.  He had just returned from meetings 
with USDOL in Washington where he was told that Costa Rica 
would not be eligible to receive a share of FY 2005 and FY 
2006 funds for trade capacity-building programs in CAFTA-DR 
countries.  The GOCR already had plans for spending FY 2005 
funds to modernize the labor justice system, strengthen the 
labor ministry inspection system, and improve enforcement of 
laws against sex discrimination.  Trejos asked Polcouns for a 
meeting on the subject between President Pacheco and 
Ambassador Langdale after the holidays. 
 
¶3.  (C) The meeting took place in the President's office on 
January 11.  Along with President Pacheco and Labor Minister 
Trejos were Minister of Foreign Affairs Roberto Tovar, Acting 
Minister of Foreign Trade Doris Osterlof, and Costa Rican 
Ambassador to the United States Tomas Duenas.  Trejos opened 
the meeting by explaining the importance of U.S. funding for 
the functioning of his ministry.  He said that in 2003 
then-USTR Zoellick announced a USD 7 million assistance 
package to improve labor standards in CAFTA-DR countries. 
That money, Trejos said, is being well spent in Costa Rica 
which he claimed had the highest labor standards in Latin 
America along with Chile.  He said it was disturbing that 
Costa Rica, because of the Nethercutt Amendment, will not 
receive its proportional share of USD 19 million in FY 2005 
Economic Support funds (ESF) to boost labor standards in 
CAFTA-DR countries; nor will Costa Rica receive FY 2006 ESF. 
 
¶4.  (C) Trejos said he had understood in Washington that 
Costa Rica would not get a waiver from the prohibition in the 
Nethercutt Amendment.  He believed, however, there was 
another way to ensure that his ministry continued to receive 
critical funding.  He suggested that the remaining funds in 
the USD 7 million program (which antedates and is therefore 
not subject to Nethercutt) be redirected to Costa Rica, since 
Costa Rica will get none of the USD 19 million package. 
Trejos said the shift in program funds would provide his 
ministry with an additional USD 4 million, and he claimed 
that the other CAFTA-DR countries were on board with such an 
arrangement.  Ambassador Duenas referred to Trejos's plan as 
"creative accounting." 
 
Concern About Effect on CAFTA-DR Ratification 
--------------------------------------------- 
¶5.  (C) Duenas noted that trade capacity-building funds were 
key to the passage of CAFTA-DR in the United States and will 
also be important in Costa Rica.  He said that the Bush 
Administration promised Democrats in Congress that effective 
programs would be put in place to improve labor standards in 
Central America.  He added that USTR officials told him that 
money for trade capacity-building would not be subject to 
Article 98 prohibitions because it would come from "other 
baskets."  (Note:  Embassy subsequently checked with the 
Department to find out if USTR had indeed made any such 
commitment and was assured it had not.)  Duenas said that if 
Costa Rica were to be denied trade capacity-building funds at 
the time CAFTA-DR ratification is being debated in the 
Legislative Assembly, "it would be a bad signal."  Acting 
Minister of Foreign Trade Osterlof added that, if the cut off 
of trade capacity-building funds becomes known to the press 
and public, it will be used by opponents of CAFTA-DR to 
further delay the ratification process. 
 
Ambassador Urges Article 98 Agreement 
------------------------------------- 
¶6.  (C) Ambassador responded that it was highly unlikely that 
the USG would either agree to a waiver under Nethercutt or 
consider shifting funds around to avoid the consequences of 
Nethercutt.  Instead, the discussion should be about how the 
USG and GOCR could come together to sign an Article 98 
agreement.  If such an agreement could be signed, Costa Rica 
would again become eligible for ESF and U.S. military 
assistance, both of which are vital to cooperation between 
our two countries.  Ambassador reminded Foreign Minister 
Tovar that the State Department stands ready to renew talks 
on Article 98 and is only awaiting the go-ahead from Costa 
Rica. 
 
¶7.  (C) Tovar said that the Rome Statute does not require 
party countries to surrender accused criminals to the 
International Criminal court (ICC) and that, whether or not 
Costa Rica signs an Article 98 agreement, the GOCR will 
refuse to turn over U.S. nationals.  Tovar did not understand 
why Costa Rica is "being punished only for being a member of 
the court."  He said the cutoff of U.S. military assistance 
was serious, but the cutoff of ESF even worse, and "it 
creates political problems for us."  He said that the United 
States should take into account the close  relations it has 
with Costa Rica and exempt Costa Rica from the prohibitions 
in the Nethercutt Amendment and American Servicemembers' 
Protection Act (ASPA).  President Pacheco closed the meeting 
with a plea to Ambassador that he help Washington to 
understand Costa Rican concerns and motivations. 
 
¶8.  (C) On January 17, Tovar told Ambassador he was working 
on an "alternative" to Article 98 based on existing 
agreements between the United States and Costa Rica and 
existing Costa Rican law.  He hoped to have a written 
proposal ready in two weeks. 
 
Oscar Arias on Article 98 
------------------------- 
¶9.  (C) During a meeting with Congressman Dan Burton and 
Ambassador on January 10, presidential candidate Oscar Arias 
asked about the effect on Costa Rica of not signing an 
Article 98 agreement.  He did not say whether his 
administration, which is expected to take office on May 8, 
would have a different approach to Article 98 than has the 
Pacheco administration, but he did criticize U.S. 
"unilateralism," citing among other things U.S. refusal to 
join the ICC.  After the meeting, however, Arias's running 
mate Laura Chinchilla asked for a copy of the U.S.-Colombia 
Article 98 agreement, which we have since provided her. 
 
Comment 
------- 
¶10.  (C) This week of meetings brought us no closer to an 
Article 98 agreement with Costa Rica.  The Pacheco 
administration is not focused on negotiating an agreement, 
but on how to get around the adverse effects of not having an 
agreement.  Though we are already engaging Oscar Arias, 
Pacheco's probable successor, on the subject, we expect he is 
even more against Article 98 than Pacheco has been. 
LANGDALE