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RHEHNSC/NSC WASHDC PRIORITY 2217
RUEHRC/USDA FAS WASHDC PRIORITY 0604
RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY
RHEFHLC/DEPT OF HOMELAND SECURITY WASHINGTON DC PRIORITY
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INFO RUEHBO/AMEMBASSY BOGOTA PRIORITY 7669
RUEHCV/AMEMBASSY CARACAS PRIORITY 3123
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RUEHPE/AMEMBASSY LIMA PRIORITY 2729
RUEHGL/AMCONSUL GUAYAQUIL PRIORITY 3713

UNCLAS QUITO 000696 
 
SENSITIVE 
 
SIPDIS 
 
AID for AA/LAC Jose Cardenas 
State pass USTR for Bennett Harman 
NSC for John Herrmann and Bob King 
Commerce for Lisa Martilotta 
USDA for Amy Slusher 
Treasury for Office of the Americas Luyen Tran 
 
E.O. 12958: N/A 
TAGS: ETRD EINV ECON PREL EC
SUBJECT: MFA MEETING ON BILATERAL DIALOGUE WITH ECUADOR 
 
¶1.  (SBU) Summary:  USG and Ecuadorian officials met July 18 to 
discuss potential agenda items for a Bilateral Dialogue between 
Ecuador and the United States.  The Dialogue would address issues of 
interest to both sides, proposing information exchange, cooperation, 
and technical assistance in areas such as the financial sector, 
customs, SPS, sustainable development, combating narcotrafficking 
and money laundering, trafficking in persons, and consular 
notification, among others.  In many of these areas, excellent 
cooperation already exists between the USG and GOE.  The proposed 
dialogue facilitates frank discussion of our investment and SPS 
issues with the Foreign Ministry and creates a new mechanism for 
promoting our interests, and Post looks forward to developing it 
further.  This cable reports on both the meeting and current USG 
efforts on proposed agenda items.  End Summary. 
 
¶2.  (U) On July 18, WHA/EPSC Director Matt Rooney and Embassy 
officials met with MFA officials to discuss an Ecuadorian agenda 
proposal for a bilateral policy dialogue between the U.S. and 
Ecuador.  The concept of the dialogue, which originated in a 
conversation between Deputy Secretary Negroponte and Ecuadorian 
President Correa in May 2007, is to serve as a forum to address 
issues of interest to both sides and to highlight the value to 
Ecuador of positive engagement with the U.S.  Ecuadorian Under 
Secretaries for Bilateral Relations, Economic and Commercial 
Affairs, and Consular Services participated in the meeting, along 
with members of their staff. 
 
¶3.  (U) The meeting was productive and its tone positive.  The 
Ecuadorians were clearly well-prepared, were able to explain agenda 
items proposed by other ministries, and were knowledgeable about 
much of the cooperation between our two governments.  They 
emphasized their desire for dialogue.  Both sides agreed that we 
already have excellent cooperation in a number of areas and that the 
dialogue should build on, but also emphasize, the breadth and range 
of our cooperation. 
 
¶4.  (U) The group addressed items in the draft agenda in order, 
going over each of the four pillars of the agenda: I) Measures to 
Promote Human Development and Poverty Reduction, II) Facilitation of 
Trade and Investment, III) Cooperation and Technical Assistance, and 
IV) Immigration Issues. 
 
Measures to Promote Human Development and Poverty Reduction 
--------------------------------------------- ---------- 
 
¶5.  (U) Much of this pillar focused on support for Plan Ecuador 
(Ecuador's development plan for the Northern Border region), 
Ecuador's National Development Plan, and small and medium sized 
enterprises (SMEs).  Ecuador and the U.S. (largely USAID and USDA) 
have solid cooperation in these areas and much of the assistance is 
to SMEs.  USDA's Foreign Agricultural Service (FAS) provided over 
$1.2 million in assistance to the Northern Border provinces for 
various agricultural projects from 2000 to 2007, benefiting over 
8,400 people in the area.  USAID has three programs that support 
Ecuador's Development Plan, and other programs that directly support 
three out of five components of Plan Ecuador - territorial 
development (including infrastructure); solidarity economy (job 
generating and income increasing productive activities); and 
strengthening of local government.  The Ecuadorian side, clearly 
aware of many of these programs, thanked USAID for their work in 
these areas, while recalling that our bilateral assistance has been 
sharply cut over the past five years and expressing the hope that it 
might be restored. 
 
¶6.  (U) In support of the Northern Border and Plan Ecuador goals, 
USAID trained 1,000 farmers on agricultural and post-harvest best 
practices and modern techniques in FY 2007 and created 5,676 new 
jobs.  Cacao yields increased from 3 to 18 100-pound bags per 
hectare, and coffee yields jumped from 2 to 12 100-pound bags per 
hectare.  Productivity increases and product quality improvements, 
plus efforts to link farmers to end-markets have contributed to 
increasing family incomes by 51% in just one year.  Participant 
farmers now export nearly 100% of their cacao, coffee, and broccoli. 
  In FY 2007, USAID also supported programs to strengthen 23 
municipal governments, and in five of these cities, municipal tax 
revenues increased 68% in just one year.  Finally, USAID financed 
the construction of 14 bridges, 20 water systems, and 9 sewerage 
systems benefiting over 50,000 people. 
 
¶7.  (U) USDA/FAS in Ecuador funded a Food for Progress project from 
2004 to 2007 that conducted over 700 farmer field schools and 
trained approximately 18,500 farmers in integrated crop management. 
The program also created 47 farmer associations and provided support 
for cocoa quality and post harvest equipment.  The project promoted 
linkages between farmer's associations and national and 
international cocoa buyers to shorten the marketing chain and 
increase farmer incomes. 
 
¶8.  (U) For SMEs, in 2008 and 2009 USAID is developing integrated 
value chains in at least 17 provinces of the country where more than 
6,000 permanent jobs will be created in the next 2 years, through 
support to small producers.  USAID's Credit Guarantee Program will 
generate $13 million in loans benefiting 2,000 small producers in FY 
2008 and 2009.  USDA's PL 480 food aid program provided micro-loans 
to 200 dairy and cheese producers from dairy associations in 
Ecuador.  These micro loans were used to buy dairy cattle to improve 
herds in Carchi, with a project investment of $210,000.  The 
Department of Commerce's Foreign Commercial Service (FCS) promotes 
and facilitates the attendance of SMEs to DOC trade shows in the 
U.S.  From 2007 to June 2008, more than 609 Ecuadorian entrepreneurs 
traveled to trade shows in the U.S. promoted by FCS. 
 
¶9.  (U) The Ecuadorians raised ATPA extension as key for human 
development and poverty reduction.  The U.S. side stressed that ATPA 
renewal is a decision of Congress, and as such the executive branch 
of the USG is not able to address it.  The Ecuadorians also 
indicated their interest in learning how the U.S. Small Business 
Administration (SBA), operates and noted an SBA program with Mexico 
that they might be interested in emulating. (Note: According to the 
GOE, the current second in command of the SBA is 
Ecuadorian-American). 
 
¶10.  (U) The Ecuadorians were also interested in learning about 
other facets of the U.S. financial system.  Specifically, they asked 
us to provide them with information about the strengths and 
weaknesses of implementing the Community Reinvestment Act (where 
U.S. banks are expected to reinvest in reviving inner city 
neighborhoods), creating sustainable municipal finance programs, 
facilitating remittances and their investment in productive 
activities, and sharing our experience with Social Security and 
financial regulators like Fannie Mae and Freddie Mac.  They also 
cited a U.S. program with Mexico collaborating with the Fed for 
remittances transfers as a potential area for information exchange, 
and interest in cooperation between the SEC and the Ecuadorian stock 
market. 
 
Facilitation of Trade and Investment 
------------------------------------ 
 
¶11.  (U) The Ecuadorians raised areas where they felt they could 
benefit from information exchange and technical assistance to 
improve competitiveness and facilitate trade, their key requests in 
this section.  They noted that they want a law on competition policy 
and have been working on a draft, but are facing technical problems. 
 The U.S. side explained that USAID has provided assistance on 
drafting a law in the past and is willing to help again (note: 
USAID could bring Andean experts to discuss the Colombian and 
Peruvian experiences applying competition policy).  USAID is also 
helping to improve competitiveness in Ecuador by supporting the 
creation of business opportunities through twelve productive 
clusters including leather goods, Panama hats, dairy products, 
cocoa, apparel, horticulture, and eco-tourism.  The projects provide 
support in reaching new markets and developing export capacities. 
In addition, USAID is supporting the creation of private sector 
councils in different provinces to promote national consensus on 
pro-market policies and at the central government level, creation of 
a national investment promotion agency and a national sectoral 
development agency.  Organic production is another competitiveness 
topic in this section; USAID plans to provide assistance to cacao 
and coffee farmers in order to obtain organic certifications. 
Similar assistance will be provided to tourism operators to obtain 
sustainable management certification. 
 
¶12.  (U) The Ecuadorians flagged the U.S. requirement for 100% 
container scanning as a challenge and requested technical assistance 
and possibly a need for additional time to comply.  The U.S. side 
noted that some assistance could be available.  The Ecuadorians 
would also like to improve their customs services, and mentioned a 
number of areas where technical assistance could help, including 
fighting contraband.  We expressed our desire to cooperate with them 
in these areas.  Department of Homeland Security (DHS)'s Customs and 
Border Protection advisors assist and train Ecuadorian 
anti-narcotics police in drug interdiction at land borders, 
international airports and seaports.  They also provide support and 
training to Ecuadorian Customs on contraband interdiction.  DHS's 
Immigration and Customs Enforcement Office (ICE) is working to 
establish a Trade Transparency Unit (TTU) with Ecuadorian Customs. 
The TTU will modernize their established information systems, in 
regards to US imports and exports, and assist them in their fight 
against customs corruption/transparency. 
 
¶13.  (U) The U.S. and Ecuador have significant cooperation on many 
SPS issues.  We mentioned access to the Ecuadorian market for U.S. 
beef as an important SPS interest on the U.S. side.  U.S. beef is 
denied entry to Ecuador due to restrictions implemented in 2001 as a 
result of a U.S. outbreak of mad cow disease.  However, in 2007 the 
International Organization for Animal Health declared the U.S. a low 
risk country.  The Ecuadorians agreed to investigate the issue 
further.  USDA's Animal and Plant Health Inspection Service (APHIS) 
works with the GOE on a number of pre-clearance programs that ensure 
Ecuadorian agricultural products are safe to enter the U.S.; one 
example is mangoes.  The GOE expressed its strong desire to improve 
its official sanitary system (SESA).  USDA is assisting with 
restructuring Ecuador's SPS system, providing direct assistance to 
the GOE and the Coordinating Ministry for Production to find 
solutions to management issues within Ecuador's current sanitary 
system.  USDA also supports the Foot and Mouth Disease Eradication 
Program in Ecuador, providing support since 2000 for supplying 
vaccination equipment, publicity, and training for producers and 
vaccinators, among others. 
 
¶14.  (U) The group discussed expansion of air transportation as 
another possible area of cooperation (U.S. carriers would like 
better routes and a more stable flight regime).   The Ecuadorians 
cited technical issues, but agreed limited expansion might be 
possible. 
 
¶15.  (SBU) Regarding investment, the U.S. side signaled concern with 
investment disputes between U.S. companies and the GOE.  We stressed 
that the key was for the GOE to follow investment-friendly policies 
that would prompt major U.S. interests like Chevron, Oxy and others 
to reconsider their approach to key Washington decisionmakers 
regarding their disputes. 
 
Cooperation and Technical Assistance 
------------------------------------ 
 
¶16.  (U) In discussing sustainable development, the Ecuadorians 
noted their need to retain discussion of their Yasuni Model, whereby 
the international community would compensate Ecuador for refraining 
from producing oil in the environmentally sensitive ITT fields, as 
an agenda point, even though they understand the U.S. is unlikely to 
participate.  The Ecuadorians explained that clean development 
included biofuels, an area that is getting new focus and is part of 
the GOE's 10 "star sectors" targeted for investment and development 
this year. 
 
¶17.  (U) The Ecuadorians offered the USG participants a summary of 
the GOE's 10 strategic sectors for development.  Since USAID 
consultants had developed this strategy for them, it was comforting 
to see the sense of ownership that the GOE showed in echoing this 
back to us. Both sides highlighted their interest in working 
together in this sector. 
 
¶18.  (U) In other areas related to sustainable development, USAID 
provides extensive support to Ecuador.  Its programs provide 
assistance for the Waorani and Kichua Indigenous communities to 
control their territories, to preserve natural resources and to 
maintain their cultures. USAID's Watershed Management Program 
preserves watersheds in selected areas and conserves biodiversity. 
The Ecuadorian Sustainable Tourism Alliance works with the tourism 
industry in order to develop sustainable tourism value chains, and 
USAID's Parks Recovery program seeks to repair the physical 
infrastructure and environmental quality of selected parks and 
protected areas. 
 
¶19.  (U) The lead GOE interlocutor, Amb. Carlos Jativa, stated his 
interest in exploring other types of development assistance that the 
U.S. could offer. The Ecuadorians would like to learn more about how 
Ecuador could qualify for MCC (the Millenium Challenge Corporation) 
support, noting that the current government has a strong record on 
combating corruption.  They also reiterated their interest in TFCA 
(Tropical Forests Conservation Act) debt relief, although they 
appear to understand the program and the barriers to their 
benefiting from it.  They also expressed interest in learning more 
about seized asset funds (from property owned by drug lords) and 
whether the proceeds from the sale in the U.S. of these seized 
assets could be shared with Ecuador to fight narcotrafficking and 
for development. 
 
¶20.  (U) They also want to add risk management for natural disasters 
as an area of cooperation.  USAID has already been implementing long 
standing programs that deal not only with risk management, but 
disaster preparation, preparedness and response.  In the first six 
months of 2008, the USG, principally through USAID and MILGROUP, 
provided over $1 million in assistance to flood victims. 
 
¶21.  (U) Cooperation in the judicial area (including extradition), 
money laundering, and in fighting narcotrafficking is excellent. 
The USG facilitates communication between the Ecuadorians and the 
U.S. Department of Justice in extradition cases, and provided 
important assistance in the Isaias Brothers case.  USAID contributed 
to a larger effort by authorities in the Ecuadorian city of Cuenca 
to ensure that prisoners are not incarcerated without being 
sentenced.  In November 2007, the Ecuadorian Supreme Court decided 
to adopt Cuenca's successful pre-trial approach nationwide.  USAID 
also promoted public defense for the most vulnerable groups in 
Ecuador.  In FY 2007, 1,463 indigent persons, including poor women, 
received legal defense services and another 1,623 were provided 
legal counsel in eight cities.  In FY 2007, the GOE selected four of 
these USAID supported legal clinics to provide public defense 
services under a new initiative to provide legal services to 
prisoners. 
 
¶22.  (U) The Embassy's Narcotics Affairs Section (NAS), part of the 
State Department, also works to strengthen Ecuador's institutional 
capacity to control drug trafficking through police and judicial 
training, training on money laundering, and assistance with border 
and coastal control.  NAS works with the Ecuadorian police, military 
and judiciary to combat narcotrafficking, providing assistance of 
more than $8M in 2007.  NAS also provides equipment and technical 
assistance to Ecuador's Financial Intelligence Unit to effectively 
identify suspicious financial transactions, and supports training 
and security upgrades for the Fiscalia's money laundering office so 
that it will be able to effectively prosecute money laundering 
cases.  DHS officers provide training on detecting and interdicting 
bulk cash smuggling to the GOE. 
 
¶23.  (U) The USG also provides intellectual property rights (IPR) 
training through the U.S. Patent and Trademark Office to Ecuadorian 
IPR and customs officials, and prosecutors.  Over 15 participants 
attended these training programs in 2008.  USAID's Andean Regional 
Trade Capacity Building Program helps strengthen the Ecuadorian 
Intellectual Property Rights Institute (IEPI) by assisting to 
digitalize all files and map the different processes and functions 
for more efficient operations. 
 
Immigration Issues 
------------------ 
¶24.  (U) Immigration is an important issue for the Ecuadorians given 
President Correa's strong interest in the topic, and migration is 
part of the Association Agreement the Andean countries are 
negotiating with the EU.  However, the U.S. side emphasized that a 
number of immigration issues are problematic for us (just as they 
are for the EU).  The Ecuadorians expressed interest in information 
exchange, and in learning more about consular notification.  DHS 
officers are working with the GOE to establish an Electronic Travel 
Document System that would allow for a shorter detention period for 
Ecuadorian Nationals detained by U.S. Customs.  The State 
Department's Bureau of Consular Affairs is developing activities to 
raise awareness of consular notification and access to federal, 
state, and local law enforcement, and corrections and criminal 
justice officials, through distribution of over 1,000,000 pieces of 
consular notification and access instructional material to these 
agencies, and publication of several articles on consular 
notification and access. 
 
¶25.  (U) The Ecuadorians would also like to work on promoting the 
developmental impact of remittances.  The U.S. side noted that this 
goal was among the benchmarks agreed at the 2004 Special Summit of 
the Americas and described the remittance programs at the community 
level that the United States had undertaken.  USAID has partnered 
with the World Council of Credit Unions to facilitate remittance 
transfers among credit unions.  Its programs promoted remittances in 
New York and New Jersey and implemented remittances services from 
Spain and Italy.  USAID programs facilitated the transfer of nearly 
70,000 remittances totaling $24 million in the period 2006-2007. 
 
¶26.  (U) On trafficking in persons (TIP), there is already excellent 
cooperation between the U.S. and Ecuador, and USAID has a number of 
projects in this area.  USAID provided assistance to the Ministry of 
Government for the implementation of Ecuador's National Plan to 
Combat TIP.  In FY 2007, USAID supported the alliance of 32 civil 
society organizations in the city of Cuenca to develop an Action 
Plan to combat trafficking, and supported a similar development in 
the Amazon province of Napo, among other programs.  DHS/ICE works 
with the GOE on TIP cases, as well as providing equipment and 
training to DINAPEN (the Administration for the Protection of 
Adolescents and Children).  The State Department's G/TIP office has 
also provided assistance, most recently to a program to assist 
victims in Chimborazo Province.  All of this support has helped 
Ecuador move from Tier 3 to Tier 2 of the State Department TIP 
Report in 2007 and stay there in 2008. 
 
Next Steps 
---------- 
 
¶27.  (U) The U.S. side agreed to send back a counter-proposal to the 
GOE, based on the discussion in the meeting.  Following that, both 
sides would like to launch the dialogue formally in October, if 
possible. 
 
Comment 
------- 
 
¶28.  (SBU) It became clear during the course of the conversation 
that the GOE proposal was driven by a desire to help us highlight 
the positive value of our bilateral relationship with Ecuador. 
Speaking informally over lunch, Ambassador Jativa told us that they 
understood they had a "credibility" problem in Washington and 
intended to mount a concerted effort to overcome it.  They clearly 
see the proposed dialogue as an element in this strategy.  The 
dialogue creates a mechanism for the GOE to demonstrate to the 
Ecuadorian public the value of our bilateral cooperation, in spite 
of Correa's rhetoric.  The obvious, tangible benefits of our 
relationship with the GOE will be highlighted, in contrast to its 
relationships with some less constructive partners.  Finally, the 
dialogue's positive atmosphere facilitates frank discussion of our 
investment and SPS issues with the Foreign Ministry and creates a 
new mechanism for promoting our interests; Post looks forward to 
developing the dialogue initiative further. 
 
GRIFFITHS