VZCZCXYZ0022
PP RUEHWEB

DE RUEHQT #0768 2341520
ZNR UUUUU ZZH
P 211520Z AUG 08
FM AMEMBASSY QUITO
TO RUEHC/SECSTATE WASHDC PRIORITY 9274
INFO RUEHBO/AMEMBASSY BOGOTA 7699
RUEHBR/AMEMBASSY BRASILIA 3963
RUEHLP/AMEMBASSY LA PAZ AUG LIMA 2759
RUEHSJ/AMEMBASSY SAN JOSE 1340
RUEHGT/AMEMBASSY GUATEMALA 1030
RUEHTG/AMEMBASSY TEGUCIGALPA 0533
RUEHME/AMEMBASSY MEXICO 1793
RUEHZP/AMEMBASSY PANAMA 0950
RUEHBS/USEU BRUSSELS
RUEHGL/AMCONSUL GUAYAQUIL 3748

UNCLAS QUITO 000768 
 
SENSITIVE 
SIPDIS 
 
USTR FOR MARK MOWREY, BENNETT HARMAN 
 
E.O. 12958: N/A 
TAGS: ETRD ECON EC
SUBJECT:  "WE HAD AN AGREEMENT" -- ECUADOR FRUSTRATED EU 
PULLED OUT OF BANANA DEAL 
 
¶1.  (SBU) Summary.  Ecuador and other Latin American banana 
producers had reached an agreement with the European Union which 
would have reduced EU tariffs on Latin bananas.  However, the EU 
withdrew the offer after WTO Doha Round negotiations reached an 
impasse, even though the Latins believed that they had a stand-alone 
agreement.  Ecuador will resume its WTO case against the EU, 
although it is willing to continue discussions with the EU, provided 
the terms of the aborted agreement remain the same.  End summary. 
 
¶2.  (SBU) Econcouns met with Mentor Villagomez, Under Secretary for 
Commercial Affairs at the Foreign Ministry, on August 18 to review 
Ecuador's reaction to the EU's withdrawal from a negotiated 
agreement that would have reduced its tariffs on Latin American 
bananas and ended Ecuador's longstanding WTO dispute.  Villagomez 
said, "We had an agreement" which was supposed to be stand-alone, 
and expressed frustration that the EU pulled out after the impasse 
in the WTO Doha Round talks at the end of July. 
 
¶3.  (SBU) Villagomez provided a copy of the aborted agreement, which 
called for the EU to lower its bound tariff on bananas to 148 
euros/ton in 2009, and steadily lower the tariff until it reached 
114 euros/ton in 2016.  The agreement would have also settled a 
series of pending banana disputes between the Latins and the EU.  As 
drafted, the agreement was to have been signed by Brazil, Colombia, 
Costa Rica, Ecuador, Guatemala, Honduras, Mexico, Nicaragua, Panama, 
Peru, and Venezuela.  A copy of the document has been forwarded to 
EEB/ATP, WHA/EPSC, and USTR. 
 
¶4.  (SBU) Villagomez said that it had been difficult for the Latins 
to reach a position on the agreement, suggesting that there had been 
disagreement between them.  He added that Colombia had already 
accepted the agreement, which lowered the Latins' negotiating room, 
and that he had been criticized by some Ecuadorian producers for 
accepting the agreement.  However, he continued, it would have been 
a good agreement. 
 
¶5.  (SBU) Looking forward, Villagomez said that it is possible that 
the EU and the Latins would revive efforts to establish an agreement 
in September, but if so, the agreement would have to be the one that 
had already been agreed.  Any effort to delay or reduce the tariff 
reductions would not be acceptable.  Meanwhile, Ecuador would 
proceed with the WTO legal process, and the next step would be for 
the WTO Dispute Settlement Body to accept the panel report that 
ruled in favor of Ecuador.  Villagomez said that the EU had asked 
that Ecuador withhold pursuing legal remedies, but he told the EU 
that given the latest setback Ecuador cannot afford further delays. 
 
Hodges