VZCZCXYZ0005
PP RUEHWEB

DE RUEHTG #1071/01 3331930
ZNY CCCCC ZZH
P 281930Z NOV 08
FM AMEMBASSY TEGUCIGALPA
TO RUEHC/SECSTATE WASHDC PRIORITY 8942
INFO RUEHZA/WHA CENTRAL AMERICAN COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHDC

C O N F I D E N T I A L TEGUCIGALPA 001071 
 
SIPDIS 
 
PLEASE PASS TO USTR 
 
E.O. 12958: DECL: 11/28/2018 
TAGS: ECIN EFIN EINV ENRG ETRD HN
SUBJECT: AMBASSADOR MEETING WITH TRADE MINISTER CERRATO 
 
Classified By: AMBASSADOR HUGO LLORENS, E.O. 12958 REASONS 1.4 (B) AND 
(D) 
 
¶1. (U) Summary: The Ambassador met with Fredis Cerrato, 
Minister of Trade and Industry, October 30 to discuss 
CAFTA-DR, fuel prices and renewable energy, and the financial 
crisis, among other topics. The Ambassador raised the 
expropriation claim of U.S. citizen Oscar Cerna.  End 
summary. 
 
---------------------------------------- 
Benefits of Trade Must be Broadly Shared 
---------------------------------------- 
 
¶2. (C) Cerrato started by saying that Central American 
integration is proceeding well and that it is part of the 
effort to make the region more competitive. Advanced 
Technology Centers are to be opened in Choluteca, Valle, and 
Olancho Departments. Cerrato lamented, as he has in previous 
meetings, that average Hondurans do not know about the 
successes of CAFTA-DR and that "we don't believe in 
ourselves." 
 
¶3. (C) Cerrato added that the government needed to make sure 
benefits of trade liberalization are shared broadly and to 
ameliorate inequality. He asserted that his ministry should 
be seen as the administrator of all trade capacity building 
projects. 
 
¶4. (U) Cerrato agreed with the Ambassador that corporate 
social responsibility, including providing good pay and 
health benefits to employees, led to better competitiveness. 
 
------------------------------- 
Effects of the Financial Crisis 
------------------------------- 
 
¶5. (C) When Cerrato expressed concern about a possible 
contraction of U.S. investment in the apparel processing 
(maquila) sector due to the financial crisis, the Ambassador 
responded that he also expected the maquila industry to face 
some difficult times.  However, he thought that the maquila 
industry had the management acumen to weather the storm, but 
needed to work closely with the government. The Ambassador 
added he expected the financial crisis to seriously affect 
the real economy due to a reduction in remittances, a decline 
in the values of key commodity exports, as well as tighter 
credit conditions.  The Ambassador advised the Minister that 
the best way to minimize the effects of the financial crisis 
would be to send a message that Honduras is a good place to 
invest and was macroeconomically stable.  Staying on track 
with its IMF standby agreement would be a good sign, he added. 
 
---------------------------------- 
Possibilities for Renewable Energy 
---------------------------------- 
 
¶6. (C) Cerrato was less open to the Ambassador's urging to 
explore the possibility of renewable energy. The country is 
"chaotic," Cerrato said, and argued that damage from the 
recent floods was partly due to high levels of deforestation. 
He noted the recent approval of a project whereby Costa 
Rica-based Mesoamerica Energy will install 100 MW of GE wind 
turbines in southern Honduras but said such projects were 
inevitably very costly and slow to develop.  Solar is also 
too expensive, he said. He complained as well that the 
Brazilians had delivered nothing since President Lula's trip 
last year to explore biofuel opportunities.  (Note:  The 
Ambassador delivered a joint demarche with the Brazilian 
Ambassador to the Honduran Deputy Foreign Minister on the 
Biofuels Initiative on November 13.  The GOH responded the 
same day, through the Honduran Ambassador in Washington, 
confirming its interest in participating in the initiative. 
End note.) 
 
---------------------------- 
Hard Line with Oil Companies 
---------------------------- 
 
¶7. (C) The Ambassador conveyed his concern for the failure of 
the GOH to resolve oil pricing issue with U.S. firms Exxon 
and Chevron.  He noted tat under the current formula U.S. 
firms were being forced to lose money.  Cerrato responded 
that talks continued but that he was still awaiting to put 
their complaints in writing and follow the legal 
administrative procedure.  As President of Petroleum 
Commission he would take any proposal to the board for 
approval, but needed this in writing.  (Note:  We understand 
that the firms are reluctant to send an joint industry 
proposal, since it would violate anti-monopoly laws.  The 
firms possibly may send separate proposals to the Commission 
for their consideration.) 
 
------------------------- 
Cerna Expropriation Claim 
------------------------- 
 
¶8. (C) Ambassador suggested to Cerrato that he consider 
reviewing the claim of expropriation of U.S. citizen Oscar 
Cerna concerning his cement industry investment.  The 
Ambassador noted that Cerna had strong support for his claim 
in the U.S. congress.  Cerrato insisted that he had never 
received any information from Cerna and that Cerna needed to 
present evidence directly to a Honduran court. 
 
---------------- 
Pathways Meeting 
---------------- 
 
¶9. (U) Cerrato said that he planned to attend the meeting in 
Panama December 10 to discuss the Pathways toward Prosperity 
in the Americas. 
LLORENS