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DE RUEHQT #1128/01 3431645
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FM AMEMBASSY QUITO
TO RUEHC/SECSTATE WASHDC PRIORITY 9715
RHEFHLC/DEPT OF HOMELAND SECURITY WASHINGTON DC PRIORITY
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY
RHEHNSC/NSC WASHDC 2243
RUEHRC/USDA FAS WASHDC 0613
RUCPDOC/DEPT OF COMMERCE WASHDC
INFO RUEHBO/AMEMBASSY BOGOTA PRIORITY 7870
RUEHCV/AMEMBASSY CARACAS PRIORITY 3297
RUEHLP/AMEMBASSY LA PAZ DEC 1322
RUEHPE/AMEMBASSY LIMA PRIORITY 2935
RUEHGL/AMCONSUL GUAYAQUIL PRIORITY 3957

UNCLAS QUITO 001128 
 
SENSITIVE 
SIPDIS 
 
AID for AA/LAC Jose Cardenas and Tully Cornick 
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: PREL ETRD EINV ECON KJUS SNAR SMIG EC
SUBJECT: LAUNCH OF U.S.-ECUADOR BILATERAL DIALOGUE 
 
REFTEL A: QUITO 696 
   B: STATE 101841 
       C: QUITO 1100 
 
¶1.  (U) Summary:  A U.S. delegation led by WHA DAS Christopher 
McMullen met with Ecuadorian officials in Quito November 24 to 
launch the U.S.-Ecuador Bilateral Dialogue, a forum to address 
issues of interest to both sides and to highlight and build on 
existing cooperation and positive engagement (ref A).  The initial 
Dialogue meeting addressed:  the financial sector; investment; 
customs; sanitary and phytosanitary (SPS) issues; sustainable 
development; combating narcotrafficking and money laundering; 
trafficking in persons; and migration issues.  The delegation heads 
also met with Foreign Minister Maria Isabel Salvador, who endorsed 
and supported the process.  A follow-on meeting was agreed for 
Washington in the second quarter of the calendar year, to be 
preceded by the establishment of working groups on various issues to 
be determined.  End Summary. 
 
¶2.  (SBU) Led by State Department's Deputy Assistant Secretary 
McMullen, the U.S delegation met with MFA officials November 24 to 
launch officially the Dialogue.  USAID Deputy Assistant 
Administrator for Latin America and the Caribbean Tully Cornick, 
USDA, DHS, and Commerce also participated.  The Ecuadorian 
delegation, led by Under Secretary for Bilateral Relations Carlos 
Jativa, included representatives from trade, consular, competition, 
security, agriculture, justice, migration, customs and antinarcotics 
offices and agencies.  Jativa welcomed the Dialogue as a way to 
strengthen the bonds between the U.S. and Ecuador.  Many Ecuadorian 
agencies thanked the U.S. side for assistance and praised current 
cooperation under the four pillars of the Dialogue:  Human 
Development and Poverty Reduction, Trade and Investment, Cooperation 
and Technical Assistance, and Immigration Issues. 
 
Human Development and Poverty Reduction 
--------------------------------------- 
 
¶3.  (U) The Ecuadorians presented detailed information on Plan 
Ecuador (Ecuador's development plan for its northern region 
bordering Colombia), and the GOE's priority interests in the region. 
 Plan Ecuador's four key sectors for investment include housing, 
water and sewage systems, production chains, and improvement of 
education.  DAS McMullen commented that USAID has worked very 
closely with the GOE on this plan, investing over $80 million since 
2001, and will continue this positive cooperation. 
 
¶4.  (SBU) An official from Ecuador's Coordinating Ministry of 
Economic Policy stressed the importance of Ecuador's need for 
balanced internal development, improved competitiveness and 
production, and an improved financial structure.  He asked for U.S. 
cooperation in sharing best practices and lessons learned on:  the 
Community Reinvestment Act (to offer credit to microentrepreneurs); 
financial regulators like Fannie Mae and Freddie Mac; designing a 
social security system and unemployment insurance; working with the 
Federal Reserve Bank of Atlanta to inventory monetary instruments in 
circulation; and cooperation and technical assistance from the 
Securities Exchange Commission to design a new securities market. 
 
¶5.  (U) The U.S. delegation responded that the USG could share its 
experiences, invited the GOE to participate in preparing for the 
Summit of the Americas, which could include a discussion on the 
financial sector, and suggested that experiences from the G-20 
process could be applied regionally.  USAID noted that Ecuador has 
one of the fastest growing micro-finance systems in the region, with 
interesting lessons to be shared.  The GOE welcomed the invitation 
to engage. 
 
Facilitation of Trade and Investment 
------------------------------------ 
 
¶6.  (U) The Ecuadorians complained about Ecuador's growing non-oil 
deficit, and noted that Ecuador's exports are far too concentrated 
(the top ten exports account for 91.51% of total exports).  They 
stressed the need to diversify exports, and asked for USG assistance 
to define a basket of products to diversify into, and USG 
cooperation in facilitating U.S. market access through training, 
research and development, marketing, and assistance in complying 
with SPS rules.  The U.S. side expanded on the Pathways to 
Prosperity in the Americas initiative (ref B), a forum to help trade 
benefits reach all levels of society, and noted the upcoming 
Ministerial in Panama in December.  Although Pathways initially 
included only Latin American FTA partners with the U.S., it is being 
expanded to include others in the region.  The Ecuadorians expressed 
interest in participating in the Ministerial as observers, and were 
encouraged to reach out to Panama about the meeting. 
 
¶7.  (U) The Ecuadorians want greater participation of small and 
medium sized enterprises (SMEs) in trade.  USAID highlighted its 
on-going program with private Ecuadorian banks that guarantee loans 
to SMEs in Ecuador, and has already offered technical assistance so 
that the GOE could replicate this guarantee fund in publicly 
controlled banks.  The GOE noted that a draft antimonopoly law was 
completed and would soon be sent to Ecuador's interim legislative 
body for approval.  USAID applauded the effort for bringing 
protection to consumers while allowing for competition, and offered 
technical assistance on the law. 
 
¶8.  (SBU) On customs issues, the Ecuadorians pointed to preventing 
drug smuggling and stronger port controls as key issues.  They were 
interested in technical assistance for incoming passenger controls 
(such as identifying risk profiles), and for controlling land 
frontiers.  They also emphasized Ecuador's likely inability to 
comply with 100% container scanning by 2012.  The DHS Immigration 
and Customs Enforcement (ICE) official proposed working together 
with Ecuador to identify equipment and provide training necessary 
for Ecuador to meet the 100% scanning requirements.  The USG side 
also offered additional training and technical assistance in setting 
up Ecuador's Trade Transparency Unit, which would allow Ecuador to 
compare trade data and thus help identify corruption, tariff fraud, 
and money laundering schemes.  GOE officials noted President 
Correa's plan to institute an electronic signature system to 
facilitate trade and enhance transparency. 
 
¶9.  (SBU) A Ministry of Agriculture representative mentioned the GOE 
desire to develop its livestock program further through Ecuador's 
National Development Plan, stressing the need for training and 
technology transfer to ensure benefits reach small producers.  He 
asked for USG assistance in developing eco-seals (certifications of 
environmentally friendly processes) for products, while cautioning 
that eco-seals would need to not increase transaction costs or 
otherwise harm competitiveness, and would need to help small 
producers.  On the U.S. interest in market access for U.S. beef, 
Ecuador's sanitary service, SESA, stated that the Andean Community 
(CAN) was reviewing its rules on mad cow disease and that there 
"could be commercial opportunities in this area soon."  The 
Ecuadorians noted that President Correa signed an "agro-quality" 
law, creating an agency that will look at SPS and agricultural 
issues simultaneously. 
 
¶10.  (SBU) The MFA detailed GOE efforts to promote its "10 star 
sectors" identified for investment, noting a focus on non-oil and 
non-traditional sectors.  These included fruit and vegetable 
processing, flowers, fish and aquaculture, forestry, biofuels, 
tourism, and transport and logistics, among others.  The Ecuadorians 
asked for U.S. support to bolster the 10 sectors, particularly in 
special promotional activities such as road shows and information 
exchange (in a separate Heads of Delegation meeting, biofuels were 
highlighted as an important area for cooperation).  USAID praised 
joint work in this endeavor.  USAID funded the initial studies that 
led to Correa adopting these "10 star sectors" as his national 
economic growth strategy. 
 
Investment Issues 
----------------- 
 
¶11.  (SBU) USG officials stressed that investment disputes of U.S. 
companies have contributed to a negative image of Ecuador's 
investment climate in Washington.  The U.S. side urged Ecuador to 
look at foreign investment as an indispensable development tool, and 
to treat foreign investors transparently and under stable rules. 
The Ecuadorian side agreed that it wanted to improve its image and 
emphasized that disputes would be resolved by law.  GOE officials 
noted that the government was designing a new investment law that 
would provide a new legal framework for investment, based on 
constitutional reforms covering investment ethics and investor 
rights. 
 
Cooperation and Technical Assistance 
------------------------------------ 
 
¶12.  (U) Risk management for natural disasters is an important area 
of cooperation between the U.S. and Ecuador, and USAID is involved 
in long standing programs with Ecuador.  The Embassy's military 
group has also provided strategic assistance in disaster response. 
The Ecuadorians noted that they were working on building a new 
national disaster relief system. 
 
¶13.  (SBU) Anti-narcotrafficking is another area where the GOE and 
USG have extensive, successful cooperation.  The Ecuadorians noted 
the GOE was working on a draft drug control plan, which President 
Correa was to sign at the end of December, and a draft law on the 
management of seized assets.  They asked for continued USG 
assistance on antinarcotics initiatives, while calling for amounts 
to be increased.  In particular, they asked for assistance with 
investigating the possibility of an asset seizure fund (to see if 
they could share in the proceeds of the sale in the U.S. of seized 
assets of Ecuadorian drug criminals).  The U.S. side agreed to 
investigate this further.  The U.S. side also commented on the need 
for an antiterrorism financing law so that Ecuador's Financial 
Intelligence Unit would be eligible for international certification 
and attendant access to information held by other certified units. 
 
¶14.  (SBU) The Ecuadorians noted the necessity of updating the 
bilateral treaty on prisoner exchange and stressed the importance of 
judicial assistance.  The U.S. side noted that the USG has sought to 
improve communication to facilitate the extradition process, such as 
by holding digital video conferences, and agreed to investigate the 
prisoner exchange issue. 
 
Immigration Issues 
------------------ 
 
¶15.  (U) The Ecuadorians noted that, due to the importance of 
migration issues in the current government, the Secretariat of 
Migration would soon become a full Ministry, and explained their 
program to assist Ecuadorian immigrants who return voluntarily. 
They proposed a dialogue and information exchange focused on 
assisting Ecuadorian immigrants in the U.S. (such as assistance with 
language and job training). 
 
¶16.  (SBU) Officials from both the USG and GOE noted difficulties in 
consular notification in both countries and the importance of 
continued police training.  DHS/ICE officers proposed establishing 
an Electronic Travel Document System with the GOE that would allow 
for a shorter detention period for Ecuadorian nationals detained by 
U.S. authorities.  DHS/ICE also expressed openness to sharing 
information on detention and deportation processes. 
 
¶17.  (SBU) The GOE would like to promote the developmental impact of 
remittances, noting the importance of remittances from the U.S.  To 
improve remittances services and lower transaction costs, the 
Ecuadorians proposed an exchange of information on remittances, a 
bilateral remittance document with qualitative and quantitative 
information, and meetings with remittance agencies.  USAID noted 
that as a result of its programs, it had already connected 4,000 
outlets in the U.S. with over 120 credit union offices in Ecuador. 
USAID will work with Ecuadorian counterparts to further explore 
areas of mutual interest on remittances. 
 
¶18.  (SBU) The MFA noted good cooperation with the U.S. and the 
GOE's ongoing efforts against Trafficking in Persons (TIP), and that 
Ecuador had moved from Tier 3 to Tier 2 in the State Department's 
TIP report in 2005.  DAS McMullen noted that the GOE's policy on 
visa-free tourism had caused a sharp rise in Chinese migration, 
abuses of migrants, and greater susceptibility to terrorist acts, 
and offered technical assistance in migration controls.  The 
Ecuadorians responded that the GOE was implementing a travel 
document requirement for Chinese effective December 1 (ref C). 
McMullen cautioned about the need to check whether other countries 
were taking advantage of the current policy. 
 
Next Steps 
---------- 
 
¶19.  (U) The two sides agreed to hold the next meeting of the 
Dialogue in Washington in 2009, most likely in May.  Working groups 
for each pillar will be formed to begin addressing pending issues, 
and will report their results to the Dialogue plenary in 2009. 
 
Comment 
------- 
 
¶20.  (SBU) The Dialogue meeting created a formal opportunity to 
engage the Correa government, show how U.S. policies support many 
key GOE objectives, and establish a framework for future 
cooperation.  A joint USG-GOE press statement praised the Dialogue 
for demonstrating the respect, friendship, and cooperation between 
the two countries, and for working to jointly develop priority 
areas.  Media coverage of the talks was positive.  GOE 
representatives at the meeting appeared eager and enthusiastic about 
potential collaboration in many areas. 
 
¶21.  (U) The U.S. delegation approved this cable. 
 
CHRITTON