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O 221844Z APR 09
FM AMEMBASSY PANAMA
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UNCLAS PANAMA 000326 
 
SENSITIVE 
SIPDIS 
 
FROM THE AMBASSADOR FOR THE SECRETARY 
WHSC PLEASE PASS TO USTR 
 
E.O. 12958: N/A 
TAGS: ECON ETRD PREL PM
SUBJECT: ENDGAME: TORRIJOS'S BOTTOMLINE ON THE FTA 
 
1) (SBU) President Torrijos and First Vice-President Lewis 
informed me this morning that VP Lewis plans to travel to 
Washington on Monday, April 27 to bring to closure their 
efforts to get the U.S./Panama Free Trade Agreement (FTA) 
approved in the remaining two months this government has in 
office.  VP Lewis will seek meetings with President Obama's 
Chief of Staff Emanuel, National Security Advisor Jones along 
with Deputy National Security Advisor Froman and National 
Security Council Director of Western Hemisphere Affairs 
Restrepo, Speaker Pelosi, and U.S. Trade Representative Kirk. 
 
 
2) (SBU)  VP Lewis explained that the purpose of his trip is 
to define clearly what the Torrijos administration can 
deliver and to seek clarity from the USG on whether what the 
Torrijos administration can offer is sufficient to move the 
treaty to and through Congress.  Torrijos and Lewis were both 
heartened by their meetings at the Summit of the Americas, 
particularly by President Obama's comments (at the SICA 
meeting) expressing his desire to see the FTA passed during 
Torrijos's time in office. 
 
3)  (SBU) Lewis repeated the GOP's bottom line: if the 
Administration sends the FTA to Congress, President Torrijos 
will convene a lame-duck session of the National Assembly to 
use his party's majority to push through the package of labor 
reforms being finalized now in Washington, along with 
legislation to immobilize bearer shares.  Lewis said that the 
signal of partnership that would be sent by approval of the 
FTA would put the U.S. and Panama on strong footing to 
address the contentious issue of tax-information exchange 
agreements as a stand-alone issue, preferably in the 
OECD/G-20 context to avoid injecting inflammatory 
"nationalist" (read anti-U.S.) rhetoric into the discussion. 
President Torrijos was explicit that he does not have the 
political capital to tackle the anti-TIEA lobby at the same 
time he is dealing with labor issues and immobilizing bearer 
shares.  (Comment: We agree.  It is taking an enormous amount 
of political capital to stand down the bearer share lobby. 
End Comment.) 
 
4) (SBU) After VP Lewis delivers his message outlining the 
bottom line of President Torrijos, he wants to shake hands 
(ideally with Chief of Staff Emanual) on a FTA game plan for 
the United States and the Torrijos Administration.  President 
Torrijos told me that he sees two options before us.  The 
first option--Plan A--is President Obama submitting the FTA 
for Congressional ratification.  After submission to 
Congress, President Torrijos will push the labor reform 
package and legislation to immobilize bearer shares through 
the National Assembly (dominated by his party).  President 
Torrijos then expects the Congress to vote on the FTA.  If 
Plan A is not viable from the American perspective--either 
for timing reasons, or because the U.S. insists that the FTA 
be conditioned on a TIEA--then President Torrijos will put 
FTA negotiations "on ice" and end his term in office with his 
current strong relationship with the United States.  He will 
pass the FTA to the next administration and graciously lose 
what he considers a "legacy" issue. 
 
5) (SBU) Comment:  For President Torrijos and VP Lewis, whose 
fathers negotiated and signed the Panama Canal Treaties, the 
FTA represents their chance to be remembered as leaders who 
sealed the deal cementing a partnership between the U.S. and 
Panama.  Their enormous political and emotional investment 
has enabled us to put together a very attractive package: not 
only labor reforms but also effective action to address the 
bearer share issue flagged as the key deficiency both by FATF 
and our own money laundering report.  In the end, this FTA is 
not centrally about trade: while the agreement brings 
duty-free access for U.S. goods, what little Panama sells the 
U.S. already enters duty-free.  For the Torrijos 
administration, the FTA is primarily an investment in a 
partnership with the U.S.  If the price for that partnership 
is beyond what his administration can pay (i.e., a TIEA), 
President Torrijos has instructed his Vice President to focus 
first and foremost on preserving the strong relationship with 
the U.S. he hopes will be a key legacy of his administration. 
 To avoid the damage to relations that would result from the 
U.S administration making a TIEA a condition for the FTA, 
Torrijos and Lewis will sacrifice their goal of FTA passage. 
I cannot state strongly enough how beneficial it would be for 
our foreign policy interests to ratify the partnership with 
Panama under this administration so we can tackle the TIEA 
talks on the strongest possible footing with the incoming 
government, which may well take many months to get fully 
formed and operational.  End Comment. 
STEPHENSON