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C O N F I D E N T I A L QUITO 000400 
 
SIPDIS 
 
USTR FOR BENNETT HARMAN 
USDOC 4332/MGAISFORD 
 
E.O. 12958: DECL: 06/02/2019 
TAGS: ETRD ECON EC
SUBJECT:  ECUADORIAN GOVERNMENT SPLIT ON CAN-EU TALKS 
 
REFTEL A: Quito 390 
       B: 08 Quito 1...



id: 209577
date: 6/1/2009 21:33
refid: 09QUITO400
origin: Embassy Quito
classification: CONFIDENTIAL
destination: 08QUITO1126|09QUITO390
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C O N F I D E N T I A L QUITO 000400 
 
SIPDIS 
 
USTR FOR BENNETT HARMAN 
USDOC 4332/MGAISFORD 
 
E.O. 12958: DECL: 06/02/2019 
TAGS: ETRD ECON EC
SUBJECT:  ECUADORIAN GOVERNMENT SPLIT ON CAN-EU TALKS 
 
REFTEL A: Quito 390 
       B: 08 Quito 1126 
 
Classified by:  Ambassador Heather Hodges, Reasons 1.4 (b) and (d). 
 
¶1.  (C) Summary.  Ecuador's trade talks with the European Union have 
stalled.  The GOE says it needs modifications so the agreement will 
comply with its new constitution, but trade officials say the Cabinet 
is split on supporting an agreement and is waiting for the President 
to make a decision.  End Summary. 
 
¶2.  (C) When trade talks between the Andean Community (CAN) bloc and 
the European Union (EU) broke up in November 2008, Ecuador decided to 
follow the lead of Colombia and Peru and negotiate bilaterally with 
the EU (reftel b).  Since then, the GOE has participated in and made 
progress in negotiating rounds, along with its neighbors.  Now, 
however, Ecuador's talks have stalled.  The country has said that it 
does not expect to complete negotiations until the end of the year, 
although Colombia and Peru are aiming to wrap up talks this summer. 
The GOE has claimed it needs modifications to the agreement to comply 
with Ecuador's new constitution. 
 
¶3.  (C) Econoff met with the MFA's Cristian Espinosa (Assistant to 
the Vice Minister for Trade) and Mireya Munoz (Director for 
International Trade) May 15.  They noted that the negotiations were 
at a standstill.  Although only a few issues remained, a political 
push was needed to close the talks.  They believed that the remaining 
issues could be resolved to Ecuador's satisfaction, including 
bananas, on which Espinosa thought they could reach agreement (he 
said that the current EU offer on bananas was "much better, but still 
not good enough"). 
 
¶4.  (C) Espinosa said that President Correa would decide whether and 
how to go forward.  He speculated about whose advice the President 
would take in regard to the EU agreement.  Within the GOE, he noted 
that Foreign Minister Falconi and Coordinating Minister for Economic 
Policy Borja both oppose the trade agreement with the EU, while 
Production Minister Susana Cabeza de Vaca supported it (note: she has 
since resigned her position).  Minister Cely, who will take over as 
Production Minister, would likely support the agreement, Espinosa 
said. 
 
¶5.  (C) Another problem in the talks was the status of the 
non-commercial portions of the agreement.  Initially, the EU proposed 
three pillars to the agreement - commercial, political dialogue, and 
cooperation (assistance).  However, once negotiations en bloc broke 
up last November, the EU claimed it did not have the authority to 
negotiate the non-commercial pillars bilaterally (its mandate only 
allowed for regional negotiation of these areas).  Espinosa was 
concerned that without these non-commercial additions to make the 
agreement more than solely trade, Correa would not support an 
agreement with the EU (in his May 23 radio address, Correa blasted 
the agreement for becoming too commercial and too much like a free 
trade agreement). 
 
¶6.  (C) On May 20, the Foreign Ministry's new Under Secretary for 
Trade told us that the GOE plans to present modified proposals for 
cooperation and political dialogue to the EU.  She implied that 
Ecuador might also seek certain provisions in the commercial 
agreement to incorporate "sovereignty."  On May 29, the EU Mission 
Charge told us that Ecuador had suggested renaming the accord a 
"trade agreement for development," and that the EU was considering 
(at Ecuador's request) including a cooperation article in the 
commercial agreement and an MOU on political dialogue on the side. 
The EU was waiting to see Ecuador's proposals for these, but the 
Charge implied that the EU would not be open to significant changes 
to its standard language. 
 
¶7.  (C) Comment:  The argument that Ecuador must delay talks in order 
to negotiate modifications to comply with its new constitution may in 
part be a stalling tactic until there is clearer guidance within the 
GOE on whether Ecuador will move forward with a trade agreement with 
the EU.  The key cabinet players are split and as usual are deferring 
any real decision to President Correa.  Even if Correa approves the 
idea of proceeding with a trade agreement, presumably dressed up with 
some sort of political/cooperation cover, it is not clear if the EU 
will be willing to negotiate under the terms and limitations that 
Ecuador may seek.  At the same time, the GOE has been hinting about 
adjusting its commercial relationship with the U.S. (reftel a).  The 
approach it is taking with the EU is likely an indication of what the 
GOE will request of the U.S. 
 
HODGES 

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