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### Viewing cable 08SANJOSE745, SUPREME COURT RULING DELAYS CAFTA IMPLEMENTATION

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Reference ID | Created | Released | Classification | Origin
--- | --- | --- | --- | ---
08SANJOSE745 | 2008-09-12 23:11 | 2011-03-02 16:04 | UNCLASSIFIED//FOR OFFICIAL USE ONLY | Embassy San Jose
Appears in these articles: http://www.nacion.com/2011-03-02/Investigacion.aspx

`

    VZCZCXYZ0000
    OO RUEHWEB

    DE RUEHSJ #0745/01 2562349
    ZNR UUUUU ZZH
    O 122349Z SEP 08
    FM AMEMBASSY SAN JOSE
    TO RUEHC/SECSTATE WASHDC IMMEDIATE 0103
    INFO RUEHZA/WHA CENTRAL AMERICAN COLLECTIVE PRIORITY
    RUEHDG/AMEMBASSY SANTO DOMINGO PRIORITY 1594
    RHEHNSC/NSC WASHDC PRIORITY

` `

    UNCLAS SAN JOSE 000745

    SENSITIVE
    SIPDIS

    DEPT FOR WHA, WHA/CEN, WHA/EPSC AND EEB; PLEASE PASS TO
    USTR:AMALITO AND DOLIVER

    E.O. 12958: N/A
    TAGS: CS ECON ETRD PGOV PINR PREL
    SUBJECT: SUPREME COURT RULING DELAYS CAFTA IMPLEMENTATION
    PAST OCTOBER 1

    REF: SAN JOSE 634 AND PREVIOUS

    ¶1.  (SBU) SUMMARY:  The Costa Rican Supreme Court has thrown
    up one more obstacle to CAFTA, ruling that one section of the
    final CAFTA implementation bill (on IPR and biodiversity
    issues) was unconstitutional.  The Constitutional Chamber
    (Sala IV) held that the GOCR should have consulted with Costa
    Rica,s indigenous communities, in compliance with the ILO
    Convention 169, about CAFTA-generated changes in the existing
    biodiversity law that could affect those communities.  The
    Sala IV,s action shocked the GOCR, pro-CAFTA legislators and
    the private sector.  While a definitive prognosis awaits
    publication of the full Sala ruling (expected on September
    16), VP Chinchilla told is September 12 that meeting the
    October 1 EIF deadline was now completely out of the
    question, even under the best case scenario.  She said the
    GOCR will need another 1-3 months to correct and re-approve
    the IPR bill.  Chinchilla and COMEX VM Pacheco did not ask us
    explicitly for an EIF extension (nor did we even hint at
    one), but they made clear that the GOCR was already laying
    the groundwork, and had received positive signals thus far
    from other CAFTA members.  They also stressed that the Arias
    administration, its pro-CAFTA allies in the legislature and
    the private sector had been re-galvanized into action by the
    Sala ruling, and were determined to wrap up this law and all
    the pending technical issues as quickly as possible.  COMEX
    Minister Ruiz is to call DUSTR Vereneau on September 15 to
    discuss the issue.  END SUMMARY.

    -------------------------
    Sala Surprise Attack
    -------------------------

    ¶2.  (U) On September 11, the Sala IV (Constitutional Court)
    ruled 4-3 that one section of the final CAFTA implementation
    bill (on IPR and biodiversity issues) was unconstitutional.
    The majority opinion, written by Supreme Court President Luis
    Paulino Mora, held that the GOCR should have consulted with
    Costa Rica,s indigenous communities, in compliance with the
    ILO Convention 169, about CAFTA-generated changes in the
    existing biodiversity law that could affect those
    communities.  The Sala also ruled that proposed changes in
    the law had not been publicized adequately.  Details on the
    Sala,s decision are pending release of the full ruling,
    expected on September 16.

    ¶3.  (U) NOTE:  The relevant portion of Article 6 of the 1989
    ILO convention, which is also known as the Indigenous and
    Tribal Peoples Convention, states that "governments shall
    consult the peoples concerned, through appropriate procedures
    and in particular through their representative institutions,
    whenever consideration is given to legislative or
    administrative measures which may affect them directly."
    This issue had not been raised in the Sala IV,s majority
    opinions on other CAFTA legislation.  END NOTE.

    ¶4.  (SBU) The Sala IV,s action shocked the GOCR, pro-CAFTA
    legislators and the private sector, and generated a series of
    emergency meetings convened by VP Laura Chinchilla (acting
    for President Arias who was still in Europe).  In an evening
    press conference, a stunned-looking Chinchilla indicated that
    the GOCR respected the Court,s decision, but now doubted
    that Costa Rica could implement CAFTA in time for the October
    1 entry-into-force deadline.   She added that she would
    "explore the possibility" of extending the deadline in a
    meeting with the Embassy on September 12.   The press
    conference was followed by media releases on September 11 and
    12 noting that the Sala,s decision placed full
    implementation by October 1 in jeopardy, but underscoring the
    GOCR,s determination to do all it could do to complete CAFTA
    as quickly as possible.

    -------------------------------------------
    GOCR Will Not Make the Deadline
     ------------------------------------------

    ¶5.  (SBU) Meeting with the DCM and Emboffs on September 12,
    Chinchilla and COMEX Vice Minister Amparo Pacheco reiterated
    that they had no advance notice of the somewhat puzzling Sala
    IV decision.  The good news:  the Court had found only
    procedural problems, which were less difficult to correct.
    Court President Mora himself had assured Chinchilla that the
    correction process should be "manageable".  The bad news:
    meeting the October 1 EIF deadline was now completely out of
    the question, even under the best case scenario.  Chinchilla
    (who had been in contact with President Arias, COMEX Minister

    Ruiz and the other senior officials traveling in Europe)
    predicted it would take "another 1-3 months" to address the
    problems identified by the Court.

    ¶6.  (SBU) According to Chinchilla, in the best case scenario,
    the Sala would provide its full ruling to the legislature
    ASAP; she had asked the Court to do so by September 16.  The
    Constitutional Consultation Committee would then take action,
    hopefully agreeing to strip out the problematic text and
    sending the modified bill for approval by a plenary vote.
    Given debate rules and the possibility of majority and
    minority reports issued by the committee, even this "fast"
    scenario could take a few weeks, and Chinchilla stressed that
    any changes to the law would have to be accepted by USTR as
    well.  She added that the highly legalistic pro-CAFTA
    Libertarian Movement (ML) party could be as problematic in
    thi scenario as the PAC-led opposition.

    ¶7.  (SBU) n a worst case scenario, the law might have to be
    more extensively modified, which would take more tme, and/or
    the opposition might press for anothe 30-day Sala IV review.
     If indigenous consultatons could not be handled in parallel
    (and separaely from the CAFTA bill itself), then additionaltime would be required before the bill was complete.  If
    comprehensive community-by-community consutations were
    required, the GOCR could find itsel holding the equivalent
    of a "mini-referendum" o CAFTA with the indigenous people.
    The GOCR wantd to avoid this at all costs: such a lengthy
    dela could invite new attacks from the small, but stil
    vocal, anti-CAFTA minority.  Chinchilla and Paceco seemed
    reasonably confident, however, that tis "worse-worst" case
    option would not be needed, pending analysis of the Sala
    IV,s full ruling.

    --------------------------------------------- --------
    Laying Groundwork for a Second Extension
    --------------------------------------------- -------

    ¶8.  (SBU) Chinchilla and Pacheco did not ask us explicitly
    for an EIF extension (nor did we even hint at one), but they
    made clear that the GOCR was already laying the groundwork.
    Minister Ruiz and the Costa Rican Embassy in Washington had
    begun informal consultations with the other CAFTA members.
    The signals about a later entry for Costa Rica were positive
    thus far, according to Pacheco.   Echoing the earlier media
    releases, Chinchilla and Pacheco made clear that the Arias
    administration, its pro-CAFTA allies in the legislature and
    the private sector had been re-galvanized into action by the
    Sala ruling, and were determined to make the required
    corrections to this last law, plus resolve the pending
    technical issues on IPR, insurance and telecom, as quickly as
    possible.  Chinchilla acknowledged that "everything" had to
    be completed before CAFTA could enter into force for Costa
    Rica.   She added that Minister Ruiz would call DUSTR
    Vereneau on September 15 to discuss these issues further.

    ---------------
    COMMENT
    ---------------

    ¶9.  (SBU) This ruling was clearly a surprising blow to the
    GOCR, which as recently as September 10 had been laying out a
    (very optimistic) timetable to complete all legislation and
    regulations by September 23.  But, there are some silver
    linings. The pro-CAFTA forces are energized and believe they
    can bring this to resolution.  The GOCR is doing its own
    heavy lifting to prepare the other CAFTA partners to permit
    later EIF by Costa Rica.  Under these circumstances, although
    they are not ideal, we recommend that President Arias be
    included in the September 24 AGP summit as planned.   Being
    in a room full of counterparts who have long since completed
    their FTAs with the United States, and hearing a strong
    pro-trade message from POTUS can only help.

    ¶10. (SBU) Later, we (and the Arias administration, no doubt)
    will examine more closely why the Sala made this decision,
    and why President Mora (who acknowledged to the Ambassador
    recently the need to get CAFTA done) authored it.
    Interestingly, Sala IV President Ana Virginia Calzada, a
    biodiversity expert who had ruled (in the minority) against
    some of the earlier CAFTA bills, and who was judged most
    likely of all the magistrates to have voted no on this bill,
    ruled in favor this time.   Finally, for those keeping score,
    the legislature approved one additional bill since our last
    report (Reftel), bringing the total approved to 12, with nine
    of those actually signed into law.

    CIANCHETTE

`