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### Viewing cable 08QUITO1128, LAUNCH OF U.S.-ECUADOR BILATERAL DIALOGUE

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Reference ID | Created | Released | Classification | Origin
--- | --- | --- | --- | ---
08QUITO1128 | 2008-12-08 16:45 | 2011-05-02 00:00 | UNCLASSIFIED//FOR OFFICIAL USE ONLY | Embassy Quito

`

    VZCZCXYZ0014
    PP RUEHWEB

    DE RUEHQT #1128/01 3431645
    ZNR UUUUU ZZH
    P 081645Z DEC 08
    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

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