VZCZCXYZ0000
PP RUEHWEB

DE RUEHSJ #0835/01 2970111
ZNR UUUUU ZZH
P 230111Z OCT 08
FM AMEMBASSY SAN JOSE
TO RUEHC/SECSTATE WASHDC PRIORITY 0205
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC PRIORITY
INFO RUEHZA/WHA CENTRAL AMERICAN COLLECTIVE PRIORITY
RHEHNSC/NSC WASHDC PRIORITY
RUEHDG/AMEMBASSY SANTO DOMINGO PRIORITY 1613

UNCLAS SAN JOSE 000835 
 
SIPDIS 
 
COMMERCE FOR ITA, TDA AND SECRETARY'S OFFICE 
DEPT FOR WHA, WHA/CEN, WHA/EPSC AND EEB 
PLEASE PASS TO USTR AMALITO AND DOLIVER 
PLEASE PASS TO USDA 
PLEASE PASS TO OPIC 
PLEASE PASS TO EXIM 
PLEASE PASS TO TDA 
 
E.O. 12958: N/A 
TAGS: EAGR ECON ETRD OVIP PGOV PINR PREL CS
SUBJECT: SECRETARY GUTIERREZ PROMOTES TRADE, HIGH TECH, AND PRODUCE 
IN COSTA RICA 
 
REF: A) SAN JOSE 823 (NOTAL), B) SAN JOSE 827 
 
¶1.  SUMMARY: Commerce Secretary Carlos Gutierrez visited Costa Rica 
for two days of governmental and business meetings, September 
30-October 1.  The Secretary's business meetings focused on trade 
and business related to American enterprise in Costa Rica.  In 
addition to offering encouraging words to key Costa Rican chambers 
on CAFTA implementation, the Secretary and senior officials from 
OPIC, Ex-Im, and the U.S. Trade & Development Agency (TDA) proposed 
to assist Costa Rica "to turn CAFTA into business" by aggressively 
pursuing ways to promote USG agency cooperation with the regions' 
businesses and chambers.  The Secretary saw first-hand the tangible 
and intangible benefits of trade:  at Intel, company officials, 
teachers, and students described Intel's commitment to technology 
education in Costa Rica; at Hortifruti (a subsidiary of Wal-Mart 
Central America), company officials discussed the merits of the 
Tierra Fertil program which raises the quality, marketing, and 
operating standards of small farmers through training and provides 
access to credit.  The Secretary's governmental meetings are 
reported in Reftels.  The Secretary's staff cleared this message. 
END SUMMARY. 
 
BUSINESS MEETINGS HIGHLIGHT IMPORTANCE OF FDI 
--------------------------------------------- 
 
¶2.  The Secretary and key members of his delegation convened with 
CINDE, a private, not-for-profit foreign direct investment (FDI) 
promotion agency (supported by fundraising and a USAID endowment). 
CINDE Executive Director Gabriela Llobet presented CINDE's strategic 
approach to attracting FDI.  By stressing Costa Rica's educated but 
cost-competitive work force, transparency (ranked third in LatAm, 
according to Transparency International's 2008 Corruption 
Perceptions Index), free trade zone program, and proximate location 
relative to North America, CINDE targets three types of FDI:  (1) 
advanced manufacturing (from car parts to INTEL's microchip 
production), (2) medical equipment and supplies, and (3) 
professional services.  Llobet highlighted recent results:  FDI grew 
from just over USD 600 million in 2002 to USD 1.884 million in 2007, 
a threefold increase in five years. 
 
¶3. The Secretary praised CINDE's strategic direction and commented 
that it is clear that FDI is used to establish a platform for 
export.  When asked about Costa Rica's relatively low ranking in the 
World Bank's "Doing Business" survey (115th of 178), Llobet noted 
that the study does not favor Costa Rica, as the business 
environment suffers from red tape.  Nonetheless, the GOCR's Free 
Trade Zone regime, she added, provides an expedited set of 
regulatory processes which is attractive to FDI investors. 
 
¶4.  President and CEO Robert Mosbacher, Jr., of OPIC, outlined his 
agency's commitment to providing access to credit and facilitating 
more investment.  First Vice President and Vice Chair Linda Conlin 
of Ex-Im Bank targeted the strengthening of Costa Rica's renewable 
energy capacity as an area of Ex-Im involvement. 
 
AMCHAM BOARD AIRS CAFTA FRUSTRATION 
----------------------------------- 
 
¶5.  Attending a special AmCham board meeting, the Secretary heard 
first hand from private sector representatives of their deep concern 
over Costa Rica's long-running CAFTA-DR saga.  Led by board 
President Michael Borg, the Secretary heard a collective anxiety 
over the re-energized PAC opposition party.  This framed a 
discussion largely colored by "CAFTA fatigue" as AmCham members 
described their efforts to push CAFTA to the finish line and 
requested help from the USG.  The Secretary inquired about the 
status of implementing legislation and the GOCR's and AmCham's plan 
to push CAFTA to completion.  He urged the Board and its members to 
continue the fight by talking to employees and helping them 
understand how the agreement is vital to Costa Rica. 
 
¶6.  When asked how to respond to charges that free trade agreements 
"only benefit the wealthy," the Secretary commented that the same 
argument was raised (and overcome) in the other CAFTA countries.  It 
is a question of organizational and public relations strategy, he 
said; "There is nothing like grassroots pressure".  If the worker 
becomes informed and realizes that his job depends on the agreement, 
then action will follow.  The Secretary emphasized the need to tell 
CAFTA success stories and encouraged AmCham members to work together 
as a coalition of traders.  Some members expressed reluctance to be 
"public" in their support of CAFTA, for fear of being targeted by 
 
the opposition.  In response, the Secretary urged businesses "to get 
up and fight." 
 
PROPOSED COOPERATIVE PROGRAM WITH CHAMBERS 
------------------------------------------ 
 
¶7.  The Secretary plus OPIC's Mosbacher, Ex-Im's Conlin, TDA 
Director Larry Walther and Commerce DAS Walter Bastian met with 
representatives of several Costa Rican chambers on two different 
occasions.  The first, chaired by Foreign Trade Minister Marco 
Vinicio Ruiz, worked to familiarize key Costa Rican chambers with 
the capabilities of Commerce, OPIC, Ex-Im, and TDA.  The second 
focused on developing issues for cooperation between the USG and the 
Costa Rican chambers.  Notable attendees included Oscar Cabada, 
President of Chamber of Commerce, and Rodolfo Molina, President of 
the Chamber of Textiles. 
 
¶8.  At the second meeting, Bastian summarized that "what we have on 
the US side around this table is people who can turn CAFTA into 
business."  After dialogue on how the chambers supported CAFTA, the 
topic turned to next steps after CAFTA implementation.  The 
participants agreed to aggressively pursue ways to promote USG 
agency cooperation with the region's businesses.  A video conference 
was proposed for the near future and other steps will follow. 
 
CAFTA EQUALS PREDICTABILITY (AND INVESTMENT) 
-------------------------------------------- 
 
¶9.  At a lunch hosted by AmCham, the Secretary delivered his keynote 
speech for the Costa Rican segment of the trip.  The Secretary 
emphasized three themes:  (1) CAFTA supporters should not let down, 
but continue the fight for the completion of CAFTA implementation in 
Costa Rica; (2) "capital is a coward" (particularly in the current 
unsettled financial environment) and will seek, in the form of FDI, 
destinations with predictable laws on market access, safeguards, 
rules of origin, remedies and arbitration, procurement, intellectual 
property, etc., as defined by USG trade agreements; and (3) a 
commitment to opportunity and prosperity depends on economic growth 
which is a direct result of flourishing trade (as NAFTA 
demonstrated). 
 
¶10.  A question from the audience regarding how the next USG 
administration "might give Costa Rica a better deal" was met with a 
straightforward observation by the Secretary:  When an agreement is 
opened up, both sides can demand changes, and this might not result 
in the "better deal" envisioned by one side or the other. 
 
AN INTEL HIGH TECH MOMENT 
------------------------- 
 
¶11.  Intel arrived in Costa Rica in 1998 to build what is still its 
only microchip manufacturing facility in Latin America, at a cost of 
USD 800 million, six times its initial commitment of USD 115 
million.  Intel accounts for 20 percent of the value of Costa Rican 
exports (Source: COMEX, Central Bank of Costa Rica).  Site manager 
Mike Forrest welcomed the Secretary to Intel's plant outside of San 
Jose and provided a background briefing.  The program then focused 
on Intel's efforts to provide a modern educational experience for 
Costa Rican students. 
 
¶12.  Intel provides training programs in technology for teachers and 
students, scholarships for graduate students in engineering, 
affordable PCs, and facilitates internet connectivity in schools. 
By using computers and the internet to research and create projects 
for the classroom, Intel's programs have increased the interest of 
local children in learning.  Two fifth-grade students presented the 
results of their projects to the Secretary, illustrating how Intel's 
involvement in the classroom supports its broader strategy of 
creating a labor force that is prepared to work in the technology 
industry, while concurrently creating a more tech-savvy populace 
that would eventually buy the computers that incorporate Intel's 
products. 
 
AGRICULTURAL COOPERATIVES BENEFIT SMALL PRODUCERS 
--------------------------------------------- ---- 
 
¶13.  The Secretary then visited Hortifruti, a cooperative program 
devoted to agricultural development, storage, and marketing of 
fruits, vegetables, and grains.  Wal-Mart of Central America 
operates a regional agro-industrial program which includes 
Hortifruti.  Wal-Mart Vice Presidents Carlos Uribe and Jose Manuel 
 
Rodriguez greeted the Secretary and provided a presentation on key 
elements of the Central American agricultural sector, which included 
producer size (small, traditional subsistence farmers), market 
access (isolation and logistical problems), and credit (lack of 
access). 
 
¶14.  Through training on growing techniques and what to grow for 
retail marketing distribution, Hortifruti's Tierra Fertil program 
improves the lives of small farmers.  The training links product 
quality to payment as the Hortifruti program guarantees to farmers 
on-time payment for produce that meets established quality 
standards.  A regular payment allows farmers to re-invest in 
diversifying their crops and thus gradually improve farm operation 
efficiencies and quality standards.  Through Hortifruti, 2,500 
producers in Costa Rica now have access to markets throughout 
Central America and to some extent in Europe, as well.  Tierra 
Fertil operates in five countries (Guatemala, El Salvador, Honduras, 
Nicaragua, and Costa Rica), produces more than 243 products, and 
involves more than 10,000 families.