STEEL 201: ITALY NOT EXERCIZED

UNCLAS ROME 001853

SIPDIS

SENSITIVE

EB/TPP/BTA/DCT FOR WMOORE
NSC FOR JCLOUD/MLATIMER/PQUANRUD
DOC/ITA/TD/SCLAEYS
PASS USTR FOR FLISER/CNOVELLI

UNCLASSIFIED

PAGE 02 ROME 01853 121621Z
E.O. 12958: N/A
TAGS: ETRD IT EUN
SUBJECT: STEEL 201: ITALY NOT EXERCIZED

REF: STATE 65823


1. (SBU) SUMMARY. THE GOI CONTINUES TO SPEAK WITH RESTRAINT
ABOUT USG STEEL SAFEGUARDS -- DEFENDING LIMITED EU RESPONSIVE
SAFEGUARDS AND LOOKING TO BRUSSELS FOR A LEGAL OPINION ON THE
WTO-CONSISTENCY OF RETALIATION BUT AT THE SAME TIME CALLING
FOR AVOIDANCE OF A PROTECTIONIST SPIRAL AND FOREGOING
STRIDENT RHETORIC. ITALIAN INDUSTRY IS WATCHFUL BUT IS NOT
PUSHING THE GOI TO ACT. THE PRESS DOESN'T TREAT STEEL AS A
MAJOR STORY. END SUMMARY.


2. (SBU) ITALIAN DEPUTY MINISTER FOR FOREIGN TRADE ADOLFO
URSO SET THE TONE OF GOI REACTION TO USG STEEL SAFEGUARDS
SHORTLY AFTER THEIR IMPLEMENTATION WHEN HE SAID THE EUROPEAN
STEEL GLUT HAD BEEN CAUSED IN GOOD MEASURE BY THE "INDULGENT"
EU MARKET ACCESS CONCESSIONS EXTENDED TO EU CANDIDATE STATES.
IN APRIL 9 PRESS COMMENTS, URSO DEFENDED EU STEEL SAFEGUARDS
BUT CONTINUED TO URGE RESTRAINT, SAYING, "THE MEASURES
ADOPTED BY THE EUROPEAN COMMISSION ARE NECESSARY, PRECISELY
TO FORCE THE UNITED STATES TO GO FOR THE POLITICAL SOLUTION
WE HAVE ALWAYS ADVOCATED AND PURSUED...BUT A PROTECTIONIST
SPIRAL MUST AT ALL COSTS BE PREVENTED (TO AVOID JEOPARDIZING)
THE NEGOTIATING ROUND SET IN MOTION IN DOHA AND THE MEASURES
TAKEN TO PROMOTE GROWTH IN THE DEVELOPING COUNTRIES."


3. (SBU) GIVING DEFINITION TO URSO'S DEFENSE OF THE EU
SAFEGUARDS, SANDRO FANELLA, COMMON COMMERCIAL POLICY OFFICE
UNCLASSIFIED

PAGE 03 ROME 01853 121621Z
DIRECTOR AT THE DEPUTY MINISTRY FOR FOREIGN TRADE, TOLD
ECONOFF ON APRIL 11 THAT THE SAFEGUARDS WOULD BE ACTIVATED
ONLY FOR CATEGORIES OF STEEL FOR WHICH IMPORTS INCREASE IN
2002 TO LEVELS HIGHER THAN TEN PERCENT OF THE 1999-2001
YEARLY AVERAGE. DEFLECTING REFTEL'S CRITICISM OF EU
SAFEGUARDS AS UNSUPPORTED BY AN INJURY DETERMINATION OR
IMPORT SURGE, FANELLA EXPLAINED THAT THE EU MEASURES HAD, IN
THIS MANNER, A BUILT-IN SURGE SENSOR. ECONOFF REPLIED THAT
THE SYSTEM AS DESCRIBED NEVERTHELESS APPEARS TO PRESUME
INJURY RATHER THAN ADJUDICATING THE QUESTION.


4. (SBU) FANELLA WAS LESS EXPANSIVE ON POSSIBLE EU
RETALIATION, SAYING HE IS AWAITING THE EU LEGAL OPINION OF
THE SAFEGUARDS AGREEMENT. HE SAID HIS MINISTRY IS NOT
SEPARATELY STUDYING THE AGREEMENT ON THE ARTICLES 8.2 AND 8.3
ISSUE. MORE GENERALLY, HE ALLEGED THAT THE USG "STARTED ALL
THIS" WITH UNILATERAL ACTION AND, IN HIS VIEW, IS NOT
WELL-POSITIONED TO BE COMPLAINING ABOUT COUNTERACTIONS. TO
ECONOFF'S REFTEL DEFENSE OF USG SAFEGUARDS AS SUPPORTED BY
THE FINDINGS OF A NINE-MONTH ADJUDICATION, FANELLA SCOFFED
THAT THE U.S. FINDINGS ON INJURY WERE "IMAGINATIVE."


5. (SBU) FANELLA SAID HIS MINISTRY HAS NOT BEEN BESIEGED BY
ITALIAN INDUSTRY ABOUT THE U.S. SAFEGUARDS. INDUSTRY, HE
SAID, IS LOOKING CLOSELY FOR ANY SIGN OF A STEEL IMPORT SURGE
REFLECTING DIVERSION OF STEEL FROM THE U.S. MARKET BUT IS NOT
PUSHING THE GOI TO ADVOCATE RETALIATION WITHIN THE EU.
ECONOFF REPEATED REFTEL DEMARCHE AT THE MFA AND AT THE
MINISTRY OF PRODUCTIVE ACTIVITIES (NOW THE PARENT MINISTRY TO
THE DEPUTY MINISTRY FOR FOREIGN TRADE) WHERE GOI OFFICIALS
CONFIRMED THAT INDUSTRY IS WATCHING BUT NOT LOBBYING FOR A
UNCLASSIFIED

PAGE 04 ROME 01853 121621Z
PARTICULAR GOI COURSE. THE ITALIAN PRESS CARRIES U.S. AND EU
STEEL DEVELOPMENTS, BUT THE STORY IS NOW USUALLY RELEGATED TO
INTERIOR PAGES.
SEMBLER

UNCLASSIFIED

>
2002ROME01853 - Classification: UNCLASSIFIED