STEEL: ITALY ON UPCOMING OECD HIGH-LEVEL STEEL

UNCLAS ROME 005982 SIPDIS SENSITIVE STATE PASS USTR GENEVA FOR USTR E.O. 12958: N/A TAGS: EIND ETRD IT EUN SUBJECT: STEEL: ITALY ON UPCOMING OECD HIGH-LEVEL STEEL MEETING UNCLASSIFIED PAGE 02 ROME 05982 131606Z REF: SECSTATE 252310 ¶1. (U) ON DECEMBER 13, 2002 ECONOFF SPOKE WITH GIUSEPPE LORENZINI, OFFICE III DIRECTOR, DIRECTORATE GENERAL FOR COMMERCIAL AGREEMENTS, MINISTRY OF PRODUCTIVE ACTIVITIES (WHICH INCLUDES THE FOREIGN TRADE SUB-MINISTRY). OFFICE III HAS THE GOI LEAD ON THE ISSUE OF STEEL RESTRUCTURING. ¶2. (SBU) LORENZINI TOLD US THAT ITALY, LIKE THE EU, WAS GENERALLY IN AGREEMENT WITH THE U.S. ON THE NEED TO ADDRESS SUBSIDIES (LORENZINI WAS IN BRUSSELS EARLIER THIS WEEK TO COORDINATE THE EU POSITION IN ADVANCE OF NEXT WEEK,S OECD MEETINGS). HOWEVER, FOLLOWING THE EU LINE, HE TOLD US HE DID NOT BELIEVE PROGRESS IN THE TALKS ON REDUCING OR ELIMINATING SUBSIDIES COULD BE ACHIEVED WITHOUT ADDRESSING OTHER ISSUES, PARTICULARLY TRADE REMEDIES. LORENZINI NOTED ITALY'S CONCERN THAT MORE ATTENTION SHOULD BE PAID TO REGIONAL AND LOCAL SUBSIDIES, IN ADDITION TO THOSE AT THE NATIONAL LEVEL. IN TERMS OF REDUCING CAPACITY, ITALY AGREES WITH THE GOAL, BUT POLITICAL REALITIES MAKE THE GOI PARTICULARLY EAGER FOR THE DEVELOPMENT OF A MECHANISM TO PROVIDE FINANCIAL INCENTIVES FOR CLOSING UNECONOMICAL FACILITIES (THOUGH LIKE MANY OF ITS FELLOW EU MEMBERS, GOVERNMENT BUDGET CONSTRAINTS WOULD INHIBIT ANY POTENTIAL GOI-FUNDED INITIATIVES). ¶3. (SBU) THE GOI FORESEES THE OECD REMAINING THE "HOME" OF STEEL TALKS INTO 2003, DESPITE THE EU'S HOPE TO HAVE THE DECEMBER HLG MEETING THE LAST OF ITS KIND WITHIN THE OECD. LORENZINI WAS CAUTIOUSLY OPTIMISTIC THAT AGREEMENT (PERHAPS INFORMALLY) TO SOME SORT OF PROPOSAL ON STEEL SUBSIDIES COULD UNCLASSIFIED PAGE 03 ROME 05982 131606Z BE DEVELOPED IN THE FIRST TWO MONTHS OF 2003, TO SUBSEQUENTLY BE INCORPORATED INTO WTO NEGOTIATIONS BEFORE THE CANCUN MINISTERIAL. ¶4. (U) REFTEL POINTS WERE ALSO CONVEYED, ON DECEMBER 11, TO THE MFA,S DG FOR ECONOMIC COOPERATION, OFFICE OF MULTILATERAL ECONOMIC COOPERATION. SEMBLER UNCLASSIFIED > 2002ROME05982 - Classification: UNCLASSIFIED