ITALY SEEKS STRONGER TRADE ROLE IN 2003

C O N F I D E N T I A L SECTION 01 OF 03 ROME 000028 SIPDIS STATE PASS USTR FOR SANFORD, BURCKY GENEVA FOR USTR E.O. 12958: DECL: 01/07/2008 CONFIDENTIAL PAGE 02 ROME 00028 01 OF 03 071023Z TAGS: ETRD IT IT IT EUN WTOETRD EUN WTOETRD EUN WTO SUBJECT: ITALY SEEKS STRONGER TRADE ROLE IN 2003 REF: A. (A) 02 STATE 257729 ¶B. (B) 02 ROME 6137 CLASSIFIED BY: ECONOMIC MINISTER-COUNSELOR SCOTT KILNER FOR REASONS 1.5 (B)(D) 1.(C) SUMMARY. SENIOR ITALIAN TRADE OFFICIALS FORESEE A STRONGER ITALIAN VOICE ON EU TRADE ISSUES IN 2003, DUE IN LARGE PART TO ITALY'S UPCOMING ITALIAN EU PRESIDENCY, DURING WHICH THE WTO CANCUN MINISTERIAL WILL FALL. GEOGRAPHIC INDICATORS REMAIN AN ISSUE OF KEY CONCERN, WHICH THE GOI MAY ATTEMPT TO LINK WITH PROGRESS ON AGRICULTURAL BIOTECHNOLOGY. THE GOI IS GENERALLY PLEASED WITH THE EU,S WTO AGRICULTURAL PROPOSAL; U.S. PROPOSALS ON BOTH AGRICULTURAL AND NON-AGRICULTURAL TRADE ARE SEEN AS INTELLECTUALLY DEFENSIBLE BUT POLITICALLY QUESTIONABLE. FOREIGN TRADE VICE MINISTER ADOLFO URSO WILL LIKELY RAISE THESE ISSUES WITH USTR ROBERT ZOELLICK IN FEBRUARY, AND MAY ALSO PROFFER AN INVITATION TO A TRADE MINI-MINISTERIAL IN ITALY IN LATE SPRING. END SUMMARY. ¶2. (SBU) ITALIAN FOREIGN TRADE OFFICIALS MET WITH ECMIN AND ECONOFFS OVER LUNCH DECEMBER 20 TO DISCUSS CURRENT WTO AND U.S.-EU TRADE ISSUES AND TO PREVIEW ITALIAN TRADE PRIORITIES IN 2003. OUR GUESTS FROM THE MINISTRY OF PRODUCTIVE ACTIVITIES, VICE MINISTRY FOR FOREIGN TRADE INCLUDED NEWLY-APPOINTED DIRECTOR GENERAL FOR TRADE AGREEMENTS AMEDEO TETI; MARIO COSPITO, DIPLOMATIC ADVISOR TO TRADE VICE MINISTER ADOLFO URSO; AND SANDRO FANELLA, DIRECTOR FOR THE CONFIDENTIAL PAGE 03 ROME 00028 01 OF 03 071023Z MINISTRY,S OFFICE OF WTO AFFAIRS. ITALY,S EU PRESIDENCY AND THE CANCUN MINISTERIAL -------------- --- ¶3. (SBU) TETI, WHO JUST RETURNED FROM A TWO-YEAR POSTING TO ITALY,S MISSION IN GENEVA, AND COSPITO INITIATED THE DISCUSSION BY NOTING THAT THE GOI INTENDS TO EXERT MORE INFLUENCE ON EU TRADE POLICIES DURING ITALY,S EU PRESIDENCY IN THE SECOND HALF OF 2003. THE GOI BELIEVES SUCH INFLUENCE WILL BE AMPLIFIED BY THE COINCIDENCE OF SEPTEMBER,S WTO MINISTERIAL IN CANCUN. A FORMAL AGENDA OF ITALIAN PRIORITIES FOR ITS EU PRESIDENCY IS EXPECTED TO INCLUDE SUCCESSFUL CONCLUSION OF THE CANCUN GATHERING. AS A PRECURSOR TO CANCUN, THE GOI IS MAKING TENTATIVE PLANS TO HOST A TRADE MINI-MINISTERIAL IN LATE SPRING 2003 (SEE PARAGRAPH 10). ITALY WILL ALSO STRIVE TO ADVANCE THE BARCELONA PROCESS, AND HOPING TO WORK WITH GREECE DURING ITS EU PRESIDENCY TO ACHIEVE CRITICAL MOMENTUM ON MEDITERRANEAN COOPERATION IN 2003, BEFORE THE SUBSEQUENT EU PRESIDENCIES OF SEVERAL NORTHERN EU COUNTRIES. U.S.-EU TRADE DISPUTES: ITALY HOPES FOR PROGRESS -------------- -------------- ¶4. (SBU) FANELLA EMPHASIZED THAT THE GOI HOPES FOR PROGRESS, IF NOT RESOLUTION, ON KEY U.S.-EU TRADE DISPUTES IN THE FIRST HALF OF 2003. DESPITE ITS INTEREST IN PLAYING A GREATER ROLE IN EU TRADE POLICY DURING ITS PRESIDENCY, ITALY WOULD NOT RELISH GETTING CAUGHT IN THE MIDDLE OF A HEATED U.S.-EU TRADE BATTLE. IN PARTICULAR, THE GOI WOULD LIKE TO SEE PROGRESS IN CONFIDENTIAL PAGE 04 ROME 00028 01 OF 03 071023Z THE U.S. CONGRESS ON ADDRESSING THE FOREIGN SALES CORPORATIONS CASE, ALONG WITH FURTHER STEEL EXCLUSIONS FOR ITALIAN AND EU COMPANIES. AGRICULTURAL BIOTECH -------------- ¶5. (C) ECMIN UNDERSCORED THE HIGH LEVEL OF U.S. FRUSTRATION OVER THE CONTINUING EU MORATORIUM ON BIOTECH APPROVALS (REF. A),AND SOUGHT OUR INTERLOCUTORS, VIEWS ON HOW TO GET THE PROCESS MOVING AGAIN. FANELLA DECLARED THAT THE TRADE MINISTRY WOULD ALSO LIKE TO SEE THE MORATORIUM LIFTED. HE WAS CAUTIOUSLY OPTIMISTIC THAT PROGRESS WOULD BE MADE IN THE SPRING OF 2003, SHOULD THE EU PARLIAMENT ADOPT PROPOSALS COMING OUT OF THE AGRICULTURE AND ENVIRONMENTAL COUNCILS WITH FEW CHANGES. COMMENT: CLEARLY, BIOTECH IS ANOTHER ISSUE THE GOI WOULD RATHER AVOID (OR AT LEAST DOWNPLAY) DURING ITS PRESIDENCY, SINCE DIVISION WITHIN THE GOVERNMENT HAS SO FAR KEPT IT FROM DEVELOPING A COHERENT AND COORDINATED BIOTECH POLICY (REF. B). END COMMENT. GEOGRAPHIC INDICATORS -------------- CONFIDENTIAL CONFIDENTIAL PTQ3651 PAGE 01 ROME 00028 02 OF 03 071023Z ACTION STR-00 INFO LOG-00 AID-00 AIT-03 CEA-01 CIAE-00 CTME-00 DODE-00 WHA-00 SRPP-00 EB-00 EUR-00 EXIM-01 E-00 VC-00 FRB-00 H-01 TEDE-00 INR-00 IO-00 ITC-01 JUSE-00 L-00 VCE-00 MED-07 AC-01 NEA-00 NSAE-00 NSCE-00 OES-00 OIC-02 OMB-01 DHS-00 OPIC-01 ACE-00 SP-00 SSO-00 SS-00 TRSE-00 USIE-00 SA-00 DRL-02 G-00 SAS-00 /021W -------------- 211A5E 071024Z /38 O 071002Z JAN 03 FM AMEMBASSY ROME TO SECSTATE WASHDC IMMEDIATE 7552 INFO EU MEMBER STATES COLLECTIVE AMEMBASSY BRASILIA AMEMBASSY NEW DELHI AMCONSUL FLORENCE AMCONSUL MILAN AMCONSUL NAPLES USEU BRUSSELS 3043 USDOC WASHDC USMISSION GENEVA C O N F I D E N T I A L SECTION 02 OF 03 ROME 000028 SIPDIS STATE PASS USTR FOR SANFORD, BURCKY GENEVA FOR USTR E.O. 12958: DECL: 01/07/2008 CONFIDENTIAL PAGE 02 ROME 00028 02 OF 03 071023Z TAGS: ETRD IT IT IT EUN WTOETRD EUN WTOETRD EUN WTO SUBJECT: ITALY SEEKS STRONGER TRADE ROLE IN 2003 ¶6. (C) ONE OF THE FEW TRADE ISSUES TO CONSISTENTLY ENERGIZE THE GOI HAS BEEN THE STRENGTHENING AND EXPANSION OF GEOGRAPHIC INDICATORS (GI),FOR WINE AND CERTAIN "TRADITIONAL" PRODUCTS, SUCH AS CHEESES AND MEATS. OUR TRADE CONTACTS AGAIN RAISED THE POSSIBILITY OF LINKING PROGRESS ON GIS AND BIOTECH, SUGGESTING THAT MUTUALLY BENEFICIAL PROGRESS COULD BE MADE IN BOTH AREAS. THE UNDERLYING IMPLICATION WAS THAT PRO-BIOTECH ELEMENTS WITHIN THE GOI COULD BE STRENGTHENED BY U.S. SUPPORT FOR GI ISSUES OF CONCERN TO ITALY. ECMIN CAUTIONED THAT WASHINGTON WAS LIKELY TO HAVE LITTLE INTEREST IN SUCH A LINKAGE. HE ALSO UNDERSCORED U.S. CONCERNS ABOUT CREATING A CUMBERSOME NEW BUREAUCRATIC PROCESS THAT IMPOSED SIGNIFICANT COSTS AND JEOPARDIZED LONG-STANDING COMMERCIAL INTERESTS OF MANY COMPANIES. TETI SUBSEQUENTLY RESTATED HIS PROPOSAL, SAYING THAT THE GOI WAS NOT NECESSARILY PROPOSING A "DIRECT LINK" BETWEEN GIS AND BIOTECH, BUT WAS RATHER INTERESTED IN MAKING PROGRESS IN BOTH AREAS WITHIN THE CONTEXT OF BROADER DISCUSSIONS OF THE U.S.-EU TRADE AGENDA. U.S. AND EU WTO AGRICULTURE PROPOSALS -------------- ¶7. (SBU) WHILE NOTING THAT THE EU MEMBER STATES STILL NEEDED TO WEIGH IN, FANELLA SAID THAT THE EU,S RECENT PROPOSAL ON AGRICULTURE FOR THE DOHA ROUND IS BEING VIEWED POSITIVELY WITHIN THE GOI, NOTABLY BY BOTH URSO AND AGRICULTURE MINISTER ALEMANNO. MARKET ACCESS IS A KEY CONCERN FOR ITALY, AND IT CONFIDENTIAL PAGE 03 ROME 00028 02 OF 03 071023Z ESPECIALLY SUPPORTS THE PROPOSED REQUIREMENT FOR A MINIMUM 15 PERCENT REDUCTION PER TARIFF LINE FOR ALL WTO MEMBERS AS A MEANS OF MAINTAINING KEY PROTECTION IN CERTAIN SECTORS. NEITHER FANELLA NOR TETI CRITICIZED THE U.S. AGRICULTURE PROPOSAL, ALTHOUGH THEY CHARACTERIZED IT AS MORE "AGGRESSIVE" THAN THE EU APPROACH. TETI SAW THE EU PROPOSAL AS OCCUPYING A MIDDLE GROUND BETWEEN THE GOALS OF THE U.S. AND THOSE OF THE DEVELOPING WORLD. U.S. NON-AGRICULTURAL PROPOSAL FOR WTO -------------- ¶8. (SBU) WHILE CHARACTERIZING THE U.S. PROPOSAL FOR NON-AGRICULTURAL PRODUCTS AS INTELLECTUALLY HONEST AND DEFENSIBLE, OUR INTERLOCUTORS EXPRESSED CONCERN OVER THE POLITICAL DIFFICULTY IN REACHING THE LONG-TERM GOAL OF ZERO TARIFFS, BELIEVING THAT MOST DEVELOPING COUNTRIES WOULD STRONGLY OPPOSE SUCH AN OUTCOME. TETI SUGGESTED THE POSSIBILITY OF TWO-TIERED APPROACH, MOVING FIRST TOWARD TARIFF-FREE TRADE AMONG DEVELOPING COUNTRIES ALONE. FULL TARIFF ELIMINATION BETWEEN DEVELOPED AND DEVELOPING COUNTRIES WOULD FOLLOW AT A MUCH LATER STAGE. COMMENT: FANELLA WAS OPENLY SKEPTICAL OF HIS BOSS'S IDEA, ARGUING THAT WTO RULES WOULD NOT PERMIT SUCH DIFFERENTIAL TREATMENT. END COMMENT. URSO-ZOELLICK MEETING, AND POSSIBLE MINI-MINISTERIAL -------------- -------------- ¶9. (SBU) DIPLOMATIC ADVISOR COSPITO UNDERSCORED THAT VICE MINISTER URSO IS LOOKING FORWARD TO MEETING USTR ZOELLICK IN WASHINGTON FEBRUARY 11. URSO IS LIKELY TO RAISE THE GOI,S CONFIDENTIAL PAGE 04 ROME 00028 02 OF 03 071023Z DESIRE FOR PROGRESS ON GIS AND BIOTECH, WITHIN THE CONTEXT OF WTO NEGOTIATIONS (PARA 6). HE MAY ALSO DISCUSS ITALY,S SELF-STYLED ROLE AS AN "INTERMEDIARY" WITH THE THIRD WORLD ON TRADE ISSUES. IN ADDITION TO EXPRESSING UNDERSTANDING FOR THE DEVELOPING WORLD,S CONCERNS ON TARIFF ELIMINATION, URSO AND TETI HAVE BOTH WARNED THAT THE ISSUE OF ACCESS TO MEDICINE UNDER TRIPS IS UNLIKELY TO BE RESOLVED THROUGH DIFFERENTIAL TREATMENT AMONG DEVELOPING COUNTRIES. ¶10. (SBU) FINALLY, COSPITO NOTED THAT URSO IS PLANNING TO INVITE USTR ZOELLICK TO ITALY IN LATE SPRING 2003, ALONG WITH EU TRADE COMMISSIONER LAMY AND TRADE OFFICIALS FROM KEY DEVELOPING COUNTRIES SUCH AS INDIA AND BRAZIL. THOUGH PLANS ARE NOT YET FULLY DEVELOPED, THE IDEA IS TO HOLD A MINI-MINISTERIAL (SIMILAR TO THAT HELD IN SYDNEY IN NOVEMBER) IN ORDER TO PREPARE THE GROUND FOR A SUCCESSFUL CANCUN MINISTERIAL. COMMENT -------------- ¶11. (C) FOR SEVERAL REASONS, ITALY HISTORICALLY HAS PUNCHED BELOW ITS WEIGHT ON EU TRADE ISSUES. WE ARE THEREFORE ENCOURAGED BY THE LEVEL OF OPENNESS AND DESIRE FOR ENGAGEMENT CONFIDENTIAL CONFIDENTIAL PTQ3650 PAGE 01 ROME 00028 03 OF 03 071024Z ACTION STR-00 INFO LOG-00 NP-00 AID-00 AIT-03 CEA-01 CIAE-00 CTME-00 DODE-00 WHA-00 SRPP-00 EB-00 EUR-00 EXIM-01 E-00 VC-00 FRB-00 H-01 TEDE-00 INR-00 IO-00 ITC-01 L-00 VCE-00 AC-01 NEA-00 NSAE-00 NSCE-00 OES-00 OIC-02 OMB-01 DHS-00 OPIC-01 ACE-00 SP-00 SSO-00 SS-00 TRSE-00 USIE-00 SA-00 EPAE-00 DRL-02 G-00 SAS-00 /014W -------------- 211A62 071024Z /38 O 071002Z JAN 03 FM AMEMBASSY ROME TO SECSTATE WASHDC IMMEDIATE 7553 INFO EU MEMBER STATES COLLECTIVE AMEMBASSY BRASILIA AMEMBASSY NEW DELHI AMCONSUL FLORENCE AMCONSUL MILAN AMCONSUL NAPLES USEU BRUSSELS 3044 USDOC WASHDC USMISSION GENEVA C O N F I D E N T I A L SECTION 03 OF 03 ROME 000028 SIPDIS STATE PASS USTR FOR SANFORD, BURCKY GENEVA FOR USTR E.O. 12958: DECL: 01/07/2008 CONFIDENTIAL PAGE 02 ROME 00028 03 OF 03 071024Z TAGS: ETRD IT IT IT EUN WTOETRD EUN WTOETRD EUN WTO SUBJECT: ITALY SEEKS STRONGER TRADE ROLE IN 2003 DISPLAYED BY OUR INTERLOCUTORS -- ESPECIALLY TETI, WHO AS THE NEW ASSISTANT-SECRETARY-EQUIVALENT OVERSEEING FOREIGN TRADE, APPEARS TO BRING SIGNIFICANTLY MORE ENERGY TO HIS RESPONSIBILITIES THAN DID HIS PREDECESSOR. WE WILL TRY TO CAPITALIZE ON THE NEW TEAM'S AMBITIONS, BUT RECOGNIZE THAT INCREASED ITALIAN EFFECTIVENESS ON TRADE WILL ULTIMATELY REQUIRE GREATER UNITY OF PURPOSE THAN THIS GOVERNMENT HAS SO FAR BEEN ABLE TO MUSTER (BIOTECH POLICY BEING EXHIBIT A). NEVERTHELESS, WE INTERPRET VICE MINISTER URSO,S INTENTION TO ORGANIZE A MINI-MINISTERIAL IN ADVANCE OF CANCUN AS A POSITIVE SIGN OF HIS SERIOUSNESS; URSO'S FEBRUARY MEETING WITH USTR ZOELLICK WILL ALSO PROVIDE AN TIMELY OPPORTUNITY TO REVIEW THE U.S.-EU TRADE AGENDA AS ITALY SHARPENS ITS OBJECTIVES FOR ITS EU PRESIDENCY. END COMMENT. SKODON CONFIDENTIAL > 2003ROME00028 - Classification: CONFIDENTIAL