ITALY'S EU PRESIDENCY: EU/EUROMED INFORMAL TRADE

C O N F I D E N T I A L ROME 003304

SIPDIS


STATE PASS USTR
GENEVA FOR USTR

E.O. 12958: DECL: 07/21/2008
TAGS: ETRD IT EUN
SUBJECT: ITALY'S EU PRESIDENCY: EU/EUROMED INFORMAL TRADE
MINISTERIAL, PALERMO, JULY 6-7, 2003

Classified By: Economic Counselor Karen Milliken for reasons 1.5 b and
d


1. (U) Italian trade officials hosted an informal trade
ministerial meeting in Palermo July 6-7. The July 6 session
included trade ministers from the EU 15 plus the 10 EU
accession countries, as well as European Commissioner for
External Trade Pascal Lamy and European Free Trade Agreement
partners, in a discussion that focused on the upcoming WTO
ministerial meeting in Cancun and with EU enlargement. The
July 7 session, the Third Euro-Mediterranean trade
ministerial conference, included trade officials from the
EU's 10 Mediterranean partners (Algeria, Tunisia, Morocco,
Egypt, Jordan, Israel, Syria, Lebanon, Turkey and the
Palestinian Authority). Trade facilitation and liberalization
of trade in services were among the issues discussed at the
Euromed meeting.

Informal EU Trade Ministerial
--------------


2. (SBU) Embassy trade contacts, including Federico Eichberg,
senior advisor to Foreign Trade Vice Minister Adolfo Urso,
told econoff that an atmosphere of relief and optimism
permeated the July 6 meeting of EU and EU accession country
ministers, following the agreement in late June on CAP
reform. The EU no longer is on the defensive regarding the
lack of CAP reform, and thus being potentially blamed for
creating gridlock at the WTO ministerial meeting in
September. No decision was made to table a new agriculture
proposal ) Eichberg stressed that CAP reform makes future
export subsidy cuts doable, even if no decision has been made
about their potential size. Predictably, Italy also
emphasized increased protection under the WTO for
geographical indications for all food products; however, our
contact admitted that it might not be possible to achieve any
progress on GI expansion by Cancun. Nevertheless, the EU will
push to conclude talks at Cancun on GI protection for wine
and spirits.


3. (SBU) No changes to the EU,s approach on other Doha round
issues were made at the Palermo meeting, according to
ministry contacts and other reports we have seen. On
non-agricultural market access the EU remains generally
pleased with the Trade Negotiating Committee,s draft paper,
but foresees the need for further work to bring developing
countries onboard. The EU will continue to push for all four
Singapore issues to be negotiated together (Italy is
particularly interested in the investment issue). Resolution
at/before Cancun of the TRIPS/medicine issue is seen as
essential for the perceived success of the ministerial.
Eichberg recalled no mention of deadlines, and said Lamy
remains optimistic regarding a timely conclusion to the Doha
Round.

4. (SBU) Eichberg noted that, contrary to some press reports,
no U.S.-EU bilateral trade disputes were discussed at the
July 6 meeting. He said much of the meeting,s content
concerned modalities for the ten EU accession countries to
integrate into the EU process on developing/implementing
trade policy. Italy also presented a proposal to make marks
of origin obligatory within the EU, with the goal of giving
EU consumers important information regarding a product,s
country of origin. Eichberg commented that there was little
discussion at Palermo on the proposal (though he said Lamy
was supportive),and Italy does not expect the proposal to
advance significantly in the near term, given the press of
the WTO round.

Euromed Meeting
--------------


5. (SBU) Eichberg noted some positive news from the July 7
Euromed meeting, especially the adoption of a protocol on
rules of origin for the EU, Mediterranean, acceding
countries, and EFTA (which he termed one of the more
significant achievements since the Barcelona Process began).
In addition to facilitating trade, the new protocol will
contribute to continuing efforts to forge a Euromed free


trade area. Eichberg also noted a positive atmosphere among
all the Euromed participants, including between the Israeli
and Palestinian contingents. The GOI informally proposed some
joint operations among Italy,s Simest (analogous to OPIC)
and relevant Israeli and Palestinian entities.


6. (C) Despite the positive atmosphere at Palermo, however,
Eichberg was pessimistic about the Barcelona Process ever
achieving significant trade expansion between the EU and the
Mediterranean basin countries, given the different economic
development levels between the two areas. European interest
in expanding into central and eastern Europe over the last
decade overrode earlier hopes for attracting more EU
investment to the south. Eichberg pointed out that Simest
attracts very little interest among potential Italian
investors in projects in the ten Euromed partners, despite
its willingness to underwrite such investments. The economic
counselor of the Egyptian Embassy in Rome shared with us
similar concerns about Euromed, noting a general
disillusionment among the ten that significant progress, much
less a free trade area, will ever gain traction. Our
Egyptian colleague agreed that EU investors &abandoned8 the
Mediterranean in favor of eastern Europe after the end of the
cold war.
Sembler
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2003ROME03304 - Classification: CONFIDENTIAL