Identifier
Created
Classification
Origin
03ROME4241
2003-09-18 05:37:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Rome
Cable title:  

ITALIAN VIEWS ON OECD STEEL SUBSIDIES DISCUSSIONS

Tags:  ECON ETRD IT CH EUN 
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UNCLAS ROME 004241 

SIPDIS


SENSITIVE

STATE FOR EB/TPP/BTA/ANA
COMMERCE FOR DAS JOE PETRINI

E.O. 12958: N/A
TAGS: ECON ETRD IT CH EUN
SUBJECT: ITALIAN VIEWS ON OECD STEEL SUBSIDIES DISCUSSIONS

REF: SECSTATE 242377

Sensitive But Unclassified -- Not for Internet Distribution

UNCLAS ROME 004241

SIPDIS


SENSITIVE

STATE FOR EB/TPP/BTA/ANA
COMMERCE FOR DAS JOE PETRINI

E.O. 12958: N/A
TAGS: ECON ETRD IT CH EUN
SUBJECT: ITALIAN VIEWS ON OECD STEEL SUBSIDIES DISCUSSIONS

REF: SECSTATE 242377

Sensitive But Unclassified -- Not for Internet Distribution


1. (U) This is an action request. See para. 7.


2. (SBU) During its EU Presidency the GOI is hoping for
progress towards an agreement on steel subsidies among major
steel-producing countries, as currently being worked by the
High Level Group (HLG) under the auspices of the OECD.
However, Ministry of Productive Activities official Giuseppe
Lorenzini, who is chairing the EU's Article 133 subgroup on
steel issues during the Italian EU presidency, told econoff
September 15 that Italy was disappointed at the reported lack
of progress made on both Articles 3 and 4 of the draft Steel
Subsidies Agreement during the informal meeting of the OECD
Steel Disciplines Study Group in Moscow in early September.
The results of the Moscow meeting, and the October 6-8
meeting of the next formal OECD meeting on steel subsidies,
is on the agenda of the Sept. 18 EU Article 133 steel
subgroup meeting.


3. (SBU) Though Italy did not attend the Moscow meeting,
Lorenzini said the GOI is especially concerned about demands
by China raised in Moscow that have the potential to derail
the steel subsidies discussions. Lorenzini gave us a copy of
the Sept. 5 letter from the OECD's Wolfgang Huber to HLG
participants that relayed China's "serious doubts" regarding
the current efforts to craft an agreement on steel subsidies.
The letter provides China's requests to the other HLG
participants in order to maintain its continued participation
in the talks: recognition of China's "market economy status"
in terms of the Chinese steel industry; a guarantee that no
transitional product-specific safeguard mechanisms will be
taken against Chinese steel products; recognition under an
eventual agreement that China is a developing country; and
that the eventual agreement not be brought into the WTO
framework.

4.(SBU) The GOI believes that acceding to all of China's
demands will be difficult. Lorenzini noted that even in the
unlikely event that the other HLG participants were to accede
to China's request, other countries participating in the
talks might then seek similar conditions as well, further
undermining any agreement. The GOI is concerned that China's
requests go too far, but it is also worried that a Chinese
pullout from the discussions would seriously weaken the
effectiveness of any potential agreement. Lorenzini told us
he raised Italian concerns with a diplomat from the PRC
Embassy in Rome. Though apparently not very familiar with the
issue, the Chinese diplomat gave Lorenzini the impression
that China remains skeptical of the entire approach on steel
subsidies being pursued through the OECD talks.


5. (SBU) Lorenzini said that Italy would not agree to a weak
accord that fails to recognize the progress made in countries
like Italy, which he noted had worked hard to create a more
modern and competitive steel sector. He cautioned against an
agreement providing too many concessions to developing
country participants. The Italian steel industry is
particularly concerned that the current level of steel
exports from China could turn into a flood if a slowdown in
China's economic growth were to inhibit the growth of
domestic steel demand.

6.(SBU) Given the number of smaller-scale steel producers in
Italy, the GOI is particularly attuned to the eventual
wording of Article 3 regarding excepted subsidies, according
to Lorenzini. Italy will pay close attention to defining the
circumstances under which such subsidies could be applied.


7. (SBU) Action Request: Lorenzini said the GOI is keenly

interested in current USG views on the state of play on the
steel subsidies talks, particularly in advance of the October
HLG meeting. The GOI would welcome U.S. views on the four
conditions sought by China to maintain its participation in
the talks, and the extent to which a pullout by China would
impede the effectiveness of an eventual subsidies agreement.
SEMBLER


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2003ROME04241 - Classification: UNCLASSIFIED