ITALIAN VIEWS ON WTO MINISTERIAL IN CANCUN

C O N F I D E N T I A L ROME 004818

SIPDIS


STATE PASS USTR
GENEVA FOR USTR

E.O. 12958: DECL: 10/20/2008
TAGS: ETRD IT EUN WTO
SUBJECT: ITALIAN VIEWS ON WTO MINISTERIAL IN CANCUN

REF: ROME 4020

Classified By: ECONOMIC MINISTER-COUNSELOR SCOTT KILNER FOR REASONS 1.5
(B) AND (D)

Introduction and Summary
--------------


1. (C) Italy views the intransigence of G-20 middle-income
countries as the reason for the breakdown of the Cancun WTO
ministerial meeting. Amedeo Teti, Director General For
Commercial Agreements, Ministry of Productive Activities
(Foreign Trade) and Federico Eichberg, senior advisor to
Foreign Trade Vice Minister Adolfo Urso, denied reports that
EU inflexibility on the four Singapore issues was responsible
for the collapse. Both saw the surprising strength of NGOs
at Cancun, and their influence on the poorest WTO members, as
an unwelcome development; and they agreed that political
polarization within the WTO discouraged meaningful
negotiations. In an effort to rebuild trust with the
developing world, especially the poorest countries, Italy was
reviewing a range of possibilities, including a more thorough
evaluation of cotton subsidies. Agriculture Minister Gianni
Alemanno told Ecmin separately that Italy was pleased Cancun
did not foreclose the possibility of enhanced WTO protection
of geographical indications. End summary.

The G-20 and the UNGA-fication of the WTO
--------------


2. (C) Amedeo Teti and Federico Eichberg (members of the GOI
delegation at Cancun) told Ecmin and econoffs October 8 that
moving the WTO trade talks forward after Cancun will depend
heavily on whether the G-20 maintains its cohesiveness. Our
interlocutors believe the disruptive nature of the G-20 at
Cancun could impede its long-term effectiveness, and the
divergent positions of its members on the key issue of
agriculture may prevent the G-20 from advancing meaningful
proposals. While characterizing Brazil and India as the
ringleaders, Eichberg observed that India was somewhat less
obstructionist at Cancun than it had been at Doha; and he
thought that China had not played a particularly assertive
role.


3. (C) The U.S. is concerned that Cancun could foreshadow an
increasingly politicized WTO, Ecmin noted, with ministerial
sessions resembling the UN General Assembly more than trade
negotiations. Both contacts said the GOI shared our view.
Teti said endless speeches at Cancun prevented progress and
limited actual negotiation to five hours, or so. He expressed
frustration that the G-20's tactic of inflexibility actually
worked against the interests of many individual G-20
countries.


4. (C) Ecmin recalled the cautious optimism we had shared
with the GOI before Cancun (reftel),with resolution of the
TRIPS/medicine access issue and the U.S.-EU agreement on a
framework for agricultural talks. USDEL in Cancun was
dismayed that some viewed the agricultural framework as a
diktat forced upon the developing world. Eichberg agreed
that the EU and the U.S. were well prepared for Cancun, and
that the agricultural framework had been developed with
transparency following requests from other WTO members at the
Montreal mini-ministerial in August. (Teti wondered cynically
whether some members at Montreal had encouraged the U.S.-EU
framework agreement to create a rallying point for those
opposed to progress at Cancun). Teti argued strongly that
the U.S.-EU framework should remain in play; however, he did
not think the revised draft Cancun Ministerial text dated
September 13 (the last text on the table at Cancun regarding
the full Doha Agenda) would be a useful document from which
to move forward. Ecmin countered that the U.S. was ready to
work with the September 13 draft Cancun Ministerial text; we
had not yet received any word from Washington regarding the
continued use of the U.S.-EU framework, however.

NGOs' Increasing Influence
--------------


5. (C) The U.S. thought NGOs had too much influence on many
developing countries at Cancun, Ecmin stated. He added that

the WTO should work on building more trade capacity in
developing countries to help them negotiate more effectively
and independently. Italy shares our concerns, said Eichberg,
who recounted his amazement at some NGOs' sophisticated
public relations campaigns. He regretted such groups were
allowed into the same conference center as the talks, since
this access enabled them to dictate the positions of many of
the poorest developing countries (including the surprising
push on cotton subsidies made by several west African
countries). Eichberg thought it unfortunate that political
realities probably would impede any efforts to diminish NGO
access at future trade talks.


6. (C) Econoff noted that the U.S. often included NGO
advisors on our trade delegations, and gave advisors a role
in the talks while ensuring some government influence on
their activity. Teti responded that Urso was looking at the
possibility of pursuing greater integration of some NGOs
within the ministry. The difficulty lies in distinguishing
those that could be helpful from the more extremist groups
seeking to obstruct negotiations -- and, he said, there is a
range of groups somewhere between the two extremes.

Singapore Issues
--------------


7. (C) Eichberg blamed NGOs for inflaming developing country
views on the four Singapore Issues (investment, competition,
transparency in government procurement, and trade
facilitation). He thought the EU had not been excessively
inflexible by insisting at first that all four issues be
negotiated together, especially when one considered South
Korea's much tougher position. Teti thought that faced with
deadlock on other issues, Chairman Derbez had used
intransigence over the Singapore Issues as an excuse to close
the ministerial. (Teti added, however, that he sympathized
with Derbez, who he believes may have called the talks off to
keep a difficult situation from spiraling out of control).

Next Steps -- Cotton Subsidies and More
--------------


8. (C) Trade Vice Minister Urso now wants to develop
approaches to rebuild trust with the developing world,
according to Eichberg. Among the ideas being considered are
increased efforts to foster trade facilitation, implementing
the TRIPS/Medicine agreement, and making cotton subsidies a
priority within the agriculture negotiations. Italy would
like the WTO to pay attention in particular to the poorest
developing countries, which had been less intransigent than
the G-20 higher income developing countries. Teti noted that
the unexpected escalation of the cotton subsidies issue had
been difficult for the EU, since there was not enough time
time for all EU Member States to reflect and reach a unified
negotiating position. He suggested the EU might propose to
cut subsidies on cotton as well as on tobacco. Eichberg
emphasized that cotton could not be a stand-alone issue, but
would have to be considered in the context of the
agricultural talks. Ecmin noted that the U.S. believed its
proposal on cotton at Cancun had been constructive.

MinAg Still Hoping for Enhanced GI Protection
--------------


9. (C) Italian Minister of Agriculture Gianni Alemanno
briefly offered additional GOI views on the Cancun talks in a
luncheon attended by Ecmin October 8. Alemanno believes that
Derbez cut off negotiations prematurely, at a point when
various parties were posturing but not necessarily opposed to
further negotiating. He said that the EU, the U.S. and others
had underestimated the importance of the non-agricultural
components of the talks. Alemanno and others in the GOI had
also been concerned that the European Commission was going to
sacrifice its position on geographical indications in order
to break a logjam on other issues, based on alleged U.S.
demands that the GOI later learned were not correct. Alemanno
was grateful that in the end the door had not been firmly
shut on enhancing GI protection within the WTO.
COUNTRYMAN


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2003ROME04818 - Classification: CONFIDENTIAL