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2003-11-17 08:24:00
Embassy Rome
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						C O N F I D E N T I A L  ROME 005184 


E.O. 12958: DECL: 11/16/2013


Classified By: POL M/C T. Countryman for Reasons 1.5 (b) and (d).

1. (U) This cable contains an action request for EAP and
EUR/ERA. Please see paragraph 11.

2. (C) Summary: Expanding trade between the EU and China, the
EU's continued arms embargo and North Korea topped
discussions at the October 30 EU-China Summit in Beijing. The
EU and China signed the Galileo Satellite Navigation
Cooperation agreement, initialed the Authorized Destination
Status (ADS) agreement and committed to increasing economic
ties through greater trade and investment. The Chinese
pressed for a lifting of the EU arms embargo arguing that the
embargo was an anachronism. Berlusconi rejoined that lifting
the embargo would be difficult without improvements on human
rights issues. The Chinese refused any such linkage and made
no concessions or commitments on human rights. EU leaders
praised China's evolving role in the region's security and
its work in convincing the DPRK to commit to multilateral
talks. End summary.

3. (C) We discussed both EU and bilateral portions of
Berlusconi's China trip with Berlusconi diplomatic advisor,
Gianpaolo Scarante and MFA Asia Desk Officer, Silvia Chiave.
Berlusconi participated in the Sixth EU-China Summit in
Beijing on October 30, a Sino-Italian Bilateral meeting on
October 31 and a meeting with Shanghai business community
leaders on November 1 in Shanghai. This was the first time
that PM Berlusconi traveled to China and the new Chinese
leadership's first direct encounter with the EU's senior
leadership. Our interlocutors reported that the new Chinese
leadership seems dedicated and more pragmatic to solving
issues and playing a greater international role. They
stressed Italy's general satisfaction with the Summit and the
bilateral meetings and confirmed that an EU Troika, headed by
Guido Martini, MFA Director General for Asia and the Pacific,
is set to visit Pyongyang, December 9-11. This trip provides
the USG an opportunity to influence EU Troika participants
(see action request in paragraph 11).

EU-China Summit


Fair Trade and Economic Cooperation


4. (C) The summit focused on trade and commerce and was
highlighted by the signing of the Galileo Satellite
Navigation Cooperation agreement and the initialing of the
Authorized Destination Status (ADS) agreement that will
facilitate Chinese group tourism to the EU.

5. (C) The EU expressed concern over the valuation of the
Chinese currency versus the Euro as well as fair trade
practices and the need to have greater economic cooperation.
Chinese leaders said they would not devalue their currency
but expressed a desire to search for a more reasonable

mechanism by which to ensure more equity and make an effort
to respect WTO regulations in order to achieve greater
economic growth and trade.

EU Arms Embargo


6. (C) The Chinese pressed hard for lifting the arms embargo,
stating that the Tiananmen incident was long past and that
China's enhanced regional role and importance merited lifting
the embargo. Chiave stated that some EU countries (which she
would not specify) are in favor of entertaining this idea but
the majority are against it. When Berlusconi tried to link
improvements in human rights to a review of the EU embargo
policy the Chinese flatly refused any such linkage.
Berlusconi told the Chinese that without improvement in human
rights it would be difficult to justify lifting the embargo
to the European public. Chiave indicated the issue likely
would resurface prior to EU enlargement, reiterating the
favorable stance of some EU states especially if there are
improvements in human rights.

One-China Policy


7. (C) The Chinese also pressed for a strengthened EU
one-China policy by soliciting a formal statement in which
both Taiwan and Tibet would be included. Chiave stated that
this was one of the opening issues and that the EU was
surprised by the fact that the Chinese appeared to be making

a non-issue into a provocation. (Note: The Chinese raised
revision of the EU's one-China policy again during
Berlusconi's bilateral discussions, but Italy refused to
consider it. Interestingly, the Chinese did not raise the
Dalai Lama's upcoming visit to Italy at either the summit or
the bilateral. End Note)

Human Rights


8. (C) In addition to the Tibet issue, the EU voiced concerns
over the general human rights situation in China. Stating
appreciation for EU concerns, the Chinese made no commitments
or concessions. They clearly expressed the need to maintain
stability and continue with economic development in order to
ensure adequate living standards for their people. They
further expressed their position to keep human rights issues
apart from political and economic issues.

North Korea


9. (C) The EU praised the more positive role China is taking
as a major player in the region's security. China is working
to convince the DPRK to commit to multilateral talks and make
the Six Party Talks proceed with the EU playing a neutral
role and developing a level of trust with the DPRK. The DPRK
will continue insisting on 'simultaneous actions' regarding
the US which will present a major challenge. However, this is
an opportunity for China as well as the EU to demonstrate
that they are global players and can fill an important role
in affecting regional as well as international security

10. (C) Relating to the EU role as a neutral participant in
the Korean peninsula, Chiave confirmed that an EU Troika, at
the regional director level headed by Guido Martini, MFA
Director General for Asia and the Pacific, is set to visit
Pyongyang, December 9-11. She was not sure with whom the EU
officials will meet but stated that the goal is to send a
clear message on a greater commitment to Six Party Talks,
denuclearization and reconciliation with South Korea. She
stated that the EU and partners need to make the DPRK
understand the need for stability in the region and the
importance of adherence to international commitments.

11. (C) Embassy Comment/Action Request: The EU-Pyongyang
dialogue, December 9-11, offers the USG an additional
opportunity to influence EU Troika participants. Post
requests background and points be sent to USEU Brussels and
other EU member state Embassies to reinforce those offered
during U/S Boniver's early November meetings in Washington.

Italy-China Bilateral


12. (C) Aside from an attempt to include Tibet and the
one-China policy issue in the agenda, bilateral talks focused
on trade and commerce. Echoing the previous day's EU-China
summit declarations, Berlusconi expressed a cooperative
approach towards economic relations between the two nations,
reassuring the Chinese that Italy would not impose bilateral
protectionist tariffs and urging cooperation and goodwill
under WTO regulations. Berlusconi stated that WTO provided
for a level and fair trading regime which, if not adhered to,
carried its own sanctions. Parties exchanged ideas on how to
increase Italian investment and deal with the trade
imbalance. They also agreed to expand the Tavolo Cina, an
existing business-focused roundtable supported by the Italian
MFA, into a political committee with an annual ministerial
meeting to review progress; committed to a bilateral seminar
on reciprocal investment that will be held in Italy in Spring
2004, and agreed to establish Italian trade offices
(Sportello Unico) housing representatives from Italian
commercial and government offices to facilitate Italian
entrepreneurial projects in Beijing and Shanghai. They also
discussed the possibility of opening cultural centers to
teach Italian language and culture as well as Italian expo

Berlusconi and the Business Community



13. (C) On November 1, PM Berlusconi met with Italian and
Chinese business leaders in Shanghai. He reiterated the
points of previous days and, acknowledging the economic boom
in China, pointed to the wide availability of opportunities
for Italian entrepreneurs. Berlusconi described China as an
open, large and well-to-do market eager to embrace and buy

Italian products and urged Italian entrepreneurs to get
organized, invest and begin doing business in China,
especially in view of the upcoming 2008 Olympics in Beijing
and the 2010 World Expo in Shanghai. A challenge to small and
medium-sized Italian firms competing against larger European
firms, Berlusconi called to entrepreneurs to organize and
group resources in an effort to compete successfully.

2003ROME05184 - Classification: CONFIDENTIAL