REQUEST FOR FEEDBACK ON EU PROPOSAL

UNCLAS ROME 000839 SIPDIS SENSITIVE SECSTATE PASS AGRICULTURE ELECTRONICALLY FOR FAS/ITP/EAMED; FAS/CMP/GFD; FAA/AO/WE/WILSON STATE PASS USTR STATE PASS TO ALL EUROPEAN UNION POST COLLECTIVE GENEVA FOR USTR E.O. 12958: N/A UNCLASSIFIED PAGE 02 ROME 00839 281059Z TAGS: ETRD EAGR IT USTR SUBJECT: REQUEST FOR FEEDBACK ON EU PROPOSAL TO MODIFY RICE IMPORT REGIME REF: STATE 46808 ¶1. ( SBU) PER REFTEL, EMBASSY ROME DELIVERED TALKING POINTS TO THE GOI ON THE INITIATIVE TO MODIFY THE MARGIN OF PREFERENCE (MOP) FOR RICE, AT THE MINISTRY OF AGRICULTURE AND AT THE MINISTRY OF PRODUCTIVE ACTIVITIES (MPA). MINAG EXPLAINED TO FAS AG ATTACHE AND AG SPECIALIST ITALY'S REASONS FOR CHANGING THE MOP, EXPRESSED HOPE THAT ITALY COULD SWAY BELGIUM TO LEAVE THE BLOCKING MAJORITY WHICH CURRENTLY STANDS AGAINST MODIFICATION, AND APPEALED TO US RICE PRODUCING INTERESTS TO ARGUE FOR REPLACING THE MOP WITH QUOTAS WHICH WOULD ENHANCE US MARKET ACCESS. ¶2. (SBU) FAS MET WITH MINISTRY OF AGRICULTURE'S ALESSANDRO DI MONACO, HEAD OF THE ARABLE CROPS DIVISION. HE ACKNOWLEDGED ITALY'S INTERESTS AS THE EU'S LARGEST PRODUCER OF RICE AND HE APPEALED TO THE US TO CONSIDER THAT US RICE EXPORTS WOULD BENEFIT FROM CHANGING THE MOP TO A QUOTA SYSTEM, MUCH LIKE THE RECENT CHANGE TO THE MOP FOR OTHER GRAINS HAS BENEFITTED US WHEAT EXPORTS. HIS ARGUMENT IS THAT IN RECENT YEARS EU IMPORTS OF RICE FROM PAKISTAN AND UNCLASSIFIED PAGE 03 ROME 00839 281059Z INDIA HAVE GAINED MARKET SHARE AT DUTY ABATEMENT RATES, DISPLACING IMPORTS FROM OTHER ORIGINS, INCLUDING THE U.S. ¶3. (U) ACCORDING TO DI MONACO IN THE MOST RCCENT MARKETING YEAR EU RICE IMPORTS FROM PAKISTAN AND INDIA HAVE REACHED OVER 300,000 TONS (MILLED BASIS) OUT OF A TOTAL 500,000 TONS OF IMPORTS. ¶4. (SBU) ECONOFF SEPARATELY RAISED U.S. CONCERNS WITH SANDRO FANELLA OF THE FOREIGN TRADE OFFICE AT THE MINISTRY OF PRODUCTIVE ACTIVITIES. FANELLA EMPHASIZED THAT THE GOI WAS ACTIVELY PUSHING THE EU TO MODIFY THE CURRENT RICE IMPORT REGIME. FANELLA NOTED THAT ITALY BELIEVED A TRQ SYSTEM WOULD PROVIDE A MORE TRANSPARENT PRICING SYSTEM ON RICE THAT WOULD ASSIST ITALIAN RICE PRODUCERS IN MARKETING THCIR PRODUCT. ¶5. (SBU) MINAG CLAIMS THAT ITALIAN RICE PRODUCERS, UNDER THE CURRENT CONSOLIDATED SYSTEM LINKING THE INTERVENTION PRICE TO DUTIES, ARE DISADVANTAGED BY AN ERRONEOUS CALCULATION WHICH DOES NOT TAKE INTO ACCOUNT THEIR ACTUAL PROCESSING COSTS. ACCORDING TO MINAG THIS IS A REASON TO OPEN ARTICLE 28 NEGOTIATIONS. ¶6. (SBU) MINAG CONFIRMED THAT THE COMMISSION UNCLASSIFIED PAGE 04 ROME 00839 281059Z HAS POSTPONED DISCUSSION OF THE MOP FOR RICE UNTIL 10 MARCH. DURING THE INTERIM ITALY HOPES TO PERSUADE BELGIUM OR ANOTHER MEMBER WITH A MINIMUM OF TWO VOTES TO LEAVE THE BLOCKING MAJORITY. SCMBLER. NOTE: NOT PASSED TO ABOVE ADDRESSEE(S) UNCLASSIFIED > 2003ROME00839 - Classification: UNCLASSIFIED