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

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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

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2003ROME00839 - Classification: UNCLASSIFIED