UNCLAS LJUBLJANA 000059

SIPDIS


SENSITIVE

DEPT FOR EUR/NCE
DEPT PLEASE PASS TO USTR

E.O. 12958: N/A
TAGS: ETRD SI WTO
SUBJECT: SLOVENIA: ZOELLICK'S LETTER: "CONSTRUCTIVE AND
PRAGMATIC"

REF: A. SECSTATE 06662


B. LJUBLJANA 030

Sensitive but Unclassified. Please protect accordingly.


1. (SBU) On 20 January, Econoff and Econ Specialist followed
up an earlier conversation with Dmirtij Grcar, State
Undersecretary for Multilateral Affairs at the Ministry of
the Economy, examining Ambassador Zoellick's letter to his
ministerial counterparts (ref A). Reaching into his drawer
and pulling out the letter with notes scribbled on the
margins, as well as a five page summary of points, Grcar
proceeded to explain his views. He noted that he was
"surprised" by the European Commission's comments on the
letter thus far. "I am surprised that the Commission is
surprised that a letter came, but also by its overall
lukewarm reception of the proposals included." Grcar credits
the Commission's tepid reaction to the letter's content to a
"concern that the U.S. is backtracking from the joint
agreements made prior to and during Cancun." The Commission
will continue to hold fast to the notion of the Singapore
issues because it has to show something in return for making
agricultural concessions, Grcar commented. Gcrar was not
forthcoming, however, sharing the Commission's view in light
of the missive. "The Commission does not allow any
discussion about tactics and strateg," Grcar said.


2. (SBU) For his part, Grcar dscribed the letter as
"constructive and pragmati" considering that many government
officials andtrade observers were pessimistic about this
years trade discussions as a result of the Cancun debace,
U.S. elections, and EU enlargement. "The leter is very
positive because it lays out a vision placing the most
contentious issue -- agricultue -- at the top of the list.
There is no doubt tat we have to deal with agricultural
issues if we want to move the trade agenda forward," Grcar
noed. He was in complete agreement with the letter' call
to support and to promote "South-South" trde and to increase
the participation and the invlvement of capitals in the
process. In his view, the letter fails to address the type
of "defensie mechanisms" allowable as trade restrictions
diappear; the manner by which food assistance progras may
be conducted; and, a mechanism to phase ou and to deal with
export grants. He was quick to point out, however, that
those are issues that my be engaged upon once negotiations
get back on rack. The re-start of negotiations is the key.
rcar was adamant that a return to the negotiation table was
vital, but also recommended that the "important world trade
players" devise a "manageable mechanism" to ensure the
progress of the Doha Development Agenda (DDA), without
falling victim to "single-issue" interests.


3. (SBU) Grcar was highly critical of the current WTO
leadership, remarking that it is imperative that the
Secretary General act as a catalyst and earn the respect of

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large and small countries alike. Although not openly
advocating for the current WTO Secretary's resignation, Grcar
contrasted the work done by previous GATT and WTO
Directors-General who "were unwilling to succumb to pressures
and kept the discussions alive." Not only does Grcar see the
need for a more dynamic Secretary, but also advocated
strongly in favor of reforming the institution's
policy-making structures. "Cancun proved that we need to
reform the WTO policy making mechanism. There are countries
that come to the table with serious offers and ideas, while
there are others, that due to their limited capacity, cannot
keep up and adjust to changing situations rapidly.
Overwhelmed, these countries proceed to block any measure --
no matter what it may be -- because they cannot follow and
understand the arguments and proposals." He suggested that
the WTO establish working groups to facilitate discussions
and negotiations. Upon reaching agreement, the working group
would present the results to the entire membership for
further action. In Grcar's view, the WTO would "cease to
become relevant" if it could not undertake and complete
"serious negotiations."


4. (SBU) COMMENT: Grcar's positive reaction to Zoellick's
letter reflects the importance the GoS places on developing
international trade in a multilateral framework, and
Slovenia's traditional "bottom line approach." Grcar's calls
for an active WTO leadership, a working group arrangement,
and a concrete agenda embody the Slovenes' desire to
reinvigorate international trade talks. Because of
Slovenia's dependency on international trade and its
commitment to multilateral fora, we can expect the GoS to be
receptive and supportive of initiatives and measures
fomenting trade and empowering multilateral institutions as
long as it doesn't have to lock horns with the European


Commission. END COMMENT.
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