NEW SPANISH SECRETARY OF STATE FOR TRADE SUPPORTS

UNCLAS SECTION 01 OF 02 MADRID 001838 SIPDIS STATE PLEASE PASS TO USTR MOWREY AND SANFORD; STATE FOR EUR/WE AND EB/IPC JURBAN E.O. 12958: N/A TAGS: ECON ETRD KIPR SENV EAGR SP SUBJECT: NEW SPANISH SECRETARY OF STATE FOR TRADE SUPPORTS TRADE LIBERALIZATION REF: A. MADRID 1673 ¶B. MADRID 1651 ¶C. MADRID 1465 ¶1. SUMMARY: In our first meeting with new Secretary of State for Tourism and Trade Pedro Mejia Gomez, he told us that Spain fully supported EU Trade Commissioner Lamy's efforts to move forward Doha negotiations and was not overly concerned about potential loss of agriculture subsidies, as long as there was reciprocity. The GOS is disappointed that investment is not the EU's choice for priority Singapore Issue, but will not fall on its sword over it. Mejia expressed relief that Spain was not included on the Special 301 Watchlist and stressed his interest in working with the USG on intellectual property issues. END SUMMARY ¶2. On May 12 DCM, Economic Counselor and Econoff met with Secretary of State for Tourism and Trade Pedro Mejia Gomez. SIPDIS Mejia was accompanied by new DG for Trade and Investment Oscar Via Ozalla and Nicholas Lopez Lopez, Deputy Director for Trade and 133 Committee titulaire. While Mejia only recently took possession of his office, he has significant experience as a trade functionary in previous administrations (see reftel A for biographic info).Mejia said the Spanish strongly supported the Fischler-Lamy letter which pushed for movement forward on Doha Round negotiations via reduction of agricultural subsidies. He noted, however, there would be no support for the move unless it was met with reciprocity from what Mejia termed as "traditional protectionists" including the United States, Japan, Canada and Australia. He acknowledged that Spanish farmers were not happy at the prospects of receiving fewer subsidies, but Mejia pointed out that changes in EU export subsidies schemes would not necessarily have a large impact on Spain. He estimated the effect on Spain would be "medium to low." ¶3. Mejia conceded that in the interest of making progress in overall Doha negotiations it made sense to focus on only one Singapore Issue. He said he agreed with Trade Commissioner Lamy that trade facilitation was important, especially for developing countries. That said, the GOS continues to be interested in all four of the Singapore Issues, especially investment. Mejia said that with such a high level of Spanish investments in Latin America, it would be ideal to make progress in eliminating barriers and restrictions through a multilateral investment agreement. Spain knows there is little support at present for this. ¶4. We took the opportunity of the meeting to highlight U.S. concerns on issues such as biotech and REACH chemicals policy since in the past we found that the Ministry of Industry (formerly the Ministry of Economy) preferred to let other ministries run with these issues despite clear trade implications. Mejia admitted to not being familiar with the issues, so Lopez quickly briefed on the GOS position on biotech saying that Spain has almost always voted in favor. He claimed that the sudden change to abstentions in two recent votes did not signify that the new administration was changing direction. He claimed the GOS remained open on biotech. (NOTE: Based on our conversations with officials in other ministries and in the industry, we are not so sanguine. See reftel C.) We and Lopez also briefed on REACH. We subsequently sent Mejia the latest REACH demarche points for his information. ¶5. Even though Mejia had been present at the Ambassador's recent courtesy call on Minister of Industry, Tourism and Trade Montilla (reftel B),we reiterated our points on U.S. concerns about protection of intellectual property rights in Spain. Mejia had obviously been briefed on this issue and expressed relief that Spain had not been named to the Special 301 Watchlist despite the high levels of piracy. He underscored Spanish commitment to combating piracy. He told us that in the past 18 months enforcement officials have made enormous progress in their crack down on street sales of pirated goods. Mejia admitted that the GOS has responded not only to U.S. government and industry pressure, but to demands from the Spanish music industry which has also been greatly effected. He emphasized GOS interest in cooperating with the USG to make further progress in the fight against piracy. ¶6. Mejia asked for the latest information on progress on the Hill to move forward legislation to repeal Foreign Sales Corporation. He termed Senate passage of a draft law to be "a significant step forward." ¶7. COMMENT: Mejia appears to be knowledgeable and reasonable. Contacts tell us he has the support and respect of trade bureaucrats working for him, something his predecessor did not enjoy. Under his management it looks likely that Spain's trade leanings will not stray far from the previous administration's. ARGYROS