ITALY ON LARGE AIRCRAFT SUBSIDIES TALKS WITH EU

UNCLAS ROME 003530

SIPDIS


STATE FOR EB/TPP/BTA/EWH
STATE FOR EB/TRA
STATE FOR EB/CBA
STATE FOR EUR/ERA
STATE FOR EUR/WE
STATE PASS USTR

E.O. 12958: N/A
TAGS: EAIR ECON EIND ETRD IT EUN FAA AVIATION
SUBJECT: ITALY ON LARGE AIRCRAFT SUBSIDIES TALKS WITH EU

REF: STATE 193990


1. On September 13, Economic Minister Counselor presented
the demarche on large commercial aircraft subsidies to
Foreign Ministry Director General for Multilateral Economic
and Financial Cooperation, Giandomenico Magliano, and Office
Director Diego Ungaro. EcMin also conveyed the demarche
separately to Gabrielle Checchia, Diplomatic Advisor to
Minister of Productive Activities (MPA) Marzano.


2. Magliano said that the MFA and MPA were in the process of
discussing the U.S. initiative to arrive at an Italian
government position. Nevertheless, the DG stated clearly
that he believed it is "reasonable to update" the 1992
U.S.-EU agreement on large civil aircraft and noted that
while subsidies were important in the past, market-based
forces play a bigger role today.


3. Magliano stated that the U.S. and EU should keep this
issue from becoming a high profile, controversial
transatlantic issue. In this context, he welcomed the
forward-looking, constructive tone of the demarche. Magliano
also promised to share our demarche with the Foreign Ministry
Office of EU Integration, both in Rome and in Brussels.


4. Ungaro asked if Washington was making a similar demarche
to Japan, given Japanese government assistance for aerospace
development. Economic Minister Counselor indicated that this
demarche was for EU member states only, but agreed to convey
Ungaro's point to Washington.


5. Magliano also offered his view that the U.S. and EU had
taken different tracks to support their respective aerospace
industries. The EU chose concessional loans, while the U.S.
provided grants for research and development (R&D). He asked
if support for R&D would be included in the proposed talks.


6. Comment: Our conversation with the MFA's senior economic
official left us with the distinct impression that, in
intra-EU discussions, Italy will be broadly supportive of the
reopening and updating the 1992 agreement. End Comment.

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2004ROME03530 - Classification: UNCLASSIFIED