COMMERCE ASSISTANT SECRETARY WILLIAM LASH FEBRUARY

UNCLAS SECTION 01 OF 02 MADRID 000752

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COMMERCE FOR 4000/ITA/MAC/AS
COMMERCE FOR 4200/ITA/MAC/EUR
COMMERCE FOR 6000/ITA/USFCS/AC
COMMERCE FOR 6950/ITA/MS/AERO

E.O. 12958: N/A
TAGS: ECON OVIP SP
SUBJECT: COMMERCE ASSISTANT SECRETARY WILLIAM LASH FEBRUARY
17 VISIT TO MADRID

REF: MADRID 0696


1. SUMMARY - Commerce Assistant Secretary William Lash and
DAS for Europe Eric Stewart conducted a full day of business
meetings in Madrid on February 17. The key meetings for
Boeing advocacy were sessions with Ministry of Industry,
Tourism and Trade Secretary General for Foreign Trade Alfredo
Bonet; Boeing CEO Harry Stonecipher with resident Boeing rep;
and U.S. Charge d'Affaires Bob Manzanares. Lash and Stewart
also held four IPR-related meetings. The GOS accepted in
principle Lash's proposal to hold a U.S.-Spain IPR seminar.

BOEING-RELATED ADVOCACY
--------------


2. In their session with Foreign Trade Secretary Bonet, A/S
Lash raised the Iberia Airlines fleet procurement issue
after a broad discussion of trade and IPR matters of mutual
interest. He gave the senior GOS official a letter from
Secretary Gutierrez for delivery to Industry Secretary Jose

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Montilla. Monet responded that he had just come from a
meeting with the Minister and Secretary of State for Trade
Pedro Mejia. The Gutierrez-Montilla call was discussed. The
Ministry also sees the initial communication between the two
as very positive. Bonet assured the senior USG visitor that
the Iberia procurement decision would be made on the basis of
commercial and technical merits of the two proposals.


3. The Madrid meeting with the Boeing CEO took place after
the Bonet meeting and after the Boeing officials had met with
Minister Montilla. The company officials were disappointed
with their meeting with the Industry Minister. Montilla had
reportedly asked Boeing what its plans were for industrial
cooperation. Without specifically saying that commercial
offsets would be required, Montilla wanted to hear what
Boeing would offer if selected. CEO Stonecipher's
description of their Madrid R&D Center investment and the
announcement earlier in the day that Spanish firm Gamesa
would be a supplier of engineering in the new B787 project
did not appear to satisfy the Minister. Boeing intends to
seek clarification from Iberia on how industrial cooperation
fits into this competition. U.S. company reps felt, however,
further industrial cooperation discussions could delay the
Iberia board selection decision for some additional weeks.

IPR-RELATED MEETINGS
--------------


4. INDUSTRY MEETINGS: Lash, Stewart, Charge, EconCouns and
EconOff met with representatives from the Business Software
Alliance (BSA),the local music industry association
(PROMUSICAE),the Federation for the Protection of
Audiovisual Intellectual Property, the local movie industry
association, and FEDICINE. The representatives described
Spain's IPR problems (see reftel for more detailed
description of the issues). Industry representatives lauded
the government's anti-piracy initiative, and they were
working with the government to improve it. Nonetheless, they
were skeptical whether it would have results in the fight
against piracy. They said it was not clear who was actually
in charge of the initiative and advocated the appointment of
a single coordinator. Several representatives advocated
including Spanish on the 301 watchlist. A/S asked whether
the idea of holding a U.S.-Spain IPR roundtable would
contribute to improving the IPR climate, and the participants
agreed that it would.


5. MINISTRY OF INDUSTRY SECRETARY GENERAL ALFREDO BONET
MEETING: Bonet noted that Spain was "lucky" to be off the
301 watchlist. He said Spain had extensive IPR problems
itself and noted that a Spanish elevator manufacturer had
found counterfeit elevators from China. Bonet noted that
Spanish trade officers in Beijing and Shanghai had been
instructed to work on IPR-related issues. Lash suggested
that it might be useful to conduct joint IPR-related
approaches to China and Bonet was receptive. Bonet noted
that his Ministry participates in the Culture Ministry's
anti-piracy initiative, although it was not in the lead. He
said his Ministry would be willing to participate in a
U.S.-Spain IPR roundtable, although again, under the Culture
Ministry's lead. Bonet will be traveling to Washington this
year. Mission will work with him to ensure he gets the
appropriate meeting in Washington.


6. MINISTRY OF CULTURE UNDER SECRETARY ANTONIO HIDALGO
MEETING: The Under Secretary and his staff described the
government's anti-piracy initiative, which is still being
developed in consultation with stakeholders. The Under
Secretary noted that it involved 11 ministries, and that the

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only reason all the ministries had agreed to participate was
because President (Prime Minister) Zapatero was personally
interested in the subject. Regulatory and legislative
problems were discussed reftel). The Ministry is committed
to finding a way for content companies to be able to provide
Internet Service Providers (ISPs) with "effective knowledge"
(the standard required by Spanish law to compel an ISP to act
against subscribers trafficking in pirated material) via an
administrative route. This is essential to curbing internet
piracy in Spain. Hidalgo was receptive to Lash's suggestion
to conduct and IPR roundtable, albeit one confined to
"technical issues." (Note: EconOff will confer with Culture
Ministry staff the week of March 1 Re: timing and content
of a Roundtable.)


7. MEETING WITH THE COMMISSIONER OF THE JUDICIAL POLICE JUAN
ANTONIO GONZALEZ GARCIA: Lash and Stewart received an
enthusiastic reception from Gonzalez and several of his staff
members. There is clearly a lot counterfeit and copied
material in Spain, some of it representing a health hazard.
For instance, the police spoke of copied exploding
cellphones. The police explained that they went on frequent
raids and arrested numerous people. However, convictions
were rare and companies sometimes settled prematurely
according to the judicial police. The police
representatives were pleased to participate in a U.S.-Spain
roundtable under Culture Ministry leadership.
MANZANARES