CZECH REPUBLIC: HOPEFUL ON DDA BUT EXPECTING

UNCLAS PRAGUE 001678 SIPDIS SENSITIVE SIPDIS STATE FOR EB/TPP, EUR/NCE, E STAFF DAN MORRISON STATE PLEASE PASS USTR LISA ERRION COMMERCE FOR ITA/MAC/EUR MIKE ROGERS TREASURY FOR OASIA ANNE ALIKONIS E.O. 12958: N/A TAGS: EAGR ETRD WTRO EUN EZ SUBJECT: CZECH REPUBLIC: HOPEFUL ON DDA BUT EXPECTING LITTLE FROM WTO HONG KONG MINISTERIAL REF: A. PRAGUE 1526 ¶B. SECSTATE 211956 ¶C. SECSTATE 209236 ¶1. (SBU) SUMMARY: The 24 member Czech delegation to Hong Kong, led by Minister of Industry and Trade Milan Urban, is doubtful that progress can be achieved in Hong Kong and yet remains hopeful about the Doha Development Agenda (DDA). Both the Ministries of Industry and Trade and Foreign Affairs believe that a more realistic window for substantial movement on DDA is in 2006, as the EU negotiating position has hardened in the last two months, leaving less room for flexibility in Hong Kong. Although they explained that the EU agriculture proposal remains their best and final offer, the GOCR still hopes for progress on NAMA and services at Hong Kong. END SUMMARY. ¶2. (SBU) Econoffs met with the Ministries of Industry and Trade, Agriculture, Finance, and Foreign Affairs and delivered a letter from the Ambassador to their Ministers, stressing USG commitment to a successful Ministerial in Hong Kong and conclusion of an ambitious DDA in 2006, and urging EU movement on the agriculture proposal per reftel B. Both Ministries of Industry and Trade and Agriculture made it clear that there would be no progress on the EU agriculture position at Hong Kong, despite the more progressive position urged by the "northern tier" (Sweden, the Netherlands, Denmark, Finland and the UK),which the GOCR fully supports (reftel A). Instead, the GOCR is hoping there would be some sort of a side agreement on NAMA and services along the lines of the Swiss formula, although they did not elaborate how that might be achieved without a breakthrough in agriculture. ¶3. (SBU) When asked whether and how the internal EU dynamic has changed as a result of the pressures brought on by the new U.S. agriculture proposal, our interlocutors indicated that in the short run, the position of the agriculture hardliners has become even harder and prevailed within the EU. Nonetheless, the interests and positions of the small non-agricultural countries have also become clearer and more vocal, and the Czech Republic is cautiously hopeful that the EU position on agriculture will evolve, even if not in time for the Hong Kong ministerial. ¶4. (U) The GOCR is taking a rather large delegation to Hong Kong. The 24 delegates represent four ministries: Industry and Trade, Agriculture, Foreign Affairs, and Finance. The final internal GOCR delegation meeting will be held December ¶5. The head of the GOCR delegation, Minister Urban of Industry and Trade, will only stay for the first three days of the Ministerial, at which point his Deputy Minister Martin Tlapa, will take over. ¶5. (SBU) COMMENT: Compared to previous meetings with Ministry of Industry and Trade (the lead ministry on WTO issues),econoffs noticed three changes to the GOCR reaction to the U.S. agriculture proposal: greater certainly that there would be no further movement on the EU agriculture proposal before Hong Kong, the mantra "DDA is not just about agriculture," and attempts to downplay the impact of the U.S. proposal. We see this as a clear result of continued indoctrination from various EU meetings preaching that the EU must be united on this issue. These changes are in contrast to initial GOCR reaction to the U.S. agriculture proposal in October, which was more open and hopeful that the U.S. proposal can trigger change within the EU. As reported in reftel A, the Czech Republic has much to gain from movement at Hong Kong, especially in NAMA. However, they are resigned to the fact that Hong Kong will likely not achieve sweeping changes and instead, Czechs are hoping that 2006 will prove a better year for reducing trade barriers. END COMMENT CABANISS