(C) GOI MOVING AHEAD WITH DATA EXCLUSIVITY

C O N F I D E N T I A L SECTION 01 OF 02 TEL AVIV 001429

SIPDIS

FOR EB/IPE SWILSON AND NEA/IPA GLOGERFO
DEPARTMENT PLEASE PASS TO USTR NOVELLI, SAUMS AND PECK

E.O. 12958: DECL: 03/08/2015
TAGS: ECON ETRD KIPR IS ECONOMY AND FINANCE LABOR AND COMMERCE ISRAEL RELATIONS
SUBJECT: (C) GOI MOVING AHEAD WITH DATA EXCLUSIVITY
LEGISLATION

REF: A: TEL AVIV 1271 B: SAUMS-WEINSTEIN EMAIL OF

3/4/2005 (NOTAL)

Classified By: Ambassador Daniel C. Kurtzer for reasons 1.4 (b) and (d)



1. (C) This is an action request message. Please see
paragraph 8.


2. (C) Summary and Comment: Post has received a clear
message from Ministry of Industry, Trade and Labor (MOITL)
that the GOI intends to move ahead this week to have the
Knesset consider the data exclusivity legislation as part of
the Economic Arrangements Law (EAL). Despite previous
understandings, Israel will not wait for negotiations with
USTR to conclude before moving the legislation from the
Knesset Finance Committee to the plenary. The GOI claims it
intends to engage in good faith with the U.S. in scheduled
March 17 DVC discussions. Any amendments agreed upon during
the DVC can only be added to the EAL before the March 31
deadline for passage of the law. Post recommends that when
the Knesset Finance Committee votes to send the legislation
to the Knesset plenary, thus voiding our agreement, we
expeditiously inform the GOI that the USG is resuming
consideration to move Israel to the Priority Watch List
(PWL),even as we proceed with the negotiations. End
Summary/Comment.


3. (C) On March 7, Minister of Industry, Trade and Labor
Ehud Olmert signaled the Knesset Finance Committee to resume
debate of the provisions of the EAL that relate to data
exclusivity and patents in preparation for a committee vote
on the law. In response, EconCouns delivered Ref B points to
Yair Shiran, Director of International Agreements & Trade
Policy at MOITL. EconCouns emphasized that no agreement was
reached last fall during negotiations, that if the
legislation moved forward before the next round of
negotiations the U.S. would have to reconsider Israel's
placement on the Special 301 Watch List, and that the GOI
moving forward on the legislation at this time calls into
question how seriously they intend to engage with the USG
during DVC discussions.


4. (C) Shiran claimed that discussions by the Knesset
Finance Committee do not/not violate the January 2005
agreement "because there was no vote" on the matter. (Note:
The oral agreement called for Minister Olmert to "withhold
from consideration and debate" the two problematic provisions
of the EAL relating to data exclusivity and patents while the
US side froze consideration of Israel's elevation to the PWL
during the Out-of-Cycle Review (OCR). End note.)


5. (C) The GOI claims that it plans to bring new ideas to
the March 17 DVC, and hopes that the U.S. will do the same.
However, in the conversation with EconCouns, rather than
engaging in a constructive discussion about the DVC, Shiran
began to list the perceived failings of the US thus far in
negotiations. Most troubling was his contention that the GOI
cannot be blamed if negotiations fail to achieve a timely
agreement because the USTR letter from February 18 arrived
"late." (Note: No timeline was outlined during the January
2005 discussions between Minister Olmert and Ambassador
Kurtzer regarding the exchange of letters. End note.)


6. (C) Reliable industry sources report that the Knesset
Finance Committee was ready to take a vote Monday on the data
exclusivity law, but decided to delay the vote until
Thursday, March 10, 2005. Embassy contacts in the Knesset
indicate that a final vote on the EAL and budget is expected
to be delayed until after March 16. The legal advisor at the
Ministry of Health (MoH) confirmed that the Knesset Finance
Committee will have to vote on the legislation soon, so that
it can be sent back to the plenary for second and third
readings as part of the EAL. The final EAL must pass no
later than March 31 along with the budget. The MoH also
noted that it is possible, but difficult, to make amendments
when the bill is being considered by the Knesset plenary. If
the data exclusivity legislation passes in current form as
part of the EAL, any new amendments will take at least six
months to enact through the regular legislative process.


7. (C) Comment: Last week Minister Olmert stated his
intention to proceed with consideration of the law despite a
previous agreement to schedule March 17 negotiations. The
anticipated vote by the Knesset Finance Committee to allow
consideration of the bills by the Knesset plenary effectively
nullifies our previous agreement. We now face the prospect
of negotiating on March 17 under the threat of the GOI's
timetable for passage of the bill while still delaying USG
action on the OCR. If we are to be successful in getting the
GOI to fulfill its IPR obligations, it is imperative that we
regain the initiative in the negotiations. Not responding to
the GOI puts the USG at a disadvantage in the negotiations,
undermines our credibility, and makes progress at the
negotiations unlikely. End comment.


8. (C) Action recommendation: Post recommends that as soon
as the vote is taken by the Knesset Finance Committee, we
notify the GOI that, while we are prepared to continue
negotiating, the USG is also reviving consideration of the
OCR that could result in immediate elevation of Israel to the
Special 301 PWL.

********************************************* ********************
Visit Embassy Tel Aviv's Classified Website:
http://www.state.sgov.gov/p/nea/telaviv

You can also access this site through the State Department's
Classified SIPRNET website.
********************************************* ********************
KURTZER