WTO TRADE TALKS: AUSTRIA UNITED AGAINST FURTHER

UNCLAS SECTION 01 OF 02 VIENNA 003840

SIPDIS

SENSITIVE

E.O. 12958: N/A
TAGS: ETRD EAGR PREL AU WTRO
SUBJECT: WTO TRADE TALKS: AUSTRIA UNITED AGAINST FURTHER
CONCESSIONS ON AGRICULTURE

REF: A) VIENNA 3586 B) VIENNA 3442

Summary
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1. (SBU) Austria's Agriculture and Economics Ministers have
announced that the GoA is "totally united" behind the current
EU position on agricultural market access. The Minister of
Agriculture, Josef Proell, and the influential Austrian farm
lobby have engaged in an intensive public relations campaign,
arguing the 2003 CAP reform should remain intact and that the
"U.S. and Brazil should offer more." The agricultural
lobby's arguments have overshadowed the Minister of Economy's
initial support for the U.S. agricultural proposal and the
MoE's desire to promote industrial and service exports.
Austria still hopes for an ambitious outcome by the end of

2006. During Austria's EU Presidency the first half of 2006,
the GoA will probably play the part of "honest broker" and
remain in the background on DDA talks. Moreover, it is
unlikely the GoA will press for further reductions in
agricultural support levels, with the governing People's
Party hoping to shore up support with the farm constituency
in advance of national elections in autumn 2006. End Summary.


Agriculture Minister: "Don't Touch 2003 CAP Reform"
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2. (SBU) During a December 5 press conference, Agriculture
Minister Josef Proell and Economics Minister Martin
Bartenstein proclaimed Austria is "totally united" behind the
present EC position. Proell emphasized that Austria would
ensure that the 2003 CAP reform remained intact and that the
EU's major trading partners accepted the need to continue to
include a category of sensitive products of up to 8% of
tariff lines. In a bizarre analogy, Proell likened the U.S.
and Brazil to "figure skating judges, who are quick to
criticize, but are unwilling to perform themselves." Proell
noted that a "Hong Kong II" would be necessary in 2006.


3. (U) Bartenstein, who had initially welcomed the USG
agricultural proposal in October, said the successful
conclusion of the Doha Round would indeed yield increased
world-wide economic growth. However, he cautioned that there
were concerns how these economic benefits would accrue both
across sectors and also between developed and developing
nations. Bartenstein underscored that there is no question
of "trading" gains in services and NAMA to the detriment of
agriculture.


Austrian Concerns With Further Agricultural Market Access
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4. (SBU) Gabriella Habermayer, Head of the Ministry of
Economy's Multilateral Trade Division, told Econ Unit Chief
December 7 that Austria had several general concerns
regarding further concessions on agricultural market access.
First, many Austrians believe philosophically that, without
adequate safeguards, the large, "industrialized" U.S.
agriculture sector would overwhelm Europe's farms. Second,
Habermayer said most Austrians supported continued financial
assistance for sustainable agricultural development,
environmentally-conscious policies, and strong consumer
protection capabilities. When pressed, Habermayer admitted
support in these areas fall within the less contentious green
box. Finally, Habermayer confirmed that the GoA strongly
opposed any reduction in the number of products exempted in
the sensitive products category.


5. (SBU) Habermayer said the GoA would "try to make the
best" out of the current situation in Hong Kong. Austria
would have preferred more progress on quantifiable
indicators, i.e., modalities, but Habermayer said the GoA
hoped there would be some progress on qualitative issues in
Hong Kong. According to Habermayer, services remain very
important for Austria, and the GoA is disappointed there has
not been more progress in this sector. Nevertheless,
Habermayer said the GoA understands that progress on services
depends on progress in NAMA and agriculture. Habermayer
added that the GoA believed the WTO could achieve an
ambitious outcome by the end of 2006 with intensified efforts.


The View From the Farm Lobby
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6. (U) Rudolf Schwarzboek, President of the Austrian
Agricultural Chamber and also President of the European
Farmers' Association, presented the farm lobby's views during
a November 29 conference. Schwarzboek claimed the
agricultural sector wanted Doha to succeed. However, in
Schwarzboek's opinion, reforms in Europe's agricultural
sector since 1993 have outpaced reforms in other sectors, so
success in Doha should "not come at the expense of
agriculture." Schwarzboek held up the CAP as a successful
common policy that other sectors, e.g., R&D, transportation,
energy, and fiscal, should emulate. Schwarzboek repeatedly
criticized the Commission for lacking a "democratic
orientation" in its decision-making.


Comment
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7. (SBU) The Ministry of Economy, the lead on trade
negotiations, was initially an advocate for more substantive
movement on agricultural market access in return for progress
on NAMA and services. However, the Agriculture Ministry and
the farm lobby began to dominate the debate, both publicly
and behind the scenes. Support for maintaining a large range
of sensitive products remains strong in
"environmentally-green" Austria, where most Austrians want
all their foodstuffs produced locally, or at least within the
EU.


8. (SBU) It is unlikely that Austria will be particularly
proactive in trying to push for an agreement during the its
Presidency the first half of 2006. As EU President, Austria
will need to play "the honest broker" within the EU and will
indeed focus more effort on resolving the EU's current budget
impasse, should the UK Presidency fail to conclude a deal.
Moreover, with national elections due in autumn 2006, the
governing People's Party and its popular Agriculture Minister
will undoubtedly look to shore up support among the farm
constituency.
MCCAW