GERMANY HONING TRANSATLANTIC ECONOMIC INITIATIVE

C O N F I D E N T I A L SECTION 01 OF 02 BERLIN 003518

SIPDIS

SIPDIS

STATE FOR EB/TPP, EUR/ERA, AND EUR/AGS
USTR FOR DDWOSKIN, MMOWREY, SDONNELLY
USDOC FOR KPARSONS

E.O. 12958: DECL: 12/14/2016
TAGS: ETRD EFIN ECIN KIPR PREL GM
SUBJECT: GERMANY HONING TRANSATLANTIC ECONOMIC INITIATIVE

REF: A. BERLIN 1747


B. BERLIN 3076

Classified By: DCM John Koenig for reasons 1.4(b) and (d).


1. (C) Summary: The Chancellor and other senior German
officials continue to note Germany's economic agenda for its
EU presidency includes promoting a more highly integrated
transatlantic market place, while at the same time
reiterating support for a successfully concluded Doha
Development Agenda (DDA). The exact parameters of the
Chancellor's transatlantic economic initiative have continued
to evolve over the past four months, moving from exploring
the possibility of a transatlantic free trade agreement
(TAFTA) (ref A) to the current formulation, which focuses
mostly on overcoming or alleviating regulatory barriers.
Merkel recently brought together leaders from business and
government to help define this transatlantic initiative. The
reformulation resulted from German officials concluding a
free trade agreement would not achieve much in terms of
tariff reduction on non-agricultural products and would face
the same challenges on agriculture market access the EU and
U.S. are currently confronting in the DDA. The Chancellery
and other ministries have become more careful to stress that
the primary objective remains a successful Doha Round, but
that they also see the transatlantic market place initiative
as something which could subsequently contribute to improved
prosperity on both sides of the Atlantic. German business
and government officials say they plan to reach out to
parliamentarians and Members of Congress to discuss the
initiative. End Summary.

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Fleshing Out German Thoughts on Transatlantic Economic
Cooperation
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2. (SBU) Taking a further step to refine thinking on
increasing trade between the U.S. and EU, representatives
from German government and business met November 22 at the
Chancellery to discuss how to integrate further the
transatlantic market economy. Starting from a premise that
any type of a transatlantic free trade agreement is
unrealistic, Chancellery and business representatives from
the Federation of German Industries (BDI) have sought to find
a more pragmatic way forward. Both government and business
representatives characterize their initiative as
complementary to Doha, rather than an alternative or
competing idea. All continue to stress the importance of a
successful DDA, even though many officials and business
people privately offer serious misgivings over the prospects
for the Round. At the request of Chancellor Merkel, who has
publicly stated her desire for a transatlantic economic
element in Germany's EU presidency, business and government
representatives created working groups in five key areas --
Energy, Finance, IPR, Standards, and Environment -- to flesh
out concrete proposals. Officials noted the first session
was intended to develop a work program for each group, with
the working groups presenting their recommendations on
December 20.


3. (SBU) According to Stefanie Conrad of the Chancellery's
Foreign Trade and G-8 Office, Merkel wants the U.S. and EU to
use what she sees as already excellent economic relations to
move forward on more challenging economic issues,
particularly on regulatory convergence and standards
recognition in the five aforementioned areas. The working
groups would develop recommendations in terms of what they
actually see as achievable. Chancellery officials see only
limited success in the previous efforts dealing with
regulatory and standards issues and say Merkel is looking to
give these efforts, and the overall transatlantic economic
relationship, a higher-profile. She wants political leaders
involved in the issues rather than leaving them to experts
for discussion. German officials see engaging Congress as an
important part of the equation. They see the Federation of
German Industry's annual US-German Roundtable, which brings
U.S. Members of Congress to Germany to discuss transatlantic
issues, as an opportunity for such engagement. The
roundtable is scheduled to take place in Hamburg in February

2007.

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BERLIN 00003518 002 OF 002


A Glimpse Inside A Working Group
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4. (C) Notes from the Chancellery's working group on IPR,
provided by a BDI representative, focused on fighting piracy
and cooperating more in the area of patents. On combating
piracy, the working group recommends coordinating diplomatic
efforts to apply political pressure on countries where piracy
originates; improving cooperation among customs agencies; and
taking political steps to implement a public consumer
awareness campaign on pirated and counterfeit goods. For
improving transatlantic cooperation on patents, the IPR
working group recommends reaching agreement on the
Substantive Patent Law Treaty (SPLT); recognizing common
U.S.-EU standards; establishing an international court
specializing in patent-law; and recognizing extended patent
protection for substances that are subject to licensing
procedures. The working group also recommended improving
cooperation between the EU and U.S. patent offices through
targeted programs like establishing exchanges of patent
reports, creating a central database for formal data on
patents, creating a worldwide standard patent application
format, establishing higher quality standards for patent
agencies and increased support for cooperation between U.S.
and EU patent agencies. For patent applicants or users, the
working group recommends prohibiting patents for business
practices and formally prohibiting the practice of "patent
trolling." (Note: These recommendations have yet to be
presented to the Chancellor for approval and will become part
of a larger paper listing the working groups'
recommendations. End Note).


5. (SBU) The transatlantic economic initiative might also be
a topic for the U.S.-EU Summit in April, according to
Chancellery officials. They note that Merkel is personally
involved in the decision making on this subject and thus
wants her stamp of approval on every aspect of this
initiative. As currently envisioned, points for discussion
would be on how to structure a more formal arrangement for
dealing with regulatory and standards issues, providing the
initiative with a strong political grounding, and agreeing to
clear goals that advance U.S. and German common interests
related to this initiative.

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Comment
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6. (C) Germany's current efforts to produce a workable
transatlantic market place initiative reflect a new approach
to old themes. The Chancellery's deliberate and evolving
approach shows as well the importance Merkel has attached to
producing a tangible objective for Germany's EU presidency
and a possible deliverable for the U.S.-EU Summit. Trade
affected by regulations and standards is a growing share of
the $3 trillion annual transatlantic ($160 billion
U.S.-Germany) economic relationship; progress in this area
could bring strong benefits to companies on both sides of the
Atlantic. The government's focus on standards and
regulations is a sign that German business and government
realize the transatlantic market place initiative cannot
replace a successful outcome to Doha, which remains a Germany
priority. By engaging a variety of upper and mid-level
business and government officials, German officials hope to
produce an honest assessment with broad commitment as to what
is achievable in terms of regulatory convergence and
standards recognition. Germany could use this assessment to
persuade skeptics in Brussels and other EU member states that
Germany's, and EU's, interests lie in accelerating the
important process of regulatory convergence and standard
recognition.
TIMKEN JR