AMBASSADOR'S MEETING WITH SHAS CHAIRMAN AND TRADE

C O N F I D E N T I A L SECTION 01 OF 02 TEL AVIV 002413 SIPDIS DEPARTMENT PLEASE PASS TO USTR: ESAUMS AND SDONNELLY E.O. 12958: DECL: 06/20/2016 TAGS: ECON ETRD PREL PGOV KIPR IS KINR GTIP ECONOMY AND FINANCE ISRAEL RELATIONS SUBJECT: AMBASSADOR'S MEETING WITH SHAS CHAIRMAN AND TRADE MINISTER YISHAI Classified By: Ambassador Richard H. Jones for reasons 1.4 (b) and (d) ¶1. (C) Summary and Comment: In a June 19 meeting with the Ambassador, Minister of Industry, Trade, and Labor and Shas Party Chairman Eliyahu Yishai outlined his priorities as a minister as well as Shas's position on PM Olmert's realignment plan. The Ambassador enumerated USG concerns regarding pending trafficking in persons (TIP) legislation, trade barriers created by Israel's adoption of non-U.S. standards, and problems created by Israel's failure to sufficiently protect intellectual property. Yishai listened carefully throughout the meeting, but did not appear fully briefed on bilateral trade problems between Israel and the U.S. He deferred to his Foreign Trade Administration staff several times during the meeting. Yishai has already imprinted his own personal style on the office and brought with him to the ministry a more conservative personal office staff. End summary and comment. -------------- Yishai's Priorities -------------- ¶2. (C) Yishai said that one of his first priorities as minister of Industry, Trade, and Labor (MOITAL) is to re-focus attention on the labor part of the portfolio. He added that as part of this effort he would also allocate ministry resources to encourage innovation in small and medium-sized enterprises. Yishai said he wants to focus resources from the ministry's Investment Promotion Center on encouraging investment in development and peripheral areas of the country. Yishai was accompanied by Director of the Foreign Trade Administration Boaz Hirsch and his assistant, Roee Madai, as well as Director of Multilateral Agreements Yair Shiran, who also acted as the interpreter. -------------- Foreign Workers -------------- ¶3. (C) The Ambassador noted that the U.S. is concerned that Israeli law does not criminalize trafficking in persons (TIP) for labor exploitation. (Note: Israeli law provides sanctions against TIP for sexual exploitation. End note.) The Ambassador encouraged Yishai to support pending legislation that would criminalize trafficking for labor exploitation, emphasizing that the legislation would have the added benefit of ensuring that the minimum wage in Israel is not undercut by trafficked foreign workers. The legislation could actually help reinforce Yishai's goal of employing more Israelis, the Ambassador said as the demand for foreign labor is often driven by an employer's desire to artificially suppress wage costs. Yishai agreed that the issue of protection for foreign workers is very important, and said that in 1996 -- while minister of Labor -- he had sponsored the first legislation that improved the conditions for foreign laborers. Yishai described the trafficking of laborers and women as against Jewish ethics and also against human rights. -------------- Standards and IPR -------------- ¶4. (C) The Ambassador explained the problem that Israel's non-acceptance of U.S. standards creates for U.S. exporters, and encouraged Yishai to utilize existing Israeli law to help remedy the problem. (Note: Existing Israeli law allows for the adoption multiple international standards for a product, if it is in the best interest of the consumer. When Israel adopts a non-U.S. standard, ministry officials have chosen to allow market access for U.S. companies through a complicated waiver system, rather than by simply adopting a second standard. End note) Yishai appeared unfamiliar with the issue, and replied only after reading a hand-written note from Hirsch. Yishai responded that Israel is an open economy that is seeking to reduce government interference, but that he would encourage the "technical level officials" to get together on this matter, and that he would be happy to follow up on the issue in future meetings. ¶5. (C) The Ambassador then described for Yishai the two main concerns of the U.S. regarding intellectual property rights (IPR): the protection for pharmaceutical patents and the pending copyright legislation. The Ambassador detailed how lack of proper protection for pharmaceutical companies' IPR discourages investment in one of Israel's key medical sectors -- biotechnology. He also explained how the draft copyright legislation is Israel's chance to upgrade outdated copyright legislation for the digital age, and cited the growing importance of copyrights for the computer industry. Finally, the Ambassador noted that the U.S. is looking to re-engage Israel in discussions about IPR protection. After consulting with his advisors from the Foreign Trade Administration, Yishai replied that Israel believes that it complies with all international commitments, but that he is willing to continue dialogue on this issue. -------------- Convergence -------------- ¶6. (C) The Ambassador noted that during coalition negotiations there was intense speculation in the press on Shas's position on "hitkansut" (the Prime Minister's realignment plan). Yishai replied by saying that his working relationship with Prime Minister Olmert is more than 20 years old, originating when Shas was first established and before Olmert became mayor of Jerusalem. Yishai said that Shas is bound by the ruling of Rabbi Ovodia Yosef, who has approved the return of territories for peace. Yishai noted that Rabbi Yosef's decision is "firm." He concluded by saying that the Prime Minister is seeking a return to negotiations and that he "hopes it would be successful." Yishai indicated that he would be willing to further discuss the position of Shas on this issue once the alternatives are more clearly defined. -------------- The office -------------- ¶7. (C) Comment and Bio note: Many of the front office staff of the Minister of Industry, Trade and Labor have changed since Yishai took over as Minister. The staff, at least in terms of dress, appeared more religiously conservative than Olmert's staff and are likely Shas party loyalists. Inside the Minister's private office, the smoke filtration system installed during Olmert's tenure, so that he could indulge in a mid-day cigar, has been removed. Yishai wasted no time in adding his own personal touches to the office, including a sofa-sized framed photo of Rabbi Ovodia Yosef (the Shas spiritual leader) and numerous photos of other prominent rabbis. Yishai speaks almost no English and looked towards bilingual ministry staff to translate to and from Hebrew for him. His staff report that he is fluent enough in Arabic that he understood the recent phone call from Egyptian Trade Minister Rashid without the need for translation, but that his spoken Arabic is a Tunisian dialect. ********************************************* ******************** 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. ********************************************* ******************** JONES