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.

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Yishai's Priorities
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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.

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Foreign Workers
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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.

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Standards and IPR
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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.

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Convergence
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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.


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The office
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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.

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