GERMANS PLEASED WITH TEC PROGRESS; IDENTIFY PRIORITIES FOR

UNCLAS SECTION 01 OF 02 BERLIN 002207 SIPDIS SIPDIS SENSITIVE BUT UNCLASSIFIED E.O. 12356: N/A TAGS: ETRD EFIN EINV ECIN PREL PGOV EU GM SUBJECT: GERMANS PLEASED WITH TEC PROGRESS; IDENTIFY PRIORITIES FOR NEXT MEETING ¶1. (SBU) SUMMARY: German government officials and industry associations are upbeat about the results achieved at the first Transatlantic Economic Council (TEC) meeting on November 9 in Washington. Government officials also expect renewed focus on TEC during the Slovenian EU Presidency. German industry identified patent legislation, auto safety regulations and biofuels standards as its top priorities for the next TEC review in 2008. Right now, there is little desire to include new areas in the process. Industry and government representatives are seeking reassurance on the change of U.S. leadership of the Council. A main objective for the Germans is to get the legislative branches on both sides of the Atlantic more engaged. END SUMMARY. -------------- REFLECTIONS ON TEC PROGRESS -------------- ¶2. (SBU) The German business community is generally satisfied with the progress made since the inception of the Transatlantic Economic Council at the US-EU Summit in April. "The Transatlantic Council has made breakthrough decisions at its first meeting in Washington," said J|rgen Thumann, President of the German Federation of Industries (BDI) and Chairman-designate of the Transatlantic Business Dialogue. "Very soon businesses and consumers will benefit from a more integrated transatlantic market." Thumann was upset at the U.S. Chamber of Commerce's lukewarm evaluation of TEC's progress because he felt TEC had made significant progress. However, BDI later told EMIN that the U.S. Chamber of Commerce and BDI continue to cooperate well on TEC matters. (Note: The Ambassador reported TEC's progress to senior executives of BDI's member companies on November 26. End note.) ¶3. (SBU) Sectoral associations echoed BDI's praise. Even skeptics like the German Chemical Industry Association (VCI) said that TEC had outlasted previous attempts at closer transatlantic regulatory cooperation and set up dialogues to prevent new regulatory barriers. "The administrations on both sides of the Atlantic have committed to regulatory cooperation, and it is no longer [just] the stakeholders who call upon the administrations to act," Prof. Reinhold Quick, VCI's lobbyist in Brussels, wrote for a BDI publication. ¶4. (U) Among the TEC deliverables, U.S. acceptance of European firms' International Financial Reporting Standards (IFRS) statements stood out for special praise. IBM supported U.S. recognition of IFRS because it hopes the EU will make a reciprocal measure permanent by August 2008. Similarly, the Germany Savings Bank Association said its members will benefit from mutual recognition. ¶5. (SBU) German interlocutors remain concerned about supply chain security potentially hampering trade. BDI's Heiko Willems said the announcement of a road map to mutual recognition of trusted partner programs was promising, but he was disappointed it had not been made public. Weert Boerner, North American Desk Officer at the Ministry of Foreign Affairs, said German officials do not expect Congress to reverse its 100 percent scanning requirement. However, Boerner said they are debating whether to seek input into the Secure Freight Initiative pilot projects through the TEC to ensure credible findings on implementation and feasibility. In an apparent shift in tone, MFA Director General for Economic Affairs Ruediger von Fritsch also told EMIN that Germany and other EU Member States will not reject implementation of the requirement but rather will only insist on their involvement in implementation plans. These countries believe they can add value to the discussion and that a one-size-fits-all approach will not work for all ports. -------------- FUTURE INDUSTRY PRIORITIES -------------- ¶6. (U) German industry's strategy now is to conclude negotiations in the priority areas ("Lighthouse Projects") identified in the Framework Agreement. BDI representatives told EMIN that patent legislation is their top priority, followed by auto safety and biofuels standards desired by the German auto manufacturers. BDI believes TEC should focus only on key Framework priorities as new issues (e.g. poultry) could overburden its already booked agenda. "Once we have moved forward on the lighthouse projects, we can add new areas," explained Sigrid Zirbel, BDI's Director for the Americas. -------------- CHANGE IN LEADERSHIP -------------- ¶7. (SBU) The departure of Al Hubbard as Director of the National Economic Council and U.S. co-chair of TEC created nervousness among BERLIN 00002207 002 OF 002 German business representatives and some in the policy community about continued U.S. commitment to TEC. On November 29 Ambassador Timken assured a forum of CDU/CS parliamentarians, journalists and industry reprsentatives that the U.S.' commitment to TEC remain strong. German interlocutors were concerned tht Hubbard's replacement might not enjoy the sameaccess to President Bush, equivalent rank within he White House, or sufficient clout to engage Cainet secretaries. Some of this concern has beenalleviated by Embassy outreach after the announcemnt that Deputy National Security Daniel Price wil be U.S. co-chair. Boerner said Ministry of Foreign Affairs officials are familiar with Price and are receptive to his appointment. -------------- LEGISLATIVE ENGAGEMENT -------------- ¶8. (SBU) Policymakers and industry representatives increasingly call for greater legislative involvement to drive the process forward. Industry representatives and foreign affairs observers say prior attempts to remove non-tariff barriers fell apart due to the lack of legislative support and question how best to engage Congress in light of the upcoming elections in 2008. BDI is organizing its annual US-German Business Roundtable in Dresden in February 2008 and has invited the Ambassador as well as a number of Members of Congress to discuss the Transatlantic Economic Council. The high turnout for the Ambassador's address to the CDU/CSU Bundestag Caucus reflected the prominence of the issue in Chancellor Merkel's party. -------------- ROLE OF EU PRESIDENCY -------------- ¶9. (SBU) German stakeholders have mixed views on the importance of the EU presidency for TEC. BDI told EMIN that the presidency is now less important to the process and that the organization trusts European Commissioner Guenther Verheugen's political instincts to drive progress. Boerner said German officials were disappointed with the Portuguese presidency's lack of leadership on TEC, but they are optimistic that the Slovenian EU presidency will renew focus on the initiative. Despite Slovenia's size and smaller resources, Boerner noted that it began preparing for its presidency up to two years in advance. Germany allowed Slovenian counterparts to observe much of its deliberations as EU President so it could learn the mechanics of the role and develop a network of German counterparts to accelerate progress. Boerner expects Slovenia's time at the helm to benefit TEC because an EU President determines which initiatives become part of the political agenda and control the channels into Brussels required to resolve issues quickly. Andreas Nicolin, Head of the Chancellery's Foreign Trade Policy Division, told EMIN that Germany is already reaching out to France to ensure TEC remains a high priority during its EU presidency. Timken Jr