GLASS HALF FULL: GERMANY BACKS CURRENT DOHA

UNCLAS SECTION 01 OF 02 BERLIN 001605 SIPDIS SENSITIVE USEU FOR PCHASE, DMULLANEY. STATE PASS TO USTR FOR DWEINER, LYANG; TO COMMERCE FOR MAC/ITA/AGORSHENIN/4212 E.O. 12958: N/A TAGS: ETRD ECON PREL EAGR WTRO EU GM SUBJECT: GLASS HALF FULL: GERMANY BACKS CURRENT DOHA PACKAGE REF: BERLIN 00666, STATE 123787 BERLIN 00001605 001.2 OF 002 ¶1. (SBU) SUMMARY. German government and industry fully concur in calling for a swift conclusion of the Doha Round. They believe that the current Doha package is the best result that can be obtained. Senior government and industry officials have signaled that they consider U.S. demands for more market access in emerging countries to be unrealistic. The German delegation to the WTO Ministerial from Nov 30 to Dec 2 described the atmospherics at the meetings as good, but expressed disappointment that no progress was made on substance. END SUMMARY. ¶2. (SBU) German government and industry stress that, especially in these economically difficult times, it is important to set a strong, long-term signal for world trade and against protectionism by concluding the Doha round. The German government believes that developing countries will not agree to further tariff cuts and has therefore called on the U.S. to accept the current Doha deal. The Ministry of Economics and German business associations, including the Federation of German Industries (BDI) and the Association of German Chambers of Industry and Commerce (DIHK),are fully aligned in their position on the Doha round. ¶3. (SBU) Dr. Axel Nitschke, Deputy CEO of the DIHK and head of the division for international economic affairs, told Econ Counselor that, even though some German industry sectors (e.g., the chemical industry) are asking for sectoral agreements, the DIHK sees the overall package currently on the table as an acceptable outcome that benefits the German economy as a whole. Oliver Wieck, Chief of Foreign Trade, Economic and Development Policy at BDI, said his organization was not against sectoral agreements per se, but did not see them as a sine qua non for an agreement. He noted that Doha, like it or not, had originally been conceived as a development round, and this has shaped the expectations of the developing countries. Wieck remarked that, while the U.S. appears to see the Doha as a half-empty glass, Germany sees it as half full. ¶4. (SBU) Knut Bruenjes, the Ministry of Economics' Deputy Director General on WTO Affairs, expressed frustration that Germany, Europe's largest economy and the world's leading exporter, has little influence on WTO negotiations, since as an EU member it is not an authorized negotiator. The Germans were also disappointed that USTR Kirk did not have time to meet with the head of the German delegation, Ministry of Economics State Secretary Dr. Bernd Pfaffenbach, but held bilaterals with other countries with significantly smaller economies. ¶5. (SBU) Bruenjes stated that talk of a new "G-2" (the U.S. and China) has caused some unease with the Germans. He encouraged the EU and the U.S. to consult closely with one another about their approaches to China. The DIHK's Dr. Nitschke was less alarmed about a "G-2," but noted that, because of China's and the United States' enormous market size, both countries have a great responsibility to move Doha forward and address global imbalances. Nitschke also advocated closer EU-U.S. cooperation on China, notably on currency exchange rates. The BDI's Wieck said that, after the recent U.S.-China summit revealed some fundamental areas of disagreement, any worries he ever had about a "G-2" were completely dispelled. ¶6. (SBU) COMMENT. The U.S. and Germany continue to disagree on Doha. There seems to be no movement in the German position, and the U.S.'s view seems to have no impact on them. Both German government and industry continue to support the current package despite its limited benefits for the German economy. During a time of falling global commerce, as a country highly dependent on foreign trade, Germany deems it important to send a strong signal in favor of the world trading system by concluding the Doha Round. Given the German propensity, both in its own civil society and within the EU, to seek consensus, it is unlikely that Germany will press emerging economies for greater market access. This is particularly true given the designation of Doha as a "development round." The Germans consider it unrealistic that the advanced developing countries will make further market entry concessions at this point. END COMMENT. BERLIN 00001605 002.2 OF 002 MURPHY #