AREAS FOR POTENTIAL U.S.-EU COOPERATION ON CHINA

UNCLAS SECTION 01 OF 04 BRUSSELS 000353

SENSITIVE
SIPDIS

STATE: PLEASE PASS TP USTR AND FTC

E.O. 12958: N/A
TAGS: ECON ECIN ECPS KIPR ETRD EFIN CI EUN
SUBJECT: AREAS FOR POTENTIAL U.S.-EU COOPERATION ON CHINA


1. (SBU) SUMMARY: The U.S. and EU share strong interests in
coordinating economic engagement with China over a broad
range of sectors, including health and safety, competition,
ICT policy, trade, IPR and investment concerns. The EU is
working with China actively in these areas, and seeks greater
cooperation with the U.S. in dealing with China across the
board. EU officials believe that presenting a united front
to the Chinese is more effective than pursuing goals
bilaterally and can avoid overlap and duplication of effort.
European Commission officials from a variety of sectors
argued that persistence is key when negotiating with the
Chinese, who consistently take long term outlooks to economic
and social issues. European Commission staff suggested
several areas for improved sharing of information and
coordination of efforts. END SUMMARY.

PRODUCT SAFETY DISCUSSIONS: A MODEL FOR OTHER SECTORS
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2. (SBU) Existing trilateral discussions among the U.S.,
China and the EU on product safety are perhaps the best
example of U.S.- EU cooperation regarding China, and the
European Commission would like to see this cooperation
deepen. U.S. Consumer Product Safety Commission (CPSC)
Acting Chair Nancy Nord and European Commission Director
General of Health and Consumer Protection (SANCO) Robert
Madelin jointly visited China to discuss quality assurance
for toys and electrical equipment in September 2008; this
dialogue was continued in a trilateral meeting with CPSC
Acting Chair Nord and Consumer Protection Commissioner
Meglena Kuneva with their Chinese counterpart, General
Administration for Quality Supervision, Inspection and
Quarantine (AQSIQ) Minister Li in Brussels in November 2008.
A follow-up meeting is expected in 2009. In addition, China
participated in the November,2008 1st International Risk
Assessment Conference, hosted by DG SANCO with the support of
OMB. Discussions among the EU, U.S. and Chinese are ongoing,
with a formal follow-up expected in 2009, perhaps in China.


3. In a meeting at SANCO with EconOff on February 11, the EU
Policy Officer for Consumer Strategy, Representation and
International Relations Bartosz Hakbart described several
areas where the EC would like to work more closely with the
U.S.

a. Increased DG SANCO - Federal Trade Commission (FTC)
cooperation on a variety of issues, including trade with
China. FTC and DG SANCO have regularly scheduled video
conferences. DG SANCO has a mandate from the European
Council to try and improve cooperation with the FTC.

b. Exchanging information -- The Consumer Product Safety
Improvement Act of 2008 gave authority to the CPSC to share
information with foreign governments for purposes of
investigating and/or engaging in enforcement proceedings
related to possible violations of its laws, if agreed to in
an appropriate memorandum of understanding. DG SANCO would
like to reach agreement with USG on meeting the requirements
for sharing this type of information regarding Chinese
products. According to Hakbart, the majority of consumer
goods sold in the EU that involve safety problems either are
proven or are suspected to be Chinese imports, and these
goods are often shipped simultaneously to the U.S. and the
EU. Under current rules, the EU and U.S. inform each other
officially about safety issues at the same time as this
information is released to the media. Earlier notification
could allow both sides to contribute to investigations, and
get messages out sooner to to consumers about potentially
dangerous products.

c. Coordinated study visits - Chinese leaders frequently
travel to the EU and U.S. on programs to learn about best
consumer safety practices. EU and U.S. officials, for their
part, travel to China to provide training and technical
advice. Sharing information about these visits and
coordinating them when possible, said Hakbart, would help to
reinforce common messages.

FOOD SAFETY
--------------


4. (SBU) DG SANCO also handles food safety issues and
threats to public health. In a February 4 meeting with
EconOff, the DG SANCO Team Leader for International Relations
for Public Health Canice Nolan said the Commission would like
to work more closely with the U.S. in both these areas. From

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a public health perspective, Nolan stressed, the EU's primary
concern is the possible appearance of pandemics originating
in Asia, such as more infectious strains of Avian Influenza
(AI) or new outbreaks of severe acute respiratory syndrome
(SARS). The Commission wants increased transparency, better
timeliness of reporting, and improved exchanges of best
practices and technical advice with China, and welcomes our
cooperation in all these areas.


5. (SBU) Nolan also thinks there is room for improved
cooperation in the area of food safety. SANCO already has
informal cooperation with both FDA and CDC on these topics,
but the EU wants better mechanisms in place to share
information more quickly and efficiently. The embedding of
FDA staff at the European Medicines Agency in London, the
European Food Safety Agency in Italy, and the placing of an
FDA Attache at USEU Brussels over the next few months should
move this process forward.

COMPETITION AND TECHNICAL ASSISTANCE
--------------


6. (SBU) At DG Competition (DG COMP),EconOffs met on
February 13 with Policy Officer for International Relations
Torben Toft and Desk Officer for Formulation of
International Competition Policy Holger Dieckmann to discuss
cooperation in the areas of merger and antitrust policy.
Toft said that Chinese officials are still learning about
international competition practices, noting that the new
Chinese anti-monopoly law just came into effect in August
2008, and its new anti-monopoly agency is still being
established. He explained that Chinese officials have
studied U.S. and EU competition law carefully, "cherry
picking" what suits them from each system.


7. (SBU) Toft added that the U.S. and EU have for several
years sent technical advisers to China to provide training
and hold conferences on anti-trust and anti-monopoly policy.
Both the EU and U.S. also bring Chinese officials to their
respective capitals for additional competition exchanges.
Coordinating these events could help to reinforce messages,
prevent the Chinese from playing the U.S. and EU off against
each other, and save resources for both sides by eliminating
unnecessary duplicate trainings. Toft noted DG COMP,s
interest in working with the U.S. to get China to take
measures needed for it to join the International Competition
Network (ICN),which would move Chinese antitrust practices
closer to the international norm.

INFORMATION TECHNOLOGY AND TELECOMMUNICATIONS
--------------


8. (SBU) At DG Information, Society and Media (DG INFSO),
EconOff met with the Deputy Head of Unit for International
Relations Maria Carbone, Head of Section for India and China
Jean-Yves Roger, and International Relations assistant
Anne-Marie Vesdrevanis on February 4. They insisted on the
need for the EU and the USG, as well as U.S. and EU business
communities, to present a common front against Chinese
protectionism. They discussed the January announcement by
the Chinese government to further develop third generation
(3G) telecommunication networks, and the opportunities this
offered for U.S.-EU cooperation. They expressed concern that
the Chinese will claim publicly to allow foreign companies to
compete in this new market, but secretly work hard to keep
them out. They noted that already, while China has 13000
licensed Value added Telecom Services, fewer than 50 foreign
companies have been granted one of those those licenses.
They saw the same pattern emerging with the 3G licensing
process, when Chinese Premier Wen Jiabao claimed during his
January 30-February 2 visit to Europe that while foreign
companies were free to apply for 3G licenses, none has shown
interest.


9. (SBU) The INFSO staff discussed Chinese insistence on
monitoring and controlling access to the Internet. In
particular, they are focused on their requirement that all
computer encryption devices within China be of Chinese
manufacture. Carbone noted that Commissioner for Infomation,
Society and Media Viviane Reding has frquently and publicly
denounced Chinese censorhip of the internet, which has
created a strained relationship with her Chinese
interlocutors.

PLENTY OF ROOM FOR ADDITIONAL TRADE COORDINATION
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10. (SBU) EconMinCounselor met February 3 with Director
General for Trade Mauro Petriccione to discuss, among other
topics, areas of high level cooperation with the U.S. in
China. Petriccione described U.S.-EU cooperation on Chinese
trade issues as well-developed, and the need for further
cooperation as well-articulated, because China is our most
intractable trade partner. He said that he saw no "magic
solution" to the this problem, and stressed the need for
consistency and perseverance in pushing for US-EU common
goals in China, forgoing any "flashy" short term political
achievements.


11. In the past, U.S. -EU cooperation on trade with China
was focused on reducing the trade deficit, especially by
trying to encourage Chinese imports and consumption.
However, the economic crisis is helping to take care of that
problem by reducing U.S. and European demand. The primary
focus now is countering threat of protectionism. The U.S.
and EU need to ensure the publically-funded recovery packages
are not exclusively domestic.


12. (SBU) Petriccione wants to reach out to the leaders of
the U.S. Strategic Economic Dialogue, and to host the new
USTR and other key trade officials, as soon as they are all
in place. He is eager to build the same level of cooperation
and trust that the EU enjoyed under the previous
administration.


13. (SBU) Petriccione said he feels China is invested in the
WTO, but is not deeply concerned about its success in the
short term. If the current problems with the Doha Round
threaten to damage the WTO system, China would step in and
use its maximum influence to prevent such damage. He warned
against believing that China has significant influence over
India, or that India stands alone on the issues that brought
the Doha Round to a halt in summer 2008.


14. (SBU) The existing U.S.-EU IPR enforcement working group,
which was established in 2006, has highlighted our joint
efforts on China. The working group has produced joint
training activities in Beijing in 2008 and other commitments
to prod China toward stronger IPR protection. The working
group will continue to make IPR support for China a priority.


INVESTMENT DIALOGUE DISCUSSES CHINESE INVESTMENT BARRIERS
-------------- --------------


15. (SBU) Also, the U.S.-EU investment dialogue, (established
in 2007),which is led for the U.S. by the Treasury
Department and USTR and for the EU by DG TRADE, is discussing
Chinese and other third country investment barriers. A
forthcoming investment dialogue videoconference will focus
exclusively on discussion of Chinese investment barriers,
considering strategies for joint approaches and identifying
next steps.


COMMENT
--------------


16. (SBU) COMMENT: The U.S. and EU share the world's most
important economic relationship, based on common interests
and common values. The bilateral U.S.-China and EU-China
relationships are also critical to the global economy, but
can be more challenging due to diverging cultural, economic
and political interests. The EU is anxious to improve
cooperation with the U.S. on China on a broad range of
economic issues. U.S. - EU cooperation in areas of product
safety, trade policy and market access when dealing with
China is already good, but there are areas for improvement
here and in competition policy, ICT, IPR, investment and
other sectors of the economy. Commission officials believe
that presenting a united front to the Chinese is more
effective than pursuing goals bilaterally, and may avoid
overlap and duplication of effort in providing technical
assistance and training. Commission officials from a variety
of sectors argued that persistence is key when negotiating
with the Chinese, who consistently take long term outlooks to
economic and social issues.


MURRAY


MURRAY

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