PA INTEREST IN WTO OBSERVER STATUS

UNCLAS SECTION 01 OF 03 GENEVA 000783 SENSITIVE BUT UNCLASSIFIED SIPDIS DEPT PASS USTR TEL AVIV FOR AMB, DCM, AND ECON USTR FOR CKLEIN, AVENKATARAMAN,SFRANCESKI, MMOWREY E.O. 12958: N/A TAGS: ETRD WTRO ECON PREL KWBG IS SUBJECT: PA INTEREST IN WTO OBSERVER STATUS Reftel: Jerusalem 1607 ¶1. (SBU) SUMMARY: On 24 September 2009, A team from the Palestinian Authority (PA) led by Ambassador Khraishi called upon USTR/Geneva Charge Shark to seek U.S. support for a request by Palestine to obtain observer status from the WTO General Council. The PA intends to formally submit its application for observer status on 28 September with a request that it be placed on the agenda for the 20-21 October 2009 meeting of the General Council. They said that the PA will not take no for an answer. However they also said that they do not want to politicize the process, nor go against the consensus-based WTO process, nor to be against any country. The Palestinian team noted that it had received expressions of support from several country groupings, including EC, EFTA, Africa, ASEAN and ACP groups, and asked for U.S. support. They also asked the United States to help convince Israel to not oppose its application. The Palestinian delegation repeatedly noted that WTO observership would contribute to its ability to develop WTO-compliant legal framework and institutions necessary for the development of a viable state. Responding with Washington talking points, Charge noted that the United States supports Palestinian observership at the upcoming Geneva WTO Ministerial Conference; supports the WTO's technical assistance efforts for the PA; and does not want to discourage the PA's institution-building efforts. However, based upon its understanding of WTO rules governing membership, the United States cannot give its support at this time to General Council observership and will likely not be ready by the October General Council meeting. The response of the PA team was friendly but firm. They plan to go ahead with their request and are hoping we will support it. They noted that their Prime Minister has raised this issue directly with us before and that we should expect him to do so again. End summary. ¶2. (SBU) The Palestinian delegation was led by Ambassador Ibrahim Khraishi, Permanent Observer of Palestine to the United Nations and other International Organizations in Geneva. It included Saeb Bamya, Economic Consultant and Trade Policy Advisor and Saad Khatib, Policy Advisor in the Ministry of Economy. Ambassador Khraishi recalled that this is a follow-up to Palestine's efforts in 1999 to obtain WTO observership. There had been a good atmosphere at that time with respect to its request and Palestine had then even secured Israeli support. However, the effort to pursue observership was suspended, for several reasons, including breakdown at the Camp David talks and Palestine's domestic political situation. In 2005, Palestine again undertook efforts to obtain WTO observership. Pursuant to advice received from United States and Israel, Palestine obtained ad hoc observer status for the Hong Kong Ministerial Conference, while it undertook preparations of its application for General Council observership. Palestine also opened a WTO reference center to provide information and to raise awareness about the WTO. ¶3. (SBU) Ambassador Khraishi said a decision was taken in Ramallah on 15 September to pursue again WTO observership. WTO observership is an important part of Palestine's efforts to establish all the institutions necessary for the establishment of a Palestinian state. Khraishi said the 15 September decision is consistent with the POTUS call for a two-state solution. The process to reactivate efforts to obtain observership began in Ramallah in meetings with diplomats and there have also been contacts in Washington. The item was also raised at the United Nations and positive responses were received. Ambassador Khraishi said the Palestinian Minister of Economy, who has the lead on the WTO observership, was present in Geneva on 22 September to attend an UNCTAD meeting. On the occasion of that visit, he met with the WTO Director General and the General Council Chair. He also met representatives from several groupings including the European Communities, EFTA, Africa, ASEAN and ACP countries, and received expressions of support from them all. They are seeking U.S. support and help in dealing with Israel. ¶4. (SBU) Charge responded per guidance from Washington, noting that there have been extensive interagency discussions in Washington over the past few days regarding Palestine's application for full GENEVA 00000783 002 OF 003 observer status at the WTO. He noted that the United States will be able to support Palestine's request for observer status at the upcoming Ministerial Conference and continues to support the WTO's technical assistance activities for the PA. He encouraged them to work with USTR to develop a plan for technical assistance for institution building. Regarding Palestine's request for full observer status, based upon our interpretation of WTO rules governing membership, we are not in a position now to say yes. While discussions are going on, he said he was not convinced that the United States would be in a position to provide the support they are seeking by the October General Council meeting and the agenda closes soon. The United States supports Palestine's institution-building efforts and its desire to have a WTO- compliant trade regime. ¶5. (SBU) Mr. Bamya responded that action on Palestine's observer request is ten years overdue and Palestine has already been an observer at a Ministerial Conference. He said the United States was able to secure observer status for Iraq in two weeks. Palestine does not want to politicize this process and it wants U.S. support. Palestine is serious about its state-building efforts and WTO observership would support those efforts. Palestine needs a positive signal at the trade level from the United States. On the technical level, it was noted that Palestine had obtained U.S. support in 2006, what has changed? The Palestinian delegation is in Geneva to ensure that this application is on the agenda for the General Council meeting, it will not lower its expectations and it needs U.S. help in convincing Israel. ¶6. (SBU) Mr. Khatib asked Charge Shark to explain the U.S. technical concerns with its application. He went on to note that Palestine has already placed on the table a proposal for a new free trade agreement where the United States would deal with Palestine as a separate entity. Khatib expressed Palestine's appreciation for the technical assistance that has been provided by the United States, noting that it has been positive and results-oriented. ¶7. (SBU) Ambassador Khraishi noted that elections are coming in Palestine and his group represents the pro-peace movement. He registered concern that his group could be "cornered" if U.S. support is not forthcoming. The Ambassador emphasized that Palestine is seeking observer status, it is aware that accession to the WTO takes a lot of time and effort. Palestine hopes to achieve independence within five years. He maintained that observership will not cause a problem for Israel, which supported it in 2005. Palestine does not want to have another United Nations-style political "front," but it wants to see the United States implement POTUS' objective of developing a Palestinian state. He requested U.S. good offices to convince Israel that this is an effort to obtain economic peace. ¶8. (SBU) Charge expressed appreciation that Palestine was making its request on a WTO consensual basis and that it did not want to politicize the issue. He said he noted well the comments made and would refer them to Washington. Responding to Bamya's comment regarding the timing of Iraq's observership, Shark noted that he had personally been involved in that process and it took months of hard work, not two weeks as claimed. (Note: From their reaction it appears that they knew this.) He noted that Palestine should not assume from his comments that when we speak of legal issues, we mean something else. With respect to Khatib's question about the specific technical concerns relating to the application as a separate customs territory, Shark responded that it would be inappropriate for him to go into detail as we are still reviewing the matter but that it relates to the question of whether Palestine "has full autonomy" over all aspects of its trade regime. ¶9. (SBU) Mr. Khatib said Palestine's trade regime is based upon a customs union with Israel, which was created as a transitional arrangement to avoid a shock to the system when Palestine is separated. Under the customs union, Israel performs customs clearance, but other aspects, including intellectual property GENEVA 00000783 003 OF 003 protection, antidumping, investment, are under Palestinian control, so Palestine has effective control over its market. Palestine is now instituting a structure to perform its own customs clearance and Palestinian agents have performed clearance under view of Israel, with EU observers. Palestine is also in the process of redrafting its competition law, has adopted patent and copyright laws and is finalizing its trademarks law. ¶10. (SBU) The meeting concluded with Mr. Bamya saying that Palestine will put in its observership application to the General Council on Monday, 28 September. "Palestine will insist until the last minute that it will not accept no as answer and will use its friends." It asked for U.S. support and expressed hope that Israel will not play politics. Palestine does not want to go against the WTO consensus basis nor against any country. Shark