AUSTR CHRIS WILSON VISIT TO SAUDI ARABIA

UNCLAS SECTION 01 OF 03 RIYADH 001425

SENSITIVE
SIPDIS

STATE PASS TO USTR FOR CHRIS WILSON, JASON BUNTIN
STATE PASS TO DOC FOR STEVEN GARRETT
DEPT FOR NEA/ARP, EB/TPP/BTA, E FOR U/S ROBERT HORMATS

E.O. 12958: N/A
TAGS: ETRD KIPR ECON EINV PREL SA
SUBJECT: AUSTR CHRIS WILSON VISIT TO SAUDI ARABIA

REF: A. 09 RIYADH 524

B. 09 RIYADH 575

C. 09 RIYADH 789

D. 09 RIYADH 793

E. 09 RIYADH 982

F. 09 JEDDAH 297

G. 09 RIYADH 1202

H. 09 RIYADH 1366

I. 09 RIYADH 1375

Summary
--------------


1. (SBU) Assistant U.S. Trade Representative for Europe and
the Middle East Chris Wilson visited Riyadh October 16 to 20
at the invitation of Deputy Minister of Commerce and Industry
Abdullah Al-Hamoudi. In all of his meetings, Wilson
delivered the clear message that the U.S. government
recognizes Saudi Arabia's significant progress on IPR
protection and awareness. Wilson also said the USG would
like to see Saudi Arabia make the improvements necessary to
move beyond the Special 301 process and towards a more mature
trade relationship. Wilson candidly requested assistance in
addressing the challenge of how to recognize Saudi Arabia's
progress while taking into account high piracy rates,
particularly in the area of copyright protection. He noted
specific action on imposing deterrent penalties on copyright
violators, actions to support a legal market, like software
audits, and reports on SAG actions to date would help Saudi
Arabia make a case for removal from the Watch List. This
dilemma was understood and many responded with concrete
examples of progress on copyright, patent, and trademark
protection which will be submitted by November 23 for
inclusion in the Special 301 Out-of-Cycle Review. Several
interlocutors requested USG and industry training and
technical assistance. The Saudis are eager to have their
hard work acknowledged and to move our trade and investment
dialogue to a more positive framework. End summary.


2. (SBU) During his recent five-day visit to the Kingdom,
AUSTR Chris Wilson met with several Saudi government
officials and industry representatives, including:

-- Minister of Commerce and Industry Abdullah Alireza
-- Minister of Culture and Information Abdulaziz Al-Khoja
-- Chairman of the Board of Grievances Ibrahim Al-Hogail
-- Saudi Arabian General Investment Authority (SAGIA)
Governor Amr Al-Dabbagh (septel)
-- King Abdulaziz City for Science and Technology (KACST)
President Mohammed Al-Suwaiyel
-- Saudi Food and Drug Authority (SFDA) President Mohammed
Al-Kanhal
-- Director General of the Saudi Customs Authority Saleh
Al-Khilewy (septel)
-- Saudi Arabia Standards Organization (SASO) Governor Nabil
Molla
-- Assistant Secretary for Economic Affairs at the Gulf
Cooperation Council (GCC) Mohammed Al-Mazrouy (septel)
-- Gulf Standards Organization (GSO) Director Anwar
Al-Abdullah
-- Deputy Minister of Culture and Information Abdulrahman
Al-Hazzaa
-- Deputy Minister of Agriculture Dr. Abdullah Al-Obaid
-- Intellectual Property experts from the Ministry of
Commerce and Industry
-- Pharmaceutical Industry representatives
-- Copyrights holders representatives

Beyond Special 301, Towards a Knowledge Economy
-------------- --


3. (SBU) Saudi officials, including the Ministers of
Commerce, and Culture and Information, stressed the
importance of the U.S.-Saudi trade relationship, though
expressed concern over the decline in U.S. investment in the
Kingdom relative to other countries (septel). Minister of
Commerce and Industry Alireza called for the Trade and
Investment Framework Agreement (TIFA) talks to be held at the
ministerial level to elevate the trade relationship. The
next TIFA meeting will likely be held next year in Saudi
Arabia. Alireza expressed interest in meeting USTR Ambassador
Kirk at the earliest possible opportunity, either at the TIFA
talks in Saudi Arabia or on the margins of upcoming trips to
the U.S.

RIYADH 00001425 002 OF 003




4. (SBU) The Ministers of Commerce and Culture, as well as
the SAGIA Governor, framed our bilateral work on IPR
protection within the context of their long-term commitment
to implementing King Abdullah's vision to develop a
knowledge-based economy. Minister of Commerce Alireza said
he was focused on developing "software more than hardware,"
meaning he is concentrating on education, training, and
knowledge to grow Saudi Arabia's economy. Removal from the
301 Watch List would be one step towards fulfilling their
longer-term commitment to the King. Several officials,
including the Chairman of the Board of Grievances, emphasized
the religious implications of IPR violations, which are
considered "haram" or forbidden in Islam as they constitute
theft.

Copyright Protection
--------------


5. (SBU) Several Saudi officials understood the importance of
implementing a software audit to ensure they are in
compliance with Saudi law. The Commerce Ministry has
selected a company to modernize and upgrade its information
technology capacity -- a process which includes an audit to
ensure the Ministry's software is licensed. The Ministry of
Culture and Information has committed to working with the
Commerce Ministry to conduct and publicize its own audit.
The Commerce and Culture Ministries intend to use their audit
experiences to encourage other ministries to conduct their
own audits.


6. (SBU) Wilson emphasized the importance of the Saudi
government's referring a copyright case to the Board of
Grievances, the Kingdom's highest court capable of sentencing
violators to imprisonment, in his meetings with the Minister
and Deputy Minister of Culture and Information. Deputy
Minister Al-Hazzaa said that the Violations Review Committee
(VRC),which he chairs, understands that pirates will only
reduce their activities once they perceive a real threat of
punishment. In that regard, the VRC is working towards
referring a case to the Board, as demonstrated by the recent
decisions to fine two violators the maximum penalty (100,000
SAR each). Al-Hazzaa said this thorough approach would
improve the chances that an offender would receive a sentence
from the Board of Grievances that would actually serve as a
deterrent because it will demonstrate that the VRC left no
stone unturned.


7. (SBU) Al-Hazzaa said the number of raids, street
inspectors, public awareness campaigns, and VRC cases had
increased significantly in the past year, an indication of
how serious his ministry is about IPR enforcement and
awareness. As a new member of the Riyadh City Council,
Al-Hazzaa said he discussed greater cooperation between his
Ministry and the police, Interior Ministry, and other
security forces on copyright protection. Al-Hazzaa
reiterated his need for support from the private sector,
specifically in updating the ministry's website, training and
deploying inspectors, and raising awareness.

Patent Protection
--------------


8. (SBU) Pharmaceutical industry representatives lauded the
King's approval of the Exclusive Marketing Rights agreement
(septel) and noted progress on data exclusivity protection,
specifically the June data protection workshop held in
Riyadh. The President of the Saudi Food and Drug Authority
(SFDA),the regulatory body responsible for data protection,
said his organization would continue to work on data
exclusivity issues and looks forward to attending the next
workshop, to be held in Riyadh in November. Although
industry representatives were withholding ultimate judgment
on the newly-formed SFDA's capacity, they applauded the
SFDA's outreach to industry to date, noting that the SFDA
accepted 80 percent of industry's input when developing their
regulatory framework. SFDA has also officially recognized
PhRMA, which Wilson noted is a significant step.

Trademark Protection
--------------


9. (SBU) The Ministry of Commerce and Industry reported
significant progress in trademark protection since the

RIYADH 00001425 003 OF 003


trademark law was passed in 1999. The maximum fine has
increased from 50,000 SAR to 1 million SAR, the number of
inspectors has grown from 60 to 400, and the number of
branches has expanded from 18 to 28. In partnership with the
Customs Authority, the Commerce Ministry's Department for
Prevention of Commercial Fraud reports it has brought 361
cases to the court and seized 22,000 spare parts in the past
nine months. The Department requested USG assistance in
alerting the Customs Authority of counterfeit shipments
destined for the Kingdom.

Judicial Capacity
--------------


10. (SBU) The Chairman of the Board of Grievances emphasized
his court's strong, faith-based commitment to IPR protection,
and said he had "no doubt" the Saudi judiciary could protect
investors' rights. The Board has led by example, conducting
its own 1.5 million SAR audit through Microsoft to ensure its
software is fully-licensed. The Board also screens the
websites it uses to order legal publications to ensure they
are fully-licensed. The Chairman said the Board is committed
to training its judges on IPR protection and values the
training the U.S. has conducted to date. The Board members
"could not underscore more" how interested they are in
additional training in the U.S. They could send 10 to 12
judges to "see the U.S. judicial system at work" to a course
tailored to their needs and conducted in Arabic. They
stressed the importance of Arabic translation in any training
program.

Origin Labeling Requirements
--------------


11. (SBU) Wilson discussed industry's need for clarification
on origin labeling requirements with the Customs Authority
and the GCC Secretariat (septels). Al-Hamoudi suggested
creating a mechanism within the TIFA for trade facilitation
issues to include representatives from the Saudi Ministry of
Commerce and Industry, Customs Authority, Ministry of
Finance, and SFDA.

Government Procurement
--------------


12. (SBU) Wilson told Al-Hamoudi that the USG would like to
see Saudi Arabia accede to the Government Procurement
Agreement (GPA) of the WTO, as committed at the time of the
Kingdom's WTO accession. The Department of Commerce is
prepared to provide technical assistance by hosting a
workshop, and Al-Hamoudi said his Ministry was working on
potential dates for the event. Al-Hamoudi welcomed the
bilateral cooperation and said he would suggest it as an
activity under the bilateral TIFA. The Saudis are conducting
an internal evaluation in parallel to determine the benefits
of joining the GPA, and Al-Hamoudi emphasized that bilateral
technical assistance was different from cooperation in the
multilateral fora of the WTO.

Comment
--------------


13. (SBU) AUSTR Wilson's positive and constructive tone was
warmly received by all of his Saudi interlocutors, who
responded with concrete examples of progress made and candid
requests for assistance. Indeed, a few key Saudi IPR leaders
have worked very hard to make significant progress on the IPR
front in a very short period of time and are eager to be
recognized. A proverbial light at the end of the 301 tunnel
would go a long way towards reinvigorating the select, and
very essential, few leaders needed to continue to make
progress on trade issues. The Saudis are under significant
pressure to reach the King's ambitious economic and
development goals, and they are eager to partner with the USG
and industry to do so.


14. (U) AUSTR Chris Wilson cleared on this cable.
SMITH