AUSTRIAN DIRECTOR OF FOREIGN TRADE POLICY EXPRESSES

UNCLAS SECTION 01 OF 02 VIENNA 001115

SIPDIS

E.O. 12958: N/A
TAGS: ETRD EIND BEXP ECON AU
SUBJECT: AUSTRIAN DIRECTOR OF FOREIGN TRADE POLICY EXPRESSES
INTEREST IN REVIVING INFORMAL COMMERCIAL TALKS


1. (SBU) Summary: Josef Mayer, Austrian Ministry of Economics
Director of Foreign Trade and EU Integration, said he would like to
revive informal commercial talks with the U.S. and hopes to pursue
the subject in Washington in October. He also cited the Ukraine as
the next market with great potential for investment. He opined that
it would be difficult to gain approval in the EU for Turkish entry,
partly because of strong public opposition but also because Turkey's
size would make entry complicated for an already overburdened
organization. On bilateral trade issues, Mayer said pharmaceutical
negotiations would need a mediator who could work well with U.S.
companies, and predicted that although bilateral trade had plunged
because of the decline in the auto industry, the environmental
industry showed promise for greater cooperation. Finally, Mayer
regretted the "emotional" Austrian attitudes towards GMOs and the
EU, citing the need to combat isolationism in the popular media.
End summary.

A Geographical Overview
--------------


2. (U) In an August 27 courtesy call by the DCM, Mayer began with a
discussion of the western Balkans, reviewing the GoA's efforts and
praising the U.S.'s long-term engagement in the region. He
considered centuries-old historical ties still relevant in
determining how individual EU members relate to particular Southeast
European countries. Mayer felt Ukraine, despite its difficulties
now, still possessed great potential for future investment. A key
factor would be achieving both political and economic stability
throughout the area.
Turkey's Candidacy, EU Organizational Problems
-------------- -


3. (SBU) Looking at Turkey's EU candidacy, Mayer noted that some
Austrians view U.S. endorsement for Turkish entry as a plot to
weaken or dilute the EU. Popular opinion remains strongly against
Turkish membership, and Mayer predicted that in a referendum
Austrian and most EU voters would oppose entry. Turkey, by virtue
of its size and political issues, would present unique problems for
entry, and he defended the extra steps which the EU was requiring
for Turkey to become a member. Speaking on the EU as an
organization, Mayer opined that the structure was designed for 6-8
members, and ill-suited for its current 27. Subsidies remain a
particular point of contention, as older EU member states such as
France and Spain were reluctant to share with the new member states.
DCM encouraged Austria to move forward with an open door to Turkey,
emphasizing the benefit of the accession process for both Turkey and
current EU members.

Bilateral Trade Issues
--------------


4. (SBU) While the EU understood the necessity for U.S. security
controls at ports of entry, Mayer warned that there needed to be a
balance between security and obstructionism that could be construed
as a barrier to trade. On the pharmaceutical pricing dispute, Mayer
predicted that it would be essential to have a mediator on good
terms with the pharmaceutical industry. (Note: Previously Mayer
himself has mediated between the Austrian insurance system and drug
companies.) DCM emphasized that question was not only fair trade
practices but also making full range of medicines available to
Austrian patients. Mayer acknowledged that U.S. industry perceived
the Austrian ministries as low-balling its pricing proposals.
However, the U.S. side would have to realize that an agreed pricing
scheme would have to satisfy the social insurance system and Finance
Ministry as well as the Health Ministry.


5. (U) On alternative energy, Mayer was more upbeat. The change in
U.S. administrations had brought a fresh attitude towards
alternative energy, and the U.S. could use some renewables, such as
wind power, at a scale unmatched in Europe. On the other hand, he
felt biomass technology was an EU strength. DCM noted that the U.S.
had many good stories to tell in terms of energy efficiency and
green technology, and hoped for greater cooperation with Austria in
this area.


6. (SBU) Bilateral trade, largely dependent on trade in auto
machinery, had plunged as a result of the decline in the auto
industry, he noted. Despite the presence of U.S. producers in
Austria, particularly in Styria, U.S. cars still suffered from an
image problem in Europe owing to their high CO2 emissions, perceived
poor technology, and poor resale value. Mayer added that the "Buy
American" legislation had created a negative impression and could
invite EU retaliation. DCM emphasized importance of keeping
communication when differences arise and in turning to bodies like
WTO to help sort them out.

GMOs and Support for the EU
--------------


7. (SBU) Speaking at some length on genetically modified products
(GMOs),Mayer reflected that the debate over GMOs in Austria had

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been taken over by emotional appeals, blaming among others the
influential newspaper "Kronen Zeitung," which had degraded the
debate to a simple "good versus evil" confrontation. Mayer
supported reasonable efforts to offer consumers GMOs side-by-side
with bio products. Austrian propagandizing for bio products, Mayer
felt, arose from Austrian isolationist attitudes and a desire to
dictate virtue to others. He cited the Austrian attempt to use
sulfur issues to prevent the Czech upgrading of the Temelin nuclear
power plant as another example of this mindset at work.


8. (SBU) This mindset also has had spillover effects in Austrian
attitudes toward the EU. Mayer noted that 2/3 of Austrian voters,
including even the now EU-phobic Kronen Zeitung, supported the 1995
referendum on membership. After becoming a member, Austrians had
felt uncomfortable with "being told what to do." The public had
been poorly informed about the EU, and part of the problem was that
Austria and other EU nations only sent second-rate politicians to
serve the EU, never the top ones. The only solution to quelling
public fears was by continuing to listen to the public, such as what
FM Spindelegger had done on his listening tour in the provinces.


9. (U) Mayer will travel to Washington October 19-21 for meetings
on trade, with one of his objectives being to restart the Informal
Commercial Exchange (ICE) talks. DCM said we would welcome the
opportunity to coordinate and try to ensure he had good meetings
during this time.


10. (SBU) Comment: Whether by coincidence or design, Mayer's
conversation started on common points of agreement before going to
some of the more contentious issues, though his tone remained genial
throughout. His choosing to discuss geopolitics first perhaps
reflected the importance he put on political issues and the
importance of U.S. engagement in the region. Mayer took care to
explain issues which he felt may be less comprehensible to an
American audience, particularly Austrian attitudes toward GMOs and
the EU. Mayer appears to be encouraged by the potential of
collaboration on environmental issues with the new administration.
Given his pro-American attitude, it is worth noting those issues on
which Mayer expressed concern for a trade conflict, namely port
security controls and the "Buy American" clause. If ICE talks do
restart, it will be useful to have a specific agenda, covering many
of the issues Mayer discussed in this meeting. He is an influential
figure on these issues in Austrian policy making and we encourage
Washington interlocutors to make time to see him. End comment.