US embassy cable - 04MADRID683

UNCLAS MADRID 000683 
 
SIPDIS 
 
SENSITIVE 
 
PASS TO USTR FOR SANFORD 
 
E.O. 12958: N/A 
TAGS: ETRD, ECON, SP, USTR, WTRO, Trade Issues 
SUBJECT: SPAIN INCLINED TO BE FLEXIBLE ON FSC 
 
REF: SECSTATE 40299 
 
1. (SBU) We shared reftel letter and points with GOS contacts 
in Moncloa (the Spanish equivalent of the White House) and 
the Ministries of Economy and Foreign Affairs.   Nicolas 
Lopez, Spain's 133 Committee titular, told us that while 
reconsideration of the March 1 retaliation is not possible, 
Spain and most other member states are inclined to view U.S. 
progress towards a legislative solution favorably.  Lopez 
said member states feel that the March 1 retaliation will 
clearly convey the EU's interest in having the Foreign Sales 
Corporation (FSC) law repealed soon.  He said he did not 
expect that the initial 5% tariff will have strong impact on 
U.S. exports given the current euro/dollar exchange rate, 
however he warned that given the monthly rate increase, it 
would not be wise to delay for long. 
 
2. (SBU) Lopez said that member states have not formally 
discussed the three-year transition period.  However, on the 
margins of 133 Committee meetings, most members have said 
"more than three years would not be acceptable."  He added 
that Spain and most other member states would like to see the 
retaliation go away.  He said if the U.S. legislation is 
reasonable, the EU will be likewise be reasonable in its 
response. 
MANZANARES