US embassy cable - 04MADRID3991

UNCLAS MADRID 003991 
 
SIPDIS 
 
SENSITIVE 
 
E.O. 12958: N/A 
TAGS: KPAO, ETRD, SP, Trade Issues 
SUBJECT: DEMARCHE ON U.S. ACTIONS TO TERMINATE LARGE 
COMMERCIAL AIRCRAFT SUBSIDIES 
 
REF: A. SECSTATE 213973 
 
     B. MADRID 3483 
 
1.  (U) We delivered Reftel A demarche to Javier Hergueta 
Garnica, Deputy Director General of Bilateral International 
Economic Relations with Europe and the OECD, Ministry of 
Foreign Affairs and Cooperation, as well as Sr. Joan Trullen 
Tomas, Secretary General of Industry and Jesus Candil 
Gonzalo, Director General of Industrial Development, both of 
the Ministry of Industry, Tourism and Commerce. 
 
2.  (SBU) Only Hergueta has been available for comment.  He 
expressed dismay that the USG took the case to the World 
Trade Organization (WTO) rather than negotiating a new 
agreement.  He provided the anticipated argument that the USG 
subsidizes Boeing, and expressed hoped that the matter would 
quickly move back into negotiating a new agreement.  He 
alleged that failing to resolve this matter quickly is "bad 
for both companies and countries." 
 
3.  (U) Spanish press generally covered the major arguments 
of both the US and the EU, with none advocating the USG 
position.  All included allegations that presidential 
election politics played a significant role in the timing of 
this dispute.  Following are some excerpts: 
 
-Conservative - ABC, circ. 359,738: 
...at the base of this discussion are two key factors:  the 
unstoppable increase in Airbus sales, and the upcoming US 
presidential election. 
 
-Left of center - El Pais, circ. 552,114: 
Brussels felt betrayed by being taken before the WTO while in 
the process of negotiating with Washington and following the 
last meeting on the 16th of September, which the Commission 
considered to be constructive. 
 
-Independent - El Mundo, circ. 408,471: 
Although Republican ideology defends the free market through 
to its ultimate consequences, the Bush administration has 
promoted a very protectionist policy in the last four years, 
in particular with steel, cotton and other agricultural 
products, along with importation penalties. 
 
3.  (SBU) Comment:  Beginning with our first consultation 
with Hergueta reported in Reftel B, it appeared that the GOS 
would play a fairly passive role in this matter.  Recent 
conversation with Hergueta does not modify this impression: 
the only difference being dismay that the dispute has moved 
to the WTO and the belief that utilizing the WTO will 
seriously harm commerce. 
ARGYROS