US embassy cable - 04ROME3998

UNCLAS ROME 003998 
 
SIPDIS 
 
 
SENSITIVE 
 
STATE PASS USTR 
GENEVA FOR USTR 
 
E.O. 12958: N/A 
TAGS: ETRD, IT, EUN 
SUBJECT: ITALY REGARDING U.S. ACTIONS TO TERMINATE LARGE 
COMMERCIAL AIRCRAFT (LCA) SUBSIDIES 
 
REF: A. SECSTATE 213973 
     B. ROME 3530 
 
SENSITIVE BUT UNCLASSIFIED -- NOT FOR INTERNET DISTRIBUTION 
 
1. (U) Post delivered ref A demarche on October 6 to senior 
Italian government trade officials Amedeo Teti, Director 
General for Commercial Agreements, Ministry of Productive 
Activities (MPA); Federico Eichberg, Senior Advisor to 
Foreign Trade Vice Minister Adolfo Urso; and Sandro Fanella, 
Director of the MPA's WTO Office. We also delivered demarche 
to Giandomenico Magliano, Director General for Multilateral 
Economic and Financial Cooperation at the MFA. 
 
2. (SBU) In a subsequent discussion with econoff, Fanella 
underscored the delicate position in which Italy finds itself 
regarding aircraft subsidies. He noted that Italian firm 
Alenia Aeronautica, part of the giant defense industrial 
conglomerate Finmeccanica, is a major subcontractor on the 
Boeing 7E7 project (it also is a subcontractor, though to a 
smaller extent, on the Airbus A380 project). The GOI thus had 
hoped for a positive outcome to recent U.S.-EU discussions on 
revising the LCA agreement, keeping both sides from 
initiating a trade war that could have potentially adverse 
consequences for both Airbus and Boeing. Fanella acknowledged 
U.S. rationale for abrogating the 1992 LCA subsidies 
agreement now, given Airbus' indications that it would soon 
request launch aid for an aircraft to compete with the 7E7. 
However, with a new commission about to take office in 
Brussels, as well as the upcoming U.S. presidential 
elections, Fanella was pessimistic that both sides would be 
able to make progress under the rather tight schedule 
dictated by the WTO consultations process. 
 
3. (SBU) Comment: Despite Italian government support for 
Alenia Aeronautica's large stake in the 7E7 program, it is 
unclear how forcefully the GOI may push within the Commission 
for a negotiated settlement with the U.S. Italy tends to play 
a relatively passive role in setting EU trade policy, and the 
GOI is likely to let the four EU member states most involved 
with Airbus drive the Commission's actions. Nevertheless post 
will continue to press our concerns with key Italian 
officials, emphasizing the U.S. goal of negotiating a new 
agreement with the EU to eliminate new subsidies for LCA. End 
comment. 
 
 
SEMBLER 
 
 
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	2004ROME03998 - Classification: UNCLASSIFIED