US embassy cable - 05PRAGUE117

UNCLAS SECTION 01 OF 03 PRAGUE 000117 
 
SIPDIS 
 
STATE FOR EUR/NCE AND EUR/ERA 
STATE PASS USTR FOR LERRION 
COMMERCE FOR 4232/ITA/MAC/MROGERS 
 
E.O. 12958: N/A 
TAGS: ETRD, EINV, PREL, EZ 
SUBJECT:  Czech Republic Response to EU Commission 
Questionnaire on the Transatlantic Economic Relationship 
 
 
1.  Summary: The European Commission presented all EU member 
states with a questionnaire seeking their views on obstacles 
or barriers to trade and investment between the U.S. and EU 
and appropriate ways to remove them.  The Czech MFA shared 
with us their responses to the questionnaire, which was 
based in part on meetings with Czech stakeholders.  The 
Czechs maintain that enhancement of the Transatlantic 
Economic Partnership is highly desirable and expected to 
have a positive impact on implementation of the Lisbon 
process, but any steps taken and decisions made should 
conform to WTO rules and the Doha Development Agenda (DDA), 
to ensure that other countries do not view it as directed 
against them.  Thus the Czechs leave only a little space for 
bilateral steps in areas not yet fully covered by 
multilateral agreements. 
 
2.  Most significant obstacles to closer 
U.S.-EU partnership on U.S. side 
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The key obstacles as seen by the Czech government are: 
 
a) The visa obligation for some EU states including the 
Czech Republic. 
b) Higher U.S. tariffs on imports of agricultural products, 
chemicals, glass, costume jewelry, and porcelain.  Confusion 
caused by differences in U.S. and Czech categorization of 
Harmonized Tariff System (HTS) at greater than 6-digit 
level, which means that Czech firms cannot use the HTS at 
that level of specificity. 
 
c) Import quotas, especially for agricultural products, and 
complicated import procedures 
 
3.  Practical measures to remove the obstacles 
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a) Removing the visa obligation for all EU member states as 
it becomes an increasingly serious factor influencing 
competitiveness in the U.S. market (due to their joint 
security policy, the same applies to the Canadian visa and 
market). 
 
b) Make full use of current negotiations in the Doha 
Development Agenda to remove tariff and non-tariff barriers. 
 
c) Apart from the multilateral Doha negotiations, each and 
every possibility of bilateral negotiations at various 
negotiation levels must be used. 
 
d) EU should promote the Eurozone among the U.S. business 
community as a stable region to establish economic ties 
with. 
 
4.  Additional measures to further 
transatlantic economic integration 
- - - - - - - - - - - - - - - - - 
 
Minimize exchange rate fluctuations and avoid long-term over- 
or under-valuation of currencies. 
 
Encourage cooperation and understanding of the business and 
social environments including through internships in start- 
up companies. 
 
5.  Which new areas of the bilateral 
agenda should be addressed? 
- - - - - - - - - - - - - - - - - - - 
 
The U.S.-EU bilateral economic agenda has made some progress 
(through Financial Markets Regulatory Dialogue, Guidelines 
for Regulatory Cooperation and Transparency, Galileo-GPS and 
the Mutual Recognition Agreement on Marine Equipment), but 
further progress can be made in: 
 
- Harmonization of standards and regulation of mobile 
telecommunication services, 
 
- Liberalization of access to the transport services, 
 
- Access for EU companies to U.S. governmental and state 
procurements, for environmental goods and services. 
 
6.  What measures to promote good 
corporate governance and reliable financial 
information in the transatlantic market? 
- - - - - - - - - - - - - - - - - - - - 
 
 - Cooperate in development of multilateral trade rules 
(within DDA WTO), 
 
 - Harmonize accounting standards on both sides, 
 
 - Mutually recognize results of audits. 
 
7.  Essential steps to ease transatlantic 
direct and indirect investment 
- - - - - - - - - - -  - - - - - - - - - - 
 
- Reopen bilateral dialogue on liberalization of sectors 
with limited access for foreign investors.  This dialogue in 
OECD stopped after the new OECD member states fulfilled 
their commitments for liberalization while U.S., Canada, 
Mexico and others maintain a number of rather restrictive 
reservations both in general and sectoral groups. 
 
-  Specific problem/barrier: the U.S. screens investments 
with national security implications.  It uses a relatively 
broad interpretation of national security, and adverse 
decisions cannot be appealed.  No compensation for lost 
profits as a result of the decision is available 
 
8.  Proposals to protect the environment, 
consumer interests and health and safety as well 
as labor standards while promoting economic integration.  -- 
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Both parties should cooperate bilaterally and within OECD, 
UN etc on implementation of the Corporate Social 
Responsibility (CSR) principles and instruments, also 
promoting them in the developing countries, 
 
-  negotiate with U.S. so as to change its position toward 
Kyoto Protocol and harmonize legislation on emission limits, 
 
- pursue the sectoral initiative in environmental goods and 
services within DDA WTO, in compliance with the Declaration 
of the 4th Session  of Doha Conference of WTO Ministers, 
 
- U.S. system of consumer protection is more complex than in 
EU, and the U.S. system of enforcement of liability for 
damage may be viewed by EU entrepreneurs as a trade barrier. 
 
- "Official control" (details not specified) of goods 
exported to the U.S. should be avoided. 
 
 
9.  What remedies should be taken to ease 
the impact of new border and transport 
security measures on trade, investment and travel? 
- - - - - - - - - - - - - - - - - - - - - - - - - 
 
Both sides should develop and fully utilize channels to 
discuss current or future security measures and regulations 
and consult each other on their effectiveness. 
 
They should also: 
 
-  determine more contact points on the U.S. side for 
notification/reporting of imported goods to U.S. 
 
-  allow round-the-clock phone notification/reporting on 
imported goods 
 
-  allow e-notification/reporting 
 
-  distribute U.S. forms for the purpose of 
notification/reporting to competent Czech institutions. 
 
10.  What steps to take to jointly 
improve IPR protection? 
- - - - - - - - - - - - - - - - - - 
 
- Improvement of the level of information available to both 
parties, enhance mutual communication and cooperation 
 
- Timely detection of problems and use of high-quality and 
well-tested procedures for their solution 
 
- Enhancement of consistency of the national legislation 
regarding IPR international treaties 
 
- Make joint efforts toward an effective strategy for 
combating global piracy and forgery. 
 
11.  To remedy problems when tendering 
for public contracts in U.S. 
- - - - - - - - - - - - - - - - - - - 
 
- make use of bilateral negotiations at various levels to 
eliminate negative/potential impacts relating to the Buy 
American principle applied by U.S. 
 
12.   To further liberalize transatlantic 
trade in services including professional 
qualifications 
- - - - - - - - - - - - - - - - - - - - - 
 
- create institutional conditions for joint assessment of 
trade policy 
 
- analyze with maximum openness all trade and other barriers 
in mutual trade in service with participation of 
entrepreneurs, professional associations, trade union, NGOs 
etc. 
 
- identify jointly the nature of the barriers (whether 
strategic or tactical) and determine timetable for their 
gradual removal 
 
- when negotiating, apply the principle of "do not ask for 
more than you yourself are able to offer" 
 
13.  Do you think further elimination or reduction of 
tariffs between U.S. and EU is important?  Specify which 
ones or in which sectors 
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - 
 
This is a long-term problem.  It is first necessary to 
eliminate retaliatory measures imposing trade barriers.  The 
only practical way forward from there is through the Doha 
Development Agenda.  Because all WTO members benefit from 
concessions there, it would be best to pursue sectoral 
initiatives in sectors of high technology and to enhance 
business cooperation.  Other opportunities for 
liberalization can be found in non-WTO areas such as 
investment and competition rules. 
 
14.  Possible impact of strengthening EU-U.S. bilateral 
integration on the multilateral system and the interests of 
developing countries 
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 
 
While further integration would set a positive example, 
certain negative effects can't be ruled out.  The U.S.-EU 
process cannot be a closed system.  It must help deepen 
multilateral liberalization of the world trade and also 
respect justified interests of developing countries.  In 
this respect further liberalization of agricultural products 
will be an extremely sensitive issue. 
 
15.  Input by academia 
- - - - - - - - - - - 
 
Czech academia represented by the private College of 
International and Public Relations contributed its views on 
the issues.  While most of them reiterate the official 
answers, suggesting the school was probably consulted in 
working out the official position, they also propose 
establishing of a permanent consultative body which would 
review legislation and regulation to be sure it is in 
conformity with WTO rules and which would have authority to 
postpone their implementation until after arbitration.  They 
suggest a special and accelerated mechanism for U.S.-EU 
dispute settlement within the WTO.  They put emphasis on 
harmonization of accounting and auditing rules, as well as 
other norms and procedures.  . 
 
16.  Comment 
- - - - - - 
 
The official Czech position definitely supports further 
U.S./EU cooperation and integration as a desirable, 
necessary and inevitable development for both bilateral and 
global progress.  However, they see the ball to be in the 
U.S. court in most areas. 
 
CABANISS