US embassy cable - 05TELAVIV1429

C O N F I D E N T I A L SECTION 01 OF 02 TEL AVIV 001429 
 
SIPDIS 
 
FOR EB/IPE SWILSON AND NEA/IPA GLOGERFO 
DEPARTMENT PLEASE PASS TO USTR NOVELLI, SAUMS AND PECK 
 
E.O. 12958: DECL: 03/08/2015 
TAGS: ECON, ETRD, KIPR, IS, ECONOMY AND FINANCE, LABOR AND COMMERCE, U.S.-ISRAEL RELATIONS 
SUBJECT: (C)  GOI MOVING AHEAD WITH DATA EXCLUSIVITY 
LEGISLATION 
 
REF: A: TEL AVIV 1271 B: SAUMS-WEINSTEIN EMAIL OF 
 
     3/4/2005 (NOTAL) 
 
Classified By: Ambassador Daniel C. Kurtzer for reasons 1.4 (b) and (d) 
 
 
1. (C) This is an action request message.  Please see 
paragraph 8. 
 
2. (C)  Summary and Comment:  Post has received a clear 
message from Ministry of Industry, Trade and Labor (MOITL) 
that the GOI intends to move ahead this week to have the 
Knesset consider the data exclusivity legislation as part of 
the Economic Arrangements Law (EAL).  Despite previous 
understandings, Israel will not wait for negotiations with 
USTR to conclude before moving the legislation from the 
Knesset Finance Committee to the plenary.  The GOI claims it 
intends to engage in good faith with the U.S. in scheduled 
March 17 DVC discussions.  Any amendments agreed upon during 
the DVC can only be added to the EAL before the March 31 
deadline for passage of the law.  Post recommends that when 
the Knesset Finance Committee votes to send the legislation 
to the Knesset plenary, thus voiding our agreement, we 
expeditiously inform the GOI that the USG is resuming 
consideration to move Israel to the Priority Watch List 
(PWL), even as we proceed with the negotiations.  End 
Summary/Comment. 
 
3. (C)  On March 7, Minister of Industry, Trade and Labor 
Ehud Olmert signaled the Knesset Finance Committee to resume 
debate of the provisions of the EAL that relate to data 
exclusivity and patents in preparation for a committee vote 
on the law.  In response, EconCouns delivered Ref B points to 
Yair Shiran, Director of International Agreements & Trade 
Policy at MOITL.  EconCouns emphasized that no agreement was 
reached last fall during negotiations, that if the 
legislation moved forward before the next round of 
negotiations the U.S. would have to reconsider Israel's 
placement on the Special 301 Watch List, and that the GOI 
moving forward on the legislation at this time calls into 
question how seriously they intend to engage with the USG 
during DVC discussions. 
 
4. (C)  Shiran claimed that discussions by the Knesset 
Finance Committee do not/not violate the January 2005 
agreement "because there was no vote" on the matter.  (Note: 
The oral agreement called for Minister Olmert to "withhold 
from consideration and debate" the two problematic provisions 
of the EAL relating to data exclusivity and patents while the 
US side froze consideration of Israel's elevation to the PWL 
during the Out-of-Cycle Review (OCR).  End note.) 
 
5. (C)  The GOI claims that it plans to bring new ideas to 
the March 17 DVC, and hopes that the U.S. will do the same. 
However, in the conversation with EconCouns, rather than 
engaging in a constructive discussion about the DVC, Shiran 
began to list the perceived failings of the US thus far in 
negotiations.  Most troubling was his contention that the GOI 
cannot be blamed if negotiations fail to achieve a timely 
agreement because the USTR letter from February 18 arrived 
"late."  (Note: No timeline was outlined during the January 
2005 discussions between Minister Olmert and Ambassador 
Kurtzer regarding the exchange of letters.  End note.) 
 
6. (C)  Reliable industry sources report that the Knesset 
Finance Committee was ready to take a vote Monday on the data 
exclusivity law, but decided to delay the vote until 
Thursday, March 10, 2005.  Embassy contacts in the Knesset 
indicate that a final vote on the EAL and budget is expected 
to be delayed until after March 16.  The legal advisor at the 
Ministry of Health (MoH) confirmed that the Knesset Finance 
Committee will have to vote on the legislation soon, so that 
it can be sent back to the plenary for second and third 
readings as part of the EAL.  The final EAL must pass no 
later than March 31 along with the budget.  The MoH also 
noted that it is possible, but difficult, to make amendments 
when the bill is being considered by the Knesset plenary.  If 
the data exclusivity legislation passes in current form as 
part of the EAL, any new amendments will take at least six 
months to enact through the regular legislative process. 
 
7. (C)  Comment:  Last week Minister Olmert stated his 
intention to proceed with consideration of the law despite a 
previous agreement to schedule March 17 negotiations.  The 
anticipated vote by the Knesset Finance Committee to allow 
consideration of the bills by the Knesset plenary effectively 
nullifies our previous agreement.  We now face the prospect 
of negotiating on March 17 under the threat of the GOI's 
timetable for passage of the bill while still delaying USG 
action on the OCR.  If we are to be successful in getting the 
GOI to fulfill its IPR obligations, it is imperative that we 
regain the initiative in the negotiations.  Not responding to 
the GOI puts the USG at a disadvantage in the negotiations, 
undermines our credibility, and makes progress at the 
negotiations unlikely.  End comment. 
 
8. (C)  Action recommendation: Post recommends that as soon 
as the vote is taken by the Knesset Finance Committee, we 
notify the GOI that, while we are prepared to continue 
negotiating, the USG is also reviving consideration of the 
OCR that could result in immediate elevation of Israel to the 
Special 301 PWL. 
 
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