US embassy cable - 05DUBLIN597

C O N F I D E N T I A L DUBLIN 000597 
 
SIPDIS 
 
E.O. 12958: DECL: 01/31/2015 
TAGS: ECON, ETRD, WTO 
SUBJECT: IRISH RESPONSE TO WTO SERVICE DEMARCHE 
 
REF: A. STATE 81619 
 
     B. WILSON-EU TRADE OFFICERS E-MAIL OF MAY 10 AND 
        PREVIOUS 
 
Classified By: Political-Economic Counselor Mary E. Daly; Reasons 1.4 ( 
B) and (D). 
 
1.  (C) Summary: On May 16, Post delivered ref A demarche to 
Frank Doheny, Deputy Principal Officer in the Department of 
Enterprise, Trade, and Employment.  Doheny noted that Member 
States would likely approve the revised EU services offer the 
week of May 23.  The offer would seek to cover the 10 new 
Member States, clarify modalities for Mode 4, and add 
elements focusing on the energy and "well-being" services 
sectors.  As a robust economy facing near full employment, 
Ireland favors a liberal approach to Mode 4.  Ireland's 
strongest interests in the EU's revised offer center on 
financial, telecommunication, and computer-related services. 
End summary. 
 
The Revised EU Offer 
-------------------- 
 
2.  (C) The EU's revised WTO services offer, now under review 
by Member States, featured updates on three "prongs," said 
Doheny.  First, the revised offer sought to extend the 
commitments of the original EU-15 to the 10 new Member States 
(per ref B).  Second, the offer would include clarifications 
of modalities for Mode 4, relating to economic needs tests 
(ENTs), numerical ceilings, etc.  The second prong, said 
Doheny, remained the most nettlesome, given significant 
differences in Member States' positions.  Third, the revised 
offer would add two elements to the EU's initial offer, one 
focusing on energy and the other on "well-being" (a broad 
sector covering hairdressing, spas, and services with a 
"curative" dimension).  Doheny said that Ireland did not have 
many difficulties with the current draft of the revised EU 
offer, which built on what the GOI regarded as a strong 
initial offer.  He added that Member States were aiming to 
approve the revised offer either at the May 25 133 Committee 
meeting or at the May 27 Deputies Meeting. 
 
Ireland and Mode 4 
------------------ 
 
3.  (C) Ireland favored a liberal approach to Mode 4, 
explained Doheny.  With strong economic growth (5 percent in 
2004), robust employment creation (57,000 new jobs in 2004), 
and an economy at near full employment (4.2 percent 
unemployment currently), Ireland needed an influx of labor, 
particularly in the services sector, to sustain economic 
momentum.  The GOI thus supported high numerical ceilings 
under Mode 4 and, to the extent possible, the lifting of 
ENTs.  The GOI acknowledged, however, that unemployment 
problems and slow economic growth in other Member States 
precluded them from taking a similarly liberal approach. 
Doheny mentioned that the Commission had hired Ireland's 
Economic and Social Research Institute (ESRI) to provide the 
Member States a confidential analysis of Mode 4.  He added 
that EU Trade Commissioner Mandelson had made clear to Member 
States that finalization on Mode 4 would depend on the U.S. 
approach to the issue in its revised services offer.  Per ref 
B, Emboff cautioned that there were no imminent improvements 
on Mode 4 as part of the U.S. revised offer. 
 
Sectors of Interest 
------------------- 
 
4.  (C) Regarding the sectors highlighted in ref A talking 
points, Ireland's strongest interests were in financial, 
telecommunication, and computer-related services, according 
to Doheny.  He noted that financial services were an 
increasingly critical component of the Irish economy (now 
receiving roughly one-third of total FDI), and he cited the 
GOI's hope that the U.S. revised offer would rise to the 
level of openness in the EU's offer for this sector.  The GOI 
likewise favored the removal of restrictions on 
telecommunications, as Ireland aspired to become a digital 
hub.  Doheny said that the EU offer featured a wider 
classification for "basic" telecoms, allowing for a greater 
level of opening than in the initial U.S. offer.  Ireland, as 
the world's leading software exporter, had a particularly 
strong interest in the software component of computer-related 
services.  Doheny pointed out that the EU had not made offers 
on audiovisual and public (health and social) services and 
that the GOI favored that approach.  On environmental 
services, Ireland would likely defer to the more developed 
positions put forward by Germany and Sweden. 
KENNY