US embassy cable - 05PARIS5145

UNCLAS SECTION 01 OF 03 PARIS 005145 
 
SIPDIS 
 
SENSITIVE 
 
E.O. 12958: N/A 
TAGS: ECON, ETRD, PREL, FR, DOC 
SUBJECT: U.S.-FRENCH INFORMAL COMMERCIAL EXCHANGE TALKS, 
JULY 2005 
 
 
NOT FOR INTERNET DISTRIBUTION 
 
1.  (SBU) Summary.  U.S. and French officials held another 
round of Informal Commercial Exchange (ICE) talks on July 
12, 2005.  A U.S. delegation led by Deputy Assistant 
Secretary for Europe (DOC) Eric Stewart met with a French 
 
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delegation headed by DGTPE Director-General Pierre 
Moraillon. The informal dialogue served in part as a follow- 
up on select issues from the U.S.-EU summit including TABD, 
IPR and various EU directives.  The talks also served as a 
forum to discuss bilateral and multilateral matters such as 
innovation, the pharmaceutical industry, WTO issues and 
China textiles.  Both sides cited the need for a precise 
vision and concrete actions on transatlantic trade 
initiatives.  Both sides stressed the importance of 
continued dialogue to reinforce the generally positive 
bilateral trade and commercial climate.  End Summary. 
 
BILATERAL ISSUES 
---------------- 
2.  (SBU) Innovation: Commerce Department DAS Stewart noted 
the recent meeting between Commerce Secretary Gutierrez and 
EU Commissioner Verheugen, in which both stressed the need 
for transatlantic cooperation on innovation, as emphasized 
by the economic statement released at the recent U.S.-EU 
Summit.  DAS Stewart commented that he sees France as a key 
player in transatlantic innovation dialogue.  In order to 
pinpoint the key elements of such a transatlantic dialogue, 
the U.S. will meet with innovative companies at home and 
abroad. The U.S. also suggested concrete steps to enhance 
innovation, including the development of a matrix to measure 
innovation progress, removal of barriers to innovation and 
the promotion of IPR training and entrepreneurship. 
 
3.  (SBU) The GOF officials stated that France is striving 
to increase innovation under the auspices of the EU's Lisbon 
Agenda.  On July 11, 2005, the GOF announced the 
identification 67 "poles de competitivite" (competitive 
clusters) of which 15 will have international visibility. 
The GOF will allot 1.5 billion euros for innovative research 
by these clusters, marking a 50 percent increase in 
financing for research and development.  Other measures 
include a research tax credit and fiscal and social charge 
incentives for young, innovative companies (a status for 
which the GOF has received 1000 applications to date). 
These measures have already been explained to foreign 
markets as part of a French effort to attract innovative 
companies.  A key pillar of French innovation plans is the 
enhancement of synergy between the public and private 
sectors.  The French delegation expressed an interest in 
American SBA and SBIR programs as well as the way the 
public/private/university research relationship is managed 
in the United States.  The two sides agreed to share 
information and exchange key contacts. 
 
4.  (SBU) Pharmaceutical industry:  DAS Stewart gave the 
U.S. pharmaceutical industry was, overall, comfortable with 
the situation in France.  DAS Stewart noted his appreciation 
for the Government of France's efforts to keep lines of 
communication open with industry - something that does not 
happen in many other countries.  The U.S. was pleased to see 
that France was taking a "holistic" approach to health care. 
DAS Stewart highlighted a recent meeting with American 
pharmaceutical companies in France.  The compliments served 
mainly as a means of contrasting French pharmaceutical 
policies with those of other European countries who have 
implemented caps and other restrictive pricing mechanisms. 
Director Dacher then highlighted the findings of the recent 
interagency visit to Berlin to discuss pharmaceutical 
pricing matters.  The U.S. advanced the idea that France 
could act as a leader (creating a "positive domino effect") 
in proactive health policy by continuing to foster 
innovative pharmaceutical research and development that 
promotes a holistic approach to treatment.  The French 
stated that they were reworking their pharmacy patent 
protection system to improve an existing breach in 
legislation and were open to further discussions about the 
creation of a reference system to link drug approval and 
patent officials. 
 
MULTILATERAL ISSUES 
------------------- 
5.  (SBU) WTO: DAS Stewart expressed satisfaction with the 
recent progress made in EU and U.S. discussions regarding 
the Doha Round.  Agriculture and geographical indicator (GI) 
debates aside, DAS Stewart stated that he values the 
partnership with the EU and finds that the two regions share 
similar objectives.  The U.S. would like to see more buy-in 
on trade facilitation.  On the issue of the Swiss formula 
(highest industrial tariffs receive the largest cuts) both 
sides concur that the model is a good choice.  France voiced 
concerns on the application of this model to Brazil, Korea 
and Caribbean nations. 
 
6.  (SBU) Both sides requested agricultural updates in the 
wake of recent calls to end farming subsidies.  Then DAS 
Stewart reiterated that the United States is willing to "put 
down the pitchfork" if Europeans do the same. 
 
7.  (SBU) China textiles: The U.S. asserted the importance 
of agreement on respective approaches to deal with the China 
textile situation, as the situation is sensitive for all 
involved.  DAS Stewart reminded France that our quotas were 
undertaken as a "safeguard" measure under WTO regulation 
with the intent to make a transition to a quota-free 
environment.  These safeguards are re-evaluated on an annual 
basis. 
8.  (SBU) French officials reported that France has lost 50 
percent of its textile jobs in the last ten years.  The 
French expressed a desire to deal with unfair Chinese 
business practices such as dumping and counterfeiting. 
Under EU agreements, France is also moving towards an end to 
their quota system.  Limitations to imports (in ten 
categories) continue until the end of 2007.  The French 
delegation admitted that the European Commission is not 
certain of how to proceed with the safeguard measures, as it 
has been several years since such measures were in place. 
Further complications include the EUROMED commercial 
development agreement with Northern African countries. 
These developing countries face difficulties in developing 
their own textile industries in the face of Chinese 
competition.  France can compete with Chinese textiles on 
two levels: by reinforcing its own high-valued added textile 
industries and assisting the North African industry to 
relieve Chinese pressure. 
 
9.  (SBU) GPA: The GOF stated that the EU is in the process 
of preparing an offer in the GPA negotiations that will be 
quite broad.  The key element will be balance in commitments 
and trade flows.  France stated that the new GPA 
requirements are bold, covering most of the EU states, local 
governments and EU procurements.  The French are looking for 
a U.S. agreement that seeks the same level of commitment 
with both federal and state entities included. (At present, 
only 39 states in the U.S. are covered, along with most 
public procurements.)  DAS Stewart affirmed that the United 
States looks forward to increased competition and reciprocal 
treatment in markets.  With a guarantee of reciprocity, the 
USG will waive "Buy America" rules for France (as it does 
for suppliers from all GPA countries), thus providing 
economic benefits for both countries. 
 
10.  (SBU) Trefinmetaux: The French government raised the 
technical issue of Trefinmetaux, a French metallurgical 
company (brass and steel) currently subject to U.S. 
antidumping and countervailing duties.  The issues on the 
table included previous U.S. refusal to complete a full 
sunset review and major discrepancies in statistics produced 
by U.S. and French customs as well as export data.  The 
French delegation stated that Trefinmetaux has been 
privatized since 1987 and had paid off all preferentially 
conditioned loans by 1997.  The company submitted a file on 
July 11 of this year requesting a full sunset review by the 
USG in order to have current restrictions lifted.  DAS 
Stewart recognized the importance of this issue and promised 
to bring the matter to the attention of the Acting Assistant 
Secretary for Import Administration with a decision to be 
 
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forthcoming. 
 
TRANSATLANTIC ISSUES 
-------------------- 
11.  (SBU) TABD: The U.S. delegation lauded the progress 
made in the Transatlantic Business Dialogue (TABD) over the 
past two years.  TABD now focuses on fewer issues, allowing 
a higher incidence of concrete successes.  The U.S. feels 
that TABD is a positive addition to the EU-U.S. summit, but 
would like to see a CEO from one of the Central/Eastern 
European countries (one of the ten newest EU members) 
represented.  France agreed that the TABD should fully 
represent the EU-25. 
 
12.  (SBU) The idea of a regulatory forum discussed at the 
recent summit holds great promise in the eyes of both France 
and the U.S.  Such a forum would permit enhanced 
harmonization of standards and regulations, thereby reducing 
trade barriers.  However, both sides recognized the need for 
a specific "road map" so that the proposed regulatory forum 
has a real impact beyond dialogue.  DAS Stewart also 
emphasized that an American political impetus (support of 
various regulatory agencies, the executive and even 
Congress) would be crucial to the development of such a 
forum as 90 percent of TABD issues fall outside the domain 
of DOC authority. 
 
13. (SBU) IPR:  France evoked the paper produced at the 
recent Gleneagles G-8 meeting as an example of European and 
American collaboration on intellectual property rights 
(IPR).  The GOF lauded the thoroughness of the paper, as it 
evokes both piracy and counterfeiting as IPR challenges in 
addition to specific references to the TRIPS agreement and 
the WIPO.  France stressed that geographical indicators 
(GIs) are one tool among many in the TRIPS agreement.  As a 
member of TRIPS, the GOF insisted that the USG should 
respect the validity of GIs, even if they do not consent to 
them.  On the bilateral level, France evoked its support of 
the U.S. STOP! Program and GOF plans to formulate a French 
equivalent of the U.S. good practice guidelines promoted by 
STOP!.  France also highlighted the need for national 
projects (such as a plan against counterfeiting and IPR 
representatives posted abroad) as a way to advance 
enforcement and educate third parties. 
 
14.  (SBU) DAS Stewart emphasized the importance of France 
as a partner in the fight against IPR--especially in light 
of a few EU officials' hesitancy to cooperate in this 
matter.  Although France and the U.S. may have different IPR 
priorities, the USG believes that they share a common goal 
of improving IPR enforcement worldwide and reaching out to 
third countries.  Close cooperation between the USG and the 
GOF to advance EU IPR enforcement would demonstrate the 
strength of our bilateral economic relationship. 
 
15.  (SBU) REACH: Both countries agree with the goals 
advanced by the REACH (registration, evaluation and 
authorization of chemicals) agreement but see problems in 
the current form of the agreement.  France observed that 
some type of legislation will have to be passed, but the 
process could take years.  Due to opposition from several 
large European countries, including France, any legislation 
is likely to be watered-down and symbolic. 
 
16.  (SBU) WEEE/ROHS: As an EU-member, France must comply 
with the WEEE (waste electric/electronic equipment) 
directive (active at the end of August).  DAS Stewart 
expressed concerns about implementation consistency, fearing 
25 different means of application that would pose challenges 
for U.S. businesses.  France is willing to counsel any 
businesses on WEEE implementation procedures but has yet to 
receive a request from any American business.  It has 
consulted with Japanese and Korean companies. 
 
17.  (SBU) Regarding the status of the ROHS directive 
(restriction on the use of hazardous substances), DAS 
Stewart stated that there are currently eight exemptions to 
this directive that are stuck in the approval processes of 
the European Parliament and Commission.  An additional 
package of exemptions has been submitted to the Parliament, 
but cannot be passed until the original eight exceptions 
have been confirmed.  Under Secretary Moraillon stated that 
he would update the U.S on the status of the exemptions, as 
discussed in the EC 133 Committee. 
 
18.  (SBU) Wood packaging: France (along with Portugal) 
abstained from the EU vote while the other 23 members voted 
to delay implementation of this directive.  The current 
directive combines all international standards instead of 
choosing one.  France stated that it would wait for a risk 
assessment by the Commission before choosing a camp. The GOF 
hopes for a decision in early 2006, as it does not wish the 
present moratorium to last indefinitely. 
 
19.  Members of the U.S. delegation have cleared this 
message.