US embassy cable - 02ROME4937

UNCLAS ROME 004937 
 
SIPDIS 
 
SECSTATE FOR EB/TPP AND EUR 
USDA FOR FAS/ITP/GRUEFF/MACKE 
CMP/GFD/REIMENSCHNEIDER 
FAA/NE/WILSON; 
DEPT PLEASE PASS TO USTR FOR MSLOAN 
 
E.O. 12958: N/A 
TAGS: EAGR, ETRD, EU, IT, ICSCA 
SUBJECT: GREEK VIEWS ON MARGIN OF PREFERENCE 
PROPOSAL 
REF: (A)STATE 166836; (B)ATHENS 02267 
 
                       UNCLASSIFIED 
 
PAGE 02        ROME  04937  091606Z 
1.  SUMMARY: ON OCTOBER 3 AGATTACHE AND 
AGSPECIALIST MET WITH MINISTRY OF 
AGRICULTURAL POLICY DIVISION SECRETARY 
GENERAL KORAKAS DG SARROS AND TWO OTHER MINAG 
EMPLOYEES RESPONSIBLE FOR THE DIVISION OF 
ARABLE CROPS TO DISCUSS GREECE'S POSITION ON 
THE MARGIN OF PREFERENCE (MOP). GREECE WILL 
LIKELY SUPPORT REPLACEMENT OF THE MOP WITH 
TARIFF RATE QUOTAS (TRQS)TO BOOST SUPPORT TO 
THEIR WHEAT GROWERS. END SUMMARY 
 
2.  THE PROSPECT OF CHEAP WHEAT IMPORTS FROM 
NEARBY BLACK SEA PORTS IS PERCEIVED BY THE 
GOG AS A THREAT TO GREECE'S PRIMARY SECTOR. 
GREEK IMPORTS OF WHEAT FROM RUSSIA AND 
UKRAINE CAN ARRIVE VIA THE BLACK SEA IN 24 
HOURS. THE GREEK MINAG PERCEIVES THAT PARTIES 
BENEFITTING MOST FROM THESE SALES ARE 
SHIPPERS AND TRADERS. THE GOG'S OVERRIDING 
CONCERN IS TO CONTINUE TO SUPPORT THEIR WHEAT 
PRODUCERS, NOT MILLERS, TRADERS, OR SHIPPERS. 
IN ADDITION, SECRETARY GENERAL KORAKAS 
POINTED OUT THAT UNDER EU POLICY REFORM 
PROPOSALS OF THE MID TERM REVIEW (MTR), DURUM 
PRODUCERS WOULD FACE SEVERE CUTS. THE GOG 
WISHES TO PURSUE POLICIES TO SUPPORT ITS 
WHEAT PRODUCERS. ACCORDING TO OUR 
INTERLOCUTORS, GREECE ALSO SEES A POTENTIAL 
THAT BLACK SEA IMPORTS COULD OPEN THE DOOR 
FOR FUTURE COMPETITION FROM DURUM PRODUCERS 
OF SYRIA OR TURKEY. 
                       UNCLASSIFIED 
 
PAGE 03        ROME  04937  091606Z 
 
3.  MINAG GAVE NO INDICATION THAT IT HAD 
CONSULTED WITH MILLERS OR TRADERS OF WHEAT TO 
DETERMINE A POSITION, NOR DID MINAG REPS 
CONSISTENTLY MAKE DISTINCTIONS BETWEEN MARKET 
EFFECTS OF TRQS ON TRADE AND PRODUCTION OF 
SOFT, HARD, OR DURUM WHEAT.  GREECE PRODUCES 
ABOUT 1.4 MILLION TONS OF DURUM WHEAT 
ANNUALLY AND ABOUT 500,00 TONS OF SOFT WHEAT. 
IN RECENT YEARS GREECE HAS IMPORTED NO US 
WHEAT, BUT ANNUAL IMPORTS OF CANADIAN HARD 
WHEAT USED FOR MIXING WITH DOMESTIC SOFT 
WHEAT HAVE BEEN 60,000 TONS. THE MINAG IS 
AWARE THAT IF THE MOP WERE REPLACED BY A TRQ, 
AND THE PRICE OF DURUM WHEAT ON THE EU MARKET 
WERE TO RISE, GREEK PRODUCERS WOULD LIKELY 
RESPOND BY PLANTING MORE DURUM, SWITCHING 
PRODUCTION FROM SOFT WHEAT AND OTHER LESS 
PROFITABLE CROPS AS WELL. 
 
4.  MINAG DID NOT DIRECTLY RESPOND TO AGATT'S 
COMMENTS ON POSSIBLE UNINTENDED INFLATIONARY 
ASPECTS OF TRQS, ALTHOUGH MINAG ACKNOWLEDGED 
THAT INFLATION OF FOOD PRICES IS A CONCERN. 
WHEN QUESTIONED ABOUT THE TIMING OF ACTION ON 
THE MOP, SECRETARY KORAKAS REMARKED THAT "THE 
SOONER WE ESTABLISH REFERENCE PERIODS, THE 
BETTER."  SEMBLER 
 
                       UNCLASSIFIED 
 
> 
 2002ROME04937 - Classification: UNCLASSIFIED