US embassy cable - 05GENEVA2617

UNCLAS SECTION 01 OF 03 GENEVA 002617 
 
SIPDIS 
 
SENSITIVE 
 
PASS USTR FOR GRIER 
 
E.O.  12958: N/A 
TAGS: ETRD, ECON, WTRO, WTO, Trade 
SUBJECT: WTO GOVERNMENT PROCUREMENT AGREEMENT MEETINGS 
DURING THE WEEK OF OCTOBER 10, 2005 
 
REFTEL:  STATE 327601 
 
SENSITIVE BUT UNCLASSIFIED NOT FOR INTERNET DISTRIBUTION 
 
1.  (U)  SUMMARY AND BACKGROUND:  DURING THE WEEK OF OCTOBER 
10, 2005, THE U.S. DELEGATION, LED BY JEAN HEILMAN GRIER, 
SENIOR PROCUREMENT NEGOTIATOR, USTR, AND INCLUDING JOHN 
LIUZZI, DEPARTMENT OF COMMERCE, AND ROBERT KASPER, U.S. 
MISSION TO THE WTO, PARTICIPATED IN FORMAL AND INFORMAL 
MEETINGS OF THE WTO GOVERNMENT PROCUREMENT COMMITTEE 
(COMMITTEE).  THE FOCUS OF THE COMMITTEE'S WORK WAS THE 
REVISION OF THE 1994 GOVERNMENT PROCUREMENT AGREEMENT (GPA) 
TEXT.  DESPITE SUBSTANTIAL PROGRESS ON THE REVISION DURING 
THE WEEK, DIFFERENCES REMAIN (SOME OF WHICH ARE SIGNIFICANT) 
ON A NUMBER OF PROVISIONS.  IT APPEARS THE COMMITTEE WILL 
NOT MEET ITS GOAL OF REACHING PROVISIONAL AGREEMENT ON THE 
NON-MARKET-ACCESS RELATED PROVISIONS OF THE GPA BY THE HONG 
KONG MINISTERIAL.  AT THE FORMAL COMMITTEE MEETING, THE 
GOVERNMENT OF ISRAEL INFORMED THE COMMITTEE THAT IT WILL 
AGAIN SEEK AN EXTENSION OF ITS CURRENT LEVEL OF OFFSETS, AND 
THE GOVERNMENT OF JORDAN REPORTED ON THE STATUS OF ITS 
PREPARATION OF A REVISED MARKET ACCESS OFFER.  THE U.S. 
DELEGATION ALSO PARTICIPATED IN A QUAD MEETING ON OCTOBER 10 
AND HELD SEVERAL BILATERAL MEETINGS.  THE U.S. DELEGATION 
MET WITH ISRAEL ON ITS OFFSETS REQUEST, CONSULTED WITH 
JORDAN ON THE STATUS OF ITS ACCESSION TO THE GPA, CONFERRED 
WITH THE EC ON POTENTIAL MEANS OF MOVING FORWARD ON TAIWAN'S 
ACCESSION TO THE GPA, DISCUSSED CHINA'S ACCESSION TO THE GPA 
WITH A CHINESE DELEGATE, AND FOLLOWED-UP WITH JAPAN ON A 
PROCUREMENT ISSUE INVOLVING JAPAN RAILWAY KYUSHU.  THE NEXT 
SCHEDULED COMMITTEE MEETINGS ARE CURRENTLY SET FOR THE WEEK 
OF FEBRUARY 6, 2006. THE U.S. DELEGATION ALSO HELD INITIAL 
EXPLORATORY DISCUSSIONS WITH SWITZERLAND ON THE POTENTIAL 
NEGOTIATIONS OF A U.S. - SWITZERLAND FREE TRADE AGREEMENT. 
END SUMMARY. 
 
QUAD MEETINGS 
 
2.  (SBU) THE U.S. DELEGATION PARTICIPATED IN A QUAD MEETING 
ON OCTOBER 10, 2005, HOSTED BY THE EC.  THE QUAD DISCUSSED 
THE STATUS OF THE TEXT NEGOTIATIONS, SEPARATE US-EC AND 
CANADIAN PROPOSALS FOR THE ARTICLE ON MODIFICATIONS AND 
RECTIFICATIONS TO COVERAGE AND AN INFORMAL US SUBMISSION ON 
A NUMBER OF THE REMAINING TEXT ISSUES.  IN ADDITION, THE 
QUAD DISCUSSED THE ISRAELI OFFSETS ISSUE, HOW TO ADVANCE 
CHINA'S ACCESSION TO THE GPA, AND CHINESE TAIPEI'S 
ACCESSION. 
 
INFORMAL MEETINGS OF THE COMMITTEE ON GOVERNMENT PROCUREMENT 
 
3.  (SBU) REVISION OF THE TEXT: THE COMMITTEE HELD INFORMAL 
DRAFTING SESSIONS FROM OCTOBER 10 THROUGH 14 ON THE REVISION 
OF THE GPA TEXT, WITH THE GOAL OF REACHING PROVISIONAL 
AGREEMENT ON THE NON- MARKET-ACCESS-RELATED PROVISIONS OF 
THE TEXT BY THE HONG KONG MINISTERIAL.  AN INFORMAL U.S. 
SUBMISSION, WHICH INCLUDED THE RESULTS OF A SEPTEMBER 2005 
BILATERAL WITH THE EC, PROVIDED THE BASIS FOR PROGRESS ON A 
NUMBER OF PROVISIONS, INCLUDING COMMERCIAL GOODS AND 
SERVICES, ELECTRONIC PROCUREMENT, TIME PERIODS, CONDITIONS 
FOR PARTICIPATION, AND DISCLOSURE OF INFORMATION.  THERE 
WERE TWO OTHER SUBMISSIONS ON THE ARTICLE ON MODIFICATIONS 
AND RECTIFICATIONS TO COVERAGE: A JOINT U.S.-EC NON-PAPER 
AND A CANADIAN SUBMISSION. 
 
4.  (SBU) THE DISCUSSIONS HELPED NARROW DIFFERENCES AND 
REMOVE BRACKETS, AND GOOD PROGRESS WAS MADE IN A NUMBER OF 
AREAS.  HOWEVER, FURTHER WORK AND MORE COMPROMISES WILL BE 
NEEDED TO REACH PROVISIONAL AGREEMENT ON THE NON-MARKET- 
ACCESS PROVISIONS.  THE COMMITTEE DISCUSSED THE POSSIBILTY 
OF HOLDING ANOTHER MEETING BEFORE THE END OF THE YEAR TO 
FINALIZE THE TEXT; THE EC WAS THE STRONGEST ADVOCATE OF SUCH 
A MEETING.   THE CHAIR INDICATED HE WAS PREPARED TO CALL 
ANOTHER MEETING THIS YEAR IF THE TEXT COULD BE FINALIZED; 
HOWEVER, HE QUESTIONED WHETHER A SINGLE MEETING WOULD BE 
SUFFICIENT TO RESOLVE ALL THE DIFFERENCES.  THE ALTERNATIVE 
WOULD BE TO ALLOW THE DRAFTING WORK TO CONTINUE INTO THE 
NEXT YEAR.  THE UNITED STATES INDICATED IT WOULD SUPPORT 
ANOTHER MEETING THIS YEAR ONLY IF IT WERE CLEAR THAT 
AGREEMENT COULD BE REACHED ON ALL THE OUTSTANDING ISSUES; 
BUT LIKE THE CHAIR, IT WAS SKEPTICAL THAT COULD BE 
ACCOMPLISHED IN ONE MEETING.  THE CHAIR WILL CONSULT WITH 
DELEGATIONS ON WHETHER TO CALL ANOTHER MEETING. 
 
ISRAELI OFFSETS 
 
5.  (SBU) AT THE REQUEST OF ISRAEL, THE U.S. DELEGATION HELD 
A BILATERAL DISCUSSION ON ISRAEL'S PLANS TO REQUEST ANOTHER 
EXTENSION REGARDING ITS OBLIGATION TO REDUCE ITS LEVEL OF 
OFFSETS. (NOTE: IN DECEMBER 2004, THE COMMITTEE AGREED TO A 
ONE-YEAR EXTENSION OF ISRAEL'S OBLIGATION TO REDUCE ITS 
LEVEL OF OFFSETS FROM 30 PERCENT TO 20 PERCENT ON JANUARY 1, 
2005, AS CALLED FOR BY ISRAEL'S GPA COMMITMENTS.)  ISRAEL 
INFORMALLY CIRCULATED A DRAFT OFFER WITH NEW ISRAELI MARKET 
ACCESS COMMITMENTS, INCLUDING A NEW TIME TABLE FOR REDUCING 
ITS USE OF OFFSETS.  UNDER THE DRAFT OFFER ISRAEL WOULD 
REDUCE ITS OFFSETS TO 15 PERCENT IN 2015, AND THEN CONSULT 
WITH THE PARTIES ON THE LEVEL OF OFFSETS.  ISRAEL SAID IT 
WAS PREPARED TO IMPLEMENT ITS NEW MARKET ACCESS COMMITMENTS 
ON JANUARY 1, 2006 AS COMPENSATION FOR THE MODIFICATION OF 
ITS OFFSET COMMITMENT.  THE UNITED STATES POINTED OUT THAT 
IT HAD REGARDED LAST YEAR'S EXTENSION AS A ONE-TIME EVENT 
AND THAT IT HAD NOT HAD SUFFICIENT TIME TO REVIEW AND 
CONSULT WITH REGARD TO ISRAEL'S DRAFT OFFER AND NEW OFFSET 
TIME TABLE.  THE UNITED STATES ALSO STRONGLY REITERATED ITS 
POSITION THAT OFFSETS ARE A TRANSITIONAL MEASURE AND NOT A 
PERMANENT ELEMENT OF ANY PARTY'S COVERAGE AND URGED ISRAEL 
TO PROVIDE A PROPOSAL THAT PHASES THEM OUT.  BASED ON 
CONSULTATIONS WITH THE UNITED STATES AND OTHER QUAD 
COUNTRIES, ISRAEL ELECTED TO NOT FORMALLY SUBMIT ITS DRAFT 
OFFER.  INSTEAD, ISRAEL INDICATED IT WOULD PREPARE A DRAFT 
DECISION FOR THE COMMITTEE TO EXTEND ITS OFFSET OBLIGATION 
UNTIL THE CONCLUSION OF THE MARKET ACCESS NEGOTIATONS UNDER 
THE GPA OR A FIXED PERIOD.  INFORMALLY, ISRAEL INDICATED IT 
WOULD SEEK A CONSENSUS FROM THE PARTIES ON A NEW PROPOSAL 
BEFORE SUBMITING IT TO THE COMMITTEE FOR ACTION BEFORE THE 
END OF THE YEAR. 
 
JORDAN ACCESSION 
 
6.  (SBU) THE KINGDOM OF JORDAN BRIEFED THE UNITED STATES 
INFORMALLY ON THE STATUS OF ITS ACCESSION TO THE GPA. 
JORDAN IS CURRENTLY  ENGAGED IN DOMESTIC CONSULTATIONS TO 
IMPROVE ITS MARKET ACCESS OFFER.  OF PARTICULAR INTEREST TO 
THE UNITED STATES, JORDAN IS WORKING TO INCLUDE ITS 
MINISTRIES OF DEFENSE AND INTERIOR IN ITS GPA COVERAGE. 
JORDAN IS AIMING TO MAKE AN IMPROVED MARKET ACCESS OFFER TO 
THE COMMITTEE BEFORE THE END OF THE YEAR.  HOWEVER, JORDAN 
REPORTS INCREASING DOMESTIC RESISTANCE FROM CERTAIN 
INDUSTRIES TO ITS ACCESSION TO THE GPA. 
 
CHINESE TAIPEI ACCESSION 
 
7.  (SBU) THE UNITED STATES HELD AN INFORMAL MEETING WITH 
THE EC TO DISCUSS POSSIBLE MEANS OF MOVING FORWARD THE 
STALLED CHINESE TAIPEI ACCESSION TO THE GPA.  THE UNITED 
STATES AND THE EC PROPOSED A TWO-STEP PROCESS THAT WOULD 
BEGIN WITH A COMMITTEE DECISION THAT GENERALLY ADDRESSES 
NOMENCLATURE ISSUES IN THE SAME MANNER AS THE WTO "BLUE 
BOOK" DIRECTORY OF MEMBERS.  A SECOND COMMITTEE DECISION 
WOULD SPECIFICALLY ADDRESS CHINESE TAIPEI'S ACCESSION.  THE 
US-EC PROPOSAL WAS GIVEN TO THE QUAD AND KOREA FOR THEIR 
COMMENTS; IT WAS ALSO GIVEN TO THE GPA CHAIR, WHO HAS BEEN 
ASKED TO FOLLOW UP WITH THE RELEVANT PARTIES. 
 
INFORMAL BILATERAL WITH CHINA 
 
8.  (SBU) THE UNITED STATES HELD AN INFORMAL BILATERAL 
MEETING WITH THE DELEGATE FROM THE PEOPLE'S REPUBLIC OF 
CHINA TO DISCUSS THE ISSUE OF CHINA AND THE GPA.  CHINA IS 
STILL STUDYING THE GPA AND THE PROS AND CONS OF ACCESSION TO 
IT.  THE UNITED STATES OFFERED TO ASSIST CHINA'S EFFORTS AND 
TOLD THE CHINESE DELEGATE THAT THE UNITED STATES WOULD SOON 
SEND A LETTER TO BEIJING TO SET A DATE AND VENUE FOR THE 
TECHNICAL CONSULTATIONS TO WHICH CHINA HAD COMMITTED IN JULY 
2005 IN THE JOINT COMMISSION ON COMMERCE AND TRADE.  THE 
U.S. DELEGATION OFFERED TO PROVIDE ANY ASSISTANCE THAT MAY 
BE NEEDED AS CHINA PREPARES TO COMMENCE ITS GPA ACCESSION. 
 
INFORMAL BILATERAL WITH THE GOVERNMENT OF JAPAN 
 
9.  (SBU) THE U.S. DELEGATION HELD, AT ITS REQUEST, AN 
INFORMAL BILATERAL DISCUSSION WITH JAPAN ON JAPAN RAILWAY - 
KYUSHU'S USE OF A GPA EXCEPTION FOR OPERATIONAL SAFETY OF 
TRANSPORTATION FOR CONSTRUCTION OF A RAILWAY STATION.  THE 
UNITED STATES AGAIN REITERATED ITS CONCERNS WITH THE 
APPROPRIATENESS OF JR-KYUSHU'S USE OF THAT EXCEPTION AND 
ASKED JAPAN WHEN IT WOULD PROVIDE A RESPONSE.  THE GOJ 
DELEGATION SAID JAPAN WAS STILL LOOKING INTO THE ISSUE, AND 
UNDERTOOK TO PROVIDE A RESPONSE AS SOON AS POSSIBLE. 
 
FORMAL COMMITTEE MEETING 
 
10.  (SBU) THE COMMITTEE HELD A FORMAL MEETING ON FRIDAY, 
OCTOBER 14, DURING WHICH THE CHAIR SUMMARIZED PROGRESS MADE 
DURING THE WEEK AND ENTERTAINED STATEMENTS BY ISRAEL 
CONCERNING THE CONTINUED IMPORTANCE OF ITS USE OF OFFSETS, 
JORDAN ON THE STATUS OF ITS PREPARATION OF A REVISED OFFER 
IN ITS ACCESSION TO THE GPA, AND CHINA REGARDING ITS 
INTEREST IN ACCEDING TO THE GPA, EVEN THOUGH IT MADE NO 
COMMITMENT AS TO THE TIMETABLE FOR DOING SO.  THE COMMITTEE 
ALSO DISCUSSED ADOPTION OF THE ANNUAL REPORT, SETTING A 
DEADLINE OF OCTOBER 30, 2005 FOR ANY EDITS OR ADDITIONS TO 
THE REPORT. 
INFORMAL EXPLORATORY TALKS WITH SWITZERLAND 
 
11.  (SBU) THE U.S. DELEGATION HELD INFORMAL EXPLORATORY 
DISCUSSIONS ON THE POTENTIAL APPROACHES TO A GOVERNMENT 
PROCURMENT CHAPTER IF NEGOTIATIONS ARE LAUNCHED ON A FREE 
TRADE AGREEMENT (FTA) BETWEEN THE UNITED STATES AND 
SWITZERLAND.  THE SWISS DELEGATION INCLUDED ITS GOVERNMENT 
PROCUREMENT NEGOTIATOR AND FTA COORDINATOR.  AS BOTH 
COUNTRIES ARE GPA MEMBERS, THEY AGREED THAT THE TEXT OF ANY 
FTA CHAPTER ON GOVERNMENT PROCUREMENT SHOULD INCORPORATE THE 
GPA'S PROVISIONS, INCLUDING THE CURRENT REVISION, AS WELL AS 
THE RESULTS OF THE MARKET ACCESS NEGOTIATIONS TO BE 
UNDERTAKEN IN 2006 UNDER THE GPA.  THE ONLY MARKET ACCESS 
ISSUE THAT THE SWISS NOTED WAS THEIR INTEREST IN EXPANDED 
COVERAGE OF U.S. STATES, BUT THEY ALSO RECOGNIZED THE 
DIFFICULTY OF ADDING STATES.  BOTH SIDES ACKNOWLEDGED THAT 
THEIR RESPECTIVE MARKET ACCESS COMMITMENTS WOULD NOT LIKELY 
GO BEYOND THOSE IN THE GPA, OTHER THAN PERHAPS WITH REGARD 
TO THRESHOLDS. 
 
NEXT MEETING OF THE COMMITTEE 
 
12.  (SBU) THE NEXT COMMITTEE MEETING IS CURRENTLY SCHEDULED 
FOR THE WEEK OF FEBRUARY 6, 2006, UNLESS THERE IS A 
CONSENSUS TO HOLD ANOTHER MEETING BEFORE THE END OF THE YEAR 
TO GIVE PROVISIONAL AGREEMENT TO THE REVISION OF THE GPA 
TEXT.  SHARK