US embassy cable - 03ZAGREB1187

UNCLASSIFIED ZAGREB 001187 
 
SIPDIS 
 
SENSITIVE 
 
STATE PASS USTR 
STATE FOR EB/IPC AND EUR/SCE 
 
E.O. 12958: N/A 
TAGS: ETRD, PREL, KIPR, PREL, KIPR, HR, HRETRD, Intellectual Property 
SUBJECT: AMBASSADOR PRESSES DEPUTY PRIME MINISTER ON INTELLECTUAL PROPERTY; 301 DECISON HAVING SALUTORY EFFECT 
 
REF: ZAGREB 541 
 
SENSITIVE BUT UNCLASSIFIED -- PLEASE HANDLE ACCORDINGLY. 
 
SUMMARY 
------- 
 
1.  (SBU) ON MAY 21, THE AMBASSADOR MET WITH DEPUTY PRIME 
MINISTER SIMONIC TO DISCUSS CROATIA'S DESIGNATION ON THE 
SPECIAL 301 WATCH LIST FOR FAILING TO PROTECT U.S. 
INTELLECTUAL PROPERTY.  SIMONIC IS IN CHARGE OF HEALTH AND 
MINORITY ISSUES.  SIMONIC ACKNOWLEDGED THE OBLIGATION CROATIA 
HAD TO RATIFY THE BILATERAL INTELLECTUAL PROPERTY MOU, AND 
SAID A KEY GOAL WAS TO PASS THE DRAFT DRUG LAW, WHICH 
CURRENTLY INCLUDES LANGUAGE ON DATA EXCLUSIVITY.  SUBSEQUENT 
NEWS ITEMS QUOTED SIMONIC AS WILLING TO TRY TO PRESS THE 
CABINET TO SEND THE MOU TO THE PARLIAMENT FOR RATIFICATION, 
BUT MINISTER OF HEALTH VLAHUSIC WAS SQUARELY AGAINST 
RATIFYING THE MOU.  END SUMMARY. 
 
                       UNCLASSIFIED 
 
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2.  (SBU) ON MAY 21, THE AMBASSADOR REVIEWED FOR DEPUTY PRIME 
MINISTER SIMONIC THE CONTEXT IN WHICH THE 1998 INTELLECTUAL 
PROPERTY MOU WAS SIGNED.  THE U.S. NEGOTIATED THE MOU IN THE 
CONTEXT OF SUPPORTING CROATIA'S BID TO JOIN THE WTO AND IN 
CONJUNCTION WITH A BILATERAL INVESTMENT TREATY (BIT). 
CROATIA WAS NOW A MEMBER OF THE WTO, THE BIT WAS IN FORCE, 
AND THE MOU WAS STALLED, DESPITES YEARS OF DISCUSSIONS, BOTH 
IN WASHINGTON AND IN ZAGREB.  HE WAS VERY DISAPPOINTED THAT 
GOC FAILURE TO ACT HAD ALLOWED CROATIA TO "DRIFT" ONTO THE 
WATCH LIST.  WHILE OUR GOAL WAS TO SOLVE PROBLEMS, THE 301 
PROCESS DID CONTAIN MECHANISMS THAT COULD WELL LEAD TO TRADE 
SANCTIONS DOWN THE ROAD IF THE GOC DID NOT ACT. 
 
3.  (SBU) THE AMBASSADOR NOTED APPROVINGLY THE NEWS THAT THE 
LATEST ITERATION OF THE DRAFT PHARMACEUTICAL LAW CONTAINED 
LANGUAGE ON DATA EXCLUSIVITY DRAWN FROM THE EU MODEL.  (THE 
LANGUAGE HAS BEEN IN AND OUT OF THE DRAFT AT LEAST ONCE 
BEFORE.)  HE HOPED THAT DATA EXCLUSIVITY WOULD REMAIN IN THE 
LEGISLATION, BE ENACTED AND IMPLEMENTED SOON. 
 
4.  (SBU) SIMONIC REMARKED THAT HE WAS RELATIVELY NEW IN THE 
GOVERNMENT.  ONE OF HIS AND HIS PARTY'S (HSS -- CROATIAN 
PEASANT'S PARTY) MAIN PRIORITIES WAS TO PASS A NEW DRUG LAW. 
UPON ENTERING THE GOVERNMENT, HE LEARNED ABOUT THE ISSUE OF 
THE MOU.  SIMONIC CONCLUDED THAT THE GOC HAD AN OBLIGATION TO 
THE U.S. TO RATIFY THE MOU.  CROATIA ALSO HAD TO FOLLOW 
INTERNATIONAL RULES, SUCH AS THOSE OF THE WTO, STABILITY PACT 
AND THE EU.  HE WAS NOT AN ECONOMIST, AND ADMITTED THAT HE 
HAD NOT BEEN ABLE TO OBTAIN DATA ON WHAT THE EFFECT WOULD BE 
ON THE CROATIAN HEALTH SYSTEM OR ON CROATIAN COMPANIES OF 
INTRODUCING DATA EXCLUSIVITY.  SIMONIC SAID HE WAS PUSHING 
                       UNCLASSIFIED 
 
PAGE 04        ZAGREB  01187  01 OF 02  271602Z 
FOR THE DRUG LAW, WHICH WAS IMPORTANT FOR CROATIA AND HIS 
PARTY, AND HE BELIEVED THE MOU WOULD BE RATIFIED AS WELL. 
HOWEVER, HE WARNED, THE MINISTRY OF HEALTH WOULD HAVE TO 
COMMENT ON THE DRAFT LEGISLATION.  SIMONIC FLAGGED THE MOU'S 
PROVISION FOR PIPELINE PROTECTION OF DRUGS AS A CONCERN AS 
WELL. 
 
5.  (SBU) THE AMBASSADOR THANKED SIMONIC FOR HIS RECOGNITION 
OF THE GOVERNMENT'S OBLIGATION TO RATIFY THE MOU.  WHILE ANY 
COUNTRY COULD EXPERIENCE DELAYS IN RATIFICATION, WHAT HAD 
BEEN OF CONCERN IN CROATIA WAS THE LACK OF EXECUTIVE 
COMMITMENT TO PUSH FOR RATIFICATION. 
 
6.  (U) THE MEDIA COVERED THE VISIT FAIRLY EXTENSIVELY, AND 
FOR THE FIRST TIME REPORTED ON THE 301 ANNOUNCEMENT. 
(SIMONIC HAD ARRANGED AN UNUSUAL POOL SPRAY AT THE TOP OF THE 
MEETING).  AFTER THE MEETING, SIMONIC TOLD THE PRESS THAT THE 
GOVERNMENT WOULD WORK HARD TO GET CROATIA OFF THE WATCH LIST, 
AND SAID HE WOULD PRESS FOR MOU RATIFICATION WITHIN THE 
CABINET.  HE NOTED THAT WHILE CROATIA WAS ON A LIST WITH 
COUNTRIES SUCH AS PAKISTAN AND JAMAICA (PRESUMABLY NOT A GOOD 
THING), THERE WERE OTHER EUROPEAN COUNTRIES SUCH AS ITALY ON 
THE LIST AS WELL. 
 
7.  (U) THE MEDIA ALSO INTERVIEWED MINISTER OF HEALTH 
VLAHUSIC, WHO WAS LESS FORTHCOMING.  VLAHUSIC (FOR REPORT OF 
 
                       UNCLASSIFIED 
 
                           UNCLASSIFIED     PTQ2786 
 
PAGE 01        ZAGREB  01187  02 OF 02  271602Z 
ACTION EB-00 
 
INFO  LOG-00   NP-00    AF-00    AID-00   CEA-01   CIAE-00  CTME-00 
      INL-00   DODE-00  DOEE-00  ITCE-00  SRPP-00  DS-00    EXME-00 
      EUR-00   E-00     UTED-00  VC-00    FRB-00   H-01     TEDE-00 
      INR-00   IO-00    ITC-01   LAB-01   LOC-01   L-00     VCE-00 
      AC-01    NSAE-00  NSCE-00  OES-00   OIC-02   OMB-01   OPIC-01 
      PA-00    PER-00   PM-00    PRS-00   ACE-00   P-00     SCT-00 
      SP-00    SSO-00   SS-00    STR-00   TEST-00  TRSE-00  T-00 
      USIE-00  PMB-00   DSCC-00  PRM-00   DRL-01   G-00     NFAT-00 
      SAS-00   SWCI-00    /011W 
                  ------------------6B584D  271602Z /38 
P 271543Z MAY 03 
FM AMEMBASSY ZAGREB 
TO SECSTATE WASHDC PRIORITY 0304 
INFO AMEMBASSY BELGRADE PRIORITY 
AMEMBASSY BRATISLAVA PRIORITY 
AMEMBASSY BUCHAREST PRIORITY 
AMEMBASSY BUDAPEST PRIORITY 
AMEMBASSY LJUBLJANA PRIORITY 
AMEMBASSY SARAJEVO PRIORITY 
AMEMBASSY SKOPJE PRIORITY 
AMEMBASSY TIRANA PRIORITY 
AMEMBASSY WARSAW PRIORITY 
DEPT OF COMMERCE WASHDC PRIORITY 
USEU BRUSSELS PRIORITY 
USMISSION GENEVA PRIORITY 
 
                       UNCLASSIFIED 
 
PAGE 02        ZAGREB  01187  02 OF 02  271602Z 
UNCLAS SECTION 02 OF 02 ZAGREB 001187 
 
SIPDIS 
 
SENSITIVE 
 
STATE PASS USTR 
STATE FOR EB/IPC AND EUR/SCE 
 
E.O. 12958: N/A 
TAGS: ETRD, PREL, KIPR, HR 
SUBJECT: AMBASSADOR PRESSES DEPUTY PRIME MINISTER ON 
INTELLECTUAL PROPERTY; 301 DECISON HAVING SALUTORY EFFECT 
 
AMBASSADOR'S FEBRUARY MEETING WITH THIS MINISTER, SEE 
REFTEL), TOLD NATIONAL RADIO THAT WHILE THERE WAS LANGUAGE IN 
THE DRAFT DRUG LAW WHICH WOULD PROVIDE DATA EXCLUSIVITY, 
CROATIA WAS DOING SOMETHING THAT IT DID NOT REALLY HAVE TO DO 
UNTIL EU ACCESSION.  IN ANOTHER PRINT INTERVIEW, HE IS QUOTED 
AS SAYING THAT "WITH THE NEW LAW ON DRUGS, AND BY JOINING THE 
WTO, CROATIA HAS ACCEPTED EVERYTHING THAT RELATES TO THE 
PROTECTION OF INTELLECTUAL PROPERTY... THE U.S. IS ASKING 
CROATIA TO SIGN SOMETHING THAT HAS NOT EVEN BEEN SIGNED BY 
SOME EU MEMBERS." 
 
8.  (SBU) WE HAVE HEARD FROM INDUSTRY SOURCES THAT VLAHUSIC 
MAY PLAN TO SUGGEST AMENDMENTS TO THE DRAFT DRUG LAW THAT 
WOULD DELAY IMPLEMENTATION UNTIL EU ACCESSION.  THE 
AMBASSADOR SENT A LETTER MAY 21 TO MINISTER VLAHUSIC, SHORTLY 
BEFORE THE MEETING WITH DPM SIMONIC (TEXT EMAILED TO USTR, EB 
AND THE DESK), URGING SPEEDY RATIFICATION OF THE BILATERAL IP 
MOU. 
 
9.  (SBU) COMMENT:  THE 301 ANNOUNCEMENT HAS HAD THE EFFECT 
                       UNCLASSIFIED 
 
PAGE 03        ZAGREB  01187  02 OF 02  271602Z 
OF HIGHLIGHTING THE MOU AND THE GOVERNMENT'S BILATERAL 
COMMITMENTS TO THE U.S.  THIS HAS STRENGTHENED THE HAND OF 
OUR ALLIES IN THE GOVERNMENT -- THE MFA, THE MINISTRY OF 
ECONOMY, AND EVEN THE STATE INSTITUTE OF INTELLECTUAL 
PROPERTY -- AND RAISED THE AWARENESS LEVEL OF THOSE WHO WERE 
HARDLY AWARE OF THE ISSUE BEFORE, FOR EXAMPLE, THE DEPUTY 
PRIME MINISTER IN CHARGE OF HEALTH ISSUES.  THE 301 
ANNOUNCEMENT POINTS UP THE FALLACY OF THE HEALTH MINISTER'S 
ARGUMENTS TO US (REFTEL) -- THAT IS, THAT SINCE THE GOC IS 
COMPLYING WITH TRIPS, IT DOES NOT NEED TO RATIFY THE MOU -- 
AND EXPOSES HIS POSITION AS PANDERING TO THE LOCAL INDUSTRY. 
WHILE THERE IS MORE MOMENTUM THAN BEFORE TO RATIFY THE MOU, 
THERE WILL ALSO BE A TEMPTATION ON THE PART OF THE 
GOVERNMENT, LOOKING AT THE LONG TIMELINE BEFORE THE NEXT 301 
REVIEW, TO PUT THIS ON THE BACK BURNER.  WE WILL DO OUR BEST 
TO KEEP THE HEAT ON. 
ROSSIN 
 
                       UNCLASSIFIED 
 
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