US embassy cable - 03ROME3304

C O N F I D E N T I A L  ROME 003304 
 
SIPDIS 
 
 
STATE PASS USTR 
GENEVA FOR USTR 
 
E.O. 12958: DECL: 07/21/2008 
TAGS: ETRD, IT, EUN 
SUBJECT: ITALY'S EU PRESIDENCY: EU/EUROMED INFORMAL TRADE 
MINISTERIAL, PALERMO, JULY 6-7, 2003 
 
Classified By: Economic Counselor Karen Milliken for reasons 1.5 b and 
d 
 
1. (U) Italian trade officials hosted an informal trade 
ministerial meeting in Palermo July 6-7. The July 6 session 
included trade ministers from the EU 15 plus the 10 EU 
accession countries, as well as European Commissioner for 
External Trade Pascal Lamy and European Free Trade Agreement 
partners, in a discussion that focused on the upcoming WTO 
ministerial meeting in Cancun and with EU enlargement. The 
July 7 session, the Third Euro-Mediterranean trade 
ministerial conference, included trade officials from the 
EU's 10 Mediterranean partners (Algeria, Tunisia, Morocco, 
Egypt, Jordan, Israel, Syria, Lebanon, Turkey and the 
Palestinian Authority). Trade facilitation and liberalization 
of trade in services were among the issues discussed at the 
Euromed meeting. 
 
Informal EU Trade Ministerial 
----------------------------- 
 
2. (SBU) Embassy trade contacts, including Federico Eichberg, 
senior advisor to Foreign Trade Vice Minister Adolfo Urso, 
told econoff that an atmosphere of relief and optimism 
permeated the July 6 meeting of EU and EU accession country 
ministers, following the agreement in late June on CAP 
reform.  The EU no longer is on the defensive regarding the 
lack of CAP reform, and thus being potentially blamed for 
creating gridlock at the WTO ministerial meeting in 
September.  No decision was made to table a new agriculture 
proposal ) Eichberg stressed that CAP reform makes future 
export subsidy cuts doable, even if no decision has been made 
about their potential size. Predictably, Italy also 
emphasized increased protection under the WTO for 
geographical indications for all food products; however, our 
contact admitted that it might not be possible to achieve any 
progress on GI expansion by Cancun. Nevertheless, the EU will 
push to conclude talks at Cancun on GI protection for wine 
and spirits. 
 
3. (SBU) No changes to the EU,s approach on other Doha round 
issues were made at the Palermo meeting, according to 
ministry contacts and other reports we have seen.  On 
non-agricultural market access the EU remains generally 
pleased with the Trade Negotiating Committee,s draft paper, 
but foresees the need for further work to bring developing 
countries onboard.  The EU will continue to push for all four 
Singapore issues to be negotiated together (Italy is 
particularly interested in the investment issue).  Resolution 
at/before Cancun of the TRIPS/medicine issue is seen as 
essential for the perceived success of the ministerial. 
Eichberg recalled no mention of deadlines, and said Lamy 
remains optimistic regarding a timely conclusion to the Doha 
Round. 
4. (SBU) Eichberg noted that, contrary to some press reports, 
no U.S.-EU bilateral trade disputes were discussed at the 
July 6 meeting.  He said much of the meeting,s content 
concerned modalities for the ten EU accession countries to 
integrate into the EU process on developing/implementing 
trade policy.  Italy also presented a proposal to make marks 
of origin obligatory within the EU, with the goal of giving 
EU consumers important information regarding a product,s 
country of origin.  Eichberg commented that there was little 
discussion at Palermo on the proposal (though he said Lamy 
was supportive), and Italy does not expect the proposal to 
advance significantly in the near term, given the press of 
the WTO round. 
 
Euromed Meeting 
--------------- 
 
5. (SBU) Eichberg noted some positive news from the July 7 
Euromed meeting, especially the adoption of a protocol on 
rules of origin for the EU, Mediterranean, acceding 
countries, and EFTA (which he termed one of the more 
significant achievements since the Barcelona Process began). 
In addition to facilitating trade, the new protocol will 
contribute to continuing efforts to forge a Euromed free 
 
 
trade area.  Eichberg also noted a positive atmosphere among 
all the Euromed participants, including between the Israeli 
and Palestinian contingents. The GOI informally proposed some 
joint operations among Italy,s Simest (analogous to OPIC) 
and relevant Israeli and Palestinian entities. 
 
6. (C) Despite the positive atmosphere at Palermo, however, 
Eichberg was pessimistic about the Barcelona Process ever 
achieving significant trade expansion between the EU and the 
Mediterranean basin countries, given the different economic 
development levels between the two areas.  European interest 
in expanding into central and eastern Europe over the last 
decade overrode earlier hopes for attracting more EU 
investment to the south. Eichberg pointed out that Simest 
attracts very little interest among potential Italian 
investors in projects in the ten Euromed partners, despite 
its willingness to underwrite such investments. The economic 
counselor of the Egyptian Embassy in Rome shared with us 
similar concerns about Euromed, noting a general 
disillusionment among the ten that significant progress, much 
less a free trade area, will ever gain traction.  Our 
Egyptian colleague agreed that EU investors &abandoned8 the 
Mediterranean in favor of eastern Europe after the end of the 
cold war. 
Sembler 
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	2003ROME03304 - Classification: CONFIDENTIAL