09.17.11

Cablegate: EU Negotiations About EU Patent/Community Patent

Posted in Cablegate, Europe, Intellectual Monopoly, Patents at 5:02 am by Dr. Roy Schestowitz

Summary: 3 cables from Brussels and Geneva, all demonstrating growing acceptance of artificial trans-Atlantic monopolies with similar trends within Europe itself

According to EU authorities, there is no reason to worry about expanding the scope of patents, opening the door to increased litigation and damages.

In the following 3 cables we see the subject brought up several times. In the second cable, “Lorrain added that patent harmonization would be interesting, along with a discussion on copyrights and other current IPR issues.”

The third cable says: “A key area that would further innovation in the seed industry would be patent harmonization of plant protection, as the existing rules under the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs) allow for protection of plant varieties either by patents or by an effective sui generis system or by any combination thereof. As a result, there are varying degrees of patent protection for plants from one territory to another. ”

We wrote about TRIPS in [1, 2, 3, 4]. The three cables from 2008 and 2009 are as follows:

VZCZCXYZ0000
RR RUEHWEB

DE RUEHBS #0859/01 1581339
ZNR UUUUU ZZH
R 061339Z JUN 08
FM USEU BRUSSELS
TO RUEHC/SECSTATE WASHDC
INFO RHEHAAA/WHITE HOUSE WASHDC
RHEHNSC/NSC WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/USDOC WASHDC
RUEHRC/DEPT OF AGRICULTURE WASHDC
RUEHC/DEPT OF LABOR WASHDC
RUEAUSA/DEPT OF HHS WASHDC
RUCNMEM/EU MEMBER STATES COLLECTIVE
RUCNMEU/EU INTEREST COLLECTIVE

UNCLAS USEU BRUSSELS 000859 

SENSITIVE 

SIPDIS 

White House for NSC/Price, Herrmann
White House for OMB for OIRA/Dudley, Mancini
USTR for USTR Schwab, EUR
HHS for FAO/von Eschenbach
Pass SEC for Commissioner Atkins 

E.O. 12958:  N/A
TAGS: ECON [Economic Conditions], ETRD [Foreign Trade],
EIND [Industry and Manufacturing],
EINV [Foreign Investments],
EFIN [Financial and Monetary Affairs],
EAGR [Agriculture and Forestry], ENRG [Energy and Power],
ECIN [Economic Integration and Cooperation], EUN [European Union]
SUBJECT: Second Meeting of the U.S.-EU Transatlantic
Economic Council, May 13, 2008, Brussels 

Ref: USEU (scene-setter) 

¶1. Summary:  The May 13 U.S.-EU Transatlantic
Economic Council: 

-- discussed in a principals-only lunch policy
issues related to Russia and protectionism (reported
septel); 

-- agreed that EU Commission would follow through on
its November 2007 commitment to remove a major
impediment to EU imports of U.S. poultry, with the
EU Commission proposing legislation to allow the
U.S. meat cleaning process, explicitly acknowledging
the absence of a scientific basis for a continued
ban and committing to work actively to get the
proposal adopted; 

-- acknowledged a Commission administrative fix to
problems importers of U.S. cosmetics could face when
implementation of the EUQs new chemicals legislation
REACH begins June 1 while agreeing the Commission
would take steps to provide transparency, greater
legal certainty, and non-discrimination in
implementation of REACH ; 

-- accepted a Department of Labor offer to publish a
Request for Information on the subject of suppliers
declaration of conformity  for low-risk electrical
equipment; 

-- issued a joint statement on Open Investment ; 

-- welcomed steps to avoid unnecessary divergences
in our approaches to regulation, improve
consideration of international trade and investment
impacts of our regulation, enhance import safety
through better sharing of confidential information,
and improve our approaches to risk assessment; and 

-- discussed recent steps to further transatlantic
capital markets integration, including through steps
to grant equivalence to one anotherQs accounting
standards, achieve mutual recognition of our
comparable securities regimes, and address
structural and other potential problems in our
insurance markets. 

End Summary 

¶2. The U.S.-EU Transatlantic Economic Council met
in Brussels on May 13, 2008.  The U.S. side was co-
chaired by Assistant to the President for
International Economic Policy Dan Price, and
included Secretary of Agriculture Ed Schafer,
Secretary of Labor Elaine Chao, United States Trade
Representative Susan Schwab, Treasury Deputy
Secretary Robert Kimmitt, State Department Under
Secretary for Economic Affairs Reuben Jeffery III,
Commissioner of Food and Drugs Andrew von
Eschenbach, SEC Commissioner Paul Atkins, Special
Envoy to the European Union C. Boyden Gray and OMB
Office of Information and Regulatory Affairs
Administrator Susan Dudley.  EU Commission Vice
President Guenter Verheugen co-chaired on the
European Union (EU) side, accompanied by Trade
Commissioner Peter Mandelson, internal Market
Commissioner Charlie McCreevy, Consumer Safety
Commissioner Meglena Kuneva, and Taxation and
Customs Commissioner Laszlo Kovacs. 

¶3. The Council addressed a wide range of subjects,
including : 

-Russia and combating protectionist sentiments (in a
principals-only lunch, reported separately);
-steps to reduce unnecessary regulatory divergences
between the U.S. and EU, improve the sharing of
information relating to import safety, take better
account of the trade and investment impacts of
domestic regulation and improve risk analysis;
-specific sectoral regulatory problems and issues
such as the EU ban on the import of U.S. poultry
meat processed using chlorinated pathogen reduction
treatments, the U.S. requirement for independent
third party certification that certain electrical
equipment is safe for the workplace and the effect
of the EUQs chemicals regulation on imports,
especially of cosmetics;
-measures being taking to integrate transatlantic
capital markets, including in the areas of
accounting, securities and insurance ;
-the need for open investment policies; and
-next steps for the Council. 

¶4. The TEC issued a Progress Report to the Summit,
including as an annex a Joint Statement on Open
Investment.  It also received two reports from the
High-Level Regulatory Cooperation Forum:  one on the
analysis of trade and investment impacts of
regulation, and one on our respective approaches to
import safety, particularly our approaches to
information sharing. 

¶5. The co-chairs also met with a small group of EU
parliamentarians.  The co-chairs and the U.S.
delegation then met with the TEC Advisory Group
(consisting of the U.S. and European co-chairs of
the Transatlantic Legislators Dialogue, the
Transatlantic Business Dialogue and the
Transatlantic Consumer Dialogue); these meetings, as
well as the TEC co-chairs post-session debrief of
the Advisory Group, are reported separately. 

I. Review of TEC Achievements 

¶6. Commissioner Verheugen opened the first plenary
session commenting that the stakeholders session was
a strong indicator that the TEC project would surely
be successful as it already had a strong and visible
impact on transatlantic economic relations.  Both
Price and Verheugen highlighted the significant
concrete accomplishments TEC already has under its
belt.  Price emphasized the strategic importance of
the crucial relationship, and the need to ensure
sustainability of the TEC to continue to build on
this relationship, identifying short, medium and
long term goals.  He affirmed our obligation to get
it right amongst usQ so that we can get it right
with others.  He pointed to common commitments
already made, including horizontal regulatory
cooperation to bring regulatory processes in line,
science-based approaches to regulation, improved
transparency and more rigorous impact assessments.
Price pointed to three areas where there has been
concrete action beyond simply agreeing to roadmaps:
1)  IPR enforcement highlighting Operation
Infrastructure, the joint customs border operation
in which at least 360,000 integrated circuits with
40 different faked marks were seized in the last
months of 2007 2) E-Accessibility where the European
Commission has invited NIST and GSA to join their
experts group on developing standards while the USG
has invited Commission experts to join discussion on
reassessment of U.S. regulations; and 3) further
enhanced cooperation on medicinal products whereby,
based on the joint administrative simplification
goals, there will be several specific initiatives
related to inspections, including joint inspections. 

¶7. Verheugen reminded the group of the TECQs long-
term vision of removing obstacles to achieve the
transatlantic economyQs full potential, ensuring our
continued competitiveness.  He asserted that the
TECQs political guidance gets things moving even
on a nasty issue like poultry.  TEC
accomplishments include a Federal Communications
Commission commitment to begin a rulemaking on
allowing use of suppliers declaration of conformity
for products it regulates; a joint roadmap on patent
harmonization; Food and Drug Administration/DG
Enterprise cooperation on administrative
simplification (including enhanced inspection
cooperation), collaboration on biomarker development
and validation, parallel scientific advice and other
regulatory cooperation initiatives for veterinary
medicines that should reduce costs of pharmaceutical
R&D and get new medicines to market sooner; car
safety cooperation including cooperation at the
UNECE to establish new global technical
regulations(GTRs), including adoption of two recent
GTRs; biofuels standards cooperation; FDA/DG
Enterprise agreement to facilitate and support a
more routine and formal process by which the EU, US,
Canadian, and Japanese alternative testing
validation organizations can work more cooperatively
to address validation priorities, methodologies, and
processes.  In addition, FDA/DG Enterprise have
agreed to work together bilaterally on the
regulatory acceptance with respect to cosmetics of
validated animal tests.  Both of these initiatives
should assure public health protection and help
mitigate possible interruptions to trade that may be
caused by the upcoming EU ban on animal testing for
cosmetics.  Verheugen said this progress was going
too slow to address the looming crisis, and asked
why scientists cannot agree.  (Comment:  This
reference was to the disingenuous assessment that if
not for the intransigence of the U.S. scientists,
the EU requirement to move to non-animal testing of
cosmetics would be possible by the 11 March 2009
deadline set in EU legislation.  Alternative methods
to determine certain safety requirements have not
yet been validated or accepted in both the EU and
the U.S. as the science has not yet caught up to
this EU statutorily-imposed deadline. End comment) 

II. Horizontal Regulatory Cooperation and the High
Level Regulatory Cooperation Forum (HLRCF): 

A. Impact Assessment, Transparency and Consultation 

¶8. EU Commission Deputy Secretary General Alexander
Italianer and OMB/OIRA Administrator Susan Dudley
summarized the accomplishments of the meeting of the
High Level Regulatory Cooperation Forum (HLRCF) that
took place on 25 April.  The Secretariat General and
OMB completed a joint report on including trade and
investment impacts in regulatory analyses that both
opened to comment.  Italianer explained that
although there were few comments, those who did
comment (including the U.S. Chamber of Commerce and
BusinessEurope) represented the major players in
transatlantic trade and investment.  At the HLRCF
stakeholders discussion, both the USG and the
European Commission broadly outlined how
transparency and public participation are handled
under our respective systems.  Administrator Dudley
added that, in the future, OMB would likely ask U.S.
agencies to identify which regulations might have
trade and investment impacts or might otherwise be
of use to our trading partners. 

B.  Risk Assessments 

¶9. Dudley explained the conviction both sides have
that we need a sound risk-based pathway to
regulation.  Sharing of data and analysis will help
build a broader consensus on risk assessments,
limiting but not excluding regulatory divergence at
the risk management stage. Dudley referred to the
trilateral (EU-US-Canada) government-only workshop
on risk assessment, management and communication in
July, whose conclusions will be reported at the fall
TEC.  Conclusions from this session would be folded
into the broader international conference hosted by
DG SANCO in November in Brussels. 

¶10. Dan Price asked EU participants how they
QsquaredQ risk assessment with their variant of the
precautionary principle.  SANCO Director General
Robert Madelin underscored that scientists
understand uncertainty and that the precautionary
principle had nothing to do with risk assessment and
everything to do with risk management. He stated
that the objective was not zero risk, and not to
default to prohibition, but he recognized the
political challenge of risk managers to avoid
distortion of the precautionary principle.  Price
felt that the risk assessment conference would help
to dispel the caricature of U.S. and EU positions,
allowing us to focus on our agreed goals of science-
based approaches to prevent new barriers from
arising. 

¶11. SEC Commissioner Paul Atkins pointed out SECQs
statutory requirement to use cost/benefit analysis
when formulating new regulations.  Without it, their
regulations could, and likely would, be overturned
in court.  FDA Commissioner von Eschenbach hoped the
U.S. and EU regulators would also emphasize benefits
of regulated technology/activity when doing
cost/benefit analysis and risk assessments.
Highlighting benefits, for example for
nanotechnology, is crucial when communicating risks. 

¶12. USTR Schwab suggested that such risk discussions
would go a long way towards precluding prolonged and
intractable bilateral disputes by Qmanaging issues
at the front end.  Emphasizing the need to use
sound science and objective criteria, Schwab warned
that any abuse in the U.S. and the EU would be
copied and worsened in third countries creating
bigger non-tariff barriers. 

¶13. Verheugen pointed out how the conversation in
the room did not reflect that this is a very hot
issue.  He wondered how the precautionary principle
impacts (EU) legislation practically, suggesting
that it would be a topic for future discussion.
Italianer noted that we have different priorities
and societal preferences, and that the precautionary
principle could lead risk managers to preclude
taking any risk.  Dudley commented about the risks
of action and inaction, pointing out that an overly
precautionary approach could create serious
opportunity costs or prevent society from enjoying
crucial benefits in areas such as nanotechnology and
biotechnology. 

¶14. Verheugen felt efforts to create consistent
methodologies and risk assessment benchmarks would
be crucial.  Taking a step further, Verheugen
believed that U.S. and EU policymakers looking at
equivalent risk assessments should also be able to
Qfind a common approach to deal with the issue at
hand.  Von Eschenbach added that regulatory agencies
often wait for science to come to them.  His hope
was that aligning our regulatory processes ahead of
scientific developments, for example in
nanotechnology, could make sure our approaches were
more integrated. 

C.  Import Safety 

¶15. Dudley explained that the joint paper on
strengthening transatlantic cooperation on import
safety was almost complete.  (Comment:  the report
was completed on Thursday, May 15th and released to
the public on the ECQs website shortly thereafter.
End comment)  The report has recommendations in
several product areas:  motor vehicles,
pharmaceuticals, cosmetics, toys, electrical
equipment for consumer use, food and customs
procedures.  One key challenge highlighted in the
report was the importance of confidentiality among
regulators, especially with respect to the
protection of confidential business information.
The U.S. import safety working group would be
providing a report on its efforts. 

¶16. EU Consumer Safety Commissioner Meglena Kuneva
stressed the importance of information sharing,
stating her conviction that once U.S. legislation is
adopted expanding Consumer Product Safety Commission
(CPSC) authorities for external communication,
information sharing would be easier.  Kuneva
implored the USG, specifically CPSC, to gain a more
thorough understanding of their rapid alert system
(RAPEX), to better understand the type of safety
information that could be shared.  (This was in
reference to a comment made during Commissioner
NordQs last Brussels visit that the RAPEX system did
not contain much information useful for CPSC.) She
assured all that Commission efforts to improve
safety would not affect open trade policy.  Kuneva
reminded the group that she invited Chinese Minister
Li and Commissioner Nord to Brussels in November for
a trilateral meeting to Qproperly communicate
priorities. 

¶17. Price asked what precludes our regulators from
sharing information, for instance on product
recalls.  Dudley stated that even where cooperation
is already mature and deep, such as in
pharmaceuticals and cosmetics, improvements can be
made.  She pointed out that EU and Member States
need to set up mechanisms to ensure that
confidentiality is adequately protected across their
network.  Some U.S. agencies lack statutory
authority to engage in more extensive information
exchange, for example CPSC.  Commissioner von
Eschenbach said FDA was looking beyond its borders,
and that even if barriers existed to external
outreach, political will could overcome those
barriers and impediments. 

¶18. Agriculture Secretary Schafer provided examples
of where international cooperation in international
organizations was complementary and at other times
counterproductive.  At the international standards
setting body for food safety (aka CODEX), U.S. and
the EU agreed on aflatoxin presence levels in tree
nuts.  However, the EU was also using CODEX to
export its non-science-based, non-food-safety based
policies on food labeling by recommending that CODEX
focus on specific standards for biotech food
labeling instead of sticking with the perfectly
acceptable existing CODEX language.  He asserted
that TEC could help spur actions for bilateral
opportunities.  Here he pointed to EU legislation on
equivalence of meat standards.  The EUQs 17
exporting member states represent only 4% of US meat
imports, but 50 percent of U.S. foreign inspection
funds.  Given the generally uniform EU food safety
system, and more consistent EU audit results, this
could allow the USDA to work on an EU-wide basis,
greatly reducing resource costs. 

¶19. Verheugen agreed on TEC prospects in this area,
and suggested they consider food safety for the next
meeting.  Verheugen pointed to the impacts of the
EUQs improved market surveillance efforts resulting
in sharp increases in import bans and recalls. 

¶20. Price asked for clarification on EUQs
information sharing limitations related to
reciprocity requirements.  (Note: At the HLRCF,
SANCO Deputy Director General Paola Testori
indicated that the EU could not and would not share
with the U.S. information on safety if they were not
getting what they considered Qreciprocal
information from the U.S.  The conversation was
largely related to a misunderstanding of OSHAQs
responsibilities, but also related to CPSC statutory
limitations.)  SANCO Director General Madelin
indicated that the European Commission has more
discretion to share information than the U.S.  He
hinted that information would not be shared if not
considered reciprocal.  At the same time, he stated
that safety information held by one side when it is
known that products are also imported by the other
side should be shared to avoid incident.   He stated
that in his experience, when agencies trust each
other, issues get on the radar screen sooner.
Madelin mentioned that, in other cases, they could
not be confident that silence means nothing is
going on.  (Madelin was referring to an incident in
which a U.S. technology company reported minute
traces of an unapproved biotech corn event in a
small amount of seed.  There were no safety concerns
related to the incident and no corn is shipped to
the EU.  Despite this, the USG shared the
information with the EU shortly before the
information went public, at the same time it shared
the information with major corn importers such as
Japan.  SANCO had, however, learned of the event
from the company earlier, some two months after it
was reported to U.S. authorities, which is why he is
concerned that it could be difficult to report to
the European Parliament that silence from the U.S.
side means there are no problems.) 

¶21. Commenting on MadelinQs statement, Deputy FDA
Commissioner Murray Lumpkin reminded the group that
FDA (like its EU counterparts) is prohibited by
statute from sharing trade secrets; however, FDA and
its EU counterparts, under executed confidentiality
agreements, have been sharing other non-public
information (commercial confidential, investigative,
pre-decisional, etc) for many years.  In addition,
on the matter of information that has significant
public health implication, he stated that even in
the case when FDA is not sure if the product is
marketed in Europe, FDA notifies its European
counterparts anyway just to be sure. 

¶22. Kuneva asserted that, in addition, we do not
sufficiently share third party information.  She
touted the EUQs four-year young RAPEX system as a
well-built enforcement tool, complaining that US
officials preferred to go to Member States.
(Comment:  Despite her reference to improved
statistics on reporting into the RAPEX system, there
is inconsistent use of this tool throughout the EU,
thus requiring communication with Member States to
get a fuller picture. End comment) 

¶23. Referring to MadelinQs hints that some in the
U.S. were not sufficiently sharing, Dan Price asked
him to name names.  During a side conversation at
the end of the session, Madelin told Price about the
biotech product incident. 

¶24. Speaking more generally on the third party
issue, OMBQs Dudley reported that in the April
meeting between OMB and Commission, DG Enterprise
Director General Zourek suggested when analyzing
standards both sides should first look to see what
international regulations and standards are in
place.  Deputy Secretary General Italianer suggested
both sides needed to discuss standards.  He
indicated that the EU has done away with EU
standards for autos and instead uses
international/UN standards.  FDAQs von Eschenbach
stated that the US has begun to bring China and
India into the international discussions on
harmonization of technical requirements for
registration of pharmaceuticals (ICH) and medical
devices (GHTF). 

D.  Regulatory Burdens 

¶25. Treasury D/S Kimmitt asked for an update on EU
efforts to reduce regulations, although this was not
on the formal agenda.  Commissioner Verheugen
described the program as part of the CommissionQs
Better Regulation efforts.  He indicated that
fulfilling reporting requirements of various kinds
cost 3.5% of EU GDP and for SMEQs the cost of
complying can be as high as 10% of turnover.  More
than 100 reporting requirements stem from the
Company Law alone.  Seventeen Member States have
started screening administrative procedures and the
Commission is now measuring the costs of complying.
The ten actions they have taken this year saved 1.9
billion Euro.  Unfortunately it is not a net savings
because in the meantime the EU is proposing other
legislation.  The Commissioner offered to share any
of the details of the program with the US side. 

III.  Removing Barriers to Transatlantic Trade 

¶26. The third major part of the TEC agenda was a
discussion of steps either side is taking to remove
barriers to transatlantic trade in key areas.  In
summary, on the question of suppliersQ declaration
of conformity, Secretary Chao indicated the
Department of Labor would publish a new Request for
Information in the Federal Register.  On poultry, by
the end of May the Commission will table a proposal
to amend two pieces of EU legislation to allow the
import of poultry meat processed using pathogen
reduction treatments (PRTs), as well as the use of
PRTs in the EU for processing poultry meat for
consumption in the EU.   (Comment:  EU law already
allows the use of PRTs in the processing of poultry
meat for export.  End comment.)  On REACH, the
Commission asserted its pragmatic approach to the
cosmetics problem would avoid immediate trade
disruption.  Verheugen agreed a legislative change
was needed to provide legal certainty to  industry,
but could not commit to Commission support for such
a legislative fix at this time as he cannot yet
guarantee that all Commissioners would support this. 

A. Suppliers Declaration of Conformity (SDOC) 

¶27. Verheugen indicated the issue had been on the
table since the first TEC meeting, and he was happy
to note that OSHA is willing to review its
requirement that certain electrical equipment be
tested and certified under the NRTL (Nationally
Recognized Testing Laboratories) system even where
suppliers are willing to provide their own
certifications.  He hoped the request for
information (RFI) would be open soon and without a
pre-judged outcome. 

¶28. Dan Price confirmed the U.S. understands this
issue is a high priority for the EU; the U.S.
government has given the issue a lot of attention.
Secretary Chao then reviewed the many meetings Labor
has had with the Commission and with other
stakeholders on SDOC and confirmed the plans to
release an RFI.  She then outlined some of the
strengths of the NRTL system including the fact that
it is open to laboratories from all countries, it
relies on the private sector not a government
bureaucracy and it has proven effective in
delivering safety in the workplace.  In considering
SDOC, Secretary Chao mentioned her concern about the
budget impact that establishing a post market
surveillance program would require and indicated
several aspects could require legislative changes.
She also wanted to better understand how EU Member
States implemented SDOC as there appear to be
different approaches in different countries.  She
emphasized that its process is open and that
regulatory decisions are based on the best data, not
the volume of submissions.  Finally, she offered to
talk to the Commission about other trade
facilitation issues besides SDOC.  Verheugen ended
the discussion by expressing hope that OSHA would
continue the process that has started. 

B.  Pathogen reduction treatments (PRT) for poultry 

¶29. Price emphasized that (despite complaints of
some about the attention paid to PRTs in the TEC),
the issue had not received undue but appropriate
attention.  There is no substantive basis for what
is an effective ban on the import of U.S. poultry
meat; further, the EU had earlier agreed to lift the
ban.  He thanked Verheugen for his efforts to move
this issue.  He also distributed copies of a
Financial Times article (published May 12 on page 4)
on EU use of PRTs. 

¶30. Verheugen agreed the attention to the issue was
appropriate.  He expressed regret that the
Commissioner in charge of the issue [Comment:
Probably referring to DG Environment Commissioner
Dimas, but note that Commissioners Vassiliou and
Fisher-Boel, who also have a role and were not
present] was not at the TEC meeting and committed
that the Commission would adopt a proposal to amend
the two relevant pieces of legislation (Food Hygiene
and Marketing Regulations) before the end of the
month; these proposals will be with the Council and
Parliament before the Summit.  He noted that the
scientific studies indicate no health concerns from
the use of PRTs, and that there are no known
environmental concerns related to use of PRTs in the
EU.  That said, he commented -- as he had done in
the stakeholders meeting -- that it made no sense to
him to ban imported chicken because of possible
concerns about environmental impacts in Europe,
especially when European producers used PRTs for
exported poultry meat. 

¶31. Verheugen expressed confidence the Council would
support the changes.  The European Parliament was
less certain but based on the discussions earlier in
the day with the European members of the
Transatlantic Legislators Dialogue and a motion
passed by Parliament on the transatlantic economic
relationship, he believed the two largest political
blocks in Parliament supported the changes.  He
ended his opening remarks by pointing out this issue
would not have moved without the TEC. 

¶32. Price commented that it was inconceivable that
there would be an environmental risk in the EU from
US use of PRTs.  Ambassador Schwab thanked Verheugen
but stressed that, after 12 years, real success
would only result from actually selling poultry in
the market, thus we look forward to the next step in
the process.  Ambassador Schwab asked what assurance
the U.S. had that the proposal would not be blocked
by the Member States, what strategy the Commission
had for overcoming such obstacles, and what role the
Slovenian presidency would be playing in the Council
to remove this problem. 

¶33. Price then directly asked Slovene Minister of
Economy Vizjak whether the Presidency would support
the proposed changes in Council and whether poultry
would be flowing by the next TEC meeting.  The
Slovenian representative indicated Slovenia supports
the changes and would try to play a major role in
the discussions but since the discussions had not
yet started they could not speculate where other
member states were on the issue.  Verheugen stressed
that Member State positions would be decided at the
highest levels, not by agriculture ministers.  He
suggested the US not put too much public pressure on
the EU now as it could be counterproductive.  In
terms of timing Verheugen said the solution could
possibly be in place by the next TEC meeting and
there was a high chance it would be resolved (i.e.,
chicken trade would commence) by the end of the year
and this administration. 

¶34. At the end of the discussion a representative of
the French Ministry of Economics stated that the
Financial Times article was not accurate: France
banned PRT use in 1997 and has not used them for
exports since 2005. 

C.  REACH/Cosmetics 

¶35. The U.S. delegation then raised concerns with
the EUQs new Regulation on the Review, Evaluation
and Authorization of Chemicals (REACH).  Price
mentioned two sets of issues: first, the June 1
deadline affecting U.S. personal care products
(including cosmetics) exports; second, broader and
more long-term concerns with the REACH regulation
itself. 

¶36. Price believed the cosmetics problem was
unintended but that a legislative fix was necessary.
Ambassador Schwab stated that REACH is an example of
regulation that would have benefited from closer
bilateral dialogue.  She pointed to significant and
growing concerns being voiced about various aspects
of REACH including the list of candidate substances
requiring further evaluation and authorization that
could act as a Qblack listQ that creates a chilling
effect and could promote substitution to untested
chemicals, and the QOnly RepresentativeQ (OR)
provisions that put US suppliers at a disadvantage
over their EU counterparts since non-EU suppliers
must use an intermediary to register and may have to
divulge proprietary information to competitors.  She
stated that impacts from REACH implementation are
broader than these few issues; implementing REACH
will be a nightmare.  The estimated cost for
registering and testing a single substance is
$100,000 and there are 400 substances in a single
perfume.  On cosmetics, EU ingredients for export
were grandfathered from the June 1 deadline and
receive a phase-in period; US ingredients were not
which raises national treatment concerns.  More than
$2 billion in trade could be impacted by this
discriminatory treatment.  She predicted there will
be other REACH issues in the future and said that
how we resolve will be an example for the TEC. 

¶37. Verheugen responded that probably no one fully
understood REACH, including himself.  The final
legislation was a complex compromise between all
three bodiesQthe Commission, the Parliament and the
Council.  Trade offs during the legislative process
led to some unintended consequences.  No one wanted
discrimination; no one was aware that EU ingredients
had previous chemical registration (EINECs) numbers
but US ingredients did not. 

¶38. Unfortunately, according to the Commission Legal
Services, this aspect of REACH cannot be changed by
a simple written procedure (corrigendum) as this
would be a substantive rather than technical change
to the legislation.  However, the Commission wanted
to resolve the problem and is working out a
pragmatic solution with the European Chemicals
Agency (ECHA), essentially allowing suppliers of
imported cosmetics and their ingredients to submit
partial files on June 1 and then have a longer
period of time to complete these.  This should
ensure there is no risk that trade would be
disrupted.  [ Comment:  ECHA has not yet opined on
whether this is feasible.] 

¶39. On the other REACH issues, Verheugen said the
candidate list and OR provisions were not
discriminatory.  The candidate list would be done in
the most transparent way possible and the actual
authorization list would not come until much later,
perhaps only after 15 years.  (Comment:  Verheugen
seems to have missed the point.  The fact that the
authorization list will not come until much later is
precisely the problem.  Inclusion of a substance on
the candidate list means that it is in a sort of
limbo.  Consumers may well refrain from using the
substance for fear that it eventually will be
prohibited.  They may well resort to substitutes
with unproven track records.  This is what is meant
by a black list effect.  End comment.)  He suggested
technical people on both sides get together to
discuss the other issues. 

¶40. Price responded that we need to finalize our
understanding of the path forward.  He summarized
the Commission would propose an amendment to give
the companies legal certainty on the cosmetics
issue.  Verheugen stressed he would try, but could
not give that assurance because REACH is a shared
responsibility and Environment Commissioner Dimas is
against such a change.  Price noted that it was
unfortunate that two Commissioners with issues
before the TEC did not attend.  (Comment:  Price was
referring to Dimas and Fischer Boel, who also did
not attend.  End comment.) 

IV.  Capital Markets Integration 

¶41. (SBU) Charlie McCreevy, Commissioner for
Internal Market and Services, began the discussion
of joint progress in capital market liberalization.
McCreevy lauded the excellent cooperation between
Treasury and the SEC with his Directorate General
for Internal Market and Services (DGMARKT) through
the five-year old Financial Markets Regulatory
Dialogue (FMRD), which predates the TEC.  He said
the FMRD had made great strides in cooperation,
which were unthinkable five years ago.  McCreevy
underscored how the U.S. and EU economies have
become inextricably linked, accounting for 80
percent of global capital market flows. 

¶42. He stressed how current financial turmoil has
heightened the importance of transatlantic
cooperation, and that increased integration enhances
financial market resilience.  In addition, existing
priorities must continue. 

A. Progress on Accounting Equivalence:
¶43. McCreevy emphasized how the first TEC meeting in
all 2007 had contributed to progress on U.S.-EU
accounting convergence, based on work in the FMRD.
He noted that the SECQs action in December, 2007 to
abolish the reconciliation requirement for foreign
companies using International Financial Reporting
Standards (IFRS) as issued by the International
Accounting Standards Board (IASB) was a Qremarkable
achievementQ. McCreevey assured TEC members that the
EU is making good progress toward a reciprocal
declaration Q as outlined in the 2005 U.S. QEU
accounting QroadmapQ Q to accept U.S. Generally
Accepted Accounting Principles (GAAP) as equivalent
to IFRS, allowing U.S. firms to file in the EU
without reconciliation. 

¶44. The Commission has received good technical
advice on this issue from the Committee of European
Securities Regulators (CESR), he noted, which issued
a recommendation in January 2008 that U.S. GAAP is
equivalent to IFRS.  The Commission will issue a
proposal to this effect within a few weeks, he
continued.  The Council and European Parliament will
consider the proposal, said McCreevy, and he expects
final approval by the end of 2008.  This would meet
the roadmap deadline of eliminating the
reconciliation requirement by 2009. 

¶45. McCreevy then noted the importance of also
making progress on IASB governance issues. In
particular, he underscored the need to improve the
IASBQs transparency and public accountability.  He
welcomed the joint SEC, Japanese FSA, and European
Commission statement at the IOSCO meeting last fall
in Japan as providing a good basis for forward
progress.  He was encouraged that the IASB had
accepted the proposal, but expressed frustration at
the pace of progress.  He encouraged increased
monitoring and engagement by both sides on this
issue to encourage changes in the IASBQs process. 

¶46. Treasury Deputy Secretary Kimmitt complimented
McCreevy in response on the good bilateral
cooperation in both the FMRD and TEC.  He stressed
that such cooperation has been vital to addressing
market confidence during the current financial
crisis.  Kimmitt noted that the strong consensus
within the Financial Stability Forum (FSF) on how to
address policy issues raised by the financial crisis
closely tracked the analysis and recommendations in
the PresidentQs Working Group on Financial Markets
and the European CommissionQs own work in this area.
Kimmitt also praised SEC work with the Commission on
accounting convergence and issues around mutual
recognition of securities regimes, saying this had
been moving swiftly. 

¶47. SEC Commissioner Paul Atkins likewise stressed
the strength of transatlantic cooperation on
security regulatory issues. He noted that open
issues include the funding and governance of the
IASB.  In addition, he noted that more work remains
to be done regarding consistency of application of
IASB standards.  He agreed that the SECQs decision
to eliminate the reconciliation requirement between
IFRS and US GAAP would have been unbelievable five
years ago. He noted the March 2008 CESR
recommendation that the EU make an equivalence
determination.  Atkins also noted that MEPS seem
still confused by the U.S. process, with some
seeming to think that Congressional action might be
needed to make the SECs regulation on IFRS final.
He clarified that no Congressional action was needed
in this area and expressed an interest in helping
the Commission with outreach to the European
Parliament if necessary in order to facilitate
approval of the CommissionQs draft regulation. 

¶48. Atkins then asked McCreevy for a more specific
timeline for EU action.  McCreevy reiterated that
the Commission would issue a proposed equivalence
regulation within weeks, affirming that he fully
expects it will be approved by the Council and
European Parliament this year (despite some MEP
concerns).  McCreevy underscored his personal
commitment to obtaining approval from Parliament and
the Member States in the Council. 

B.  Mutual Recognition of Comparable Regimes for
Brokers 

¶49. McCreevy noted that work on mutual recognition
of securities regimes is proceeding well.  He
recalled his joint statement with SEC Chairman Chris
Cox in February 2008 defining a process to engage in
discussions regarding mutual recognition of U.S. and
EU Member State securities regimes in mid-2008.  He
stressed that the aim of such discussions should be
a system based on mutual trust, greater coordination
between regulators, and transparency.  He welcomed
the Qunilateral opennessQ associated with the SEC
proposal to provide expanded exemptive relief for
certain foreign brokers as an update to rule 15a-6
for large investors.  However, he noted the
ultimate, long-term goal of these discussions should
be regulatory convergence. 

¶50. Atkins underscored the SECs commitment to
moving forward on a broad range of mutual
recognition issues.  He explained that the SEC is
also in talks with Australia and Canada on mutual
recognition, noting it might conclude an agreement
first with one of these countries before the EU. He
noted skepticism exists in the U.S. Senate regarding
broad mutual recognition agreements in the
securities area and that much work can proceed using
the SECQs broad exemptive authority. 

C.  Insurance Issues 

¶51. McCreevy then turned to address reinsurance
collateral, which he recognized was a thorny issue
in the U.S.  He explained that currently EU
reinsurers in the U.S. must post 100 percent
collateral against their gross liabilities.  In
contrast, U.S. reinsurers do not face such a
requirement.  He estimated that the cost of the U.S.
requirement to EU firms was $500 million/year.  He
indicated that his goal was to achieve mutual
recognition for insurance supervisory systems as
well, but that reform in the United States was a
necessary precondition for such agreement.  He
expressed sympathy for the difficulty the Treasury
Department faces in addressing this issue, since
insurance regulation authority is reserved to U.S.
states.  He welcomed, therefore, the U.S. Blueprint
for Financial Regulatory Reform, which proposes an
optional federal charter for insurance and an
interim Treasury insurance office to with authority
to engage internationally. He lauded a legislative
proposal in the Congress that would establish an
Office of Insurance Oversight in the Treasury
Department as part of the solution.  He also
expressed frustration with the difficulties the
Commission sometimes faces in engaging the National
Association of Insurance Commissioners. 

¶52. Kimmitt noted that significant progress had been
made in other areas of the Financial Markets
Regulatory Dialogue because the relevant parties in
the United States had authority to address the
issue. 

¶53. He appreciated the CommissionerQs understanding
of the challenges created by the state-based
insurance regulatory structure.  Regarding
reinsurance collateral, he noted that the U.S. is
open to foreign insurers, which have 85 percent of
the U.S. reinsurance market, so this is not a market
access issue. 

¶54. Kimmitt then noted that there are actually two
different insurance issues on the TEC agenda:
reinsurance collateral and the EUQs proposed
treatment of the insurance companies from third
countries that do not have consolidated home country
supervision (the proposed Solvency 2 directive).
Solvency 2 would require an equivalence
determination; it seems likely that the 50 state
systems in the U.S. would not receive such a
determination, which could significantly affect the
ability of U.S. insurance firms to operate on an
equal footing in the EU. 

¶55. Kimmitt expressed an interest in working with
the Commission at the tactical level to address
Solvency 2 and other insurance issues in the FMRD.
He noted that one key aspect of the Treasurys
proposed blueprint would be to create an optional
federal charter.  An intermediate step would be to
create an office of federal insurance oversight
inside the Treasury Department, and noted that, as
Commissioner McCreevy had observed, Mr. Kanjorski
and Ms. Pryce in the U.S. House of Representatives
had already introduced a bill to make this a
reality.  He indicated that the U.S. and the EU
would need to work closely together to avoid a
potentially distracting and counterproductive fight
over Solvency 2.  He also noted that in an earlier
meeting with the Commissioner that day, they had
agreed to work together and that the Treasury
Department would be sending specific ideas on how to
address the issues raised by Solvency 2. 

V.  Keeping our Investment Regimes Open 

¶56. Trade Commissioner Peter Mandelson opened this
part of the meeting by underscoring the importance
of working together to promote open investment
regimes, calling this a Qkey economic issue for the
coming decade.Q  He stressed that foreign direct
investment (FDI) is an important driver for the
competitiveness of both the EU and U.S. economies,
noting that FDI is critical to support our supply
chains in foreign countries.  There is nothing to
gain, Mandelson continued, from tit for tat
policies restricting foreign investment.  He
underscored that there is no international regime
backstopping global openness to investment, pointing
out it is subject to political pressure within
countries. 

¶57. National security reviews of investment have a
legitimate place, Mandelson said, but should not be
overused.  In this regard, the EU and U.S. must
avoid applying a double standard to Qstate backed
investment.  National security restrictions on
investment should be Qcarefully calibrated
exceptions to a strong rule,Q he explained. 

¶58. Mandelson said the U.S.-EU Open Investment
Statement adopted by the TEC was strong but should
be backed up with concrete steps.  He identified two
specific EU concerns regarding the U.S: tax code
requirements for EU firms and the negative political
response to the recent Northrup-EADS military tanker
contract announcement.  The latter must be upheld on
a technical basis, he declared, noting that we must
apply our standards consistently and objectively. 

¶59. Commissioner McCreevy underscored the EUs
treaty commitments to open investment with limited
exceptions. He then noted that some Member States
are seeking to expand these exceptions to strategic
sectors. He stressed that DG MARKT examines all EU
legislation on investment to ensure compliance with
EU rules, and underscored that the Barroso
Commissions is more pro open-investment than prior
Commissions. In his opinion, efforts to create an
EU-level security 

¶60. review process would generate a system based on
the lowest common denominator, which would not be a
good thing. He considered that protectionist
pressure may have eased somewhat over the last year,
saying it is an ongoing, fluctuating problem. 

¶61. Dan Price responded that U.S. foreign affiliate
sales overseas dwarf U.S. exports, so it is critical
to get investment rules right.  He encouraged the
Commission to remember its roots in the pioneering
bilateral investment treaties with Germany, the
Netherlands, and the U.K.  Those treaties created
only narrow exceptions to the principle of national
treatment and open investment markets to address
national security issues.  He encouraged the EU to
lead by example globally, particularly given
developments in Japan, Canada, and France. 

¶62. Kimmitt said that a free flow of capital based
on investment policies is the lubricant of the
global economy.  He highlighted how establishment of
the U.S.-EU Investment Dialogue last fall was an
early TEC success that has already borne fruit in
improving legislative proposals in Germany.  He
noted excellent U.S.-EU cooperation in developing
policy toward Sovereign Wealth Funds (SWFs) through
the OECD, and he congratulated the Commission on its
recent communication regarding SWFs.  Even though it
is important for SWFs to develop best practices in
consultation with the IMF, Kimmitt noted that the
U.S., EU, and other recipient countries also have
responsibilities to promote basic principles of
openness, transparency, nondiscrimination and
predictability regarding investment policy.  He
underscored the importance of the first ever joint
statement between the U.S and the EU on this topic
as a good foundation on which to build. He suggested
that in the next year the U.S. discussion will
likely shift to investment by State Owned
Enterprises (SOEs), which raise more complex issues
than those of SWFs. 

¶63. Much more work is needed on maintaining open
investment climates, Kimmitt underscored, noting
recent actions by Japan and Canada to block FDI.  We
need to publicize better the benefits of open
investment, such as the three to four million U.S.
jobs created by EU FDI.  When EU business leaders
are in the U.S., he said, they should visit not just
FDI sites around the country and the Administration,
but also Congress to highlight their role in
providing jobs and other benefits associated with
FDI. 

VI.  Sustaining the Work of the TEC 

¶64. Verheugen then moved on to discussing next steps
for the TEC.  He noted that there are good reasons
to hold the next meeting in Washington in October,
before the U.S. elections; Price agreed.  Kimmitt
suggested that the TEC should discuss an agenda for
the next year or two, to show continuity across
administrations.  Verheugen agreed, saying that
stakeholders have asked for an 18 month-two year
workplan.  Kimmitt said that TEC members should ask
stakeholders for their suggestions on such a
workplan; Verheugen said this was a great idea. 

VII.  Finalizing the Joint Statement and Progress
Report 

¶65. Price and Verheugen then discussed finalizing
the TEC joint statement and progress report.
Verheugen suggested the documents needed some work,
including additional language to provide greater
political emphasis, before release.  Price expressed
serious concern about having the concluding TEC
session with stakeholders and a press conference
without having finalized the Joint Statement.  He
asked if there were any issues still open that the
TEC itself should resolve.  When told yes, he asked
that the negotiators be brought into the room to
report to the TEC plenary. 

¶66. The first unresolved issue that was addressed
concerned the language in the Progress Report on
poultry.  Price pushed hard for recognizing in the
document that the scientific reports the Commission
had received in March concluded that the use of PRTs
was safe.  Verheugen was clearly concerned about
making such a flat statement, saying that while it
applied to consumer consumption of the poultry, the
environmental studies left open that some problems
might arise.  He also noted during the at times
animated discussion that he was facing
interference (presumably from the French presidency
representative) and even that the staff of President
Barroso was telling him not to go any farther.
Price wryly commented that the Commission was
unlikely to adopt a proposal that would allow for
something that was unsafe, and then proposed that
instead the Progress Report note that the studies
showed there was no scientific basis for continuing
the ban on imported poultry.  A commission staffer
noted the ban was on the use of PRTs, not on imports
per se.  After conferring with each of the
Commissioners present (Mandelson for Trade, Kuneva
for Consumer Safety, McCreevy for Internal Market,
and Kovacs for Customs and Taxation), Verheugen
agreed to this language. 

¶67. A second issue related to poultry was related to
the wording of an explicit commitment from the
Commission to take active steps with the Council
and the Parliament to get the proposal enacted
before the next TEC meeting in the Fall.  This was
ultimately agreed. 

¶68. The third issue addressed concerned REACH and
cosmetics, and specifically the nature of the
commitment the Commission could enter into to
describe what the Commission would do, in addition
to its administrative measures, to provide legal
certainty for imported products.  Verheugen again
reiterated that he could not bind the Commission to
seek an amendment to REACH, but that he would
advocate this.  The language ultimately agreed was
softer than this, but indicates a clear commitment
not to allow REACH to disrupt trade in these
products. 

¶69. Finally, Kovacs asked to make sure that the
language about the EUs concerns about the U.S.
legislative requirement for 100 pct scanning of
containerized cargo imports was sufficiently strong.
He agreed to the language after it was read to him,
and seemed pleased that the TEC had agreed this
issue would be addressed in more detail at the next
TEC meeting. 

¶70. The Progress Report was then closed (pending
some additional political language for the opening).
Price and Verheugen both agreed that the Joint
Statement should be aligned with the language that
had just been agreed. 

¶71. Price and Verheugen thanked participants for an
incredibly worthwhile meeting.  Price said the TEC
is proving its worth as a key problem-solving
mechanism; Verheugen agreed. 

VIII.  Other TEC-Related Outcomes 

¶72. While the TEC discussed poultry, SDOC, REACH,
capital markets and investment, the process leading
to the TEC, and discussions on the margins of it,
brought additional accomplishments.  Among other
things, Verheugen agreed to chair on the EU side a
Council-level video-conference of climate change and
energy issues.  In addition, the two sides agreed to
bring experts together to get an overview of the
various sanitary and phytosanitary issues each has
with the other. 

Comment 

¶73. Indeed, the TEC has proved its worth if in fact
the poultry issue Q a stumbling block in U.S.-EU
trade relations effectively since the Chicken Wars
of the early 1960s is finally resolved.  The
Framework and the TEC provide a vehicle for
identifying priority issues to address to promote
transatlantic economic integration, providing a
political profile to those issues, shining a bright
spotlight on the work experts are undertaking to
address them, and ultimately, if necessary, actually
resolving them at the political level.  This can be
particularly important where the issues are long-
term such as ensuring greater coherence in the way
the U.S. and EU approach regulation and where each
side has long-cherished approaches that
(intentionally or unintentionally) impede trade.
Further, the opportunity to have a principals-only
inter-agency/inter-services discussion of our
respective approaches to such strategic economic
policy issues as China, Russia, protectionism and
investment provides policy makers valuable insight
into how the other side perceives these issues.  All
these advantages should help assure the TECs
continued viability through the 2008 change in
Administration in the United States and change in
the Commission in 2009. 

Murray

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UNCLAS SECTION 01 OF 03 BRUSSELS 000202 

SENSITIVE
SIPDIS 

NSC FOR KRISTINA KVIEN
STATE FOR E, EUR/ERA, EEB/TPP
STATE PASS TO OMB/OIRA Mancini, USTR
COMMERCE FOR D. DEFALCO 

E.O. 12958:  N/A 

TAGS: ECON [Economic Conditions], EFIN [Financial and Monetary Affairs],
EIND [Industry and Manufacturing], EAGR [Agriculture and Forestry],
ETTC [Trade and Technology Controls], ENRG [Energy and Power],
KIPR [Intellectual Property Rights], PREL [External Political Relations], EUN [European Union]
SUBJECT: CONSUMERS: TRANSATLANTIC ECONOMIC COUNCIL NEEDS
STRONGER CONSUMER FOCUS, MORE TRANSPARENCY 

¶1. (SBU) Summary: At a February 4 meeting with USEU,
TransAtlantic Consumer Dialogue (TACD) representatives raised
concerns over and suggested new directions for the
Transatlantic Economic Council (TEC) process.  TACD is
concerned about the need for more transparency in the drafting
of the TEC agenda, and the TEC's heavy focus on business
concerns, when they believe the consumer organizations can
contribute usefully to transatlantic discussions on
innovation, energy technologies, IPR and other issues.  USEU
will continue working with TACD to help build this
constructive approach.  End Summary. 

Background
---------- 

¶2. (SBU) At USEU's initiative, Econoffs met with
representatives of the Transatlantic Consumer Dialogue (TACD)
February 4 as a follow-up to the December Transatlantic
Economic Council (TEC) meeting.  TACD participants included
Benedicte Federspiel (TACD Chair), Julian Knott, Willemien Bax
and Anne-Catherine Lorrain.  Bax is also Deputy Director
General for the European Consumer's Organization (BEUC).
(Note: TACD's U.S. and EU co-chairs, along with their
Transatlantic Business and Legislators' Dialogues (TABD and
TALD) counterparts, were included in the group of advisors to
the TEC Co-chairs when the TEC was created in 2007.  End
note). 

Overview
-------- 

¶3. (SBU) Federspiel opened the discussion by welcoming the USG
outreach to TACD and willingness to discuss a broad range of
issues related to the U.S.-EU Transatlantic Economic
Integration Framework (TEF), saying that "this meeting in
itself sends a message."  After explaining her role (current
and past president, rotates among members of board, presidency
alternates between US and EU consumer groups) she addressed
the TEC.  She said TACD members have both procedural and
substantive concerns with the TEC as it has operated to date. 

¶4. (SBU) The group's main concern, Federspiel said, is around
a lack of transparency around the TEC process.  This
encompasses the lack of information exchanged between USG and
TACD members on what has been discussed and decided, agendas
and schedules for meetings, what is planned, and who has
responsibility for various elements of TEC work.  As a result,
TACD representatives feel their suggestions have not been
incorporated into the TEC agenda.  She said the process of
reviewing stakeholder input should be improved. 

¶5. (SBU) In addition, Federspiel said, TEC agendas have been
too heavily focused on issues of interest to business.  Many
issues that TEC takes up are not "consumer friendly."  She
suggested that moving EU TEC management away from DG
Enterprise, which addresses mainly business issues, to the
Council Secretariat (coordinating body for member state
issues) or the Commission's interdisciplinary foreign
relations directorate (DG RELEX) would help address this. 

TEC Dynamics
------------ 

¶6. (SBU) USEU presented some initiatives the co-chairs have
undertaken to improve the TEC, including completing and
publishing a workplan and establishing parallel USG and
Commission websites for TEC/TEF documents; in addition,
Econoffs indicated State and Commerce will work to facilitate
interagency coordination and continuity.  Willemien asked
whether the workplan would simply be a list of activities that
occurred within the TEF framework and a list of additional
planned activities, or whether we would use it as an
evaluative tool, to measure the effectiveness of these
activities.  Econoffs explained that it is likely to be
primarily a factual inventory of specific project commitments,
goals, progress to date, and next steps. 

BRUSSELS 00000202  002 OF 003 

¶7. (SBU) Knott asked about the various sectoral dialogues
under the TEC.  Econoffs described the U.S.-EU Investment
Dialogue and the High-Level Regulatory Cooperation Forum
(HLRCF).  The HLRCF is strong, and expected to continue with
or without a TEC process.  Bax said there should be greater
coordination among the dialogues.  She also said that BEUC had
been invited to brief EU member state reps who follow
transatlantic relations (COTRA working group) on their view of
the TEC.  Federspiel also noted that at the May 2008 TEC
meeting, (she was unable to attend in December), there were
definite personality problems among some participants, which
led to a sometimes uncomfortable situation and less
productivity for the meeting overall. 

TACD Recommendations
-------------------- 

¶8. (SBU) TACD shared several specific recommendations with
Econoffs.  TACD suggested that actual TEC meetings put a
greater emphasis on discussion of broad, strategic issues
(e.g. financial crisis impacts and responses).  Federspiel
said one challenge in balancing the dialogue would be
addressing how to improve competitiveness in the transatlantic
marketplace versus using the political weight of the TEC to
resolve discreet, thorny, problematic issues.  To this end,
Federspiel suggested removing poultry from the TEC agenda,
citing it as an example of an issue that had loomed too large
in TEC discussions, taking up too much time to the exclusion
of other issues that could have been addressed.  She said the
only person in the Commission who supported allowing U.S.
poultry into the EU market was Verheugen, and as he was not a
"dictator," he alone could not get poultry accepted,
especially as 26 member states voted against allowing poultry
and one, the UK, abstained. 

¶9. (SBU) TACD interlocutors again emphasized the need to move
EU management of the TEC to DG RELEX or the Council
Secretariat.  Federspiel pointed out that having DG Enterprise
run the TEC for the Commission has led to an overemphasis on
business interests on the agenda.  Under this dynamic, it is
difficult to get buy-in on TEC participation from
Commissioners like Dimas (Environment) and Vassiliou (Health),
whom she suggested would not like to put themselves in a
position of going to the TEC to "be bossed around by
Verheugen."  She suggested DG RELEX would be a better home for
the TEC due to its neutrality, but added that "TABD may not
make the same recommendation." 

¶10. (SBU) Federspiel said that perhaps different meeting
formats could be considered for the TEC, such as a shorter
plenary and more time allowed for breakout sessions, where
discussion could be freer.  She lamented the fact that members
of the TEC advisory committee were allotted five minutes to
speak at the beginning of the meeting, then sat there silently
for hours on end Q a wasted opportunity for the advisors to
provide useful input. 

¶11. (SBU) Knott and Federspiel emphasized above all the need
to broaden the agenda to include "consumer-friendly issues."
Federspiel noted that TACD had submitted recommendations for
all previous meetings for the TEC, which included suggestions
the agenda should not be dominated by "crises of common
interest" to the consumer and business communities, but should
also include positive and proactive discussions on topics such
as nanotechnology, innovation, and sustainability.  Knott
proposed that the TEC examine the connection between
innovation, access to technology and potential reexamination
of IP rights, particularly for developing countries, as well
as general access to knowledge.  Lorrain added that patent
harmonization would be interesting, along with a discussion on
copyrights and other current IPR issues. 

Next Steps
---------- 

BRUSSELS 00000202  003 OF 003 

¶12. (SBU) On next steps, Knott agreed to update and send USEU
four papers on TEC issues, along with other recommendations.
All agreed on the usefulness of the meeting and voiced their
commitment to reinforce the dialogue between the Mission and
TACD, and improve communication.  TACD thanked USEU again for
proactively reaching out to TACD on these issues.  Federspiel
closed by noting that TACD would hold its annual meeting June
7-10, 2009 in Brussels, to which the Mission and senior USG
TEC officials would be invited.  She suggested that this
provided a great opportunity to meet with Commission leaders
on TEC issues.  (Note: TACD formerly held meetings twice
annually, one in DC and the other in Brussels, but for
budgetary reasons, can now only do one per year. End note.) 

Comment
------- 

¶13. (SBU) TACD clearly feels the advent of a new U.S.
administration offers them the chance to correct what they see
to have been an excessive focus on business issues and
concerns in prior TEC meetings.  TACD recommendations on TEC
structural reform should be considered thoroughly as part of a
larger process of USG review of the TEC's continuation,
functioning and structure.  USEU will work to strengthen our
dialogue with the group and will work to integrate it more
effectively into the network of TEC stakeholders. 

MURRAY

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UNCLAS GENEVA 000730 

SIPDIS
SENSITIVE 

SECSTATE FOR IO, EEB, OES
COMMERCE FOR USPTO
ROME for FODAG 

E.O. 12958: N/A
TAGS: ECON [Economic Conditions],
KIPR [Intellectual Property Rights],
SENV [Environmental Affairs],
WIPO [World Intellectual Property Organization]
SUBJECT:  WIPO Conference on Public Policy 

¶1. SUMMARY (SBU):  During the July 13-14 World Intellectual Property
Organization (WIPO) Conference on Intellectual Property (IP) and
Public Policy Issues in Geneva, Switzerland, participants explored
and clarified the connection between IP and several major public
policy issues such as climate change, public health, food security
and protection of traditional knowledge.  The conference was held at
the behest of the WIPO Standing Committee on Patents (SCP) and
provided an opportunity for WIPO not only to reinsert itself into
debates on IP's role in addressing key public policy issues, but
also to claim a leadership role that WIPO hopes will result in
better understanding of the IP aspect of public policy issues by
intergovernmental organizations, non-governmental organizations and
member states.  A Chair's report on the public policy conference
will be submitted to the next SCP meeting in November 2009, at which
time, developing countries may push to have the conference's topics
become a new focal point for work under the SCP.  To address
concerns from some WIPO Member States that the focus of the public
policy conference not be diverted from the patent system, WIPO held
a separate conference on access to reading material for the visually
impaired on the morning of July 13 (septel). END SUMMARY. 

Climate Change
-------------- 

¶2. (U) The role of IP in promoting the development and diffusion of
green technologies to combat climate change was at the heart of
discussions at a two-day international conference on IP and public
policy issues.  The overall view at the Conference was that IP is a
key incentive for the creation of new green technologies to address
climate change problems.  To assess the extent of the climate change
problem, Michel Jarraud, Secretary General the World Meteorological
Organization (WMO) pointed to unequivocal scientific evidence on the
tremendous impacts of climate change on health and food security.
He noted that IP should be a catalyst, and not an obstacle, to
solving problems associated with climate change.  Jarraud emphasized
the advantages of international cooperation and the need for a
multi-disciplinary approach to the challenges arising from climate
change, as well as the importance of facilitating technology
transfer. 

¶3. (U) Britain's Minister for Higher Education and Intellectual
Property, Mr. David Lammy, and WIPO DG Gurry also provided similar
messages emphasizing the importance of IP rights in facilitating the
transition to clean technologies and renewable energies, and the
range of options offered by the IP system in identifying,
transferring, and disseminating those technologies to address
climate change.  Lammy specifically noted that the technology
transfer issue was crucial to the success of climate change
negotiations in the United Nations Framework Convention on Climate
Change (UNFCCC).  DG Gurry added that IP rights offered the
necessary incentives to develop green technologies, noting moves by
several countries to develop systems to fast track the examination
of patent applications in the area of clean technologies and
renewable energy.  The IP system offers a proven means of
encouraging investment in the clean technologies required to adapt
to and mitigate climate change. 

¶4. (U) As referenced in the speeches of UK Minister Lammy and DG
Gurry, technology transfer of green technology is a key issue among
NGOs, developing countries and the IP community.  It is also a key
feature in the UNFCCC, which is slated to have a finalized agreement
by the end of the year.  Wanna Tanunchaiwatana, Manager of the
Technology Sub-Program of the UNFCCC, reported that draft language
concerning technology transfer would commit developed countries 'to
take all practicable steps to promote, facilitate and finance, as
appropriate, the transfer of, or access to, environmentally sound
technologies and know-how to other parties, particularly developing
country parties' (Article 4.5 of the UNFCCC).  Tanunchaiwatana
believes that difficulty in negotiating the IP section of the UNFCC
agreement does not rest with the idea of transferring IP-dependent
green technologies itself, but with the broader challenge of how to
implement and encourage the diffusion of all relevant technologies
to reduce the impacts of climate change on a global scale.  She
reminded attendees of the short amount of negotiating time remaining
before the December deadline, and encouraged parties to work through
the current standstill on IPR in the UNFCCC talks. 

¶5. (U) In response to the growing debate on whether the solution to
climate change should mirror the compulsory license solution reached
in the WTO for improving access to pharmaceuticals for poor
countries, economist Daniel Johnson and Chief IP Counsel for General
Electric Carl Horton noted empirical research illustrating that
weakening IPR protection for climate change-related technologies is
an unsound policy and will harm innovation.  It was noted that there
are very few patents on green technologies (fewer than in the
pharmaceutical sector), making compulsory licensing unnecessary in
most cases.  Panelists emphasized that a lack of green technology
patents in this area shows that IP is not an obstacle to development
and it allows for open access and further innovation.  They
concluded that proposals in the UNFCCC for mandatory technology
transfer and/or compulsory licensing under UNFCCC will have the
unintended effect of hampering any investment and innovation in this
area.  It was also highlighted that technology transfer concerns
must be addressed on a commercial basis and not through government
enforcement. 

Public Health and Traditional Knowledge
--------------------------------------- 

¶6. (U) Evident throughout the discussions related to public health
was a theme calling for 'strong collaborative action' among IGOs and
the private sector to address questions on IP, trade and public
health.  WHO Director General Dr. Margaret Chan stated that while
innovation has a key role to play in new drug development, market
forces alone are insufficient to ensure the delivery of affordable
and universal public health solutions.  She noted that both needs-
and profit-driven incentives should be explored to address both
access problems faced by the poor and lack of new treatments for
neglected diseases. 

¶7. (U) Dr. Chan said that international agreements can be shaped in
ways favoring health needs of the poor and cited the May 2008 World
Health Assembly-adopted resolution on public health, innovation and
intellectual property, as a model.  According to Dr. Chan, the
global strategy and plan of action contained in the resolution
provide agreed-upon lines of action for making health care products
more accessible and affordable, especially in the developing world.
Further, Chan noted that creative solutions to address the health
needs of the poor that complement the IP system include UNITAID's
patent pool, a voluntary system created with the intent to reduce
expenses and increase access to IP essential to make medicines that
are needed by poor countries facing the HIV/AIDS crisis.  Chan also
cited other IP-complementary solutions, such as WHO's
pre-qualification program, which helps developing county producers
achieve necessary quality standards to produce safe and effective
medicines. 

¶8.  (U) World Trade Organization (WTO) Director General Pascal Lamy
also underlined a need for effective international partnerships.
With interdependent issues of public health, climate change,
biodiversity and food security, "no single international agency has
a monopoly on these diverse areas of policy," said Lamy.  Noting
that climate change will likely have a severe impact on disease
patterns and on agriculture, Lamy stressed that the effective use of
the IP system and of TRIPS flexibilities are important, but do not
stand alone: IP law and policy must be harnessed with drug
procurement policies, pro-competition safeguards, and regulation of
drugs for safety and quality. 

¶9. (U) Tony Wood, Vice President of Medicinal Chemistry at Pfizer
Global Research and Development, noted that IP is absolutely
essential from the researchers' point of view.  He added that 10 to
12 years elapse between inventing the right molecule and undertaking
all the necessary testing and trials to bring it to market. Without
patents, the research would be held as a trade secret during
testing, holding back medical research that is aided by disclosure
in patent applications. 

¶10. (U) Joseph Straus of the Max Planck Institute for Intellectual
Property agreed, saying a precondition of access to medications is
their existence, which means research and development must be
incentivized.  Robert Sebbag, Vice President of Access to Medicines
at Sanofi-Aventis, added that important progress is being made to
effectively address access to medicine concerns for the poor through
public and private partnerships.  Moreover, he noted that the
industry is utilizing alternative models to deliver lower profit
medicines at higher volumes to treat neglected diseases without
dismantling the patent system.  He reminded the audience that access
to affordable medicines is just one piece of the puzzle, and that
education and communication are key in fighting diseases. 

TRADITIONAL KNOWLEDGE
--------------------- 

¶11. (U) Discussions also centered on the role of traditional
knowledge in addressing IP and public health concerns.  Claudia Ines
Chamas, senior advisor in the Secretariat of Sciences and Technology
and Strategic Inputs at Brazil's Ministry of Health noted that for
many neglected diseases, the medicines are old, toxic, expensive, or
in short supply. She stated that access to medicine is not possible
without reasonable efforts towards increasing local capacity and
building a local basis of knowledge.  Yonah Seleti, Director General
of South Africa's Department of Science and Technology stated that
the "African renaissance can only be borne on the role of indigenous
knowledge systems".  According to Seleti, indigenous people have
enormous economic and social potential in their knowledge, but the
current IP system sometimes fails to protect that knowledge.  It was
also noted that misappropriation of traditional knowledge must be
stopped. 

¶12. (U) Vinod Kumar Gupta, head of the Information Technology
Division at the Traditional Knowledge Digital Library (TKDL), a
project of the Council of Scientific and Industrial Research in
India, reported on his efforts to use the TKDL to catalogue
traditional knowledge in a patent-like format so that it is easier
to identify as prior art.  He mentioned that a recent agreement with
the European Patent Office has made the database available for
patent examiners to use in grant procedures, and a similar agreement
is expected soon with the U.S. Patent and Trademark Office.  He
concluded by noting that collaborative research between traditional
knowledge and modern medicine can yield great public health
benefits, but IP agreements must find ways to protect traditional
knowledge. 

¶13.  (SBU) COMMENT: It should be noted that, though not specifically
raised at the Conference, the issue of providing IP protection for
traditional knowledge/access to genetic resources/traditional
cultural expressions (TKGRTCE) has been examined by Member States
for several years at WIPO's Intergovernmental Committee (IGC) on
TKGRTCEs.  WIPO technical assistance units also continue to provide
essential advice to developing and least developed countries on the
effective use of existing IP principles and systems for these
IP-related interests.  All Member States support the need for
protecting traditional knowledge and are committed to making
progress on the protection, preservation and promotion of TKGRTCEs.
However, the Africa Group, along with Brazil, India, Indonesia,
Iran, Pakistan, and many Caribbean nations are currently demanding
that an internationally-binding treaty be negotiated at the IGC and
concluded and signed by Member States in 2012.  Developed countries,
as well as two developing countries (South Korea and Singapore),
believe that it would be premature to agree upon the nature of the
text to be negotiated (i.e. that it would be a binding treaty)
without a pre-agreement on the content of that text. The U.S. and
others also maintain that no outcome of the IGC should be precluded,
including the adoption of a legally binding international
instrument, but that, at this point, no outcome should be prejudged
either. END COMMENT 

Food Security
------------- 

¶14.  (U)  In opening remarks under the topic of IP and Sustainable
Agriculture, Algerian Ambassador Idriss Jazaory stated that the
number of malnourished people in the world has topped one billion.
WIPO's role here is to ensure that the system for IP protection
contributes to the creation of new food and agricultural resources,
but at the same time does not become an obstacle to the most
vulnerable people in the most vulnerable places having access to
them, said Jazaory.  He noted that IPR could be used to justify food
cartels or to alleviate hunger; how this plays out depends on the
international community. 

¶15.  (U) Shakeel Bhatti, Secretary of the International Treaty on
Plant Genetic Resources for Food and Agriculture at the Food and
Agriculture Organization (FAO) of the United Nations added that
access to seeds has impacted food security. The treaty has, he said,
made significant breakthroughs in funding its access and benefit
sharing system, while waiting for the built-in time lag of 5 to 7
years before commercial products start growing out of it. 

¶16.  (U) Kanayo Nwanze, President of the International Fund for
Agricultural Development (IFAD) noted that it is not tenable to
separate IP from sustainable development.  Intellectual property
rights can serve as catalysts for sustainable agricultural growth,
but there needs to be a shift in thinking on technology development
from the public/private divide to partnerships and equitable
benefits for both stakeholders. 

¶17.  (U) Richard Jefferson, Chief Executive of non-profit Cambia,
proposed one way in which the IP system might be set up for improved
collaboration.  He reported on the Initiative for Open Innovation, a
new project in collaboration with WIPO and the Gates Foundation
launched in July 2009, which aims to create a "free, open, global
web-based facility" that will map in all languages not only patents,
but also regulatory data and science and technology literature,
cross-referencing them with key genes and compounds, creating
'patent landscapes' that will allow for a clear picture of what is
patented, where it is patented, and who controls it. 

¶18.  (U) As a part of the Initiative for Open Innovation, Cambia has
proposed the creation of a new legal tool they call a 'concord;' a
mutual agreement not to assert IP rights in a particular field of
use.  For example, Jefferson said companies might agree not to
assert any IP rights related to research, development, manufacture,
delivery or support of malaria interventions.  The patents might be
enforced for other purposes, but this allows for collaborative
innovation to solve specific problems, and will reduce costs for
small players who want to work on such problems. 

¶19.  (U) Michael Kock, the Global Head of IP at agriculture
technology firm Syngenta International, compared the seed industry
to the entertainment industry, as copying and counterfeits continue
to be major problems for the seed industry.  He clarified that
Syngenta does not seek patents for plants/seeds in least developed
countries or enforce rights used in subsistence farming.  He noted
that the enforcement issues arise in the context of use by large
farmers in developed countries.  He continued in emphasizing that
the disclosure of origin of genetic resources, which has been
proposed as a way to protect small growers, is problematic because
it increases uncertainty for innovators and will discourage the use
of genetic diversity.  A key area that would further innovation in
the seed industry would be patent harmonization of plant protection,
as the existing rules under the WTO Agreement on Trade-Related
Aspects of Intellectual Property Rights (TRIPs) allow for protection
of plant varieties either by patents or by an effective sui generis
system or by any combination thereof.  As a result, there are
varying degrees of patent protection for plants from one territory
to another. 

Closing remarks
---------------
¶20.  (SBU) In summarizing the two-day Conference, the Chair of the
Standing Committee of Patents (SCP), Maximiliano Santa Cruz (Chile),
noted that IP is not an end in itself, but an instrument to promote
innovation, creativity and the dissemination of knowledge.  He added
that while the IP system may present some challenges, it can also be
part of the solution to development questions.  The SCP Chair noted
that a common theme during the Conference was that innovation and
technology coupled with technology transfer is no doubt an important
contribution to solving problems that may arise in other areas of
development.  The Chair is charged with reporting back to Member
States on the outcome of the Conference.  Though proposals have yet
to be made, certain developing countries are likely to push for
further discussion of the topics raised at the Conference,
particularly those concerning technology transfer at future SCP
meetings, as well as follow up conferences. 

¶21.  (U) All PowerPoint Presentations and audio speeches can be
found at:  http://www.wipo.int/meetings/en/2009/ip_gc_ge /
program.html 

GRIFFITHS#

That ought to be enough cables for now. █

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