–Steve Ballmer, Microsoft CEO

Image from Wikimedia

Summary: Microsoft is reportedly still working on tying FOSS to Microsoft Windows

Microsoft loves to “embrace” projects that pose a threat to Microsoft because what better way to eliminate competition than to control and subvert it?

Although it may be too early to jump to any conclusions, The H suggests that Microsoft gets its claws on Node.js, a popular FOSS project:

Cloud9, makers of the Cloud9 IDE, have announced that they will be working with Microsoft to allow Node.js applications created in the Cloud9 IDE to be deployed to Microsoft’s Azure cloud platform. The open source, event-driven, JavaScript-on-the-server Node.js platform was ported to Windows last year with the support of Microsoft.

Microsoft just wants everything to run on Windows, even if it’s FOSS. This is something to keep an eye on. █

Summary: How a process which produces monopolies or fear is being streamlined to potentially make the effects more severe

THE USPTO, a farce for the masses, has signed a contract to have some software supplied. The goal there seems to be to increase efficiency, i.e. grant even more patents (poor patents) more rapidly. Here’s to monopoly:

Science Applications International Corp. or SAIC (SAI) was granted a prime contract by the U.S. Patent and Trademark Office or USPTO to provide software development integration and testing services in support of the USPTO’s Automated Information Systems. The multiple award, indefinite-delivery/indefinite-quantity or IDIQ contract has a one year base period of performance, four one-year options, and a total ceiling value of $525 million for all awardees, if all options are exercised. Work would be performed mainly in the National Capital Region or NCR.

Meanwhile, yet another automation system is presented which claims to be capable of finding FOSS inside a body of code or files, further helping the fear of FOSS along the lines of Black Duck and Protecode. To quote:

SourceSquare is graphically creative with a range of colors highlighting the various files on your system. It generates a direct line notation of where the Open Source files exist, and even more important, how much Open Source is on your system. The treemap visualization allows users to get a more detailed outline of all their files, with and without Open Source coding.

Whether it will be used to help FOSS or harm it remains to be seen, but it is Open Source and uses Java. We saw what OpenLogic was doing about it, usually just scaring users. Companies with Microsoft roots tend to do this. █

Summary: The alter-ego of Microsoft Corporation as seen in the news and in new “official” reports

THERE is a set of companies we sort of specialise in here at Techrights because they have a commonality. While pretending to serve FOSS they usually do the opposite.

Black Duck, a firm with Microsoft roots, gradually becomes the ‘expert’ in GPL (telling us it is declining) while joined by OpenLogic, a company with management from Microsoft, which reinforces the same message. If they control information, they will control minds. In this case, they can capture and control perception that FOSS developers have. GPL FUD is just on example and OpenLogic, the firm that reinforces the same message as Black Duck, now seeks to become the authority in what FOSS to use and what not to. As one article puts it:

The report ranks hot open-source projects in three key categories: Web and application servers; application frameworks; and databases and big data.

Too bad the source of the report is a company founded and control by a former Microsoft guy, eh? They always neglect to say this. Ohloh is another one (now owned by Black Duck).

Speaking of Microsoft talking heads/points, Ed Bott is at it again with his PR lies. Pogson responds by writings:

Ed knows better. He wrote, “Windows 7 has shipped a half-billion copies” since October 2009, 9 quarters, 55 million a quarter. IDC reports 80-90 million PCs per quarter produced. M$ is no longer getting a free ride, Ed. Get used to it. There are businesses that do give M$ a free ride but there are many governments, organizations and businesses that have seen the light and choose to avoid monopoly. Shopping around is the right way to do IT.

This lie goes back to Microsoft’s PR people and is echoed by their shills/MVPs. We need to be careful in the face of Microsoft’s Big Lies that it spreads via its allies. They are all just a matter of “perception management” as Microsoft calls it. We tackled those lies before. █

“Mind Control: To control mental output you have to control mental input. Take control of the channels by which developers receive information, then they can only think about the things you tell them. Thus, you control mindshare!”

–Microsoft, internal document [PDF]

Summary: The crackdowns on counterfeiting in at least one African nation help the adoption of Free/open source software

WHENEVER we hear about Kenya [1, 2, 3, 4, 5] we tend to hear about corporate corruption and other misuses of positions of power. The counterfeiting wars are mentioned quite frequently too because the pirates from Microsoft and its front groups (such as the BSA) raid local businesses, sparking adoption of Free/open source software, which Microsoft in turn attacks in a variety of nefarious ways. To quote a new report:

Kenyans are turning to open source software, which are freely available to the public, after the fight against piracy was stepped up in the East African nation.

Microsoft East and Southern Africa and Kenya Copyright Board (Kecobo) have in the past months intensified war on pirated software, raiding several businesses suspected to be dealing in unlicensed software, confiscating computers and instituting legal action against offenders.

This is a good and very new example of why counterfeiting is actually beneficial to Microsoft. The report contains some common mistakes and myths, but it’s still worth reading. █

“Microsoft boss Bill Gates threatened to kill 800 Danish jobs if Denmark opposed the European Computer Implemented Inventions Directive, reports today’s Danish financial daily Børsen, quoted by NoSoftwarePatents.com”

–P2PNet, 2005

The company which is run by former Microsoft staff, OpenLogic, moves into the Fog Computing (‘cloud’) business with usual FUD like “provides solutions for open source scanning and governance — reducing the risk…”

There are articles about the press release showing in various places and also in Xmas time articles. We urge people to stay suspicious of the motives based on past behaviour. Having said that, it is a step in the right direction given the deaprture from spreading fear. █

Summary: A good look at how Microsoft crushes freedom-respecting software in Vietnam

AS ALWAYS EXPECTED, the monopolist from Redmond will never permit competition to exist. Like a tyrant running after potential opposition, Microsoft runs after any signs of Free/open source software adoption and sends its proxies for annihilation, confusion, entryism, or whatever. Cablegate provides some more insight and examples of what Microsoft is doing. The following cable, for instance, gives yet more details on how Microsoft asks US government officials to help derail Vietnam's migration to GNU/Linux.

In ¶6 of the first cable it says: “Software industry members estimate that nearly 90 percent of software in Vietnam is pirated. Several events in 2007 indicate that this situation could improve in the near future, however. Following the Prime Minister’s July 2006 Decision 169 requiring government agencies to strictly comply with copyright laws, a February 2007 Prime Minister’s Instruction laid out the functions, tasks and budgetary means to meet this goal. In May 2007, the GVN signed a landmark software copyright agreement with Microsoft, under which Vietnam will purchase an estimated 300,000 licensed copies of Microsoft Office for government workers, provincial officials and many university faculty and staff (reftel E). In a recent meeting, Microsoft officials informed the Embassy that they are pleased with the GVN’s compliance with this agreement, although “implementation could be faster.” Reportedly in an attempt to avoid copyright infringements, the Communist Party of Vietnam announced in October 2007 that it would switch its 20,000 computers nationwide to open source software. In December 2007 the Ministry of Information and Communication (MIC) issued a list of open-source software products that it recommended other GVN agencies use to avoid copyright violations.”

It is also reassuring to see that “[t]he Government of Vietnam issued the following IPR-related regulations in 2007: . . . — Decision 08/2007/QD-BTTTT, dated 24 December 2007, on the List of open source Software That Meets the Requirements for Usage by State Agencies and Organizations;”

Here is some more lobbying: “Representatives of U.S. IT companies met with Bisbee and Mikalis to voice their concerns about an IT procurement policy announced by Vietnam in late July 2006 (Decision 169). USTR and Embassy Hanoi have worked closely with the Ministry of Post and Telecommunication (MPT) since July to raise USG and industry concerns about the policy, which seeks to provide procurement preferences for localized IT products and open source software. MPT released a draft implementing circular on January 30 for industry comments, and USTR urged the IT industry members to raise their concerns directly with MPT. In response to concerns raised by the USG in July, the MPT has worked to revise the original Decision to limit coverage to only government agencies and explicitly exclude state owned enterprises. USTR and Hanoi Econoff explained to the industry representatives that MPT was open to hearing from industry about global procurement best practices, and industry was urged to engage the GVN directly on this issue. (Note: In meetings in Hanoi, USTR raised industry concerns with MPT directly.”

The those who want to see it in context, here is the first cable:

VZCZCXRO2279
OO RUEHCHI RUEHDT RUEHHM RUEHNH
DE RUEHHI #0194/01 0510949
ZNR UUUUU ZZH
O 200949Z FEB 08
FM AMEMBASSY HANOI
TO RUEHC/SECSTATE WASHDC IMMEDIATE 7201
INFO RUEHBK/AMEMBASSY BANGKOK PRIORITY 6191
RUEHHM/AMCONSUL HO CHI MINH 4317
RUCNASE/ASEAN MEMBER COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEHRC/DEPT OF AGRICULTURE USD FAS WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC

UNCLAS SECTION 01 OF 08 HANOI 000194 

SIPDIS 

SENSITIVE
SIPDIS 

STATE FOR EAP/MLS AND EEB/TPP/IPE JBOGER
STATE ALSO PASS USTR JCHOE-GROVES, DBISBEE AND RBAE
STATE ALSO PASS USPTO FOR JURBAN
STATE ALSO PASS LIBRARY OF CONGRESS FOR TEPP
AMEMBASSY BANGKOK FOR USPTO JNESS
USDA FOR FAS/FAA/AO HUETE
USDOC FOR ITA/MAC/OIPR CPETERS AND 4430/MAC/AP/OPB/VLC/HPPHO 

E.O. 12958: N/A
TAGS: KIPR [Intellectual Property Rights], ECON [Economic Conditions], ETRD [Foreign Trade], VM [Vietnam]
SUBJECT: VIETNAM SHOULD REMAIN ON THE 2008 SPECIAL 301 WATCH LIST 

REF: (A) STATE 009475; (B) 07 HANOI 308; (C) 07 HANOI 309; (D) HANOI
090; (E) 07 HANOI 945; (F) 07 HANOI 1752 

HANOI 00000194  001.2 OF 008 

(U) SENSITIVE BUT UNCLASSIFIED, DO NOT POST ON THE INTERNET 

¶1. (SBU) Summary:  Mission Vietnam recommends continued placement of
Vietnam on the Office of the U.S. Trade Representative's (USTR)
Special 301 Watch List for 2008.  One year after acceding to the
World Trade Organization, Vietnam has continued efforts to put in
place an effective legal regime to protect intellectual property
rights (IPR), taken some positive steps to reduce IPR violations and
worked to raise awareness of this issue.  Despite these efforts,
however, enforcement remains weak, piracy and counterfeiting
rampant, and several key obligations unfilled -- most notably the
failure to provide criminal remedies for commercial scale copyright
and trademark violations.  With additional time to improve its human
resource capacity, joined by strong incentives such as Vietnam's
expressed goal of participating in the Generalized System of
Preferences (GSP) program and desire to continue to attract record
levels of foreign direct investment, Vietnam should improve its
enforcement record.  In the meantime, Vietnam should remain on the
Special 301 "Watch List".  End Summary. 

IPR Situation in Vietnam - Achievements and Challenges
--------------------------- -------------------------- 

¶2. (U) Vietnam's rapid economic development and integration into the
world economy continued in 2007, highlighted by its January 11, 2007
accession to the World Trade Organization (WTO).  The Government of
Vietnam (GVN) also took noticeable strides in 2007 to provide
adequate and effective protection for intellectual property rights
and provide market access to U.S. persons who rely on IP protection.
 Since the Mission's 2007 Special 301 submission (reftels B and C),
Vietnam has: (1) continued to strengthen its IPR legal regime; (2)
largely met its commitment to implement the Trade Related Aspects of
Intellectual Property Rights (TRIPS) agreement upon its January 2007
WTO accession; (3) modestly improved IPR enforcement and
coordination of enforcement efforts; (4)signed a landmark agreement
for GVN agencies to use only licensed software; (5) stopped the
broadcast of unlicensed content by VTC, the state-owned digital
terrestrial cable company; (6) stepped up training, public awareness
and capacity building efforts for GVN officials and the general
public; (7) joined the Rome Convention for the Protection of
Performers, Producers of Phonograms and Broadcasting Organizations;
and (8) enhanced IPR cooperation with the United States and other
international donors. 

¶3. (SBU) Despite this recent progress, many of the problems
identified in the 2007 Special 301 Review persist.  The Mission has
reviewed industry and public comments submitted as part of the 2008
Special 301 review process, and finds that they portray a broadly
accurate picture of Vietnam's IPR situation.  Enforcement in Vietnam
remains weak, inconsistent and unreliable, while IPR violations are
rampant.  Piracy and counterfeiting are of particular concern, with
industry estimates placing music, software and book piracy rates
around 90 percent.  Anecdotal evidence supports these estimates.
Market access barriers, including censorship of "cultural products,"
continue to limit the availability of legitimate products, further
complicating efforts to combat piracy.  Although the GVN conducted a
commendable public outreach campaign in 2007, including public
television programs focused on IPR issues, awareness remains low.
From the police to the courts, officials in Vietnam's enforcement
system, especially at the local level, are poorly informed about the
rights of IPR holders or how to prosecute, adjudicate and enforce
those rights.  With additional resources and more time to implement
its relatively new legislative framework, we expect that Vietnam
will develop a more consistent track record of IPR enforcement.  In
the meantime, we do not recommend a change in Vietnam's "Watch List"
status. 

Optical Media and Book Piracy
----------------------------- 

¶4. (U) Despite improvements in Vietnam's legal regime and a growing
understanding of optical media and book piracy among enforcement
agents, the GVN has made little progress at reducing the amount of
counterfeit and pirated goods available in Vietnam.  Hanoi, Ho Chi 

HANOI 00000194  002.2 OF 008 

Minh City and most other major cities in Vietnam are rife with music
CD, VCD, DVD and video shops.  Virtually 100 percent of U.S. and
foreign products (and most domestic products) for sale or for rent
are pirated.  Where legitimate media products and books are
available, they are typically up to five times more expensive than
pirated versions.  While most pirated goods are still manufactured
in other countries, locally-produced pirated CDs, VCDs and DVDs are
becoming more prevalent, and present a growing problem. 

¶5. (U) The Ministry of Culture, Sport and Tourism's (MOCST)
Copyright Office of Vietnam (COV) has commenced drafting new
legislation on optical disks.  In 2007, COV officials attended a
seminar organized by IFPI and USAID's Support for Trade AcceleRation
(STAR) program to review model optical disk laws and best practices
adopted by other countries.  COV reports that it continues to
discuss this regulation with other GVN agencies, and hopes to submit
a draft for government approval in 2008. 

Software Piracy
--------------- 

¶6. (SBU) Software industry members estimate that nearly 90 percent
of software in Vietnam is pirated.  Several events in 2007 indicate
that this situation could improve in the near future, however.
Following the Prime Minister's July 2006 Decision 169 requiring
government agencies to strictly comply with copyright laws, a
February 2007 Prime Minister's Instruction laid out the functions,
tasks and budgetary means to meet this goal.  In May 2007, the GVN
signed a landmark software copyright agreement with Microsoft, under
which Vietnam will purchase an estimated 300,000 licensed copies of
Microsoft Office for government workers, provincial officials and
many university faculty and staff (reftel E).  In a recent meeting,
Microsoft officials informed the Embassy that they are pleased with
the GVN's compliance with this agreement, although "implementation
could be faster."  Reportedly in an attempt to avoid copyright
infringements, the Communist Party of Vietnam announced in October
2007 that it would switch its 20,000 computers nationwide to open
source software.  In December 2007 the Ministry of Information and
Communication (MIC) issued a list of open-source software products
that it recommended other GVN agencies use to avoid copyright
violations. 

¶7. (SBU) American software companies report growing cooperation with
enforcement authorities to reduce the incidence of software piracy.
In 2007, for example, Microsoft cooperated with the Economic Police
to conduct five end-user raids (up from only two in 2006), three of
which were Vietnamese-owned firms.  Microsoft credits this growing
cooperation to its capacity-building work with MOCST Inspectorate
and Economic Police staff.  Software companies continue, however, to
bemoan enforcement authorities' lack of resources and the low level
of fines, which do not serve as an effective deterrent.  Microsoft
reported that several penalties from the 2007 end-user raids are
still pending, but the infringers from these five cases have only
been forced to pay USD 15,000 in compensation, "a fraction" of the
value of the infringed software. 

Signal Piracy
------------- 

¶8. (SBU) In a significant sign of Vietnam's growing will to meet
international IPR commitments, continued industry and USG engagement
finally convinced the state-owned digital terrestrial provider
Vietnam Multimedia Company (VTC), formerly known as the Vietnam
Television Technology Investment and Development Corporation, to
cease its unauthorized re-broadcast of U.S.-owned content in
September 2007 (reftel F).  Consequently, industry members estimate
that losses to rights holders due to signal piracy in Vietnam
reduced from $38 million in 2006 to $10 million in 2007.  Despite
VTC's shift to a more legitimate business model, copyright
violations continue in Vietnam's television industry.  Smaller
provincial cable operators are the most common violators.  The
Mission continues to hear occasional complaints of national cable
operators airing DVDs and U.S. movies without authorization. 

Data Protection
--------------- 

HANOI 00000194  003.2 OF 008 

¶9. (U) In compliance with its U.S.-Vietnam Bilateral Trade Agreement
(BTA) and WTO TRIPS commitments, Vietnam included a provision
(Article 128) in its 2005 Intellectual Property Law and the Ministry
of Health issued a 2006 Regulation on Data Protection Applied to
Drug Registration Dossiers, providing data protection and
non-reliance.  To date, Post is not aware of any cases of U.S. firms
attempting to avail themselves of data exclusivity as provided in
these regulations.  We understand that industry members are working
to engage and build capacity for GVN officials on how other
countries approach this topic. 

WTO and BTA Compliance - Lack of Criminal Remedies
------------------------ ------------------------- 

¶10. (U) Chapter Two of the BTA, which entered into force on December
10, 2001, codified Vietnam's commitment to bring its IPR legal
regime and enforcement practices up to international standards, to
protect intellectual property consistent with WTO TRIPS standards,
and in some cases, to provide protection stronger than TRIPS.  The
BTA covers the fields of copyright and related rights, encrypted
satellite signals, trademarks (including well-known marks), patents,
layout designs of integrated circuits, trade secrets, industrial
designs and plant varieties.  Vietnam also agreed to implement the
WTO TRIPS agreement immediately upon its January 2007 WTO accession. 

¶11. (SBU) In recent years, Vietnam has undertaken significant
efforts to promulgate a legal framework to provide for adequate and
effective protection of IP rights.  As reported in recent years'
Special 301 submissions, the 2005 Intellectual Property Law, its
implementing decrees and circulars, as well as a number of other
related laws and guidance have largely brought Vietnam's legal
system into compliance with its BTA and TRIPS obligations.  Some
legal documents, however, remain outstanding or are not yet
adequately detailed to implement in practice.  Most notably, Vietnam
has not yet issued provisions for criminal remedies for willful
trademark counterfeiting or infringement of copyrights or related
rights on a commercial scale.  Vietnam agreed to issue this circular
by the time of its WTO accession as a stop-gap measure until it can
complete required revisions to make its Criminal Code consistent
with the new IP Law and Vietnam's BTA and TRIPS commitments.
Despite continued U.S. engagement with the GVN, this commitment
remains unfulfilled.  While Vietnam reports that it will begin to
revise its Criminal Code in 2008, Post and USTR continue to press
urgently for the GVN to meet its commitment on this important
circular. 

IPR-Related Legislative Reforms in 2007
--------------------------------------- 

¶12. (U) The Government of Vietnam issued the following IPR-related
regulations in 2007: 

-- Instruction 04/2007/CT-TTg, dated 22 February 2007, on
strengthening copyright protection for software.  The Prime Minister
required government officials and agencies to provide adequate
protection of software copyrights and to gradually cease the use of
illegitimate software;
-- Decision 51/2007/QD, dated 12 April 2007, on the Development Plan
for Vietnam's Software Industry, 2007-2010;
-- Decision 08/2007/QD-BTTTT, dated 24 December 2007, on the List of
Open Source Software That Meets the Requirements for Usage by State
Agencies and Organizations;
-- Circular 01/2007/TT-BKHCN, dated 14 February 2007, guiding the
implementation of Decree 103/2006/ND-CP detailing the procedures for
registering rights of intellectual property;
-- Decree 172/2007/ND-CP, dated 28 November 2007, concerning the
revision and supplementing some Articles of Decree 57/2005/ND-CP on
Administrative Penalties for the Violations in the Field of Plant
Varieties;
-- Decision 56/2007/QD-BNN, dated 12 June 2007, from MARD
supplementing the list of protected plant species;
-- Decision 103/2007/QD-BNN, dated 24 December 2007, from MARD
supplementing the list of protected plant species
-- Decision 3957/QD-BNN-TT, dated 13 December 2007, on use of
guidelines to conduct tests for Distinctness, Uniformity and
Stability of Plant Varieties. 

HANOI 00000194  004.2 OF 008 

Legal Updates Expected in 2008
------------------------------ 

¶13. (U) Relevant GVN agencies continue to draft circulars and
implementing documents for Vietnam's IPR Legal framework.  These
agencies report the following expected updates in 2008: 

-- A Government Decree on Administrative Remedies for copyright and
related rights infringement;
-- A joint circular drafted by the Supreme People's Court, Supreme
People's Procuracy, Ministry of Justice and Ministry of Public
Security guiding the criminal prosecution for IPR infringement under
the Criminal Code (see para. 11);
-- A joint circular drafted by the Supreme People's Court, Supreme
People's Procuracy and other concerned agencies guiding civil
prosecution for IPR infringement;
-- A COV Decree on Management of Optical Disks;
-- A circular issued by MOST concerning administrative remedies for
industrial property infringement;
--  A joint circular drafted by MOCST, MOST, MOF and the Ministry of
Planning and Investment concerning financial support for the
purchase of legitimate software as well as guiding the collection
and distribution of royalties;
-- A circular issued by MOST guiding the issuance and revocation of
certificates for examiners and qualified industrial property
assessment organizations. 

¶14. (U) Agencies also report the following expected amendments and
revisions in 2008: 

-- Revision of the Criminal Code;
-- Revision of Article 8.2 of Decree 154/2005/ND-CP detailing some
provisions of the Customs Law concerning customs procedures, customs
investigations and supervision which require applicants to specify
trademarks of declared goods;
-- Amendment of Decree 106/2006/ND-CP on administrative remedies for
IP infringement (The amendment reportedly will note that for
Customs-related issues, the General Department of Customs'
Department of Anti-Smuggling will have responsibility for applying
remedies);
-- Amendment of the IP Law assigning ex-officio powers to Customs
officials in the enforcement of intellectual property rights;
-- Revision of Article 214.3.b of the IP Law concerning
allowance/disallowance of re-export of IPR infringing goods; 

International Agreements
------------------------ 

¶15. (SBU) As reported in reftels B and C, in 2006 Vietnam fulfilled
its BTA obligation to join five key international IP conventions.
After completing procedures to join the Rome Convention for the
Protection of Performers, Producers of Phonograms and Broadcasting
Organizations in 2006, Vietnam officially joined the Convention on
March 1, 2007.  National Office of Intellectual Property (NOIP)
contacts report that the GVN is working on procedures to accede to
the Hague Agreement Concerning the International Registration of
Industrial Designs.  COV also claims that it hopes to join the 1996
WIPO Copyright Treaty (WCT) and the WIPO Performances and Phonograms
Treaty (WPPT) once it has met all requirements for these agreements,
but no specific target date has been set. 

Growing Coordination on IPR Enforcement...
------------------------------------------ 

¶16. (U) As outlined in reftels B and C, in 2006 six GVN Ministries -
MOCST (then the Ministry of Culture and Information), the Ministry
of Science and Technology (MOST), the Ministry of Agriculture and
Rural Development (MARD), the Ministry of Finance (MOF), the
Ministry of Industry and Trade (MOIT), the Ministry of Public
Security (MPS) and the Ministry of Information and Communications
(MIC) - jointly signed a "Plan of Action on Cooperation in
Preventing and Fighting against IPR Violations during the period of
2006-2010," commonly referred to as Program 168.  The program has
helped to address one of Vietnam's glaring shortfalls - poor
coordination among the country's varied enforcement agencies - by
codifying information sharing, enforcement cooperation and joint 

HANOI 00000194  005.2 OF 008 

training.  Agencies in Ho Chi Minh City report they are using
Program 168 to facilitate inter-agency cooperation at the city
level.  There are also signs of growing enforcement coordination at
the provincial level, including in the infringement-rich China
border province of Lang Son (reftel D). 

... But Enforcement Mechanisms Remain Weak
------------------------------------------ 

¶17. (SBU) Vietnam's IPR enforcement structure, however, remains
overly complicated and bureaucratic, with no less than seven
ministries involved.  Multiple agencies are tasked with overlapping
functions, but there are also gaps in coverage.  Institutional
experience on IPR enforcement is extremely limited across the board,
and local law enforcement personnel in particular remain uninformed
on Vietnam's IP laws and procedures.  Government agencies rely
heavily on administrative enforcement of IPR laws and typically only
issue administrative findings or warnings either by letter or orally
to small retailers of pirated material.  Very few cases have been
referred for civil or criminal prosecution.  Some rights holders
have told the Embassy that they often pursue only administrative
remedies due to the uncertainty over the outcome of civil or
criminal proceedings, given the lack of experience with IP issues
among Vietnam's judges and prosecutors. 

¶18. (SBU) Under the new IPR regulations, to provide impartiality,
experts at NOIP, MOST and the provincial Departments of Science and
Technology (DOST) no longer have the lead in assisting enforcement
agencies to assess trademark and other infringements (although in
practice they are still consulted regularly).  Instead, Vietnam
created in 2007 an Intellectual Property Research Institute, which
among other tasks, is to provide expert consultations and
independent assessments on suspected infringement cases.  The
Institute is headed by former NOIP Director General Dr. Pham Dinh
Chuong, but it is unclear who will comprise the rest of the staff of
experts.  The creation of this new body of expertise will likely
delay dispute resolution.  Since its creation in May 2007, The IP
Research Institute has not yet provided any independent assessments.
 The Director of the HCMC Market Management
Bureau described the curtailment of technical advice from HCMC DOST
as the primary reason fewer violations were processed in HCMC in
2007 than in 2006. 

Enforcement Efforts in 2007
--------------------------- 

¶19. (U) MOCST:  According to GVN data, MOCST officials fined 4,952
businesses for infringing upon IP rights in 2007. Of that total,
cultural inspectors issued warnings to 267 business (down from 519
businesses in 2006), suspended the operations of 148 businesses
(down from 289 in 2006), and revoked the business licenses of 43
businesses (down from 169 in 2006).  Additionally, MOCST officials
suspended two websites, ordered companies to cease broadcasting
three movies due to copyright infringement and revoked three
copyright certificates in the field of applied arts.  MOCST also
confiscated more than 3.8 million pirated tapes and disks, 1.8 tons
of semi-final pirated books, 28 VCD and DVD readers and 13 computers
used to burn illicit disks.  MOCST inspectors collected fines of
12.3 billion VND (USD 766,000) in 2007 (approximately equal to 2006
totals), and forwarded one case for criminal prosecution. 

¶20. (U) MOST/NOIP:  In 2007, MOST reported it investigated 600
businesses, settled 136 industrial design infringement cases, 606
trademark infringement cases, 16 patent infringement cases and three
geographical indication infringement cases and imposed fines
totaling VND 2 billion (USD 125,000), up from VND 170.2 million (USD
10,640) in 2006.  NOIP also provided expert consultation for
enforcement bodies, local and overseas organizations and individuals
when requested. 

¶21. (U) Market Management Bureau (MMB):  According to the MMB, in
2007 the agency handled a total of 2,423 cases (over 10 percent more
than 2006), of which there were 256 industrial design violations,
2,156 trademark infringements, three commercial name violations, two
patent infringement cases and six unfair competition cases.  MMB
imposed fines totaling VND 3.514 billion (USD 220,000), 20 percent
below 2006 totals. 

HANOI 00000194  006.2 OF 008 

¶22. (SBU) Customs: In 2007, Customs received 27 requests to monitor
potential IPR infringing goods at Vietnam's borders, including from
companies such as Honda, Nokia, Gucci, Nike, Chanel, Louis Vuitton
and Wilson.  (Note: Customs officials have claimed they can only
take action against products where the rights-holder has filed a
monitoring request.  End Note.)  Customs confiscated infringing
goods in 13 cases with fines totaling VND 970 million (USD 60,625).
Confiscated goods included cell phone batteries, cell phone
chargers, cell phone headsets, laptops, calculators, USB drives, and
computer parts.  Customs provided the following examples: 

-- Haiphong Customs confiscated counterfeit CASIO and NOKIA cell
phone batteries, chargers, headsets and calculators in a shipment
from Hong Kong. The total value of the infringing goods is VND 10
million (USD 625). Officials destroyed the goods and applied
administrative remedies. 

-- Quang Ninh Customs confiscated goods from a customs-bonded
warehouse including 2,109 KG of cell phone batteries, chargers,
headsets and calculators.  Authorities destroyed the goods and
applied administrative remedies. 

-- Ho Chi Minh City: Customs confiscated 98 motorbikes that
infringed the industrial design of SAPPHIRE motorbikes with the
total value of USD 47,481. 

¶23. (U) Courts: According to data provided by NOIP, the court system
settled 15 of 16 civil IPR-related cases it received (14 cases
concerned disputes over copyrights, one related to contractual use
of artistic works and one related to technology transfer).  The
courts also settled eight of ten criminal cases with six offenders
sentenced to less than three years prison time and two sentenced to
three-to- seven years in prison. 

¶24. (U) The Economic Police: MPS reports receiving 128 IPR
infringement cases (down from 156 last year), including: 18
trademark counterfeiting cases, 67 cases of geographical indication
infringement, 11 trade name infringement related cases, five
industrial design related cases and 27 unfair competition cases.
The Economic Police have settled 86 of these cases.  Confiscated
goods include 9000 bottles of wine, 10 tons of cosmetics and 3790
bottles of perfume. 

¶25. (U) MIC: MIC settled 1 case related to copyright infringement
over the broadcast of SEAGAME soccer matches, warned three press
organizations for not referencing copyrighted source material, cited
35 press organizations for the unauthorized use of copyrighted
information, and fined 22 organizations for domain name use without
MIC's permission (the domain names were reportedly similar or
identical to registered domain names).  Fines totaled VND 230
million (USD 14,375). 

Growing Costs of IPR Infringement
--------------------------------- 

¶26. (U) Vietnam's average per capita GDP, while still relatively low
(approximately 840 dollars in 2007 according to the General
Statistics Office of Vietnam), continues to rise rapidly,
particularly in the larger cities.  Vietnam's middle class is
growing and a culture of consumerism is taking hold - increasing the
losses to U.S. firms from piracy and counterfeiting.  Industry
estimates show that the cost of pirated business software to U.S.
firms in 2007 was more than USD 80 million, while pirated books cost
U.S. companies an additional USD 17 million.  In addition, some
items deemed "cultural products," (e.g., music, movies, books) are
still subject to censorship and control regulations that impede
access to this growing market. 

Public Awareness
---------------- 

¶27. (U) Public and private awareness of the value of IPR protection
is low but continues to grow.  Public television aired a number of
IPR-related programs, including a game show on IP rights.  According
to COV, Vietnamese media carried over 1,000 news articles on
copyright in printed newspapers and a significantly higher number of 

HANOI 00000194  007.2 OF 008 

copyright related articles in online newspapers.  Vietnamese IPR
agencies, the Vietnam Chamber of Commerce and Industry (VCCI) and
other business associations organized workshops, panels and public
forums to help increase awareness of IPR.  The COV website regularly
updates information on copyright legislation and news, as well as
provides a database on copyright registration.  The GVN also
designated November 29 as "Anti-Counterfeit Day," and held IPR
related activities in conjunction with the event. 

¶28. (U) With growing awareness of their rights, individuals and
businesses are becoming increasingly active in self-protection.  COV
issued 3,231 copyright certificates in 2006, a slight increase over
2006.  NOIP received more than 3,080 applications for registration
of inventions (28 percent higher than 2006), 1,908 applications for
registration of industrial designs (19 percent higher than 2006),
almost 32,000 applications for registration of trademarks (39
percent higher than 2006), four applications for registration of
geographical indications and one application for registration of
layout designs of integrated circuits. 

¶29. (U) Copyright associations continue to expand their operations.
The Vietnam Literature Copyright Centre (VLCC) increased its
membership to more than 500, up from only 350 two years ago.  Total
royalties of VLCC members in its first three years were VND 500
million (USD 31,250).  The Vietnam Center for Protection of Music
Copyright (VCPMC) has also grown; it now represents 1,200 members
(up 20 percent from last year).  VCPMC members' total revenues
reached VND 10 billion (USD 625,000) in 2007, up 233 percent from
2006.  In 2004, the Record Industry Association of Vietnam was
established and its membership has now grown to 45. 

Technical Assistance helps Build Enforcement Capacity
--------------------------- ------------------------- 

¶30. (U) (U) In 2007, Vietnam continued to receive considerable
IPR-related technical assistance from a number of NGOs and foreign
donors, including multiple U.S. Government agencies such as USAID,
Customs, the International Law Enforcement Academy (ILEA), the U.S.
Patent and Trademark Office (USPTO) and the Department of Justice.
This assistance included conferences, seminars, study tours and
review of draft legislation.  For example, the USG funded a two-week
study tour for 20 senior prosecutors, judges and IP officials to
understand better how law enforcement agencies and the courts in the
United States protect intellectual property. 

¶31. (U) Other examples of IPR technical assistance conducted in 2007
include: 

-- COV worked with the Cable and Satellite Broadcasting Association
of Asia (CASBAA) to organize a workshop on "Regularizing Vietnam's
Pay TV Market" in Ho Chi Minh City.  The U.S. Embassy also
participated in the seminar;
-- Together with IFPI and STAR, COV held a workshop on "Optical disk
regulation and enforcement";
-- NOIP worked with USPTO to organize a workshop on "Trademark and
Domain Name Registration";
--NOIP held workshops on "The Role of Automation in Management and
Service Provision in IPR Organizations" and "IP Strategy for
Universities, Research and Development" with the assistance of WIPO; 

--Vietnam hosted an APEC Seminar on "IP in the Digital Era" and a
seminar on well-known trademarks and brands with the assistance of
the Government of Japan;
-- NOIP reported also receiving other training from the United
States, the EU, Switzerland, Japan and WIPO;
-- The Supreme People's Court, in coordination with STAR, USPTO and
DANIDA's Business Sector Programme Support (BSPS) hosted 2 training
courses for 175 judges;
-- Customs receiving training from organizations and governments
from the United States, the EU, the UN, Japan, China, Belgium,
France, the UK and Indonesia. 

Training needs
--------------- 

¶32. (U) In 2008, the GVN will continue to require detailed legal
consultations and technical assistance as it completes and "fine 

HANOI 00000194  008.2 OF 008 

tunes" its IPR legal framework.  Two specific areas for further
engagement are with the Ministry of Justice as it begins revisions
to the IP-related portions of the Criminal Code and working with COV
as it works to draft an Optical Disk regulation.  Continued
cooperation with the various enforcement agencies will be essential
to raise awareness and build enforcement capacity as these
organizations seek to take advantage of Vietnam's strengthened
enforcement provisions.  English language abilities are an oft-cited
concern among the IPR enforcement agencies, and in-country training
activities conducted in Vietnamese, when possible, would greatly
benefit these organizations. 

-----------------------------
Conclusion and Recommendation
----------------------------- 

¶33. (SBU) Vietnam will continue to grapple in the near future with
the challenge of reducing the massive scale of IPR violations.  GVN
authorities, including at the highest levels, have publicly
demonstrated their understanding of the problem and expressed their
resolve to protect and enforce IP rights.  With a strong legal
foundation already in place, it will be important to work closely
with the GVN on its Criminal Code revisions in 2008 to provide
rights holders with the full cadre of remedies for IPR violations -
administrative, civil and criminal.  The real challenge, however,
lies in building the capacity and improving the efficacy of
Vietnam's enforcement and judicial systems.  While training of
judges and enforcement officials will be a longer-term fix,
increasing fines to a level which would deter future violations and
reversal of the GVN's decision no longer to empower NOIP, MOST and
provincial DOSTs to provide technical advice to enforcement agencies
could immediately and visibly reduce IPR violations. 

¶34. (SBU) Vietnam's BTA and WTO/TRIPS commitments provide us with
strong tools for engaging the GVN on IPR enforcement, and the
recently-signed Trade and Investment Framework Agreement (TIFA)
provides a useful forum under which to do so.  Vietnam's expressed
aspirations to be considered for the U.S. Generalized System of
Preferences (GSP) program and its strong desire to continue as a
popular destination for foreign direct investment will help
strengthen our push for the GVN to fulfill its IPR-related BTA and
WTO commitments. 

Recommendation
-------------- 

¶35. (SBU) The Mission believes it is important to maintain
consistent engagement with Vietnam to enhance the protection and
enforcement of IPR.  Vietnam has shown a willingness to cooperate
with the United States and other trading partners to address its
serious problems with IP violations.  It must now take demonstrable
and concrete steps to follow through on that commitment.  Given the
great number of tools available, including the Special 301 process,
continued pressure from the USG and industry members, and
capacity-building and training, we expect that Vietnam should
improve its ability to enforce IP rights.  For 2008, we recommend
USTR maintain Vietnam on the Special 301 "Watch List." 

¶36.  (SBU) This message was coordinated with ConGen Ho Chi Minh
City. 

MICHALAK

Here is another cable:

VZCZCXRO7452
RR RUEHHM
DE RUEHHM #0178/01 0571035
ZNR UUUUU ZZH
R 261035Z FEB 07
FM AMCONSUL HO CHI MINH CITY
TO RUEHC/SECSTATE WASHDC 2151
INFO RUEHHI/AMEMBASSY HANOI 1543
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUEHRC/DEPT OF AGRICULTURE WASHINGTON DC
RUEHBK/AMEMBASSY BANGKOK 0220
RUEHGV/USMISSION GENEVA 0027
RUEHHM/AMCONSUL HO CHI MINH CITY 2323

UNCLAS SECTION 01 OF 02 HO CHI MINH CITY 000178 

SIPDIS 

USDOC
SENSITIVE
SIPDIS 

STATE FOR EAP/MLS AND EB/TPP/BTA/ANA
STATE PASS USTR DAVID BISBEE
USDOC FOR 4431/MAC/AP/OPB/VLC/HPPHO AND EMIKALIS
TREASURY FOR OASIA
GENEVA FOR USTR
BANGKOK FOR USPTO JNESS 

E.O. 12958: N/A
TAGS: ETRD [Foreign Trade], ECON [Economic Conditions], WTRO [World Trade Organization], KIPR [Intellectual Property Rights] VM [Vietnam]
SUBJECT: USTR DISCUSSES WTO MEMBERSHIP, IT AND IPR WITH HCMC BUSINESS
COMMUNITY 

REF: HANOI 233  B) HANOI 310 

¶1. (SBU) Summary: Area businesspeople discussed new trading
rules and changes to Vietnam's legal framework as a result
of its WTO membership with representatives of the Office of
the U.S. Trade Representative (USTR) and the U.S.
Department of Commerce, during a February 5-6 visit to Ho
Chi Minh City.  The USG visitors provided American Chamber
of Commerce members with an overview of the U.S. - Vietnam
bilateral trade relations following Vietnam's accession to
the World Trade Organization in January of this year, and
the U.S. proposal to Vietnam to negotiate a Trade and
Investment Framework Agreement.  USTR also explained many
of the important commitments Vietnam has undertaken as part
of its WTO accession agreement including comprehensive
tariff reductions, significant service sector
liberalization and adoption of WTO consistent rules in
areas such as trading rights, IPR, and transparency.   In
turn, AmCham members outlined their plans to form a WTO
implementation committee to monitor implementation, and
asked a broad range of questions relating to specific
service sector commitments, trading rights, and customs
duties.  In separate meetings representatives of U.S.
information technology (IT) companies registered concern
about new regulations that they believe could make it
difficult for U.S. companies to qualify for Vietnamese
government IT contracts.  Legal experts outlined challenges
to adequately protecting intellectual property rights (IPR)
under Vietnam's new IPR law. The visit followed meetings on
February 1-2 in Hanoi and HCMC by Assistant United States
Trade Representative Barbara Weisel. In those meetings USTR
proposed to the GVN to move our bilateral relationship
forward along the path set out under the Enterprise for
ASEAN Initiative by negotiating a Trade and Investment
Framework Agreement (TIFA) (ref A).   End summary. 

AMCHAM
------ 

¶2. (SBU) David Bisbee, Director for Southeast Asia and
Pacific Affairs for USTR, and Elena Mikalis, Director for
ASEAN Affairs for the International Trade Administration at
the Department of Commerce, visited HCMC February 5-6 to
discuss Vietnam's WTO obligations and its legal reform
efforts with members of the U.S. business community here.
In a lengthy session with the American Chamber of Commerce,
USTR fielded questions and provided additional details and
clarifications on the terms and coverage of Vietnam's WTO
accession package. AmCham members admitted that more study
of the agreement was needed by members and that to better
monitor and track implementation of the commitments by
Vietnam, Amcham was considering forming a WTO
Implementation Committee. Bisbee encouraged the formation
of such a group and suggested that AmCham propose a formal
dialogue with the Ministry of Trade as part of the process
to facilitate a better understanding of the many legal and
regulatory developments underway to meet WTO commitments. 

¶3. (SBU) The meeting also included lengthy discussions over
trading rights and distribution services.  Members asked
for clarification of Vietnam's commitments, which include
the ability for all Vietnamese and foreign companies and
individuals to directly import most goods into Vietnam as
of January 1, 2007. Vietnam's commitments also provide for
foreign individuals and enterprises without a physical
presence in Vietnam to act as an importer of record, an
important provision for many U.S. exporters.  Foreign firms
can engage in distribution services of most goods without
going through a Vietnamese intermediary in 2009. In the WTO
accession agreement, Vietnam improved upon the timetable
for granting trading rights established in the U.S.-Vietnam
Bilateral Trade Agreement (BTA) to meet its GATT
obligations, and reduced the range of products subject to
transition periods. For distribution services, Vietnam also
reduced the list of products excluded in Vietnam's WTO
commitments compared to the BTA. 

IT
-- 

HO CHI MIN 00000178  002 OF 002 

¶5. (SBU) Representatives of U.S. IT companies met with
Bisbee and Mikalis to voice their concerns about an IT
procurement policy announced by Vietnam in late July 2006
(Decision 169).  USTR and Embassy Hanoi have worked closely
with the Ministry of Post and Telecommunication (MPT) since
July to raise USG and industry concerns about the policy,
which seeks to provide procurement preferences for
localized IT products and open source software.  MPT
released a draft implementing circular on January 30 for
industry comments, and USTR urged the IT industry members
to raise their concerns directly with MPT.  In response to
concerns raised by the USG in July, the MPT has worked to
revise the original Decision to limit coverage to only
government agencies and explicitly exclude state owned
enterprises.  USTR and Hanoi Econoff explained to the
industry representatives that MPT was open to hearing from
industry about global procurement best practices, and
industry was urged to engage the GVN directly on this
issue. (Note: In meetings in Hanoi, USTR raised industry
concerns with MPT directly. (Ref B) End note.) 

IPR
--- 

¶6. (SBU) Bisbee and Mikalis also met with lawyers and HCMC
government officials to discuss the implementation of
Vietnam's new IPR law, which came into effect in 2006.  An
attorney at a foreign law firm reported that in her opinion
Vietnam's IPR enforcement activities had slowed as
authorities familiarized themselves with the new law and
its regulations.  The attorney and a representative from
HCMC's Department of Science and Technology (DOST) observed
that new rules meant to preserve the impartiality of IPR
enforcement activities (by clearly separating registration
and enforcement activities) have, in the short term,
reduced the ability of experts at DOST and other agencies
to assist enforcement authorities in pursuing IPR
violations.  During a discussion on USTR's Special 301
review of IP protection among major trading partners, DOST
requested USTR's assistance in establishing a dialogue
mechanism specific to HCMC's local efforts, similar to the
301 review but on a semi-annual basis. DOST explained that
provincial level implementation could be supported by
regular dialogue with USTR and other USG agencies on the
problems and bottlenecks experienced by the private sector.
DOST also acknowledged the valuable technical assistance
received from the U.S. Patent and Trademark Office (USPTO)
and the USAID-funded Support for Trade Acceleration (STAR)
program and reiterated the common request among Vietnam's
IP agencies for increased levels of technical assistance. 

¶7. (SBU) The private sector attorney also explained her
understanding that in order for IPR rights-holders to
pursue those who sell counterfeit goods or goods that
violate trademarks, rights-holders must first send "cease
and desist letters" to violators.  While these letters are
meant to be used as evidence that violations have taken
place, they often tip off infringers, who are then able to
evade prosecution. In subsequent meetings in Hanoi with IP
authorities and advisors to the STAR program, it was
clarified that the relevant decree requires 'cease and
desist' letters only in cases of unfair competition, not in
cases of clear trademark infringement. 

¶8. (U) Mr. Bisbee and Ms. Mikalis cleared this cable.
WINNICK

These will be the last cables that we cover this year. We wish to thank James Love for organising some cables in Knowledge Ecology International. █

Summary: Venezuela gets the “PRIORITY WATCH LIST” treatment, meaning that it gets sanctioned or at least warned for not kneeling to Western monopolies (‘IP’)

US resistance to the authorities in Venezuela may have been boosted by Microsoft's interests that are all about money and subjugation. If Venezuela accepts Microsoft’s software, then it accepts software which is controlled by US powers, making it simpler to topple those authorities. According to the following Cablegate cables, Free/open source software gets mentioned unfavourably 3 years in a row, in relation to so-called ‘IP’ (monopoly on knowledge). A cable from 2007 says: “The piracy rate for business software in 2006 is 84 percent, according to International Intellectual Property Alliance statistics — a 6 percent increase from 2005. U.S. software companies have repeatedly come under attack from the BRV as exemplars of what President Chavez referred to as the “neo-liberal” trap of IPR. In 2004, the BRV passed legislation that mandates the use of open source software throughout the public sector. While not necessarily a violation of IPR in and of itself, the software industry has concerns about a lack of transparency in its implementation and favoritism shown to certain vendors.”

The 2008 cable is similar. It states:”The piracy rate for business software in 2007 was 86 percent, according to the Business Software Alliance. U.S. software companies have repeatedly come under attack from the BRV as exemplars of what President Chavez referred to as the “neo-liberal” trap of IPR. In 2004, the BRV passed legislation that mandated the use of open source software throughout the public sector. While not a violation of IPR in and of itself, the software industry has concerns about a lack of transparency in its implementation and favoritism shown to certain vendors.”

In 2009 it says: “In 2004, the GBRV passed legislation that required the use of open source software throughout the public sector. While not a violation of IPR in and of itself, the software industry has concerns about a lack of transparency in its implementation and favoritism shown to certain vendors. The piracy rate for business software in 2008 was 87 percent, according to the Business Software Alliance. The market for legitimate CDs and DVDs continues to decline. As Venezuela imports a high number of virgin discs, the country may be a distribution source and a production center for counterfeit products. The National Film Law, passed in August 2005, requires distributors to locally copy a percentage of the movies they distribute and to register all films, leading to unauthorized release of confidential information and piracy.”

Once again they lump software in with counterfeits to bloster their case for so-called ‘IP’ and make the government of Chavez weaker. Here is the 2007 cable:

VZCZCXRO3434
RR RUEHCD RUEHGD RUEHHO RUEHMC RUEHNG RUEHTM
DE RUEHCV #0366/01 0521438
ZNR UUUUU ZZH
R 211438Z FEB 07
FM AMEMBASSY CARACAS
TO RUEHC/SECSTATE WASHDC 7899
INFO RUEHZI/WHA IM POSTS COLLECTIVE
RUCPDOC/DEPT OF COMMERCE

UNCLAS SECTION 01 OF 02 CARACAS 000366 

SIPDIS 

SENSITIVE
SIPDIS 

STATE FOR EB/IPE CLACROSSE, DEPT PLS PASS TO USTR
JCHOE-GROVES, DOC JBOGER, DOC PLS PASS TO USPTO JURBAN AND
LOC STEPP 

E.O. 12958: N/A
TAGS: KIPR [Intellectual Property Rights], VE [Venezuela]
SUBJECT: 2007 SPECIAL 301 RECOMMENDATION:  KEEP VENEZUELA
ON PRIORITY WATCH LIST 

REF: A. STATE 7944 

     B. 06 CARACAS 486
     C. 05 CARACAS 596 

¶1.  Summary: (SBU)  The BRV's protection and enforcement of
IPR continues to deteriorate.  The market for legitimate
music CDs is eclipsed by piracy, with piracy rates for CDs,
DVDs, and business software hovering around 80 percent.
SAPI, the agency that oversees IPR enforcement and issues
patents, has not issued a single patent since 2004.
Venezuela's customs and tax agency, SENIAT, has achieved some
success in its anti-piracy campaigns and seizure of
contraband, but overall enforcement of IPR legislation
remains ineffective.  The implementation of proposed legal
changes would further weaken IPR protection.  Based on the
BRV's antipathy to IPR, weak enforcement and possible legal
changes to further strip away IPR protection, Post recommends
that Venezuela remain on the Special 301 Priority Watch List
for 2007.  End Summary. 

---------------------------
The Pharmaceutical Industry
---------------------------
¶2.  (SBU) The international pharmaceutical industry continues
to see a weakening of IPR protection in Venezuela.  Despite
Venezuela having the highest per-capita pharmaceutical
consumption in Latin America, and being the third largest
market in the region, SAPI, the Autonomous Intellectual
Property Service (the country's primary IPR authority), has
not issued a patent to an imported pharmaceutical product
since 2003, and has not issued a patent in any sector since
2004.  SAPI has continued to receive an average of over 500
patent application submissions per year.  Since 2002, the BRV
has failed to protect pharmaceutical testing and other
confidential data for product submissions that have not yet 

SIPDIS
received patent protection.  The BRV does not provide linkage
between patent and sanitary registration.  Counterfeiters can
receive sanitary registration approval in the absence of a
patent -- equivalent to marketing approval for a counterfeit
product. 

¶3.  (SBU) The legal framework in Venezuela for pharmaceutical
protection is ambiguous after the BRV withdrew from the CAN
(Andean Community) in April 2006.  Venezuelan law had
incorporated over 650 legal decisions from the Andean
Community into domestic law, including Decision 486, a
pronouncement on protection of intellectual property rights.
The most recent domestic intellectual property legislation in
Venezuela dates from 1955 and does not provide for patent
protection.  Venezuelan courts have, de facto, continued to
apply Decision 486, though they have offered no assurances
that they will continue to do so. 

---------------------------
Recorded Media and Software
---------------------------
¶4.  (SBU) The market for legitimate CDs and DVDs continues to
decline.  According to a Post IPR source, there are
approximately 1.8 million music CDs sold annually in
Venezuela and 80 million virgin discs imported.  This would
indicate that Venezuela is not solely a distribution source,
but a mass production center for counterfeit products.
Industry estimates the piracy rate for music CDs at 85
percent, a two percent increase from 2005.  The National Film
Law, passed in August 2005, requires mandatory registration
of all films, which could lead to unauthorized releases of
confidential information and contribute to piracy. 

SIPDIS 

¶5.  (SBU) The piracy rate for business software in 2006 is 84
percent, according to International Intellectual Property
Alliance statistics -- a 6 percent increase from 2005.  U.S.
software companies have repeatedly come under attack from the
BRV as exemplars of what President Chavez referred to as the
"neo-liberal" trap of IPR.  In 2004, the BRV passed
legislation that mandates the use of open source software
throughout the public sector.  While not necessarily a
violation of IPR in and of itself, the software industry has
concerns about a lack of transparency in its implementation
and favoritism shown to certain vendors. 

---------------
IPR Enforcement
---------------
¶6.  (SBU) IPR enforcement in Venezuela continues to be weak.
Enforcement problems derive for the most part from a lengthy
legal process, unprepared judges, as well as lack of 

CARACAS 00000366  002 OF 002 

resources for investigation and prosecution.  A single
special prosecutor is responsible for IPR issues.
Consequently, investigations are severely backlogged.  Under
current Venezuelan law, most IPR enforcement actions can only
take place as a result of a complaint by the rights holder.
In addition, the complainant is responsible for the cost of
storage of allegedly illicit goods during the investigation
and trial.  A loophole in the law only permits actions
against copyright violators operating at a fixed location,
effectively barring prosecution of street vendors. 

¶7.  (SBU) SENIAT remains the one bright spot in a dismal
landscape of respect for IPR with noteworthy efforts to fight
piracy in conjunction with its "zero tax evasion" mission.
SENIAT proposed an Anti-Piracy Law in 2006.  We do not expect
this proposal to be signed into law.  In February 2007,
SENIAT reportedly destroyed 450,000 pirated CDs and 280,000
pirated DVDs.  SENIAT superintendent Jose Gregorio Vielma
Mora has called on the BRV to provide the legislative
framework to protect author's rights, adding that enforcement
efforts to stamp out counterfeiting requires enhanced
cooperation of SENIAT, local police, and the national guard.
Coordinated efforts, to date, have been minimal. 

----------------------------
Legal Changes on the Horizon
----------------------------
¶8.  (SBU) Proposed legal changes, if implemented, would
result in further weakening of the IPR regime in Venezuela.
The National Assembly has delegated to President Chavez, for
a period of 18 months, the power to issue decrees carrying
the force of law.  Both the pharmaceutical and recording
industries expressed their concern to us over potential abuse
of this power to push through legislation that would further
weaken the IPR regime.  In particular, there is concern that
Chavez may sign into law a controversial copyright bill
dating from 2004, which apparently was no longer on the
legislative agenda.  The bill would violate a reported 31 of
Venezuela's bilateral and multilateral IPR treaty obligations
including the Bern Convention and TRIPs.  It would reduce the
protection period for copyrights from 60 to 50 years and
would allow the BRV to expropriate artistic rights for the
public sector.  Venezuela has not yet ratified the WIPO
Copyright Treaty or the WIPO Performances and Phonograms
Treaty. 

-------
Comment
-------
¶9.  (SBU) Venezuela continues to be an unfriendly environment
for intellectual property rights.  Pirated and counterfeit
products abound, and piracy rates are climbing.  Despite
SENIAT's efforts, overall enforcement remains weak.  The BRV
has dedicated few resources to investigating and prosecuting
IPR crimes.  The legal regime for IPR protection is in a
state of uncertainty after Venezuela's withdrawal from the
CAN.  IPR protection will likely deteriorate in the upcoming
year as Chavez may push through controversial copyright
legislation that would further undermine IPR protection and
violate Venezuela's treaty obligations.  Post recommends
keeping Venezuela on the Special 301 Priority Watch List for
2007. 

BROWNFIELD

Here is the 2008 cable:

VZCZCXYZ0007
RR RUEHWEB

DE RUEHCV #0232/01 0532127
ZNR UUUUU ZZH
R 222127Z FEB 08
FM AMEMBASSY CARACAS
TO RUEHC/SECSTATE WASHDC 0650
INFO RUEHBO/AMEMBASSY BOGOTA 7695
RUEHLP/AMEMBASSY LA PAZ FEB LIMA 0959
RUEHQT/AMEMBASSY QUITO 2774
RUCPDOC/DEPT OF COMMERCE

UNCLAS CARACAS 000232 

SIPDIS 

SENSITIVE
SIPDIS 

STATE FOR EB/IPE JBOGER
DEPT PLS PASS TO USTR JCHOE-GROVES
DOC PLS PASS TO USPTO CPETERS 

E.O. 12958: N/A
TAGS: KIPR [Intellectual Property Rights], VE [Venezuela]
SUBJECT: 2008 SPECIAL 301 RECOMMENDATION: KEEP VENEZUELA
ON PRIORITY WATCH LIST 

REF: A. STATE 9475
     B. 07 CARACAS 366
     C. 06 CARACAS 486 

¶1. (SBU) Summary: The BRV's protection and enforcement of IPR
continues to deteriorate.  The market for legitimate music CDs is
eclipsed by piracy, with piracy rates for CDs, DVDs, and business
software hovering above 80 percent.  SAPI, the agency that oversees
IPR enforcement and issues patents, has not issued a single patent
since 2004.  Based on the BRV's antipathy to IPR, weak enforcement,
and possible legal changes to further strip away IPR protections,
Post recommends that Venezuela remain on the Special 301 Priority
Watch List for 2008.  End Summary. 

---------------------------
The Pharmaceutical Industry
--------------------------- 

¶2. (SBU) The international pharmaceutical industry continues to see
a weakening of IPR protection in Venezuela.  Despite Venezuela
having the highest per-capita pharmaceutical consumption in Latin
America, and being the third largest market in the region, SAPI, the
Autonomous Intellectual Property Service (the country's primary IPR
authority) has not issued a patent to an imported pharmaceutical
product since 2003, and has not issued a patent in any sector since
2004.  According to a local IPR contact, SAPI received 2,958 patent
applications in 2007 (over 50 percent of these were from the
pharmaceutical industry), of which zero were approved.  (Note: SAPI
approved 26 designs.  End Note.)  Since 2002, the BRV has failed to
protect pharmaceutical testing and other confidential data for
product submissions that have not yet received patent protection.
The BRV also does not provide a linkage between patent and sanitary
registrations.  As a result, counterfeiters can receive sanitary
registration approval in the absence of a patent -- equivalent to
marketing approval for a counterfeit product.  Eduardo Saman, the
Director of SAPI and the newly appointed Director of the National
Institute for the Defense of the Consumer (INDECU), has argued that
trademarks and patents impeding the fabrication of generic medicines
or the reproduction of technology should be considered monopolies.
Monopolies are prohibited under the Venezuelan constitution. 

---------------------------
Recorded Media and Software
--------------------------- 

¶3. (SBU) The market for legitimate CDs and DVDs continues to
decline.  According to a Post IPR contact, in 2007 there were
approximately 1.9 million music CDs sold in Venezuela and 90 million
"virgin" discs imported, ten million more disks than in 2006.  This
would indicate that Venezuela is not solely a distribution source,
but may be a production center for counterfeit products.  Industry
experts estimated the piracy rate for music CDs at 88 percent in
2007.  The number of street vendors selling pirated DVDs and CDs on
the highway during rush hour has also visibly increased over the
last year.  One local report estimated losses due to pirated CDs at
USD 50.6 million.  The 

¶4. (U) National Film Law, passed in August 2005, requires
distributors to copy in Venezuela a percentage of the movies they
plan on distributing locally and to register all films.  Industry
sources fear that this could lead to unauthorized releases of
confidential information and contribute to piracy.  They estimate 

SIPDIS
that 92 percent of movies purchased in Venezuela were produced
illegally, and estimate losses of approximately USD 41.3 million. 

¶5. (SBU) The piracy rate for business software in 2007 was 86
percent, according to the Business Software Alliance.  U.S. software
companies have repeatedly come under attack from the BRV as
exemplars of what President Chavez referred to as the "neo-liberal"
trap of IPR.  In 2004, the BRV passed legislation that mandated the
use of open source software throughout the public sector.  While not
a violation of IPR in and of itself, the software industry has
concerns about a lack of transparency in its implementation and
favoritism shown to certain vendors. 

--------------------------------------------
Tenuous Legal Protection of IPR in Venezuela
-------------------------------------------- 

¶6. (SBU) The legal framework in Venezuela for Intellectual Property
Rights has become more ambiguous since the BRV withdrew from the CAN
(Andean Community) in April 2006.  Venezuelan law had incorporated
over 650 legal decisions from the Andean Community into domestic 

law, including Decision 486, a pronouncement on protection of
intellectual property rights.  The most recent domestic intellectual
property legislation in Venezuela dates from 1955 and does not
provide for patent protection.  Venezuelan courts have, de facto,
continued to apply Decision 486, though they have offered no
assurances that they will continue to do so. 

¶7. (SBU) Numerous Post contacts have said that a new copyright law
is expected to be decreed via the "enabling law."  In January 2007,
the National Assembly delegated to President Chavez, for a period of
18 months, the power to issue decrees carrying the force of law.
Both the pharmaceutical and recording industries expressed their
concern to us over potential abuse of this power to push through
legislation that would further weaken the IPR regime.  In
particular, there is concern that Chavez may sign into law a
controversial copyright bill dating from 2004.  The bill would
violate many of Venezuela's bilateral and multilateral IPR treaty
obligations including the Bern Convention and TRIPs.  It would
reduce the protection period for copyrights from 60 to 50 years and
would allow the BRV to appropriate artistic rights for the public
sector.  In 2007 the second-Vice President of National Assembly
presented a different but similar version of this bill to the Andean
Parliament.  Venezuela has also not deposited the instruments of
ratification for the WIPO Copyright Treaty or the WIPO Performances
and Phonograms Treaty, and we are told has not sent an official
delegation to WIPO committee meetings since 2004. 

--------------------------------------------- --
Government of Venezuela's Open Hostility to IPR
--------------------------------------------- -- 

¶8. (SBU) In 2007, the BRV attempted to remove significant IPR
protections from the Venezuelan constitution as part of President
Chavez failed December 2 constitutional reform package.  Eduardo
Saman, the director of SAPI and INDECU, drafted the proposed changes
to article 98 that would have notably deleted any mention of abiding
by established IPR law and international treaties and also would
have removed the term intellectual property rights from the
constitution, referring only to copyrights.  This measure was
co-sponsored by cooperatives representing distributors of pirated CD
and DVDs.  Despite the rejection of President Chavez' reform
package, Saman has continued to issue anti-IPR statements and has
said that he was trying to decriminalize the pirating of all works. 

------------------
Other IPR BARRIERS
------------------ 

¶9. (SBU) The BRV's foreign currency controls have been another
barrier to IPR in Venezuela.  The Currency Exchange Administration
(CADIVI) has been blocking access to foreign exchange for companies
attempting to pay royalties, patent license fees, and franchise
fees.  As indicated in a June 2007 CADIVI resolution, 100 foreign
currency requests to pay licensing fees from 2005 were allowed to
expire due to improper paperwork, something IPR contacts deny.
While CADIVI does not deny these currency requests, not acting on
them prevents businesses from complying with IPR laws. 

---------------
IPR Enforcement
--------------- 

¶10. (SBU) IPR enforcement in Venezuela continues to be weak.
Enforcement problems derive for the most part from a lack of
political will, lengthy legal processes, unprepared judges, and a
lack of resources for investigation and prosecution.  A single
special prosecutor who has one assistant is responsible for IPR
issues in Venezuela.  Consequently, investigations are severely
backlogged.  Under current Venezuelan law, IPR enforcement actions
can only take place as a result of a complaint by the rights holder.
 In addition, the complainant is responsible for the cost of storage
of allegedly illicit goods during the investigation and trial.
Trials can go on for years and storage costs are very high, making
it unfeasible that someone will complete the legal process.  A
loophole in the law only permits actions against copyright violators
operating at a fixed location, effectively barring prosecution of
street vendors. 

¶11. (SBU) SENIAT, the customs and tax enforcement agency, has been
the one bright spot for IPR enforcement with noteworthy efforts to
fight piracy in conjunction with its "zero tax evasion" and "zero
contraband" missions.  In February 2007, SENIAT reportedly destroyed 

450,000 pirated CDs and 280,000 pirated DVDs.  Vielma Mora, the
former superintendent of SENIAT, claimed to have invested USD
32.5-37.2 million to fight piracy in 2007.  To avoid possible
political fallout, SENIAT has sent employees outside Venezuela to
receive IPR enforcement training.  However, on February 1, Vielma
Mora, the BRV's lone IPR advocate, was fired.  Two weeks after this
announcement, Post's contact at SENIAT declined to speak with us on
SENIAT's IPR enforcement plans, saying she had to wait for new
guidelines before sharing any information.  The Venezuelan copyright
and trademark enforcement branch of the police (COMANPI) also
attempts to provide copyright enforcement support with a small staff
of permanent investigators.  Local IPR contacts have said that
COMANPI, an agency known for its lack of personnel, limited budget,
and inadequate storage facilities for seized goods, no longer has a
functioning headquarters. 

-------
Comment
------- 

¶12. (SBU) Venezuela continues to have an unfriendly environment for
protecting intellectual property rights.  Pirated and counterfeit
products abound, and piracy rates are climbing.  Overall enforcement
remains weak and high ranking officials publicly express their
disdain for IPR protection.  The BRV has dedicated few resources to
investigating and prosecuting IPR crimes.  The legal regime for IPR
protection is in a state of uncertainty after Venezuela's withdrawal
from the CAN, and IPR protection will likely deteriorate in the
upcoming year if Chavez pushes through controversial copyright
legislation that would further undermine IPR protection and violate
Venezuela's treaty obligations.  Post recommends keeping Venezuela
on the Special 301 Priority Watch List for 2008. 

Duddy

Here is the 2009 cable:

VZCZCXRO8270
PP RUEHAO RUEHCD RUEHGA RUEHGD RUEHGR RUEHHA RUEHHO RUEHMC RUEHMT
RUEHNG RUEHNL RUEHQU RUEHRD RUEHRG RUEHRS RUEHTM RUEHVC
DE RUEHCV #0271/01 0621828
ZNR UUUUU ZZH
P 031828Z MAR 09
FM AMEMBASSY CARACAS
TO RUEHC/SECSTATE WASHDC PRIORITY 2678
INFO RUEHWH/WESTERN HEMISPHERIC AFFAIRS DIPL POSTS
RUCPDOC/DEPT OF COMMERCE

UNCLAS SECTION 01 OF 02 CARACAS 000271 

SENSITIVE
SIPDIS 

STATE FOR EEB/IPE
DEPT PLS PASS TO USTR 

E.O. 12958: N/A
TAGS: ECON [Economic Conditions], ETRD [Foreign Trade], KIPR [Intellectual Property Rights]
SUBJECT: 2009 SPECIAL 301 RECOMMENDATION:  KEEP VENEZUELA
ON PRIORITY WATCH LIST 

REF: A. STATE 8410
     B. 08 CARACAS 1427
     C. 07 CARACAS 366
     D. 06 CARACAS 486 

¶1. (SBU) Summary: The Government of the Bolivarian Republic
of Venezuela (GBRV) continues to chip away at protection of
intellectual property rights.  In 2008, the GBRV resurrected
a 50 year old law disallowing the patenting of medicines and
food.  Enforcement remains a problem as the police agency
primarily responsible for IPR is defunct.  SAPI, the agency
that oversees IPR and issues patents, has not issued a single
patent since 2004.  Based on the GBRV's aversion to IPR, weak
enforcement, and possible legal changes to further weaken IPR
protections, Post recommends that Venezuela remain on the
Special 301 Priority Watch List for 2009.  End Summary. 

--------------------------------
Weakened Legal Protection of IPR
-------------------------------- 

¶2. (SBU) Until Venezuela's April 2006 withdrawal from the
Andean Community, Venezuela had incorporated over 650 legal
decisions from the Andean Community into domestic law,
including Decision 486, which provided the legal framework
for patent and trademark protections.  In September 2008,
SAPI, the Autonomous Intellectual Property Service (the
country's primary IPR authority), announced in a press
release that it had resurrected the Ley de Propriedad
Industrial de 1955 (the 1955 law).  The 1955 law states that
drinks, foodstuffs, drugs of any kind and other chemical
reactions and combinations may not be patented. 

¶3. (SBU) Creative works are protected pursuant to the
Copyright Law of 1993, Decision 351 of the Cartagena
Agreement, the Bern Convention and the Universal Copyright
Convention.  Venezuelan law protects the rights of authors of
creative intellectual works.  Currently, copyright protection
is valid for the life of the author, plus 60 years.  However,
the pharmaceutical and recording industries continue to be
concerned that Chavez may sign into law a copyright bill
drafted in 2004.  The draft legislation would violate many of
Venezuela's bilateral and multilateral IPR treaty
obligations, reduce the protection period for copyrights from
60 to 50 years and would allow the GBRV to appropriate
artistic rights for the public sector.  Venezuela has also
not deposited the instruments of ratification for the WIPO
Copyright Treaty or the WIPO Performances and Phonograms
Treaty, and has not sent an official delegation to WIPO
committee meetings since 2004. 

¶4. (SBU) Trademarks are registered with SAPI, granted for ten
years and may be renewed for successive ten-year periods.
Trademark rights can be enforced through civil,
administrative and criminal actions.  As a result of civil
action, a registered trademark owner may be entitled to
relief, which is at the discretion of the judge.  However,
the registered trademark owner cannot prohibit a third party
from using a trademark in connection with products that are
provided by the trademark owner.  A trademark may be canceled
at the request of any interested third party if it has not
been used in Venezuela for three years. 

---------------------------
The Pharmaceutical Industry
--------------------------- 

¶5. (SBU) Eduardo Saman, the former Director of SAPI and
current Director of the Venezuelan consumer protection
agency, the Institute for the Defense of People's Access to
Goods and Services (INDEPABIS), has argued that trademarks
and patents hindering the fabrication of generic medicines or
the reproduction of technology should be considered
monopolies, which are prohibited under the Venezuelan
constitution.  Despite his move to INDEPABIS, Saman continues
to carry weight on IPR issues.  SAPI has not issued a patent
for an imported pharmaceutical product since 2003, and has
not issued a patent in any sector since 2004.  Since 2002,
the GBRV has failed to protect pharmaceutical testing and
other confidential data for product submissions that have not
yet received patent protection.  As the GBRV does not link
patents and sanitary registrations, counterfeiters can
receive sanitary registration approval in the absence of a
patent -- equivalent to marketing approval for a counterfeit
product. 

--------------------------- 

CARACAS 00000271  002 OF 002 

Recorded Media and Software
--------------------------- 

¶6. (SBU) In 2004, the GBRV passed legislation that required
the use of open source software throughout the public sector.
 While not a violation of IPR in and of itself, the software
industry has concerns about a lack of transparency in its
implementation and favoritism shown to certain vendors.  The
piracy rate for business software in 2008 was 87 percent,
according to the Business Software Alliance.  The market for
legitimate CDs and DVDs continues to decline.  As Venezuela
imports a high number of virgin discs, the country may be a
distribution source and a production center for counterfeit
products.  The National Film Law, passed in August 2005,
requires distributors to locally copy a percentage of the
movies they distribute and to register all films, leading to
unauthorized release of confidential information and piracy. 

------------------
Other IPR BARRIERS
------------------ 

¶7. (SBU) Another barrier to IPR in Venezuela is foreign
currency controls.  The Currency Exchange Administration
(CADIVI), the agency that administers the GBRV's currency
controls, may block access to foreign exchange for companies
attempting to pay royalties, patent license fees, and
franchise fees.  (To receive US dollars at the official
exchange rate for transactions such as dividend repatriation
and operating costs, a company must obtain CADIVI approval.
There are no reliable figures for how much money US companies
as a whole have requested from CADIVI.)  Post has received
reports of CADIVI not acting on foreign currency exchange
requests due to "improper paperwork".  While denial of
currency requests may not be related to IPR enforcement, not
acting on them prevents businesses from complying with IPR
laws. 

---------------
IPR Enforcement
--------------- 

¶8. (SBU) The enforcement situation in Venezuela remains the
same as last year.  An ongoing lack of political will,
lengthy legal processes, unprepared judges, and a lack of
resources for investigation and prosecution create effective
barriers to IPR enforcement.  A special prosecutor with one
assistant is responsible for IPR issues in Venezuela and
investigations are severely backlogged.  Under current
Venezuelan law, IPR enforcement actions can only take place
as a result of a complaint by the rights holder and the
complainant is responsible for the storage cost of the
illicit goods.  Furthermore, only violators operating at a
fixed location are prosecutable, effectively barring
prosecution of street vendors. 

¶9. (SBU) With its "zero tax evasion" and "zero contraband"
programs, SENIAT, the customs and tax enforcement agency, has
undertaken IPR enforcement.  Despite these efforts, SENIAT
fired its lone IPR advocate in 2007.  Throughout 2008,
however, SENIAT published reports that it had destroyed
pirated goods.  COMANPI, the Venezuelan copyright and
trademark enforcement branch of the police, is also charged
with IPR enforcement and maintains a small staff of permanent
investigators.  Local IPR contacts have said that COMANPI, an
agency known for its lack of personnel, limited budget, and
inadequate storage facilities for seized goods, no longer has
a functioning headquarters. 

-------
Comment
------- 

¶10. (SBU) The protection of intellectual property rights in
Venezuela continues to deteriorate.  The legal regime is
increasingly tenuous, with a reversion to a 1955 law covering
medicinal and food patents in 2008.  Enforcement continues to
remain weak and high ranking officials continue to express
their disdain for IPR protection.  Few resources are
dedicated to investigating and prosecuting IPR crimes.  Post
recommends keeping Venezuela on the Special 301 Priority
Watch List for 2009.
GENNATIEMPO

The next post is likely to be out last of Cablegate, at least for now. █

Summary: US cables show the attitude towards Venezuela’s adoption of freedom-respecting software

AS we showed earlier this year, US diplomats and Microsoft fight GNU/Linux in Venezuela and according to the following Cablegate cable, they also try to paint the move with the ‘piracy’ brush. “In an effort to move away from proprietary software products, the Government of Venezuela in 2004 introduced a law mandating the use of open-source software in government and public institutions,” says one cable. But it continues: “This is expected to reduce the demand for U.S. software products somewhat, though much software currently in use is unlicensed or pirated.”

Microsoft never seemed to mind this. Gates and other Microsoft executives openly admitted that this so-called ‘piracy’ was beneficial to Microsoft. Let us carry on with ¶29 of the same cable that says: “Unfortunately, pirated software, music and movies remain readily available throughout the country. In the 2003 Annual Review, Venezuela remained on USTR’s Special 301 Watch List.”

We are going to write more about this in the next post. Basically, open source gets mentioned in most such cables and it is lumped in with all sorts of unrelated issue that have it painted as “piracy” and illegalities.

The Cablegate cable is as follows:

UNCLAS  CARACAS 003940 

SIPDIS 

STATE FOR WHA/AND
STATE FOR EB/MTA/MST
NSC FOR CBARTON
TREASURY FOR OASIA-GIANLUCA SIGNORELLI
USTR FOR G. BLUE
USTR FOR B. HARMON 

E.O. 12958: N/A
TAGS: ECON [Economic Conditions], EFIN [Financial and Monetary Affairs], ETRD [Foreign Trade], VE [Venezuela]
SUBJECT: VENEZUELA 2005 NATIONAL TRADE ESTIMATE REPORT
SUBMISSION 

REF: STATE 240980 

¶1. (U) Summary: The Following is Embassy Caracas' submission
for the 2005 National Trade Estimate Report. This document
was also submitted as a MS Word document to G. Blue and B.
Harmon at USTR by e-mail on December 23, 2004. End Summary 

-------------
TRADE SUMMARY
------------- 

¶2. (U) The estimated U.S. trade deficit with Venezuela for
2004 is projected at $19.5 billion, an increase of $5.2
billion from the trade deficit of $14.3 billion in 2003.
U.S. goods exports to Venezuela were approximately $4.5
billion, up $1.8 billion from 2003.  U.S. imports from
Venezuela are estimated at about $24 billion in 2004, an
increase of $7 billion from the level of imports in 2003. The
large increase in imports is related primarily to the
increase the price of petroleum, which represents the vast
majority of U.S. imports. 

¶3. (U) The stock of U.S. foreign direct investment (FDI) in
Venezuela in 2003 was $10.8 billion according to U.S.
Department of Commerce statistics.  U.S. FDI in Venezuela is
concentrated largely in the petroleum, telecommunications,
manufacturing and finance sectors. 

---------------
IMPORT POLICIES
--------------- 

Tariffs
------- 

¶4. (U) Venezuela is part of the Andean Community.  In 2002,
the five member countries of the Andean Community (Venezuela,
Peru, Ecuador, Colombia, and Bolivia) agreed to establish an
Andean free trade zone, a common external tariff (CET), and a
customs harmonization policy by January 2004.  The CET
agreement established a unified tariff schedule that would
have come into effect at the end of 2003 (decision 535).  In
October 2002 the member Ministers of the Andean Community met
and agreed upon tariff rates for 62 percent of import items.
In April 2003 all the Andean members except Peru reached
consensus on a CET for the remaining 38 percent. 

¶5. (U) In December 2003, however, the members decided to
postpone implementation of the CET, previously set for
January 1, 2004, until May 10, 2004.  In May members again
decided to postpone the implementation of the CET, this time
for a year until May 2005. The members have agreed to review
the CET,s effect on individual tariffs with the intention of
possibly modifying the rates.  The CET has a four-tiered
tariff structure of zero, five percent, ten percent and
twenty percent. 

¶6. (U) In December 2003 the Andean Community signed a free
trade agreement with MERCOSUR, the Southern Cone Common
Market. Key elements of the agreement such as the length of
phase-in periods for tariff removal require further
negotiation.  In Mid-2004, Venezuela joined MERCOSUR as an
associate member, which does not provide access to the tariff
benefits of full membership. Venezuela was among the 12 South
American countries that signed the "Cuzco Declaration" on
December 8, 2004 announcing the formation of the South
American Community of Nations which would ultimately unite
and replace both the Andean Community and MERCOSUR. Work on
the mechanics of the new entity is slated to begin in 2005. 

¶7. (U) Venezuela has been using the tariffs established under
the Andean Community,s price band system since 1995 for
certain agricultural products, including feed grains,
oilseeds, oilseed products, sugar, rice, wheat, milk, pork
and poultry.  Yellow corn was added to the price band system
in 1996, and processed poultry was added in 2001.  Ad valorem
rates for these products are adjusted according to the
relationship between commodity market reference prices and
established floor and ceiling prices.  When the reference 

price for a particular commodity falls below the established
floor price, the compensatory tariff for that commodity and
related products is adjusted upward.  Conversely, when the
reference price exceeds the established ceiling, the
compensatory tariff is eliminated.  Floor and ceiling prices
are set once a year based on average prices during the past
five years.  Venezuela publishes these prices each April. 

¶8. (U) In addition to the traditionally high import tariffs
of the Andean Community,s price band system, Venezuela also
protects its agricultural producers through a non-legislated
system of guaranteed minimum prices and the restrictive use
of import licenses and permits.  Management of tariff-rate
quota commitments by the Government of Venezuela has been
arbitrary and nontransparent and has negatively affected
trade in basic agricultural commodities as well as processed
products.  The Venezuelan Government has denied import
licenses for both in-quota and over-quota quantities, even
though importers are willing to pay the over-quota tariff for
additional quantities of products. 

¶9. (U) U.S. agricultural exporters advise that the Venezuelan
Government also routinely fails to open the quotas in a
timely manner, and for some products, such as pork, has
refused to "activate" the quota at all.   Venezuela announced
in 2001 that it would not grant import licenses for corn
until all domestic white corn had been marketed, resulting in
an effective import ban.  Venezuela also has restricted the
issuance of import licenses for sorghum, soybean meal, yellow
grease, pork, poultry, oilseeds, and some dairy products.
The government no longer publishes information and statistics
on license requests or license issuance. 

¶10. (U) Under the Andean Community,s Common Automotive
Policy (CAP), assembled passenger vehicles constitute an
exception to the 20 percent maximum tariff and are subject to
35 percent import duties. 

Non-Tariff Measures
------------------- 

¶11. (U) In response to the rapid decline in the value of the
national currency, the Bolivar, following a two-month general
strike that brought oil production to a near standstill, the
Central Bank of Venezuela halted trade in Bolivars on January
22, 2003.  President Chavez announced the creation of an
Exchange Administration Board (CADIVI) on February 5, 2003 to
regulate the purchase and sale of foreign currency.  During
much of 2003, CADIVI was unable to process requests for
authorization of foreign exchange in an efficient and timely
manner and only supplied $3.6 billion or approximately two
months worth of transactions.  There has been significant
improvement over time.  The supply of foreign currency
reached a level of approximately $15 billion in 2004, or 55
percent of approved authorizations.  A number of goods have
also been added to the list of imports eligible for foreign
exchange including intangibles such as services and the
repatriation of capital, which totaled $1.5 billion at the
end of the third quarter.  A new resolution allows importers
to ship products without pre-approval by the government.
There continue to be delays with pre-inspection companies
thereby increasing storage costs.  Although the number of
currency certificate approvals has increased steeply,
operating with a 50 percent backlog in liquidations puts
significant constraints on imports which accounted for 68.5
percent of requests, followed by private foreign debt with
12.5 percent and foreign investments with 8.6 percent.
Exchange control authorities have repeatedly said that the
exchange control system will be eased but will remain a
permanent long-term mechanism. 

¶12. (U) Agricultural products have received the majority of
dollars under the CADIVI system, since most basic food
products are on the import list.  Even so, the problems with
coordinating the timing of access to dollars, approval of
import permits and licenses, and contracting the shipments
have led to numerous delays and cancelled shipments.  Trade
in higher value products, such as apples, pears, grapes, 

nectarines and other fruits and nuts, has been dramatically
reduced as they are not included among the list of high
priority products for which foreign exchange is available
under the current currency control regime. 

¶13. (U) Venezuela also requires that importers obtain
sanitary and phytosanitary (SPS) permits from the Ministries
of Health and Agriculture for most pharmaceutical and
agricultural imports.  The government increasingly has
appeared to use this requirement to restrict agricultural and
food imports without providing evidence of a scientific
basis, raising concerns about the consistency of these
practices with World Trade Organization (WTO) requirements.
The Venezuelan Government continues to issue SPS permits in
an arbitrary manner without citing specific phytosanitary
concerns. This restriction in particular affects trade in
pork, poultry, beef, apples, grapes, pears, nuts, onions and
potatoes. 

¶14. (U) Though the GOV has not published requirements on
absorption agreements, it has been common practice for years
to require the purchase of domestic production before issuing
import licenses or permits.   Imports of yellow corn are
dependent upon the purchase of local sorghum and/or white
corn.  Soybean imports are dependent upon the purchase of
"locally produced" soybean meal, and permits for grape and
black bean imports have been tied to the purchase of local
product.  The use of absorption requirements is extremely
subjective, since Venezuela lacks a good statistical system
to track levels of domestic crop production. 

¶15. (U) This discretionary use of import licensing and permit
procedures to curtail agricultural imports has become a major
problem for the United States and other countries.  Various
countries have notified Venezuelan government officials that
these and other licensing practices appear to violate their
WTO commitments.  In 2002, the United States Trade
Representative initiated formal WTO consultations with
Venezuela on its agricultural import license procedures for a
wide-range of products.  Canada, the EU, Chile, Argentina,
and New Zealand participated in the first round of
consultations and posed questions to the government of
Venezuela. 

¶16. (U) Venezuela prohibits the importation of used cars,
used buses, used trucks, used tires and used clothing.  No
other quantitative import restrictions exist for industrial
products.  Some products such as cigarette paper, bank notes,
weapons of war and certain explosives can only be imported by
government agencies, (tax authorities calculate the cigarette
tax on the volume of cigarette paper imported by the
manufacturers).  The government can delegate authority to
import on its behalf, and can place orders for such products
with the local sales agents of the foreign manufacturers. 

¶17. (U) Venezuelan officials continue to discuss plans to
improve customs procedures to better control the entry of
illicit merchandise.  The Venezuelan Commission on
Antidumping and Safeguards has started investigations on the
importation of steel and paper products as well as clothing
and footwear.  It appears that deficient customs procedures
and the proliferation of contraband were contributing factors
in those industries, calls for protection. 

--------------------------------------------- -
STANDARDS, TESTING, LABELING AND CERTIFICATION
--------------------------------------------- - 

¶18. (U) Some Venezuelan importers of U.S. products have
alleged that the Venezuela applies product standards more
strictly to imports than to domestic products. The
certification process is expensive, increasing the cost of
U.S. exports relative to domestic products.  The Venezuelan
Commission for Industrial Standards normally requires
certification from independent laboratories located in
Venezuela but at times accepts a certificate from established
standards institutes abroad. 

¶19. (U) In 2003 the Government of Venezuela passed Decree 

2444, which requires importers of goods to Venezuela to
obtain pre-shipment inspections of all imports.  Four
companies are certified to do these inspections: Bivac
Venezuela (Veritas Group), SGS Trade Assurance Services,
COTECNA, and Intertek Foreign Trade Standards. 

¶20. (U) With regard to labeling, U.S. industries have raised
concerns regarding Venezuela,s labeling regulation for
clothing and footwear.  The regulations as proposed by
Venezuela,s Autonomous National Service for Standardization,
Quality, Metrology and Technical Regulations (SENCAMER) were
notified to the WTO Technical Barriers Trade Committee in
July 2002 and the notice was published in the Official
Gazette of Venezuela in August 2002.  The regulations, which
became effective in December 2002, establish the register of
domestic manufacturers and importers of clothing and footwear
and minimum labeling requirements for all clothing and
footwear products marketed in Venezuela.  Of primary concern
to U.S. manufacturers is the requirement that labels must be
customized to include detailed information about the importer
of the goods. 

----------------------
GOVERNMENT PROCUREMENT
---------------------- 

¶21. (U) Venezuela,s government procurement law covers
purchases by government, national universities, and
autonomous state and municipal institutions.  The law
requires a contracting agency to prepare a budget estimate
for a given purchase based on reference prices maintained by
the Ministry of Production and Commerce.  This estimate is to
be used in the bidding process.  The law forbids
discrimination against tenders based on whether they are
national or international.  However, the law also states that
the President can mandate temporary changes in the bidding
process "under exceptional circumstances" or in accordance
with "economic development plans" to promote national
development, or to offset adverse conditions for national
tenders.  These measures can include margins of domestic
price preference; reservation of contracts for nationals;
requirements for domestic content, technology transfer and/or
the use of human resources; and other incentives to purchase
from companies domiciled in Venezuela.  For example,
government decree 1892 establishes a 5 percent preference for
bids from companies with over 20 percent local content.  In
addition, half of that 20 percent of content must be from
small to medium sized domestic enterprises. 

¶22. (U) In an effort to move away from proprietary software
products, the Government of Venezuela in 2004 introduced a
law mandating the use of open-source software in government
and public institutions.  This is expected to reduce the
demand for U.S. software products somewhat, though much
software currently in use is unlicensed or pirated. 

¶23. (U) In the international arena, Venezuela has
reinstituted state controlled purchases of basic food
products for its new internal distribution system, Mercal, a
network of state-owned stores aimed at low-income
Venezuelans.  The state-trading entity, CASA, has to date
purchased sugar, rice, wheat flour, black beans, milk powder,
edible oil, margarines, poultry and eggs from a variety of
countries.  The private sector has complained that CASA has
an unfair advantage in that its access to dollars is assured,
as is its access to import licenses and permits. Furthermore,
CASA, as a government entity, brings in products without
tariffs and customs duties. 

¶24. (U) A new ministry has been created called the Ministry
of Food. The new ministry is now responsible for a large
number of activities formerly under the Ministries of
Agriculture and Lands, Health and Social Development, and
Production and Commerce.  Among the duties taken away from
the Ministry of Agriculture and Lands are the issuances of
sanitary permits and import licenses.  Price setting for all
food and feed products has been moved from the Ministry of
Production and Commerce into the Ministry of Food.  In
addition, the government is working to move food registration 

from the Ministry of Heath and Social Development into the
new food ministry. 

¶25. (U) Venezuela is not a signatory to the WTO Agreement on
Government Procurement. 

----------------
EXPORT SUBSIDIES
---------------- 

¶26. (U) Exporters of selected agricultural products - coffee,
cocoa, some fruits and certain seafood products - are
eligible to receive a tax credit equal to 10 percent of the
export,s value. 

---------------------------------------------
INTELLECTUAL PROPERTY RIGHTS (IPR) PROTECTION
--------------------------------------------- 

¶27. (U) Venezuela is a member of the World Intellectual
Property Organization (WIPO).  It is also a signatory to the
Berne Convention for the Protection of Literary and Artistic
Works, the Geneva Phonograms Convention, the Universal
Copyright Convention, and the Paris Convention for the
Protection of Industrial Property.  Through Andean Community
Decision 486, Venezuela has ratified the provisions of the
WTO Agreement on Trade-Related Aspects of Intellectual
Property Rights (TRIPS). 

¶28. (U) The Venezuelan Industrial Property Office (SAPI)
leaves much room for improvement, and its actions and
occasional publicly stated antagonism towards IPR often draw
criticism from IPR advocates and rights holders. Protection
of IPR is also hindered by the lack of adequate resources for
the Venezuelan copyright and trademark enforcement police
(COMANPI) and for the special IPR prosecutor,s office.
Venezuela's tax agency SENIAT is promoting several measures
to fight piracy in an effort to reduce tax evasion, including
a new anti-piracy law and the introduction of a tax on street
vendors.  According to industry representatives, SENIAT seems
to be a promising enforcement entity due to its better
technical and financial capabilities. 

¶29. (U) Unfortunately, pirated software, music and movies
remain readily available throughout the country.  In the 2003
Annual Review, Venezuela remained on USTR's Special 301 Watch
List. 

Patents and Trademarks
---------------------- 

¶30. (U) Venezuela provides the legal framework for patent and
trademark protection through Andean Community Decision 486
and the 1955 National Industrial Property Law.  Andean
Community Decision 486 takes major steps towards bringing
Venezuela into WTO TRIPS compliance.  However, without
corresponding local laws, Venezuela is not completely TRIPS
compliant.  Andean Community Decision 345 covers patent
protection for plant varieties. 

¶31. (U) U.S. companies remain concerned about the impact of
the Andean Tribunal's 2002 interpretation of Articles 14 and
21 of Decision 486, which do not allow for the patenting of
"second-use" products.  Under pressure from the Andean
Community and in line with some changes in leadership at
SAPI, Venezuela has revoked previously issued patents.  Very
few patents were awarded in 2004.  Since 2002, Venezuela's
food and drug regulatory agency (INH) began approving the
commercialization of new drugs, which were the bioequivalents
of already patented drugs, thereby denying the patent-holding
companies protection of their test data.  In effect, the
government now allows the test data of patented drugs or
those for which patents have been requested, most of which
required lengthy and expensive development, to be used by
others seeking approval for their own unlicensed versions of
the same products. 

Copyrights
---------- 

¶32. (U) Andean Pact Decision 351 and Venezuela's 1993
Copyright Law provide the legal framework for the protection
of copyrights.  The 1993 Copyright Law is modern and
comprehensive and extends copyright protection to all
creative works, including computer software.  A National
Copyright Office was established in October 1995 and given
responsibility for registering copyrights, as well as for
controlling, overseeing and ensuring compliance with the
rights of authors and other copyright holders.  Industry
experts are concerned about a proposed new copyright law
proposal, which would require the mandatory registry of
works, reduce protection terms, hamper distribution
agreements and increase royalties. 

¶33. (U) The Venezuelan copyright and trademark enforcement
branch of the police (COMANPI) continues to provide copyright
enforcement support with a small staff of permanent
investigators.  A lack of personnel, coupled with a very
limited budget and inadequate storage facilities for seized
goods, has forced COMANPI to work with the National Guard and
private industry to improve enforcement of copyrighted
material.  COMANPI can only act based on a complaint by a
copyright holder; it cannot carry out an arrest or seizure on
its own initiative, which leads to weaker enforcement. 

-----------------
SERVICES BARRIERS
----------------- 

¶34. (U) Venezuela maintains restrictions on a number of
service sectors.  Professions subject to national licensing
legislation (e.g., engineers, architects, economists,
business consultants, accountants, lawyers, doctors,
veterinarians and journalists) are reserved for those
individuals who meet Venezuelan certification requirements.
In addition, only Venezuelan nationals may be licensed as
architects.  Some (particularly government-related)
accounting and auditing functions require Venezuelan
citizenship, and only Venezuelan nationals may act as
accountants for companies with public stock greater than 25
percent.  Also, foreign professionals wishing to work in
Venezuela must revalidate their credentials at a Venezuelan
university on the condition of reciprocity.  A foreign lawyer
cannot provide legal advice on foreign or international law
without being licensed in the practice of Venezuelan law. 

¶35. (U) Foreigners are required to establish a commercial
presence for the provision of engineering services.  Foreign
consulting engineers must work through local firms or employ
Venezuelan engineers.  There is a law for public tenders,
which gives preferential treatment to Venezuelan companies if
they have the capability to carry out the work and if the
project is financed by public funds.  Foreign capital is
restricted to a maximum of 19.9 percent in professional
associations. 

¶36. (U) Venezuela limits foreign equity participation (except
from other Andean Community countries) to 20 percent in
enterprises engaged in television and radio broadcasting,
Spanish language newspapers, and professional services whose
practice is regulated by national laws.  Finally, in any
enterprise with more than 10 workers, foreign employees are
restricted to 10 percent of the work force, and Venezuelan
law limits foreign employee salaries to 20 percent of the
payroll. 

¶37. (U) The government enforces a "one-for-one" policy that
requires foreign musical performers giving concerts in
Venezuela to share stage time with national entertainers.
There is also an annual quota regarding the distribution and
exhibition of Venezuelan films.  At least half of the
television programming must be dedicated to national
programs, and at least half of FM radio broadcasting must be
dedicated to Venezuelan music. 

Financial Services
------------------ 

¶38. (U) By signing the 1997 WTO Financial Services Agreement,
Venezuela made certain commitments to provide market access
for banking, securities, life and non-life insurance,
reinsurance and brokerage activities.  Venezuela did not make
commitments on pensions, or on maritime, aviation and
transportation insurance, and it reserved the right to apply
an economic needs test as part of the licensing process.
Only local insurers may insure imports that receive
government-approved tariff reductions or government financing. 

¶39. (U) New rules governing civil aviation, maritime
activities and transportation insurance also have been issued
in the package of 49 laws passed under enabling powers by
President Chavez.  Many of the laws still need implementing
regulations.  The impact of the legislation is, therefore,
still unclear. 

-------------------
INVESTMENT BARRIERS
------------------- 

¶40. (U) The government continues to control key sectors of
the economy, including oil, petrochemicals and much of the
mining and aluminum industries.  Venezuela began an ambitious
program of privatization under the Caldera administration,
but under President Chavez further privatization has been
halted. 

¶41. (U) Foreign investment continues to be restricted in the
petroleum sector.  The exploration, production, refining,
transportation, storage, and foreign and domestic sale of
hydrocarbons are reserved to the state.  However, private
companies may engage in hydrocarbons-related activities
through operating contracts or through equity joint ventures
with state owned PDVSA.  The Venezuelan constitution reserves
ownership of the state oil company (PDVSA) to the Venezuelan
government.  It does allow the sale of subsidiaries and
affiliates of PDVSA to foreign investors.  In the early
1990's, the Venezuelan government partially opened the sector
to private investment in order to promote new petrochemical
joint ventures and to bring inactive oil fields back into
production.  Almost 60 foreign companies, representing 14
different countries, participated in this process.  PDVSA and
foreign oil companies signed 33 operating contracts for
marginal fields after three rounds of bidding. 

¶42. (U) The Hydrocarbons Law of 2001 has raised concerns in
the industry as it mandates a minimum 50 percent national
participation in future projects and increases most royalties
from 16.67 percent to 30 percent.  No projects have yet been
negotiated under this law. The Gaseous Hydrocarbons Law
offers more liberal terms, and Venezuela's government has
sought foreign investment to develop offshore natural gas
deposits near the Orinoco delta.  The Venezuelan Government
recently unilaterally eliminated a royalty holiday ceded to
joint venture projects devoted to the development of
Venezuela's extra heavy crude. These projects created as
strategic associations during the partial opening of the
sector enjoyed 35 year contracts endorsed by the National
Congress. 

¶43. (U) The government passed legislation in 1998 aimed at
introducing domestic and foreign competition into the
domestic gasoline market.  The law allows foreign and
non-governmental Venezuelan investors to own and operate
service stations, though the government retains the right to
set product prices.  Government controlled gasoline prices
have not risen in several years and a number of currency
devaluations and a high inflation rate have eliminated profit
margins. 

¶44. (U) Hydroelectric power generation in Venezuela is
reserved to the state, although private sector participation
is permitted in transmission and distribution.  In early
2000, the U.S. power generating company, AES Corporation,
successfully took control, by means of a stock swap, of
Electricidad de Caracas (EDC), the local electrical company
that provides power to the Caracas metropolitan area. 

¶45. (U) A range of other natural resources - including iron
ore, coal, bauxite, gold, nickel and diamonds - is gradually
being opened to greater private investment by means of
strategic alliances.  In 1996, CVG, the state-owned mining
firm, announced its first joint venture with a foreign
company to develop the Las Cristinas gold mine.  President
Chavez personally announced the beginning of operations in
May 1999. Low gold prices, however, forced CVG and its
partners to suspend the project.   In 2001, the concession
was revoked on grounds of the concessionaire's alleged
inability to comply with the contract by not developing the
reserves as stipulated, and the concession has been granted
to another firm.  In April 1999, the Venezuelan Government
updated the 1945 Mining Law in order to encourage greater
private sector participation in mineral extraction.  However,
in 2003 in line with a policy to centralize mining rights
under the Ministry of Energy and Mines (MEM), the government
ratified a 1996 decree requiring CVG to turn over to the
Ministry the original files on concessions granted by CVG.
In September 2003 the Ministry acted unilaterally to
terminate some concession areas of a private diamond mining
company in southern Venezuela alleging failure to comply with
the terms of the concession. 

¶46. (U) Under the Andean Community Common Automotive Policy,
Venezuela, Colombia and Ecuador impose local content
requirements as a condition for reduced duties on imports.
The local content requirement for passenger vehicles was 32
percent in 1997.  It was raised to 33 percent for 1998, and
was then lowered to 24 percent for 2000.  Under the WTO
Agreement on Trade-Related Investment Measures (TRIMS
Agreement), the three countries were obligated to eliminate
local content requirements by the year 2000.  However, in
December 1999, the Andean Automotive Policy Council
determined that it would not eliminate the local content
requirement as it had initially indicated, but instead
decided to increase it gradually to 34 percent by the year
2009.  This automotive policy may be inconsistent with
Venezuela's WTO obligations under the TRIMS Agreement.
Brownfield 

NNNN
      2004CARACA03940 - UNCLASSIFIED

The next post will look at other responses, derived from other cables. █

Summary: A United Nations cable shows the difference between developing countries (oppressed countries) and ruling nations, which obviously get their way

According to the following United Nations-related Cablegate cable, there is truly a struggle between the oppressors and the oppressed, just as we saw in OOXML corruptions, ACTA debates, etc.

Here is the relevant part:

Open Source

¶14. Paragraphs on open source software (OSS) remain open. Brazil proposed the addition of the original “Rio Commitment,” reflecting Brazil’s (and GRULAC’s) promotion of open source software (OSS) over proprietary software products. Ghana, speaking for the African Group, also supported this proposal. The U.S. opposed the addition in that it lacked the requisite technology neutrality previously recognized in the Geneva Declaration of Principles and has proposed technologically neutral language with which Brazil, GRULAC, and Ghana have indicated they could agree. The U.S. resisted Brazil’s attempts to move the technologically neutral language within the paragraph, which would have resulted in promotion of OSS over proprietary software. It appears that all parties are willing to agree to the U.S.’ original suggested placement of the language. Brazil also had communicated its desire to eliminate all other references to OSS anywhere in the final document, in favor of the one reference to OSS in the PoliticalChapeau. This possibility remains an open issue, however, as other references to OSS already were the subject of working group drafts. Drafting group participants have not completed work on all the paragraphs concerned. Australia favored dropping Brazil’s proposal altogether, with which the U.S. would agree. Ghana has indicated to the U.S., however, that it needs this provision on OSS in the Political Chapeau to support its development agenda.

To clarify the obvious, they confuse vendor-neutral with neutral. Open Source is not a company or a product, it is a licensing and development paradigm that helps respect nation’s autonomy and self determination. The word “neural” — like “choice” — is often used by Microsoft and its front groups to mean “not open source”.

Here is the Cablegate cable in full:

UNCLAS SECTION 01 OF 05 GENEVA 002727 

SIPDIS 

PLEASE PASS TO IO/T FOR JOYCE NAMDE AND EB/CIP FOR SALLY
SHIPMAN 

E.O. 12958: N/A
TAGS: ECPS [Communications and Postal Systems], EU [Europa Island], IO [Chagos Archipelago; Diego Garcia; British Indian Ocean Territory], TS [Tunisia], WSIS
SUBJECT: WSIS PREPCOM III MEETS IN GENEVA; LEAVES KEY
ISSUES UNRESOLVED 

¶1.  Summary: The third meeting of the Preparatory Committee
(PrepCom III) for Phase II of the World Summit on the
Information Society (WSIS) took place in Geneva, Switzerland
on September 19 ) 30, 2005.  Over 1,900 participants
attended the PrepCom including 1047 delegates representing
152 states and the European Commission.  UN agencies,
international organizations, private sector and civil society
organizations also participated.  Major issues from the
PrepCom remain unresolved and negotiations will continue
during the intersessional period and a resumed PrepCom III
scheduled for the three days prior to WSIS, in Tunisia.  The
issue of Internet governance was particularly contentious
with the EU moving to the extreme and proposing an alternate
model of management with a high degree of government
involvement.  WSIS implementation and follow-up also remain
unresolved with debate centering around which UN body should
coordinate implementation.  Many freedom of expression
issues, stemming from Cuban proposals, and debate on
financial mechanisms from PrepCom II also remain open. 

¶2.  The output of the Tunis Phase will be a non-binding
document comprising a political part (political chapeau) and
an operational part.  The operational part will consist of
four chapters: 1) implementation; 2) financing; 3) Internet
governance; and 4) the way ahead.  PrepCom III focussed on
the political chapeau, chapters 1, 3 and 4 and the unresolved
portions of chapter 2 remaining from PrepCom II.  Ambassador
David Gross, EB/CIP, led the U.S. delegation which included
Assistant Secretary of Commerce for Communications and
Information/Administrator of NTIA, Michael Gallagher and
representatives of State (EB/CIP, EB/CBA IO, DRL, PM, L/EB,
Mission Geneva), USAID, DOC/NTIA, DOC/PTO, Library of
Congress, Institute of Museum and Library Services, DOJ, and
NASA.  End Summary. 

Key Issues: 

Internet Governance 

¶3.  The primary issue of PrepCom III was Internet governance.
  During Phase I of the WSIS, participants discussed Internet
governance and adopted a series of principles.  To further
the discussion,  the various WSIS stakeholders asked the UN
Secretary General to convene a working group to consider the 

SIPDIS
issue further and to prepare a report in time for discussion
at the September PrepCom.  The working group released its
report in July and asked stakeholders to comment.  The U.S.
delegation submitted views founded primarily on the
Administration,s principles with respect to the Internet,s
Domain Name and Address System (DNS) as well as long standing
U.S. policy on general Internet issues. 

¶4.  The Internet governance debate during the PrepCom focused
on a number of key issues.  First, prepcom participants
debated the role of the various stakeholders (governments,
civil society, and private sector).  The U.S. argued firmly
that the success of the Internet is due, in large measure, to
the unfettered ability of the Internet community throughout
the world to innovate and add economic value at the edges of
the network.  A number of countries, in contrast, supported a
stronger role for governments in both the technical and
policy aspects of the Internet.  This discussion quickly
moved into a debate over whether governmental oversight of
the Internet is needed. While most delegations agreed, in
principle, that governments ought not to be involved in the
day-to-day management of the Internet, there are great
differences in what is perceived to be part of the technical
management versus public policy. 

¶5.  Second, there was an ongoing debate about the nature of
change in Internet management ) whether this change should
be evolutionary or whether a more revolutionary approach is
warranted.  Those favoring an evolutionary approach supported
permitting technological change within existing systems.
Supporters of a revolutionary change are seeking to uproot
the current system and develop a new mechanism for Internet
management, which would then be sent to the UN to oversee.
Supporters of evolutionary change differed on whether
governments should drive change through additional processes
and mechanisms or whether the evolutionary change should be
driven primarily by the technology and new innovation. 

¶6.  Third, several delegations expressed dissatisfaction that
a single government, the United States, has an essential role
in the management of the Internet, specifically the role by
the Department of Commerce in authorizing changes or
modifications to the authoritative root zone file of the DNS.
 Various formulations were offered as to how to
&multilateralize8 this role.  The U.S. defended its unique
role in the system and reiterated the U.S. commitment to
doing its part to ensure the long-term stability and security
of the Internet. 

¶7.  Lastly, discussions focused on whether or not there was a
need to develop some sort of forum to continue the debate on
Internet governance issues broadly.  While most delegations
agreed that dialogue should continue, disagreements persisted
over the terms of reference for such a forum.  Some
governments such as the U.S. and Australia articulated a
preference to use existing institutions while others called
for the creation of a new organization to fulfill the role. 

¶8.  In a surprise move toward the end of the PrepCom, the EU
presented a proposal that would transfer much of the
Internet,s management, both technical and policy-related, to
an intergovernmental oversight body.  Iran, Cuba, Brazil,
China and Saudi Arabia, who have long argued for greater
intergovernmental control of the Internet, promptly supported
this proposal.  Argentina, with support from Canada, New
Zealand, Singapore, Mexico and others, tabled an alternative
proposal that focused on the need to strengthen and improve
existing institutions, and which called for a forum to
address public policy issues.  The U.S. has expressed
interest in the Argentine proposal. 

¶9.  While prepcom participants tentatively agreed on
introductory text on the role of stakeholders and some
issue-specific text, they did not reach consensus on issues
related to the authoritative root zone file, Internet
oversight or a new forum dialogue.  The Subcommittee chairman
produced a text that sought to bring together the various
proposals.  The Chair,s proposal, coming at the end of the
PrepCom, did not help the negotiations; indeed it established
another element that further confused future negotiations.
This document has no status and is not considered a baseline
text by the U.S.  The issue of Internet governance will be
discussed further during the resumed PrepCom III in Tunis. 

¶10.  Additional Internet governance issues include:
international charging arrangements for Internet services,
cybersecurity, cybercrime, spam: 

(a) International Charging Arrangements for Internet Services
(ICAIS)
In the context of measures to promote development,
disagreements persisted over the need for governments to
impose a cost-sharing model on interconnection arrangements
between Internet Service Providers (ISPs), similar to the
model used in traditional international voice
telecommunications. The U.S. continued to advocate that
arrangements for Internet services should continue to be
negotiated commercially and governments should rely on
technology and market forces to support expansion of the
Internet and should not intervene in the process.  Text was
agreed that supports: the commercial nature of these
negotiations; the continued development of regional Internet
Exchange Centers; the development of low cost terminal
equipment; and the completion of ITU work on this issue.  A
proposal originally tied to existing multilateral trade rules
remains bracketed due to ambiguity in drafting. 

(b) Cybersecurity 

Russia proposed language on security for the political
chapeau based on that in paragraph 36 of the Geneva
Declaration of Principles.   In corridor discussions, the
U.S. worked with Russia to modify that language, which they
accepted, but Iran, Cuba and El Salvador proposed additional
sentences drawn from paragraphs 35 and 36 on social and
economic development and human rights.  While all parties had
indicated acceptance for the language, Russia and Cuba placed
the paragraph in brackets.  Upon review, the U.S. will
propose inclusion of language on the culture of
cybersecurity, drawn from paragraph 35, to rebalance the
compromise between paragraphs 35 and 36 reached in the Geneva
Declaration of Principles. 

Much of the U.S. proposed language on cybersecurity in other
sections was agreed upon.   The agreed language promotes a
culture of cybersecurity, with specific mention of
information sharing to develop common standards and exchange
of best practices.  In addition, the language highlights the
importance of promoting cybersecurity while respecting
privacy and human rights. 

(c) Cybercrime 

Prepcom participants agreed to the core U.S. language with a
call for governments to adopt domestic legislation on
cybercrime, taking into account existing frameworks.  In
addition, there is a specific acknowledgment of the Council
of Europe's Convention on Cybercrime as an existing framework
for fighting cybercrime.  However, the last sentence of new
paragraph 61 is still in brackets as requested by the Russian
Federation.  This sentence focuses on the need for
international cooperation on cybercrime enforcement efforts,
but avoids a call for any new international agreement on
cybercrime. 

(d) Spam 

The core U.S. language was agreed to at PrepCom III. Pursuant
to U.S. policy, the language explicitly acknowledges the
London Action Plan, among other multi-lateral memoranda of
understanding, and calls for a multi-pronged approach to
counter spam that includes policy elements promoted by the
U.S. (consumer and business education; appropriate
legislation; law enforcement authorities and tools; continued
development of self-regulatory and technical measures; best
practices; and international cooperation).  In addition, the
language avoids a call for a global agreement on spam. 

WSIS Implementation 

¶11.  The issues of coordination and implementation of the
outcomes of the WSIS remained highly contentious.  Many
States at the PrepCom want the WSIS to designate specific UN
agencies to carry out specific tasks related to the WSIS
outcomes, want the WSIS to specify those tasks and want the
ITU, UNESCO and UNDP to play a &leading role8 in WSIS
coordination and implementation.  These States include
Venezuela, Saudi Arabia, Cuba, Russia, El Salvador, Ghana,
Iran, Azerbaijan, Brazil, Nigeria and the Dominican Republic.
 The U.S., the European Union (represented by the UK),
Norway, Australia and Canada contend that it is not up to the
WSIS to designate the tasks of UN agencies and that
coordination on implementation should be carried out through
the UN Secretary General within the context of the existing
framework of UN coordination under UNGA Resolution 57/270B
(on integrated and coordinated implementation of and follow
up to the outcomes of the major United Nations conferences
and summits in the economic and social fields) and within
existing UN mandates and resources.  An extensive debate on
this issue was conducted over the course of several days in
PrepCom Subcommittee B (chaired by Lyndall Shope-Mafole of
South Africa) and the attending States were unable reach
agreement on the issue.  The issue of WSIS implementation is
inextricably linked to the issues related to Internet
governance and is unlikely to be settled until the issue of
Internet governance is resolved within the WSIS. 

Political Issues 

¶12.  Freedom of Expression/Role of Media/Unilateral Measures
Language:  The U.S., EU, Canada and Australia expressed
strong support repeatedly for reaffirming the commitment made
to human rights in the Geneva Declaration of Principles,
without reopening the language.  However, proposals made
primarily by Cuba attempted to reopen language rejected in
Phase I instead of utilizing negotiated language already
agreed.  This was particularly the case regarding references
to the &removal of obstacles8 in the Political Chapeau and
the Implementation chapters of the Summit document(s) that
were geared to evoke criticism of the U.S. embargo and/or
U.S. media transmissions to Cuba (Radio/TV Marti).  Cuba also
continued to press for inclusion of paragraphs on the role of
the media and the &new world information and communication
order8 that are unacceptable to the U.S. and other
like-minded nations.  Although the U.S. delegation was able
to whittle the Cuban proposals down from many paragraphs to a
more limited number, the end result is that all such language
remains bracketed in the text.  Cuba is committed to
&operationalizing8 paragraph 46 of the Geneva Declaration
(on unilateral measures) and paragraph 45 of that Declaration
(on legality of management of the radio frequency spectrum).
Twice Cuba agreed to and then reneged on negotiated language
on those issues.  Agreement remains a major challenge prior
to Tunis. 

Financial Mechanisms 

¶13.  Chapter Two on Financial Mechanisms was substantially
agreed at PrepCom II.  However, due to lack of time, the few
remaining bracketed passages were never brought to the
Committee for final agreement. 

Open Source 

¶14.  Paragraphs on open source software (OSS) remain open.
Brazil proposed the addition of the original "Rio
Commitment," reflecting Brazil's (and GRULAC's) promotion of
open source software (OSS) over proprietary software
products.   Ghana, speaking for the African Group, also
supported this proposal.  The U.S. opposed the addition in
that it lacked the requisite technology neutrality previously
recognized in the Geneva Declaration of Principles and has
proposed technologically neutral language with which Brazil,
GRULAC, and Ghana have indicated they could agree.  The U.S.
resisted Brazil's attempts to move the technologically
neutral language within the paragraph, which would have
resulted in promotion of OSS over proprietary software.  It
appears that all parties are willing to agree to the U.S.'
original suggested placement of the language.  Brazil also
had communicated its desire to eliminate all other references
to OSS anywhere in the final document, in favor of the one
reference to OSS in the Political Chapeau.  This possibility
remains an open issue, however, as other references to OSS
already were the subject of working group drafts.  Drafting
group participants have not completed work on all the
paragraphs concerned.  Australia favored dropping Brazil's
proposal altogether, with which the U.S. would agree.   Ghana
has indicated to the U.S., however, that it needs this
provision on OSS in the Political Chapeau to support its
development agenda. 

Technology Transfer 

¶15.  Technology transfer continues to be an open issue,
although it is not expected to be a fractious one in that
there appears to be general agreement to modify the phrase
with "on mutually agreed terms" or similar modifications such
as "enabling environment."  Initial clashes with Saudi Arabia
and Egypt over inclusion of "with mutually agreed terms" were
resolved through several meetings of the drafting group, in
which the U.S. pointed to similar references in the Geneva
Declaration of Principles and the Plan of Action and the
parties were able to address their disagreement through the
inclusion of the phrase "enabling environment." 

Cultural diversity 

¶16.  Several paragraphs relating to cultural diversity/the
diversity of cultural content and artistic expression appear
in the political chapeau.  The U.S. agreed to language on
&respecting cultural and linguistic diversity8 in paragraph
13; however, debate remains open on paragraph 35 around
language on the &promotion and protection of cultural
diversity and identity,8 which the U.S. does not support. A
working group of Egypt, Ghana, Honduras and the U.S. proposed
an alternative, which removed reference to protecting
cultural diversity, which Egypt later rejected.  The working
group reconvened with the EU, Australia and Guatemala also
participating to develop the following language which will be
submitted at the intersessional PrepCom meeting: &We
reaffirm our commitment to promoting the involvement of all
peoples in the information society through the development
and use of local languages in ICTs, thereby promoting,
affirming, and preserving diverse cultural identities and
languages.8 

Tunisia 

¶17.  At the closing plenary of the WSIS PrepCom III, the
issue of respect for human rights resurfaced in a dramatic
way.  The Canadian delegation read a statement on behalf of
the EU, Romania, Bulgaria, Croatia, Serbia/Montenegro,
Switzerland, Norway, New Zealand, Iceland, Monaco, Australia
and the U.S. that emphasized, while their governments are
dedicated to achieving a successful WSIS Summit in Tunis,
they remain deeply concerned about the human rights situation
in Tunisia, particularly with recent incidents and issues
involving limitations on freedom of expression and
participation by some groups of Tunisian civil society.  The
statement noted that they expected Tunisia to demonstrate its
commitment to freedom of expression and opinion as host of
the Summit. 

¶18.  Tunisia responded vehemently by saying that it had
spared no effort to make WSIS a success and that it had
provided the conditions for an open and inclusive summit, in
line with the UN rules and procedures.  The GOT also said
there was no reason for further concern and that there was no
reason to raise this issue at the Plenary and that it
regretted hearing such a statement. 

¶19.  Saudi Arabia (on behalf of the Arab Group), Pakistan (on
behalf of the Asia Group), Ghana (on behalf of the Africa
Group), and Cuba spoke in support of the Tunisian efforts to
hold a successful summit.  Saudi Arabia, in particular,
deplored that this issue was raised in Plenary.  ITU
Secretary General assured the Plenary that the UN rules would 

SIPDIS
apply to the Tunis Summit and that the inclusive nature of
WSIS would be upheld.  He claimed that the host country
agreement, just signed by Tunisia and the ITU, will ensure
the openness of the summit, in accordance with the UN rules.
The tension surrounding the issue was clear and the dividing
lines in the plenary hall were evident. 

Accreditation 

¶20.  Contentious human rights issues served as the bookends
for PrepCom III, opening and closing the meeting.  During the
opening plenary, the United States raised the issue of the
accreditation of U.S.-based NGO Human Rights in China (HRIC)
and requested an explanation from the WSIS Secretariat as to
why HRIC was not accredited for this meeting, given they had
submitted all necessary paperwork, including audited
financial statements showing they received no government
support. This concern was echoed by Canada and the UK on
behalf of the EU.  Following the Secretariat's explanation
that HRIC was denied accreditation because it failed to
disclose information about its anonymous donors, the U.S.
moved that the HRIC be accredited.   A lengthy procedural
discussion followed in which China strongly objected, stating
that discussing a single NGO after the Secretariat had not
recommended their accreditation would break with standard
procedures and that all NGOs rejected for accreditation could
also need to be discussed.  China raised a procedural point
that the PrepCom should not take up the discussion of NGOs
not recommended for accreditation by the Secretariat.   In an
intervention, Cuba supported this position.
¶21.  Ambassador Karklins, President of the PrepCom, proposed
postponing the discussion on HRIC to allow time for greater
examination of the issue and to save precious plenary time.
However, China expressed concern that, by doing this, a
precedent would be set and also argued that HRIC does not
work for the protection of human rights in China.  China then
called for a roll call vote on its proposal to not discuss
the issue of NGOs denied accreditation.  Acknowledging that
there was no guiding precedent in WSIS for this issue,
Ambassador Karklins called a roll call vote with the
following results: 52 countries supported China,s proposal,
35 voted in favor of discussing the accreditation issue, 35
countries abstained and 70 countries were declared absent,
primarily because they chose not to respond to the roll call
(many of them were in the room).   Following the vote, which
prevented the U.S. motion to accredit HRIC from being
considered, the U.S. expressed disappointment that the WSIS
process would not be as transparent and inclusive as the U.S.
had hoped. 

Conclusion/Comments 

¶22.  PrepCom III will be remembered as the international
meeting where the EU dramatically shifted its support from
the current system of Internet Governance to one it has
characterized as &a new cooperation model.8   In so doing,
the EU not only moved away from supporting a system it was
instrumental in helping to create but in so doing, it clearly
appeared to rebuke the U.S. and its historic role in the
management of the Internet system.  This dramatic shift --
reflecting the views of Commissioner Viviane Redding -- is in
sharp contrast to the policies advocated by her predecessor
Commissioner Erkki Liikonen.  The summit will now be
remembered for the outcome of the US/EU differences over
Internet Governance. Consequences of these differences, and
how they will be dealt with at the Summit, will echo across a
number of upcoming international meetings, particularly
during the ITU,s Plenipotentiary Conference to be held in
Turkey in November 2006.
Moley

Next up: Venezuela. █

Summary: US diplomatic cables from Sri Lanka reveal interesting stories about the small country’s flirtations with freedom-respecting software

According to the following Cablegate cables (first one in ¶7): “During a March 22 meeting with members of the American Chamber of Commerce, DAS Patterson outlined USG views on regional developments of the past two years and asked for insights into the current domestic political situation and business climate. IBM Managing Director and former Amcham President, Kavan Ratnayaka described IBM efforts to support open source software development, noting that Sri Lanka has become an internationally recognized “brand” in the open source community.”

IBM is right because here in Techrights we accumulated many examples of Free software in Sri Lanka. But just like in Thailand, there is a fight back from Microsoft proxies. Let us remember that “[w]hen the 2004 Indian Ocean tsunami seriously damaged the coastline of Sri Lanka, Virtusa funded salaries and benefits for its employees as they developed open-source software for disaster relief management. It continues to fund its employees as they travel to disaster-affected countries and assist in implementing the software program.” (see cables below)

The BSA (Business Software Alliance) is not happy with the country’s embrace of Free software. Here is what the BSA says according to cables: “While we see this as a step in the right direction, the Business Software Alliance (BSA) is not fully satisfied with the policy and accuses the government of “more funny business.”"

So when a country seeks digital independence, that is “funny business” in the eyes of the BSA. Good to know. Perhaps the BSA does not speak for FOSS like it claims to. Here are three Cablegate cables from which we extract the evidence:

C O N F I D E N T I A L SECTION 01 OF 03 COLOMBO 000545 

SIPDIS 

DEPARTMENT FOR SA, SA/INS, S/CT
DEPARTMENT PLEASE ALSO PASS TOPEC
NSC FOR E. MILLARD 

E.O. 12958:  DECL:  03-26-14
TAGS: PGOV [Internal Governmental Affairs], PREL [External Political Relations], ECON [Economic Conditions],
PTER [Terrorists and Terrorism], CE [Sri Lanka], LTTE [Liberation Tigers of Tamil Eelam] - Peace Process, Elections, ECONOMICS
SUBJECT:  In visit to Sri Lanka, SA DAS Patterson
discusses April 2 elections, plus peace and economy 

Refs:  Colombo 515, and previous 

(U) Classified by Ambassador Jeffrey J. Lunstead.
Reasons 1.5 (b, d). 

¶1.  (C) SUMMARY:  SA DAS Torkel Patterson visited
Colombo, March 21-23.  Highlights of the visit included
meetings at the MFA, with a key adviser to President
Kumaratunga, with local diplomats, and with local
business leaders, including the American Chamber of
Commerce.  Key issues discussed included the April 2
parliamentary elections, the peace process, and the
economic situation.  The visit served to underscore
continued high-level USG engagement with Sri Lanka
during this sensitive timeframe.  END SUMMARY. 

------------
MFA Meetings
------------ 

¶2.  (C) Deputy Assistant Secretary for South Asian
Affairs Torkel Patterson visited Colombo, March 21-23.
On March 22, DAS Patterson and Ambassador Lunstead held
separate meetings with Foreign Minister Tyronne Fernando
and Foreign Secretary Bernard Goonetilleke.  Patterson
and the Ambassador used both meetings to review CHR
priorities, including the Cuba and China draft
resolutions, and the Iraq situation (see Reftels).  In a
brief discussion regarding Sri Lanka's April 2
parliamentary elections, Goonetilleke remarked that he
felt that voter turnout might be lower this time around
due to voter dissatisfaction with the two major parties.
Foreign Minister Fernando claimed that the campaign of
his United National Party (UNP) was getting a good
response among younger voters, but admitted that
confidence in the UNP on economic issues among "the
average voter" was low. 

-------------------------------------
Meeting with Key Presidential Adviser
------------------------------------- 

¶3.  (C) On March 22, DAS Patterson and Ambassador also
met with Lakshman Kadirgamar, former foreign minister
and a key adviser to President Kumaratunga.  Asked for
his views on the election campaign, Kadirgamar seemed
confident that Kumaratunga's "United People's Freedom
Alliance" (UPFA) would do well.  There had not been much
violence so far in the campaign, he related.  He
thought, however, that there could be some post-election
violence.  President Kumaratunga was prepared to deal
with any such incidents, he said.  Queried re the split
in the Liberation Tigers of Tamil Eelam (LTTE) (see
Reftels), Kadirgamar thought there was some prospect of
reconciliation between breakaway eastern rebel leader
Karuna and Tiger leader V. Prabhakaran.  That said, any
possible reconciliation would likely take place after
the April 2 election, as would any possible armed
conflict between the two sides.  DAS Patterson noted the
degree of control the GSL had over Sri Lanka's media.
Kadirgamar, who is currently the Minister of Media and
Communications, agreed that the state-run media outlets
were quite influential.  There had been attempts to
reform the situation in the past, but they had all
failed.  (Per Reftels, the Ambassador also raised the
issue of the fabrication of results of a poll in
government-controlled newspapers on March 20.  The poll
had been partially financed by USAID.  Kadirgamar said
he would look into the matter.) 

---------------------------
Dinner with Local Diplomats
--------------------------- 

¶4.  (C) DAS Patterson also attended a March 22 dinner at
the Ambassador's residence with local diplomats,
including those from Norway, the UK, the EU,
Netherlands, and Canada.  The natural focus of
conversation was the upcoming parliamentary election.
The overall feeling at the dinner was that it was not
precisely clear how the political situation was playing
out.  That said, most agreed that the President's UPFA
grouping had gotten off to a fast start and was probably
ahead at this point in the race.  Prime Minister
Wickremesinghe's UNP had gotten off to a very slow
start, but its campaign was getting more active.
Norwegian Ambassador Brattskar noted that the anti-peace
process JHU party -- in an unprecedented move -- was
running an all-Buddhist monk candidate slate, and might
pick up between 2-5 seats in Parliament.  It was not
clear whether the JHU's support would come from voters
who might have supported the UPFA, or would come from
voters who were dissatisfied with the two major parties
and were looking for other alternatives.  Regarding the
LTTE split, there was widespread agreement that the main
LTTE organization would probably wait until after the
April 2 election to try to displace Karuna via an armed
attack or by trying to entice Karuna's supporters away
from him. 

-------------------------
Commerce Ministry Meeting
------------------------- 

¶5.  (C) Secretary of Commerce and Consumer Affairs
Harsha Wickramasinghe and Director General of Trade K.J.
Weerasinghe updated DAS Patterson March 22 on current
political activities, GSL positions in the WTO, and
progress in BIMST-EC (Bangladesh, India, Myanmar, Sri
Lanka and Thailand Economic Cooperation) and SAFTA
(South Asia Free Trade Agreement) talks.  Wickramasinghe
discussed UNP election tactics designed to discredit the
JVP's stance that it is a credible political party, by
highlighting its brutal past actions.  He also noted
that the pro-LTTE Tamil National Alliance (TNA) had said
they would not ally with the United People's Freedom
Alliance (UPFA), but would hold out for as much as they
could get from the UNP. 

¶6.  (C) On WTO issues, Weerasinghe promised that the GSL
Representative in Geneva would support USG positions on
UNCTAD and on food aid issues.  The GSL is now busy
finalizing its proposals for accession to the
Information Technology Agreement, fulfilling a
commitment made during the last round of TIFA talks.
Wickramasinghe mentioned that he saw BIMST-EC as an
important bridge between SAARC and ASEAN, and as a tool
to open up Myanmar's trade regime.  Weerasinghe bemoaned
the multiplicity of bi- and multi-lateral trade regimes,
and noted the need for convergence. 

-----------------
AMCHAM Roundtable
----------------- 

¶7.  (U) During a March 22 meeting with members of the
American Chamber of Commerce, DAS Patterson outlined USG
views on regional developments of the past two years and
asked for insights into the current domestic political
situation and business climate.  IBM Managing Director
and former Amcham President, Kavan Ratnayaka described
IBM efforts to support open source software development,
noting that Sri Lanka has become an internationally
recognized "brand" in the open source community. 

¶8.  (SBU) Amcham Director Graetian Gunawardene, whose
company manufactures Samsonite luggage, noted that the
export sector has been driving growth and employment.
He asked specifically for DAS Patterson's support in
pushing for a U.S.-Sri Lanka Free Trade Agreement (FTA)
and in returning U.S. visa validity to 5 years.  (Note:
We are discussing possible changes in our visa
reciprocity schedule with the GSL.)  Noting that Sri
Lanka has a long democratic tradition, even through some
very difficult times, Gunawardene suggested there should
be closer U.S.-Sri Lanka commercial ties to match their
shared democratic ideals.  Patterson promised to review
FTA issues when he got back to  Washington, and urged
the Amcham to consult with the GSL's Ministry of Foreign
Affairs to promote a review of the reciprocity issues
that have led to the limited validity of U.S. visas for
Sri Lankans. 

¶9.  (C) On the current political situation, optimism
about the future mixed with concerns about short-term
political realities.  Ratnayaka (a longtime UNP
supporter whose family is close to the Prime Minister)
raised concerns about the opposition's ability to move
forward on the peace process due to the LTTE's lack of
trust in the President.  Others in the group, including
Citibank CEO Kapila Jayawardena, thought the LTTE would
look closely at who wins the April 2 election and would
be willing to deal with whichever party wins, assuming
that party has the intention of negotiating a workable
solution.  Outgoing Energizer Managing Director Sunil de
Alwis commented that Sri Lanka remains an attractive
place to do business.  He mentioned Energizer's new USD
2 million investment, which upgraded its manufacturing
facility and improved Energizer's ability to meet
increased domestic demand and a potential export market
into India as well.  Citibank and Energizer reps said
their Sri Lankan operations are leading performers in
their respective companies.  Jayawardene noted that
American companies tend to do well in Sri Lanka.
Citibank's own return-on-equity in Sri Lanka is over 50
percent, the best in Asia. 

-------
COMMENT
------- 

¶10.  (C) As the many threads laid out above indicate,
this is a very sensitive timeframe for Sri Lankans, who
have deep worries about the future of the peace process
and the economy.  These overall concerns are fed by
specific worries over the unstable pre- and post-
election period, over what the radical JVP might due in
power if the UPFA wins, over what the LTTE split means
for the peace process, etc.  Given this complex, fluid,
situation, DAS Patterson's visit was reassuring to Sri
Lankans, who deeply appreciate continued high-level USG
engagement in support of the peace process.   END
COMMENT. 

¶11.  (U) DAS Patterson was not able to clear on this
message before departing Post. 

¶12.  (U) Minimize considered. 

LUNSTEAD

Cable II:

UNCLAS SECTION 01 OF 02 COLOMBO 000851 

SIPDIS 

SIPDIS 

STATE FOR EEB/EPPD NSMITH-NISSLEY AND SCA/INS
DOL/ILAB FOR TINA MCCARTER
MCC FOR S. GROFF, D. TETER, D. NASSIRY AND E. BURKE
TREASURY FOR LESLIE HULL
GENEVA PASS USTR 

FOR EEB ASSISTANT SECRETARY SULLIVAN FROM AMBASSADOR BLAKE 

E.O 12958: N/A
TAGS:  ECON [Economic Conditions], BEXP [Trade Expansion and Promotion], ETRD [Foreign Trade],
ELAB [Labor Sector Affairs], KSEP, SENV [Environmental Affairs], AMGT [Management Operations], CE [Sri Lanka]
SUBJECT:  SRI LANKA - NOMINATION OF VIRTUSA FOR CORPORATE EXCELLENCE
AWARD 

REF: STATE 47222 

¶1.  I am pleased to nominate Virtusa for the Secretary's Award for
Corporate Excellence in the small and medium enterprise category.
While meeting all eligibility requirements for this award, Virtusa
has demonstrated outstanding corporate citizenship by assisting
disaster-ridden countries with an open source disaster recovery
management system it developed following the 2004 tsunami which
struck Sri Lanka and other Indian Ocean countries.  Virtusa also
contributed to the advancement of Sri Lanka's scientific and
technology policies by enhancing information and communications
technology (IT) capacity in local universities.  Finally, by
creating an intensive training program which converts unemployed but
motivated graduates without sufficient IT training into IT managers,
Virtusa is directly contributing to Sri Lanka's overall growth and
development. 

OUSTANDING CORPORATE CITIZENSHIP:  VIRTUSA-SPONSORED SYSTEM SPEEDS
RECOVERY FOLLOWING DISASTERS 

¶2.  When the 2004 Indian Ocean tsunami seriously damaged the
coastline of Sri Lanka, Virtusa funded salaries and benefits for its
employees as they developed open-source software for disaster relief
management.  It continues to fund its employees as they travel to
disaster-affected countries and assist in implementing the software
program. 

¶3.  The system, called Sahana, was initially designed for Sri Lanka
to have a good disaster recovery system following the tsunami.  It
has been widely used in recent disasters, including Pakistan
following its 2005 earthquake, the Philippines following its 2006
mudslide in Southern Leyte, and Indonesia following the Yogjakarta
earthquake of 2006.  The software has received several awards,
including the Free Software Foundation's 2006 Award for Social
Benefit, the 2006 Good Samaritan Award from Software 2006. Sahana is
now managed by the non-profit Lanka Software Foundation.  In
addition to Virtusa's continued support through its personnel,
Sahana receives funding from IBM and the U.S. National Science
Foundation. 

CONTRIBUTING TO THE ADVANCEMENT OF SRI LANKA'S SCIENTIFIC AND
TECHNICAL POLICIES:  ENHANCING UNIVERSITIES; ENLIGHTENING STUDENTS
WITH INFORMATION TECHNOLOGY 

¶4.  Sri Lanka has identified IT as a potential growth sector, and is
actively encouraging its development.  Hundreds of "Virtusans" have
volunteered their time and skills over the past few years to create
IT awareness within communities and share best practices with
academia. In 2006, the company introduced information technology to
over 700 students in a southern district of Sri Lanka, donated a
computer lab to a Colombo-based school, provided career guidance and
leadership skills to thousands of undergraduate and advanced level
students, and contributed to fostering free and open software
education in Sri Lanka. 

¶5.  Virtusa supplies staff to universities to serve as
lecturers/trainers.  It shares industry best practices with
university staff and invites them to Virtusa for special seminars.
Through Virtusa's Project Enhancement Initiative, university
undergraduates receive software engineering and management guidance.
 All of these activities promote the importance of IT to Sri
Lankans, furthering Sri Lanka's prospects for growth in the IT
sector. 

CONTRIBUTING TO OVERALL ECONOMIC GROWTH:  TRANSITIONING
PROFESSIONALS FROM OVERSUBSCRIBED PROFESSIONS INTO INFORMATION
TECHNOLOGY THROUGH TRAINING 

¶6.  As Sri Lanka's IT industry continues to grow, the country's
shortage of IT workers becomes increasingly critical.  Universities
still have not adapted sufficiently to meet the demands of the IT
sector.  In 2006, Virtusa implemented a dynamic IT Leadership 

COLOMBO 00000851  002 OF 002 

Conversion Program to help resolve this shortage.  The company
identifies self-driven, high-aptitude graduates who do not have
sufficient IT skills.  It then provides these individuals with a
fast-track career conversion opportunity enabling them to make the
transition into an IT services career. 

¶7.  The company has hired 30 successful Virtusa IT Conversion
Program graduates from the 40 it trained.  It plans to double the
number of Conversion Program candidates this year, enabling Sri
Lanka to meet a greater demand in the growing IT sector. 

BLAKE

Cable III:

C O N F I D E N T I A L SECTION 01 OF 02 COLOMBO 000063 

SIPDIS 

TREASURY FOR USTR MICHAEL DELANEY;
COMMERCE FOR USPTO KRISTINE SCHLEGELMILCH
DEPARTMENT FOR EEB/TPP/IPE JOELLEN URBAN 

E.O. 12958: DECL: 01/28/2020
TAGS: KIPR [Intellectual Property Rights], ECON [Economic Conditions], PGOV [Internal Governmental Affairs], CE [Sri Lanka]
SUBJECT: IPR PROTECTION IN SRI LANKA: BAD, BUT IMPROVING 

Classified By: Deputy Chief of Mission Valerie Fowler for Reasons 1.4 (
B) and (D). 

¶1. (SBU) SUMMARY: Sri Lanka's intellectual property rights
regime is good on paper but lax on enforcement.  Still, since
the passage of comprehensive legislation in 2003, things have
slowly been improving.  The Embassy, American Chamber of
Commerce, Business Software Alliance, a cadre of specialized
law firms, and a number of government offices have worked
hard to increase awareness and provide much-needed training
for judges, police, and investigators.  While much remains to
be done, new and ongoing initiatives should reduce the amount
of pirated and fake items available in the marketplace.  END
SUMMARY. 

BACKGROUND 

¶2. (U) Sri Lanka's intellectual property rights (IPR) regime
is, like that of many emerging economies, good on paper but
lax on enforcement.  The country enacted a comprehensive IPR
law in 2003 that governs copyrights and related rights,
industrial designs, patents, trademarks and service marks,
trade names, layout designs of integrated circuits,
geographical indications, unfair competition, databases,
computer programs, and undisclosed information.  Infringement
of intellectual property rights is a punishable offense under
the law and falls under both criminal and civil courts of
jurisdiction in Sri Lanka.  Recourse available to owners
includes injunctive relief, seizure and destruction of
infringing goods and plates or implements used for the making
of copies, and the prohibition of imports and exports.
Penalties for the first offense include a prison sentence of
6 months or a fine of up to Rs 500,000 ($4,425).  Penalties
can be doubled for a second offense. 

¶3. (C) Since the passage of the 2003 IPR law Sri Lanka has
slowly begun enforcing its provisions.  However, counterfeit
goods continue to be widely available.  Local agents of
well-known U.S. and other international companies
representing recording, software, movie, clothing and
consumer product industries continue to complain that the
lack of IPR protection is damaging their businesses.  Piracy
of sound recordings and software is widespread, making it
difficult for the legitimate industries to protect their
market and realize their potential in Sri Lanka.  The Police
occasionally raid stores selling counterfeit goods --
especially garments.  However, it is rare for the Police to
act without a formal complaint and assistance from an
aggrieved party.  Several offenders have been charged or
convicted by courts.  A leading anti-piracy lawyer, Sudath
Perera, told EconOff that his firm has successfully conducted
several raids in Colombo in 2008-2009.  In January 2010,
police and the law firm (representing the rights holders)
recently raided two outlets in Colombo selling counterfeit
garments and stationary. 

SOFTWARE PIRACY 

¶4. (SBU) Software companies complain of the lack of IPR
enforcement within government institutions and even some
larger corporations, including several banks.  According to a
survey commissioned by the Business Software Alliance (BSA)
and conducted by the IDC, a leading global IT market research
firm, software piracy in Sri Lanka is as high as 90 percent.
Sri Lanka,s software companies and the Sri Lankan
Association for Software and Service Companies (SLASSCOM)
dispute the findings of the study, questioning the sampling
methodology used by the IDC.  However, both organizations
have bottom-line reasons to publicly doubt the study.  For
example, SLASSCOM's members worry the bad publicity could
cause potential clients to go elsewhere due to the high
piracy rate.  ICTA, in collaboration with the SLASSCOM, is
planning to commission an independent IPR survey covering a
sample of about 5,000 companies. 

¶5. (SBU) Sri Lankan government officials in charge of IPR
protection acknowledge there is a high software piracy rate 

COLOMBO 00000063  002.4 OF 002 

in the government.  The government and industry leaders are
taking various actions to improve IPR protection in the
Information and Communication Technology (ICT) sector.  In
December 2009, the government of Sri Lanka approved a new
Information Technology (IT) policy for the government sector
which includes rules on hardware and software procurement.
When the new policy will be implemented is not known.  Under
the new policy, the government will issue IT procurement
guidelines requiring all government agencies to stick to
licensed software or open-source software.  If the cost of
licensed software or maintenance and consultancy fees of
open-source software is higher than proprietary software, the
government will provide additional funds to purchase
proprietary software. 

¶6. (C) While we see this as a step in the right direction,
the Business Software Alliance (BSA) is not fully satisfied
with the policy and accuses the government of "more funny
business."  Shalini Ratwatte, BSA's local consultant, told
EconOff that she sees it as a push for open source software.
However, she acknowledged that pricing is an issue.  For
instance, global software producers are not willing to offer
discounted prices to Sri Lanka (as they do in mass markets
such as India).  They argue that Sri Lanka, although a
developing country, does not offer economies of scale to
justify discounts.  Nevertheless, BSA is contemplating
starting IPR awareness programs for senior Sri Lanka
government officials covered by the new procurement policy. 

OTHER PROGRESS AND PROGRAMS 

¶7. (U) Post,s recent efforts focus on IPR protection in the
ICT sector.  In a bid to support the ICT sector, Post teamed
up with BSA to hold an IPR awareness program for the Sri
Lanka Police on January 8.  The U.S. Department of Justice
Office of Overseas Prosecutorial Development, Assistance and
Training (USDOJ/OPDAT) and Business Software Alliance
provided funds for this workshop.  Approximately 45 police
officers from the Criminal Investigations Division (CID) of
the Sri Lanka Police participated.  The program focused on
the importance of IPR to the economy, elements of IPR law,
and investigating and prosecuting IP cases.  Industry
representatives from pharmaceutical, software, and electrical
product industries provided technical information about
product identification.  At the conclusion of the seminar,
participants from the CID requested continued training on IPR
awareness and education and more involvement from the
industry. 

¶8. (U) Demonstrating a positive trend, well-known vendors of
branded laptops and computer systems now advertize that their
products come "only with licensed software."  Previously,
laptop and desktop computers were sold without any reference
to software and the sellers and users freely copied software.
 Furthermore, Dr. D.M. Karunaratne, Director of the National
IP office, informed EconOff that a World Intellectual
Property Office,s (WIPO) intellectual property academy will
soon be established in Sri Lanka.  Sri Lanka has been chosen
for this academy as a pilot project.  Earlier, WIPO carried
out a successful pilot project on WIPO outreach programs in
Sri Lanka. 

COMMENT 

¶9. (SBU) The end of the war gives an opportunity to refocus
efforts on IPR enforcement.  The Embassy, the USPTO regional
office in New Delhi, AMCHAM and BSA are working to pursue
more aggressive enforcement and enhance public awareness, and
require the active cooperation of the National IP office of
Sri Lanka.  Upcoming training programs in the first quarter
of 2010 for law enforcement agencies include USPTO-sponsored
training programs for the Attorney General,s Office and Sri
Lanka Customs, and an AMCHAM/BSA sponsored training program
for magistrates in the Central, North Central, Eastern and
Northern Provinces, ensuring that magistrates from all nine
of Sri Lanka's provinces receive training.
BUTENIS

Those propaganda workshops are indirectly funded by the likes of Microsoft. To quote, “recent efforts focus on IPR protection in the ICT sector. In a bid to support the ICT sector, Post teamed up with BSA to hold an IPR awareness program for the Sri Lanka Police on January 8. The U.S. Department of Justice Office of Overseas Prosecutorial Development, Assistance and Training (USDOJ/OPDAT) and Business Software Alliance provided funds for this workshop.”

And who provides funds for the BSA? Follow the money. █

Summary: 3 cables from Peru where Free/open source gets mentioned, especially in relation to government policy

TECHRIGHTS has a dear contributor called Eduardo Landaveri, to whom the following Cablegate cables would probably provide insight that is needed for understanding of his home country’s policy regarding software. The first cable says that “[i]n 2003, the GOP[Government of Peru] passed a decree mandating that all government agencies use legally procured open-source software. GOP agencies had until March 31, 2005 to erase all pirated software and install the legitimate versions”; the second one is similar but newer and the third one is a bit gross because Intel is nominated for a goodwill award for merely attacking its competition and trying to make a profit at the expense of poor people in Peru. Intel is a viciously anticompetitive company.

The three cables follow.

UNCLAS SECTION 01 OF 03 LIMA 000870 

SIPDIS 

DEPT FOR WHA/AND, EB/IPE SWILSON
COMMERCE FOR 4331/MAC/WH/MCAMERON
DOC FOR J. BOGER
USPTO FOR J. URBAN
LOC FOR S. TEPP
USTR FOR J. CHOE-GROVES 

E.O. 12958: N/A
TAGS: ECON [Economic Conditions], ETRD [Foreign Trade], KIPR [Intellectual Property Rights], PE [Peru]
SUBJECT: PERU: SPECIAL 301 REVIEW 

REF: A) State 23950   B) 04 Lima 1031   C) 04 Lima 1524 

¶1.  Summary.  Post recommends that Peru remain on USTR's
Special 301 Watch List for 2005.  Peru continued to face
high levels of copyright piracy, including a substantial
increase in optical disc piracy affecting the audiovisual
industry in 2004.  Indecopi, the GOP's IPR administrative
agency, conducted high-profile raids and continued its
public awareness campaign.  Peru continues to face several
problems, including the overall inadequacy of enforcement
and the lack of deterrent sentences.  The GOP did not take
any significant steps to resolve the pharmaceutical
industry's concern about a lack of protection for
proprietary test data.  GOP trade officials indicated that
the data protection issue should be resolved during the U.S.-
Andean free trade negotiations in 2005.  End Summary. 

High Rates of Optical Disc Piracy
--------------------------------- 

¶2.  Despite Indecopi's efforts, copyright piracy rates
continued to climb in 2004.  The audiovisual industry
suffered from a dramatic increase in pirated optical discs,
with an estimated piracy level of almost 75 percent, up from
65 percent in 2003.  Jose Vega, General Manager of
Blockbuster Peru, informed us that the motion picture
industry lost an estimated $5 million in 2004 due to
audiovisual piracy.  The large amount of imported blank
optical discs, as well as the wide availability of DVD
technology, helps account for this increase.  Peru also has
one of the highest rates of musical piracy in the world.
According to the Anti-Piracy Crusade, 98 percent of CDs in
Peru are pirated.  Martin Moscoso, head of Indecopi's
copyright office, and the Business Software Alliance noted
that Indecopi estimated that business software piracy levels
have decreased from 60 percent in 2003 to 56 percent in
2004. 

Efforts to Rein in Piracy
But More Coordination Needed
---------------------------- 

¶3.  Indecopi continued its "Anti-Piracy Crusade," which
began in 2002.  Indecopi's anti-piracy efforts in 2004, in
collaboration with other government agencies as well as the
private sector, focused on:  1) intensifying enforcement
actions and 2) expanding the public awareness campaign.
Indecopi's copyright office conducted, jointly with the
national police and SUNAT (Peru's tax and customs agency),
37 raids in 2004 and confiscated over $20 million in pirated
goods and blank optical discs.  In March 2004, the Peruvian
police, coordinating with one of Peru's special IPR
prosecutors, successfully uncovered and seized a shipment of
750,000 blank optical discs valued at $400,000 (Ref C).  In
December 2004, the national police raided a Lima shopping
center where pirated goods are sold, confiscating over
$500,000 in pirated DVDs and CDs. 

¶4.  Private sector and Indecopi officials note that although
SUNAT has participated in several seizures of pirated goods,
it needs to become more involved in overall IPR enforcement.
SUNAT assumed control of Peruvian customs in 2003 and has
worked with Indecopi on several raids.  The head of
Indecopi's copyright office declared that SUNAT should take
a more active role in coordinating and conducting raids,
particularly at the ports.  Currently, SUNAT is more focused
on facilitating shipments at ports by quickly clearing
containers.  Many customs officials have had no prior
training on how to recognize counterfeit goods. 

Harsher Punishments for
Copyright Infringements
----------------------- 

¶5.  Industry and Indecopi officials involved in the Anti-
Piracy Crusade agree that the GOP needs to improve IPR
enforcement.  Both call for the establishment of specialized
judges to handle IPR cases, as well as greater authority for
the two special IPR prosecutors (who only have authority in
Lima).  Currently, judges lack expertise in intellectual
property matters and have avoided imposing harsh sentences
on IPR violators.  In July 2004, the GOP passed Law No.
28289, the Law on the Fight Against Piracy, which increased
the minimum penalty for piracy from a two-year to a four-
year sentence, with a maximum sentence of eight years.
There have yet to be any convictions under the new law,
although there are more than 1,000 IP cases pending before
Peru's courts. 

GOP Mandates the Use of Legitimate Software
------------------------------------------- 

¶6.  In 2003, the GOP passed a decree mandating that all
government agencies use legally procured open-source
software.  Unfortunately, this loosely written decree did
not establish which GOP agency was to take the lead on
implementation, nor did it designate penalties for
violations of this decree.  GOP agencies have until March
31, 2005 to erase all pirated software and install the
legitimate versions.  Peru's Software Association held
several educational sessions for Congressmen in 2004,
emphasizing the importance of using legal software.
Mario Camara, Deputy Director General of the Office of E-
Commerce and Information, informed us February 16 that not
all agencies have complied with the requirement.  With no
agency designated as point of contact, it is difficult for
the GOP to monitor progress.  Camera noted that his office
would meet with each GOP agency's Systems Office next week
to encourage them to comply with the decree.  Camera also
warned that the lack of funding to purchase the new software
might limit some agencies' ability to procure legal
software. 

Higher Taxes and a New Import Registry
-------------------------------------- 

¶7.  A new decree passed as part of Peru's tax reform in
January 2004 requires importers of blank CDs to make valued
added tax payments in advance, improving SUNAT's ability to
trace subsequent purchases.  In November, SUNAT began
imposing a higher tariff on all importers of blank optical
discs ($1.30 per DVD and $0.25 per CD), in an effort to
differentiate between legal and illegal importers. 

¶8.  In July, the GOP passed a law requiring that SUNAT
establish an import registry for all persons and companies
importing blank optical discs and recording equipment.  With
the registry, SUNAT would be able to monitor the frequency
of optical disc importation and target those companies that
cannot justify legal sales of these discs.  To date, SUNAT
has not yet established this registry. 

Pharmaceutical Data Protection
------------------------------ 

¶9.  The GOP did not take significant action in 2004 to
improve the protection of confidential pharmaceutical data.
The issue of data protection is increasingly sensitive, as
local generic drug producers have high levels of political
clout.  Trade officials continue to argue that the TRIPs
Article 39.3 does not mandate any specific period of data
exclusivity.  Peru, which is, along with Colombia and
Ecuador, negotiating a free trade agreement with the United
States, intends to resolve our data exclusivity concerns in
the FTA process. 

Comment: Recommend No Change in Status
--------------------------------------- 

¶10.  Post recommends that Peru remain on USTR's Special 301
Watch List due to the continued high levels of piracy and
copyright violations, as well as the continued lack of
protection for pharmaceutical test data.  Despite increased
focus and awareness of IPR problems, the GOP has not
increased judicial enforcement of existing laws in order to
create a meaningful deterrent nor established clear
administrative measures for government agencies to comply
with those laws. 

STRUBLE

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SIPDIS 

SIPDIS 

DEPT FOR WHA/AND, WHA/CEN, EB/IPE CLACROSSE AND AANDAMO
COMMERCE FOR 4331/MAC/WH/MCAMERON
DOC FOR JBOGER
USPTO FOR JURBAN
LOC FOR STEPP
USTR FOR JCHOE-GROVES 

E.O. 12958: N/A
TAGS: ECON [Economic Conditions], ETRD [Foreign Trade], KIPR [Intellectual Property Rights], PE [Peru]
SUBJECT: PERU: SPECIAL 301 REVIEW 

REF: A) STATE 14937   B) 05 LIMA 1971  C)05 LIMA 3794 

¶1.  Summary.  Post recommends that Peru remain on USTR's
Special 301 Watch List for 2006.  Peru continued to face
high levels of copyright piracy in all sectors, including
media, books, toys, apparel and other merchandise, in 2005,
including a slight increase in optical disc piracy.
Indecopi, the GOP's IPR administrative agency, conducted
high-profile raids and continued its public awareness
campaign.  Peru continues to face several problems,
including the overall inadequacy of enforcement, inadequate
border protections and the lack of deterrent sentences.  The
GOP, in concluding Free Trade Agreement negotiations with
the United States in December 2005, obligated itself to
protecting proprietary test data for pharmaceutical and
agrochemical products beginning in January 2007.  End
Summary. 

Peru's International Obligations
-------------------------------- 

¶2.  Peru is a member of the World Intellectual Property
Organization (WIPO).  It is also a member of the Paris
Convention, Berne Convention, Rome Convention, Geneva
Phonograms Convention, Brussels Satellites Convention,
Universal Copyright Convention, the WIPO Copyright Treaty
(WCT) and the WIPO Performances and Phonograms Treaty
(WPPT).  Peru's 1996 Copyright Law is generally consistent
with the TRIPS Agreement.  Peru joined the WCT in July 2001
and the WPPT in February 2002.  Although most of the
provisions of these two WIPO treaties are included in Peru's
1996 Copyright Law, officials at Indecopi, the IPR
administrative agency, have acknowledged the need for
additional legislation in order to clarify the rights of
artists and producers.  The National Association of Music
Publishers continues to criticize Indecopi's enforcement,
claiming that its members are not receiving the royalties
due to them.  Peru's 1996 Industrial Property Rights Law
provides the framework for patent protection.  In 1997,
based on an agreement reached with the U.S. Government, Peru
addressed several inconsistencies with the WTO TRIPS
Agreement provisions on patent protection and most-favored
nation treatment for patents. 

Efforts to Rein in Piracy
Enhances Coordination
------------------------- 

¶3.  Indecopi continued its "Anti-Piracy Crusade," which
began in 2002.  Indecopi's anti-piracy efforts in 2005, in
collaboration with other government agencies as well as the
private sector, focused on:  1) intensifying enforcement
actions and 2) expanding the public awareness campaign.  In
March and November, the Anti-Piracy Crusade organized "Anti-
iracy Day" and "Movie Theater Day", in an effort to
increase public awareness about intellectual property
rights.  On both days, Peruvian movie theaters offered
discounts on movie tickets prices, promoting increased
attendance.  Moviegoers were encouraged to turn in pirated
DVDs in exchange for discounts on food and future movie
ticket sales.  On both days, the Anti-Piracy Crusade
collected more than 80,000 pirated DVDs. 

¶4.  Indecopi's copyright office conducted, jointly with the
national police and SUNAT (Peru's tax and customs agency),
more than 60 raids in 2005, with 13 occurring outside of
Lima.  Indecopi and SUNAT confiscated more than $30 million
in pirated and contraband goods and blank optical discs.  In
July 2005, the Peruvian police, coordinating with one of
Peru's special IPR prosecutors, successfully raided "El
Hueco", a market known for selling pirated products in Lima,
and confiscated 8 tons of contraband and pirated merchandise
worth $300,000. 

¶5.  In September 2005, SUNAT and Indecopi signed a
Memorandum of Understanding, enabling Indecopi to assign one
officer to the Port of Callao.  This officer works closely
with Customs to review incoming shipments.  In six months,
Indecopi and SUNAT screened 51 containers and confiscated
the contents of 18 containers that were illegally
transporting contraband and pirated goods.   Private sector
and Indecopi officials agree that this is a step in the
right direction, although they believe that SUNAT, which
assumed control of Peruvian customs operations in 2003, must
become more involved in overall IPR enforcement.  Many
customs officials have had little or no prior training on
how to recognize counterfeit goods. 

¶6.  In October 2005, Post, the U.S. Patent and Trade Office,
and U.S. Customs conducted an IPR training seminar for
Customs and Indecopi officials.  U.S. Customs officials
advised the Peruvian participants on obligations under TRIPs
and best practices for finding and seizing contraband and
pirated goods.  One issue highlighted by the conference was
the need for Peru to meet its TRIPS obligations; many
Customs officials were unaware of TRIPS and how the
agreement affects how they do their job. 

High Rates of Optical Disc Piracy
--------------------------------- 

¶7.  Despite Indecopi's efforts (detailed below), copyright
piracy rates remained the same in 2005.  The audiovisual
industry suffered from the piracy of optical discs, with an
estimated piracy level of almost 75 percent, up from 65
percent in 2003.  Jose Vega, General Manager of Blockbuster
Peru, informed us that the motion picture industry lost an
estimated $5 million in 2005 due to audiovisual piracy.  The
large amount of imported blank optical discs, as well as the
wide availability of DVD technology, helps account for this
increase.  Peru also has one of the highest rates of musical
piracy in the world.  According to the Anti-Piracy Crusade,
98 percent of CDs in Peru are pirated.  Martin Moscoso, head
of Indecopi's copyright office, and the Business Software
Alliance noted that business software piracy levels remained
the same since 2004, at approximately 54 percent. 

Formal Importation of Blank Discs
Decreases But Contraband on the Rise
------------------------------------ 

¶8.  Indecopi estimates that in 2005, approximately 100
million blank optical discs were legally imported into Peru,
a decrease of 10 million since 2004.  Indecopi approximates
that of these 105 million discs, only 14 million were used
for legal purposes.  Martin Moscoso, Director of Indecopi's
Copyright Office, explained that, due to the high private
copy levies (approximately 200-300 percent of costs) imposed
by the Peruvian Artists Association in 2005, formal
importers of blank optical discs chose to reduce imports in
order to avoid paying such a high fee.  Moscoso also
indicated that contraband of blank optical discs has
increased, although official figures are unavailable. 

SUNAT Implements Registry
------------------------- 

¶9.  In July 2004, the GOP passed a law requiring that SUNAT
establish an import registry for all persons and companies
importing blank optical discs and recording equipment.  With
the registry, SUNAT would be able to monitor the frequency
of optical disc importation and target those companies that
cannot justify legal sales of these discs.  On September 25,
2005, SUNAT published regulation 020-2005, which established
the norms for the import registry.  Importers of blank
optical discs must provide SUNAT with the number of units
imported, the name of the commercial organization that will
sell the discs, the commercial brand of the discs, the model
information and format characteristics.
¶10.  The registry went into effect on October 24, 2005.
According to SUNAT officials, legitimate importers of blank
optical discs have faced no difficulty in providing SUNAT
with the necessary information.  However, importers that
either use the discs for illicit means or sell them to
illegitimate vendors have been more reluctant to provide
SUNAT with the information.  SUNAT officials predict that
the level of legal imports of blank optical discs will
decrease in 2006, as more discs are smuggled across land
borders.  SUNAT plans on improving its border protections to
crack down on the contraband of blank discs. 

New Regulations to Strengthen IPR Enforcement
--------------------------------------------- 

¶11.  The GOP in 2005 passed several new regulations aimed at
improving the IPR environment.  On October 28, SUNAT,
coordinating closely with Indecopi and the private sector,
issued a resolution modifying the January 2004 decree that
required importers of blank CDS to make valued added tax
payments in advance.  The new regulation seeks to improve
SUNAT's ability to trace imports of blank discs and their
subsequent purchases.  SUNAT now charges an advance VAT of
$0.03 per CD and $0.06 per DVD.  Under the regulation, SUNAT
is now able to audit importers' sales to determine the
legitimacy of the sale and who are the largest consumers of
blank optical discs.  If a company feels that it has paid
too much in VAT, it must provide SUNAT with evidence of its
sales.  SUNAT would then issue a credit for future VAT
payments. 

¶12.  The Lima Municipality in October 2005 issued Order 717
to improve the ability of police to raid local vendors of
pirated products.  The regulation now enables the Municipal
Government, working with the police, to revoke licenses for
those vendors who sell pirated products.  The Anti-Piracy
Crusade lauded the new regulation, but commented that the
Lima Government has yet to enforce it.  Indecopi continues
to work with the Lima Municipality, as well as several other
municipal governments, to encourage the protection of
intellectual property. 

Amendment to the Artists
Protection Law Pending
------------------------ 

¶13.  In July 2004, the Prime Minister approved a Supreme
Decree establishing the Law of Artists, Interpreters and
Music to protect the interests and rights of those involved
in the creative arts, including performers and producers of
musical recordings and motion pictures, from acts of piracy.
The decree argued that blank optical media was being used
for "private copies" and piracy of media and software,
violating copyright laws.  Under the law, the Peruvian
Artists Association can apply a levy of 200-300 percent on
all blank optical discs, to be paid by the manufacturers of
blank recording media. 

¶14.  The private sector, working with Indecopi, the Lima
Chamber of Commerce, and the Peruvian Artists Association,
sought to have the levy reduced to a more reasonable 20
percent of the value.  A recommendation was passed to the
Ministry of Trade in early January 2006 for action.  If the
Ministry of Trade agrees with the recommendation, it will
pass the document to the Prime Minister's office for a
Supreme Decree. 

Still No Convictions of IPR Violators
------------------------------------- 

¶15.  Industry and Indecopi officials agree that the GOP
needs to improve IPR enforcement.  Both call for the
establishment of specialized judges to handle IPR cases, as
well as greater authority for the two special IPR
prosecutors (who only have authority in Lima).  Currently,
judges lack expertise in intellectual property matters and
have avoided imposing harsh sentences on IPR violators.  In
July 2004, the GOP passed Law No. 28289, the Law on the
Fight Against Piracy, which increased the minimum penalty
for piracy from a two-year to a four-year sentence, with a
maximum sentence of eight years.  There have yet to be any
convictions under the new law, although there are more than
1,000 intellectual property cases pending before Peru's
courts. 

¶16.  In mid-2005, Indecopi filed a lawsuit for piracy and
money laundering against one of the main optical disc
importers.  The case remains in the Judiciary, and the
importer has filed a countersuit against the Indecopi
officials for slander and wrongful prosecution.  Martin
Moscoso lamented that the Peruvian Judicial system is
inherently slow and corrupt -- this case could take several
years to resolve. 

Deadline Extended for Legal Software Use
---------------------------------------- 

¶17.  In 2003, the GOP passed a decree mandating that all
government agencies use legally procured open-source
software.  GOP agencies had until March 31, 2005 to erase
all pirated software and install the legitimate versions.
The E-Government Office in the Prime Minister's Office in
late 2004 took the lead in implementing this project.  In
mid-2005, Rafael Muente, the new Director of the E-
Government Office, conducted an audit of the software used
by GOP agencies.  He found that only 60 percent of GOP
agencies were following the decree.  In November 2005, the
GOP issued a regulation extending the deadline for
installation of legal software to December 31, 2006. 

Increased Problems with Lack of
Patent Protections for Pharmaceuticals
-------------------------------------- 

¶18.  In 2005, three U.S. pharmaceutical companies complained
that Indecopi was not adequately protecting patents.  In all
three cases, the companies noted that they face unfair
competition from local distributors selling foreign-made
pirated copies of their best selling products.  While
Indecopi initially issued a precautionary measure against
the local producers, this measure, per Peruvian law, expires
after 120 days.  In several cases, Indecopi ordered the U.S.
companies to prove that the local distributors are selling
pirated copies of their patented medicines, which is
contrary to TRIPS obligations.  This process takes time and
substantial funding, during which the company can still sell
the pirated product on the market.  Even if Indecopi orders
a local distributor to cease sales of the allegedly pirated
product, the distributor can appeal the decision; during the
appeals process, local producers can resume sales of the
"pirated" product.  The companies estimate that they have
lost more than $5 million in damages due to lost government
procurement sales. 

Pharmaceutical Data Protection
------------------------------ 

¶19.  The U.S. pharmaceutical and agrochemical industries
also continue to be concerned about Peru's protection of
confidential test data.  Peruvian government health 

SIPDIS
authorities approved the commercialization of new drugs that
were the bioequivalents of already approved drugs, thereby
denying the originator companies the exclusive use of their
data.  In effect, the Government of Peru allows the test
data of registered drugs from some companies to be used by
others seeking approval for their own pirate version of the
same product.  U.S. companies also are concerned that the
Peruvian government does not provide patent protection for
second uses, which would allow a company with a patented
compound for one use to subsequently patent a second use of
that compound.  Although Peruvian law provides the means for
effective trademark protection, counterfeiting of trademarks
and imports of counterfeit merchandise remain widespread. 

¶20.  While Indecopi did not take significant action in 2005
to improve the protection of confidential pharmaceutical
data, the GOP did conclude negotiations on a bilateral free
trade agreement with the United States.  In doing so, the
GOP committed itself to protecting proprietary test data for
pharmaceutical and agrochemicals for ten years.  The free
trade agreement, once signed and ratified by the U.S. and
Peruvian Congresses, is scheduled to go into effect on
January 1, 2007. 

2006 Training Plans
------------------- 

¶21.  In 2006, Post, working with the U.S. Patent and Trade
Office and the Department of Homeland Security, plans on
hosting several training classes in Peru for key IPR and law
enforcement officials.  In February 2006, the International
Law Enforcement Academy (ILEA) in Peru, with assistance from
the U.S. Customs and Border Protection, hosted a training
seminar for 50 officials from Peru, Brazil, Argentina and
Paraguay.  During the seminar, officials learned new
techniques for investigations and seizures, how to prepare a
case report for pending prosecutions, and best practices
from U.S. Customs. 

¶22.  Post in 2005 submitted to State/INL a request for
funding for an IPR training seminar for Peru's special IPR
prosecutors, police and judges.  To date, Post has not
received an answer from State/INL on its proposal.  If money
is not available from State/INL, Post will seek funding from
alternate sources, such as the U.S. Patent and Trade Office
and the private sector. 

¶23.  Post also plans on sending several Indecopi Officials
to the United States for an international visitors IPR
program.  Additionally, we would like to work with the U.S.
Patent and Trade Office to host a conference on Peru's
obligations under TRIPS and the U.S.-Peru Free Trade
Agreement. 

Comment: Recommend No Change in Status
-------------------------------------- 

¶24.  Post recommends that Peru remain on USTR's Special 301
Watch List due to the continued high levels of piracy and
copyright violations, as well as the continued lack of
protection for pharmaceutical test data.  Despite increased
focus and awareness of IPR problems, the GOP has not
increased judicial enforcement of existing laws in order to
create a meaningful deterrent or established clear
administrative measures for government agencies to comply
with those laws. 

ARELLANO

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TO RUEHC/SECSTATE WASHDC PRIORITY 5873
INFO RHEHAAA/NATIONAL SECURITY COUNCIL WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC

UNCLAS LIMA 002106 

SIPDIS 

SIPDIS 

DEPT FOR D, E, AND EEB/EPPD NSMITH-NISSLEY
COMMERCE FOR 4331/IEP/WH/MCAMERON
USTR FOR BENNETT HARMAN 

E.O. 12958: N/A
TAGS: BEXP [Trade Expansion and Promotion], ECON [Economic Conditions],
 EINV [Foreign Investments], ELAB [Labor Sector Affairs], ETRD [Foreign Trade],
USTR [Office of the Special Representative for Trade Negotiations],
AID [Agency for International Development, International Cooperation Administration], PE [Peru]
SUBJECT: EMBASSY LIMA NOMINATES INTEL FOR SECRETARY'S AWARD
FOR CORPORATE EXCELLENCE 

REF: STATE 71180 AND PREVIOUS 

SUMMARY
------- 

¶1.  Embassy Lima is pleased to nominate Intel Semiconductores
del Peru S.A. for the Secretary of State's 2007 Award for
Corporate Excellence.  Intel Corporation's office in Peru is
an outstanding example of Intel's commitment to corporate
social responsibility, education and bridging the digital
divide.  In only two years of existence, the small Peru
office has made major contributions to economic development
in Peru and meets the standards of conduct in all eight
categories on which the award is based.  Described below are
three concrete examples that show why Intel deserves this
award:  Intel's groundbreaking "PC Peru" program, the
recently launched Intel Education Initiative, and an IT
training center for the visually handicapped.  END SUMMARY. 

TRANSFORMATIONAL "PC PERU" PROGRAM
---------------------------------- 

¶2.  In March 2005, Intel and Peruvian President Alejandro
Toledo announced the launch of the "PC Peru" program, aimed
at bridging the digital divide by offering low-cost
high-quality computers throughout Peru.  With more than half
of the population living in poverty and one of the lowest
computer penetration levels on the continent, the Peruvian
government wanted to raise the quality of life for its
citizens by providing better access to IT and Internet-based
resources.  Intel convinced other computer component
manufacturers, distributors and content providers to join
Intel in supplying the components at heavily discounted
rates.  In order to stimulate the Peruvian IT industry, all
of the computers were assembled entirely in Peru by at least
five local companies.  The assembly was done under
international standards and certified by Intel. 

¶3.  Two models were initially offered under the PC Peru
program at over 300 points of sale, with the lower priced
package costing $399.  Each PC included a 40GB hard drive, a
15" monitor, a 52x CD-ROM, a keyboard, a mouse, two 240w
speakers, a 1.44MB disk drive, free anti-virus software, the
Linux operating system, three months of free Internet
service, a warranty, and free training.  To make the PCs even
more accessible, Intel provided a 36-month payment plan
option.  One model included an Intel Celeron 1.8 processor
and 128MB RAM, while the other included an Intel P4 2.26
processor and 256MB RAM. 

¶4.  During the launch phase with the Peruvian Ministry of
Production, 4,140 of these low-cost computers were sold
publicly and distributed throughout Peru.  The private sector
continued selling the PCs after the Peruvian government's
direct involvement ended, and reached 20,000 units sold in
2006.  There are countless testimonials of how access to
affordable PCs improved the lives of lower and middle class
Peruvians.  Many small and micro enterprises were able to
computerize their inventories, create websites, use e-mail to
contact clients, expand their sales, and even begin exporting
their products.  Many of the PCs were acquired by schools,
giving students their first access to a computer and the
Internet.  Currently, PC Peru offers four more modern
packages from $457 to $620, which can be purchased online at
www.pcperu.org.  This program has been so successful, that it
is being replicated by Intel in several other Latin American
countries. 

INTEL EDUCATION INITIATIVE
-------------------------- 

¶5.  Intel's Education Initiative is a worldwide program aimed
at training teachers to effectively integrate technology into
their classrooms.  Primary and secondary school teachers are
taught how IT can improve and facilitate their students'
learning, are coached on how to apply IT to existing
curricula, and are given free on-line resources and
interactive lessons.  Each teacher participates in 10, 4-hour
modules (40 hours) of practical workshops plus 20 hours of
homework.  They learn to develop unit plans, incorporate the
Internet in classes, design web pages, use multimedia
programs, and how to transfer what they learn in workshop to
other teachers.  The Teachers are also put in contact with
other trained teachers around the world, and invited to
future meetings and Intel seminars.  Each teacher receives an
extensive Study Program Manual and a CD-ROM with resources.
The use of IT and the Internet motivates students and
stimulates their creativity. 

¶6.  In September 2006, less than two months after taking
office, Peruvian President Alan Garcia witnessed Intel and
the Ministry of Education signing an agreement launching the
pilot program of the Intel Education Initiative in Peru.
During the first phase of the pilot program, which began in
February 2007, foreign Senior Trainers trained 33 Peruvians
for 40 hours, after which they themselves became qualified
Senior Trainers.  In the second phase, which began at the end
of April 2007, 10 of these new Senior Trainers are training
100 teachers from 5 public schools in the Lima area that were
selected by the Ministry of Education to become Master
Teachers (trained teachers that will help expand the program
throughout Peru).  This 10-week training also consists of one
4-hour module and 2 hours of homework per week, and is
scheduled to be completed in mid July.  Intel paid 100
percent of the pilot program costs:  brought in trainers;
rented computer center; provided manuals, CD-ROMs and
incentives for Senior Trainers; and donated computers to a
Ministry of Education training center. 

¶7.  The pilot program is being monitored by the Education
Department of the Pontifical Catholic University of Peru,
which will present its evaluation in mid July.  After the
pilot phase, the next step will be to train 300 additional
Master Teachers in August 2007, with the goal of training
3,000 teachers nationwide (in all of Peru's 25 regions) by
the end of 2007.  After the conclusion of the pilot phase,
the costs to continue and spread the program will be split
50-50 by Intel and the Ministry of Education.  Intel also
signed an agreement with San Martin de Porres University to
help expand the training program throughout Peru. 

¶8.  Worldwide, the Intel Education Initiative has trained
nearly five million primary and secondary school teachers in
more than 40 countries since the program's launch in 2000.
Intel invests $100 million per year in this program, and
plans to train 10 million teachers more in the next five
years.  Intel donated 10,000 PCs to schools in developing
countries in 2006 and plans to donate at least 90,000 more. 

COMPETITIVENESS CENTER FOR THE VISUALLY HANDICAPPED
--------------------------------------------- ------ 

¶9.  In 2004, three blind young Peruvians, who had used a
World Bank grant to launch Peru's first cyber cafe for the
visually impaired in 2003, established the non-profit
Association for Technology and the Handicapped (ATECNODIS).
Later that year, Intel helped ATECNODIS establish the
Peruvian Competitiveness Center for the Visually Handicapped
(CCD), providing the building for the Center in the San Borja
district of Lima, bringing foreign specialists to train
ATECNODIS' volunteers, and donating 15 computers. 

¶10.  The CCD is a modern IT facility with accessible hardware
and software that has provided individualized training to
hundreds of visually handicapped Peruvians in computer and
Internet use.  Courses offered include:  Introduction to IT,
Windows Operating System, Microsoft Word, Excel, Internet and
E-mail, Magic, Messenger, Open Book (scanner), Interactive
Encyclopedias and Dictionaries, JAWS, and Mexvox.  Since
2005, the CCD also offers text and book digitization services
for the handicapped.  ATECNODIS, with Intel support, is a
leader in promoting the social inclusion of handicapped
Peruvians. 

OTHER INTEL ACTIVITIES INVOLVING PERU
------------------------------------- 

¶11.  Intel has begun offering its wireless laptop "Classmate
PC" in Peru for only $270 per unit.  These low cost laptops
are especially designed for primary and secondary school
students.  Intel donated 200 units to the Peruvian government
for distribution to public schools in May 2007. 

¶12.  Intel made possible Peru's first ever wireless district
in 2004, donating the infrastructure to provide free wireless
"hotspots" throughout Lima's Miraflores district.  Similarly,
in September 2005, Intel and two other companies launched the
"Wireless Cuzco" initiative, which provides free wireless for
the central plaza of Peru's number one tourist destination
high in the Andes. 

¶13.  Peruvian students participate and have won awards in
Intel's International Science and Engineering Fair (ISEF),
the largest pre-university science fair in the world. 

Sponsored by Intel since 1997, Intel's ISEF brings together
the most promising innovators and scientists at the primary
and secondary school levels.  Prizes include cash and full
university scholarships. 

INTEL'S PERU OFFICE
------------------- 

¶14.  Intel has had a presence in Peru for eight years, but
its local office opened two years ago and currently has four
employees.  Intel Peru's corporate social responsibility
contributions, with so few employees in such a short time,
are truly amazing. 

¶15.  In addition to its exceptional corporate citizenship
which contributes to economic development and innovation,
Intel's Peru office follows exemplary employment practices
and all Peruvian laws and regulations.  Intel Peru has not
violated any laws or standards, and has not been involved in
any acts of corruption.  Intel Peru is known as a great and
safe place to work. 

COMMENT
------- 

¶16.  Intel, an innovative U.S. firm respected worldwide, has
made a real difference in Peru with a solid commitment to
improving education and bridging the digital divide.  The
work Intel has done in Peru is an excellent example of
Intel's broader commitment to corporate social responsibility
and great business practices worldwide.  Intel Peru, with a
staff of only four, has done more to contribute to
development in Peru than many huge firms and deserves the
Department's recognition for its exemplary accomplishments.
With the U.S.-Peru Trade Promotion Agreement (PTPA) close to
fruition and Peru hosting the Asia-Pacific Economic
Cooperation (APEC) forum activities in 2008 (including visits
by Secretary Rice and President Bush), this would be a great
time to recognize a model U.S. company that is doing great
things in Peru.
STRUBLE

That’s all from Peru for now. █

Summary: What a cable about lobbying in Lithuania reveals about Free/open source software

IN Lithuania, the “USE OF GOVERNMENT SOFTWARE” saw some changes not too long ago. According to the following Cablegate cable,”[a] A Government Information Society Development Committee is considering a draft resolution which will recommend that government institutions use open source computer software programs. The GOL does not have a timeframe for the resolution’s adoption, but intends to allocate funds to support training to familiarize agencies with the new software.”

This is not he first time we write about Lithuania, but sometimes we do. The relevance of this cable is that it shows yet another example where blacklists or shame lists are used to oppress and subjugate countries that are sceptical of patent/copyright regimes. We gave many such examples before, e.g. in Turkey. Here is the entire cable:

UNCLAS SECTION 01 OF 05 VILNIUS 000165 

SIPDIS 

STATE FOR EB/IPE SWILSON AND EUR/NB GERMANO
STATE PLEASE PASS TO USTR JCHOE-GROVES AND LOC STEPP
COMMERCE FOR JBOGER AND USPTO JURBAN 

E.O. 12958: N/A
TAGS: ECON [Economic Conditions], KIPR [Intellectual Property Rights], ETRD [Foreign Trade], LH [Lithuania], HT24
SUBJECT: LITHUANIA: YEAR 2005 SPECIAL 301 REVIEW 

REF:  A. SECSTATE 23950 

 B. 04 VILNIUS 00226
 C. 04 VILNIUS 00241
 D. 04 VILNIUS 00273
 E. 04 VILNIUS 00372 

-------
SUMMARY
------- 

¶1.  Lithuania is making progress against intellectual
property rights (IPR), but it should remain on the Watch
List for 2005 due to persistent weaknesses in its
enforcement system.  A local industry association estimates
that the rate of piracy for recorded music, films, and
games dropped to 40 percent of the total product in
circulation, down from 55-65 percent in 2003.  Local IPR
advocates indicate that two large organized crime
syndicates with Russian links control piracy activities
related to these items.  The GOL conducted an IPR Public
Awareness Campaign, but has still not decided whether to
require mandatory source identification coding on optical
discs.  It seized 316,948 units of audio CDs, DVDs, videos,
PC games and other pirated products, (up from 142,800 units
in 2003) worth USD 3,548,966, launched cases against six of
an estimated 20 distributors of illegal works on the
internet, and filed 131 criminal cases and 180
administrative protocols (versus 86 pretrial investigations
and 171 administrative protocols in 2003).  Court
procedures remain slow and cumbersome.  Fines levied
against IPR violators are low and do not deter pirating.
The police are understaffed in the IP section, and border
surveillance is inadequate.  End Summary. 

-------------------
OVERALL PIRACY RATE
------------------- 

¶2.  The Lithuanian Music Industry Association (LMIA), which
collects and maintains general piracy statistics, estimates
the general level of piracy for music, films, and games in
the Lithuanian market at about 40 percent, down from 55-65
percent in 2003.  Definitive figures, LMIA cautions, are
difficult to derive due to problems with tracking the use
of rented films and internet games.  LMIA's figures reveal
a piracy level of musical works of 30-40 percent, with
international repertoire representing 58 percent of the
total.  This is significantly lower than the International
Intellectual Property Alliance's (IIPA) figures of 80
percent for records and music, 65 percent for motion
pictures, 58 percent for business software, and 85 percent
for entertainment software.  The Chairman of the Board of
the Phonogram Producers and Distributors Association (FGPA)
in Lithuania stated that the piracy rate of phonograms
(CDs, musical videos, and DVDs) is greater than 70 percent,
resulting in annual losses of USD 20 million. 

¶3.  FGPA stated that at least two large organized crime
groups, likely under Russian mafia control, coordinate and
control piracy in Lithuania.  The FGPA estimates that each
of these Vilnius-based groups has stockpiled 200-300,000
illegal CDs, and sells nearly 300,000 discs per month
equally to Lithuanian and foreign customers.  Over 50
percent of this volume has pirated American content.  The
FGPA Chairman explained that organized crime sells its CDs
through direct marketing to cafes, bars, offices, and at
marketplaces, and by exporting them to Poland, Germany,
Latvia and Estonia.  More than 90 percent of the illegal
product is imported from Russia, Belarus, Ukraine and
Poland, while the rest is burned locally. 

-------------------
LAWS PROTECTING IPR
------------------- 

¶4.  Lithuania did not modify its IPR-related laws in 2004.
A GOL working group has been charged with drafting the
relevant legal amendments by August 2005.  These amendments
will bring the country's copyright and industrial property
rights laws into line with EU standards.  The amendments
will require the publication of court judgments in
newspapers as a preventive measure to discourage IPR
violations. 

------------
GOL OUTREACH
------------ 

¶5.  The GOL conducted an IPR Public Awareness Program in
2004.  The Ministry of Culture organized public
consultations in each of the country's ten largest cities.
The Ministry invited representatives of cultural
institutions (libraries, museums, theaters, publishers) and
small businesses to attend these sessions in order to
discuss copyright agreements and the identification of
protected works. 

--------------------
OPTICAL MEDIA PIRACY
-------------------- 

¶6.  The GOL has not decided whether to require mandatory
source identification coding (SID) of all optical discs
produced in the country.  The Ministry of Culture will make
a decision following a meeting with representatives of the
recording industry in early 2005.  We question the impact
of such a rule, however, since most pirated CDs are
manufactured outside of Lithuania. 

--------------------------
USE OF GOVERNMENT SOFTWARE
-------------------------- 

¶7.  A Government Information Society Development Committee
is considering a draft resolution which will recommend that
government institutions use open source computer software
programs.  The GOL does not have a timeframe for the
resolution's adoption, but intends to allocate funds to
support training to familiarize agencies with the new
software. 

---------------
INTERNET PIRACY
--------------- 

¶8.  The GOL intends to include in its amendments to the
copyright law procedures that would clarify its Ecomas
Directive of 2000, which required an internet service
provider (ISP) to act expeditiously and block content, upon
the request of the appropriate IP right holder.  The
amendments will define the requirements that the request
must fulfill, and a timeframe for the ISP to act.  The
Managing Director of the Lithuanian Neighboring Rights
Association (Agata) informed us that the issue of who
should take lead responsibility for internet content is
under consideration by Lithuania's Constitutional Court. 

-------------------------------------------
TRIPS COMPLIANCE AND OTHER IP-RELATED ISUES
------------------------------------------- 

¶9.  On January 1, 2004, the GOL implemented a six percent
tax on blank media carriers to help remunerate the authors
of copyrighted works.  The Agency of the Lithuanian
Copyright Protection Association (LATGAA) collected LTL 2
million (USD 757,576) in blank media carrier taxes in 2004,
and distributed this sum to authors. 

¶10.  The GOL amended its trademark law on February 19,
2004, and its design law on April 29, 2004, to conform to
EU regulations and directives.  Community trademarks and
designs were given precedence over corresponding national
products.  The GOL did not modify its patent law in 2004.
Parliament, however, will consider amendments during its
Spring 2005 session that will harmonize Lithuanian law with
an EU directive on biotechnological inventions.  All
Lithuanian legal limitations to the exclusive rights of
copyright owners and producers of sound recordings conform
to TRIPS exceptions and EU law. 

¶11.  Three Lithuanian laws protect geographical indicators:
the Law on Plant Variety Protection, the Law on
Competition, which prohibits the declaration of improper
origin, and the Law on Trademarks, which bars the
registration of a trademark with misleading geographical
indicators (GI).  Prior to joining the EU, the GOL, on
April 26, 2004, modified its Order "On the Protection of
Geographical Indicators in Agricultural Products and
Foodstuffs" to implement the EU regulation protecting GIs.
The Patent Law (effective February 1, 1994) provides patent
protection to all technical products, including those
derived from genetic resource sharing.  There was no change
in 2004 to Lithuania's June 16, 1998, Law on the Legal
Protection of Topographies of Semiconductor Products, which
covers integrated circuits.  The Law on folklore
supervision protects the rights of folklore artists,
registers their works, and requires publisher-author
agreement on remuneration. 

------------------------------------
LITHUANIA HAS RATIFIED WIPO TREATIES
------------------------------------
¶12.  The GOL ratified the two World Intellectual Property
Organization (WIPO) treaties in 2002 and incorporated their
requirements into national law via amendments to the
copyright law of March 5, 2003.  Enforcement of the law has
been weak.  The police initiated only five criminal cases
against internet piracy in 2004, up from four in 2003.
Embassy feels that this modest progress made little headway
in combating the high level of internet piracy in the
country. 

-----------------------------------------
GOL'S RESPONSE TO IIPA'S LEGAL CRITICISMS
----------------------------------------- 

¶13.  The Ministry of Culture responded to criticisms of its
Copyright Act that IIPA included in its 2005 Special 301
submission to the Department.  IIPA noted that it was
unclear whether Lithuania assesses damages for each act of
infringement or for each work infringed.  The Ministry
noted that it is considering the introduction of a sampling
procedure under the Civil Procedure to help identify the
legality of an entire batch of products.  Though the IIPA
alleges that the term of protection is too short, the
Ministry states that it provides an adequate term of
protection for works (for 70 years of an author's life, and
an additional 70 years after his death).  The Ministry
stated it had not heard of the "private copying exception"
mentioned by IIPA in its submission.  Article 3 of
Lithuania's Law on the Protection of Intellectual Property
and Neighboring Rights covers the first release or
simultaneous publication -- in Lithuania -- of works or
phonograms.  Lithuanian law confirms the rights of
broadcasters to receive royalties, in compliance with the
International Rome Convention (Article 12) and the WIPO
treaty (Article 15).  Agata collects these broadcasting
royalties. 

-----------
ENFORCEMENT
----------- 

Police
------ 

¶14.  The Criminal Police, together with LMIA, conducted
inspections of 239 companies and retailers in 2004.  It
seized 316,948 units of pirated products, mostly audio CDs.
65 percent of black market sales in Lithuania were for
musical products, 31 percent were for audiovisual works,
and four percent for games.    The corresponding proportion of
these products in the legal market is music - 52.25
percent, audiovisual works - 26.75 percent, and games - 21
percent.  In 2003, the police confiscated 142,800 units of
CDs, videos and computer software, and brought three
actions against organized crime groups in 2004.  In
February, it seized 36,000 units, including 11,000
audiocassettes and 20,000 audio CDs, of pirated product
from an illegal warehouse in Vilnius.  It seized another
170,000 units from a second Vilnius warehouse and from a
production facility in July, and more than 30,000 CDRs
(including 10,000 blank CDRs) and 2,800 DVDs smuggled from
Russia in Kaunas in December. 

¶15.  The total value of products seized by the police in
2004, utilizing the lowest legal retail prices, was LTL
9,369,270 (USD 3,548,966), of which music works constituted
LTL 6,149,970 (USD 2,329,534) of the total, audiovisual
works LTL 2,940,960 (USD 1,114,000), and games programs LTL
278,340 (USD 105,432).  LMIA's data suggests that losses to
the owners of international repertoire music works rights
in 2004 were about USD 6.13 million. 

¶16.  An LMIA representative reported that, following the
establishment of a five-person specialized IPR police unit,
crime bosses masterminding piracy activities and retails
outlets selling pirated goods have increasingly been
targeted by law enforcement.  The specialized unit utilizes
city police officers to conduct the raids and undercover
stings.  Every major police department in Lithuania
dedicates one officer to coordinating IPR activities. 

---------------
INTERNET PIRACY
--------------- 

¶17.  The police launched six cases (one administrative,
five criminal) against internet distributors.  In one raid,
police seized 2,900 films from a distributor.  In 2003,
police initiated four criminal prosecutions against
websites marketing pirated products.  LMIA estimates that
there may be as many as 20 distributors selling pirated
products over the internet.  Agata and FGPA are trying to
establish cooperative agreements between ISPs and rights
holders under which the ISPs will agree to block the
broadcasting of protected works.  The Agata Managing
Director noted the difficulty in getting permits from
international phonogram producers, since many don't have
local offices in Lithuania.  Protecting IPR rights on the
internet, she said, is an area of particular interest for
her organization, since there is a growing potential for
abuse of IPR on the internet. 

------------------------------------
INADEQUATE INTER-AGENCY COORDINATION
------------------------------------ 

¶18.  The coordination between GOL agencies charged with IPR
protections could improve. 

Customs
------- 

¶19.  Customs intercepted few pirated products in 2004.
Most pirated products are smuggled into Lithuania without
an opportunity for Customs inspection.  Further, now that
Lithuania is part of the EU, Customs does no inspection of
vehicles entering through Poland and Latvia.  They only
inspect at the borders with Belarus and Kaliningrad,
reducing the amount of contraband they might find.  The FGPA
Chairman criticized the Customs Intelligence Service for
not being more active in identifying corrupt Customs
officers and cars carrying smuggled goods.  He noted that
one car is capable of concealing 6-10,000 CDs. 

The Courts
---------- 

¶20.  The police filed 131 criminal cases and 180
administrative protocols for IPR violations in 2004. (An
administrative protocol is a description of a violation of
the Administrative Code, which is judged by an
Administrative Court.)  In 2003, the police began 86
pretrial investigations, and filed 171 administrative
protocols. 

¶21.  The maximum penalty for piracy is LTL 2,000 (USD 758),
but courts usually award penalties of between LTL 100-200
(USD 38-76).  Pirates often receive lower penalties by
claiming mitigating circumstances as a basis for leniency.
Industry representatives told us that these fines fail to
adequately deter piracy.  Pirates, they tell us, fear
retaliation from organized crime more than penalties
imposed by the judicial system.  The Ministry of Culture
told us that a draft law under consideration by parliament
would increase the maximum fine for individuals under the
new Administrative Code to LTL 5,000 (USD 1,894), and for
legal persons to LTL 10,000 (USD 3,788). 

¶22.  The relevant laws are new, and experts cite the need
for judges to receive training in interpreting these laws.
During a December 2004 USG-funded visit by U.S. Patent and
Trademark Office Senior Counselor Michael Keplinger, Court
of Appeals Judge Virginija Cekanauskaite remarked that her
colleagues could use training in how U.S. and other foreign
judges interpret IPR statutes. 

¶23.  IIPA and FGPA raise valid concerns about the
cumbersome nature of the court-mandated expert review
process.  The courts require that experts submit reports
after identifying, examining, and translating the title of
each seized album.  Courts require these reports to confirm
that the stolen intellectual property belongs to the rights
holder, a process that necessitates the comparison of each
CD code with corresponding legal CD codes.  By contrast,
common European practice sanctions the use of sampling. 

-------------------------
BALTIC OPTICAL DISC PLANT
------------------------- 

¶24.  In its submission, IIPA noted the recording industry's
complaint alleging pirate production at the Baltic Optical
Disc (BOD) plant.  The LMIA and FGPA told us that the plant
is "clean."  LMIA opined that production of pirated goods
at BOD is unlikely, because the plant is inspected by the
police, LATGAA, LMIA and NCB (the Nordic Copyright Bureau).
LMIA added that these inspections had found no evidence of
piracy.
--------------------------------------------- -----
RECOMMENDATION -- KEEP LITHUANIA ON THE WATCH LIST
--------------------------------------------- -----
¶25.  Lithuania continues to have IPR problems, despite its
progress.  We concur with the thrust of IIPA's criticisms,
and with its recommendation that Lithuania remain on the
Watch List for 2005.  The piracy rate dropped to about 40
percent from 55-65 percent in 2003, the government
conducted a Public Awareness Campaign on IPR protections,
and is making a good faith effort to tackle internet
piracy, launching cases against six of an estimated 20
distributors of illegal media.  The Criminal Police seized
316,948 units of pirated products, up from 142,800 units in
2003.  The police brought three actions against organized
crime groups in 2004.  Enforcement, however, remains the
weakest element in the country's IPR protection system.
There appears to be insufficient political will to tackle
the problem.  Additional high-level attention focused on
the importance of IPR protections would be beneficial on
the ground.  The law enforcement effort against piracy is
constrained by inadequate resources, corruption, low fines,
and a slow and cumbersome process of redress in court. 

--------------------------------------------
EMBASSY'S EFFORTS TO PROMOTE IPR PROTECTIONS
-------------------------------------------- 

¶26.  We will continue to urge Lithuania to make greater
efforts to address weaknesses in its enforcement system.
USG-funded programs made it possible for U.S. experts to
hold a two-week training session for Lithuanian Customs and
Police officers in January 2005, for two Lithuanian Court
of Appeals judges to participate in an IPR business-
judicial roundtable in Bratislava, and for a U.S. copyright
expert to speak at a GOL conference to commemorate the 10th
anniversary of Lithuania's membership in the Berne
Convention.  We also solicited and arranged the first ever
visit to Lithuania of a representative of the Motion
Picture Association of America to discuss piracy issues
with key distributors and government officials.  We will
encourage the GOL to approach IPR violations within the
broader context of complex crimes encompassing tax evasion
and illegal employment, and to continue to go after the
organized crime bosses masterminding piracy in Lithuania. 

MULL

Notice how these US diplomats bat for Hollywood and other such ‘IP’ interests. It’s like an extension of the commercial sector, funded exclusively by taxpayers. █

Summary: Interesting cable from Tripoli and its items regarding software

According to the following Cablegate cable from the US embassy at Tripoli, “UNESCO Reinforces Capacities of Public Administrations through the Use of Free Software: The Arab Federation of Technical Education, the UNESCO Office in Rabat, and ISESCO, in cooperation with the Libyan Ministry of the Labor and Training, organized a workshop at the Higher Institute of Computer Technology in Tripoli, Libya. The workshop aimed to reinforce capacities of public administrations through Free and Open Source Software (FOSS). During the three-day workshop, experts from the Maghreb countries presented best practices in using FOSS in their respective countries. This enabled participants to reinforce the capacities of universities in the field of technical education through the use of FOSS, and to develop tools in order to make public services more transparent. [UNESCO, 12/19/2008]“

We also wrote about UNESCO one day ago, in relation to what Microsoft was doing there to derail Free software preference. Here is today’s cable

VZCZCXRO3549
RR RUEHTRO
DE RUEHTRO #0151/01 0471652
ZNR UUUUU ZZH
R 161652Z FEB 09
FM AMEMBASSY TRIPOLI
TO RUEHC/SECSTATE WASHDC 4492
INFO RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RHMFISS/DEPT OF ENERGY WASHINGTON DC
RUEHTU/AMEMBASSY TUNIS 0757
RUEHEG/AMEMBASSY CAIRO 1399
RUEHAS/AMEMBASSY ALGIERS 0892
RUEHRB/AMEMBASSY RABAT 0830
RUEHVT/AMEMBASSY VALLETTA 0378
RUEHCL/AMCONSUL CASABLANCA 0016
RUEHAM/AMEMBASSY AMMAN 0090
RUEHLO/AMEMBASSY LONDON 1005
RUEHFR/AMEMBASSY PARIS 0691
RUEHTRO/AMEMBASSY TRIPOLI 5017

UNCLAS SECTION 01 OF 06 TRIPOLI 000151 

SIPDIS 

STATE FOR NEA/MAG,
COMMERCE FOR NATE MASON,
ENERGY FOR GINA ERIKSON,
STATE PASS USTR (BURKHEAD) AND USAID (MCCLOUD)
USDOC FOR ITA/MAC/ONE (NATHAN MASON), ADVOCACY CTR (REITZA), AND
CLDP (TEJTEL AND MCMANUS)
CASABLANCA FOR FCS (ORTIZ)
AMMAN FOR ESTH HUB (BHALLA)
CAIRO FOR FINANCIAL ATTACHE (SEVERENS)
LONDON AND PARIS FOR NEA WATCHER 

E.O. 12958: N/A
TAGS: ECON [Economic Conditions], EFIN [Financial and Monetary Affairs], ETRD [Foreign Trade], EINV [Foreign Investments],
EIND [Industry and Manufacturing], EPET [Petroleum and Natural Gas], ENRG [Energy and Power],
PGOV [Internal Governmental Affairs], LY [Libya]
SUBJECT: LIBYA COMMERCIAL ROUND-UP FOR DECEMBER 2008 AND JANUARY
2009 

ENERGY 

¶1. (U) State-Owned Zwara Oil Refinery Company Has Appointed HSBC
as Financial Adviser: Zwara Oil Refinery Company (Zorco) plans
to develop a 200,000 barrels-a-day crude oil refinery. The
development of the refinery will be tender on a
build-own-operate basis. The refinery is the first major
government sponsored project in the country to seek commercial
finance. Earlier in 2008 bankers pulled out of talks on
financing the project and Nigeria's Africa Finance Corporation
and Citadel Capital of Egypt both decided against investing in
the plant. The project is estimated to cost about $4 billion
U.S. dollars and should be completed in 2014.[MEED, 12/4/2008] 

¶2. (U) Chinese CNPC to Bid for Verenex Asset in Libya: China
National Petroleum Corporation (CNPC) is bidding for Canadian
energy firm Verenex Energy in a transaction valued at as much as
$300 million; adding a successful bid would broaden CNPC's
assets in Africa. Indonesia's state oil firm, Pertamina, had
announced its interest to participate in the Libyan oil area of
the Canadian energy company Verenex. [Reuters, 12/15/2008] 

¶3. (U) AGOCO Announces Oil Discovery: The National Oil
Corporation (NOC) announced that the state-owned oil company
Arabian Gulf Oil Company (AGOCO) made an oil discovery in the
Ghadames Basin. The well is located approximately 500 kilometers
south of Tripoli. The initial production testing established an
oil rate of 5,000 barrels per day, and a gas rate of 150 million
standard cubic feet per day. [HYPERLINK
"http://en.noclibya.com.ly/
 "http://en.noclibya.com.ly
 , 12/16/2008] 

¶4. (U) Hess Discovers Oil in Libya Sirte Offshore: In Libya,
well A1-54/01, which is located 38 miles offshore in the Sirte
Basin, was drilled to a depth of 11,077 feet in 2,807 feet of
water. The well encountered a gross hydrocarbon section of
approximately 500 feet at various intervals. Hess holds a 12.4
percent share and the NOC holds the remaining 87.6 percent.
[rigzone.com, 12/17/2008] 

¶5. (U) Turkish Petroleum Overseas Company Pre-Qualifies More
than Ten Companies to Provide Drilling Services: A
prequalification notice had been issued, and the companies in
the running, all based in Libya, now have until the end of
January to make their bid quotations. The tender is for 1,500
horsepower drilling rig services in the Murzuq basin. The
project comprises two firm and five optional wild cat wells to
be drilled within the range of 9,000-11,000 feet. [MEED,
12/30/2008] 

¶6. (U) Libya Orders to Cut Production by 270,000 Barrels per
Day: Effective Jan 1, Libya ordered oil companies operating in
Libya to cut production by 270,000 barrels per day, which is
more than Libya is requested to do under OPEC agreement to slash
the cartel's production by 2.2 billion barrels per day. [JANA,
12/30/2008] 

¶7. (U) Five Firms Are Expected to Bid for an Onshore Drilling
Contract: Total Exploration & Production Libya, a subsidiary of
France's Total expects to formally begin the tender process in
early January. Prequalification entries were accepted until
early December, and around five firms were left in the running
after that process ended. The contract is for the provision of
onshore drilling rig services and the testing of two exploration
onshore wells with possible options in the west of Libya. The
proposed land rig would have a maximum drilling depth of
approximately 21,000 feet. The well spud is planned for the
third quarter of 2009. [MEED, 12/31/2008] 

TRIPOLI 00000151  002 OF 006 

¶8. (U) Libya Gains $5.4 Billion Dollars from Altering Oil Deals:
The NOC reported earnings of $5.4 billion U.S. dollars in
additional oil revenues from changes to contracts with foreign
companies ENI, Petro-Canada and two consortiums led respectively
by U.S. Occidental and Spain's Repsol last year. The changes of
deals yielded $2.4 billion U.S. dollars extra earnings during
the first nine months of 2008. The companies also accepted to
pay a total of $3 billion U.S. dollars as up-front payments. NOC
said negotiations were underway with other companies to reach
similar changes which would boost oil earnings further.
[HYPERLINK "http://en.noclibya.com.ly/
 "http://en.noclibya.com.ly
 , 1/18/2009] 

¶9. (U) New Oil and Gas Discovery by Australian Woodside: NOC
announced that an exploratory well drilled by Woodside in the
Ghadames Basin, 900 kilometers South of Tripoli, produced oil
and gas when tested. The well, F1-NC210, is the fourth discovery
drilled by Woodside Energy in the contract area NC210, awarded
by the NOC in May 2003. Under the contract, Woodside has a 37
percent production share and the NOC has 63 percent.
[Libyaonline.com, 1/15/2009] 

¶10. (U) Canadian Verenex Confirms Oil and Gas Discovery in
Libya: Canadian company Verenex has made its tenth oil discovery
in Libya's western region of Ghadames since drilling began in
September 2006. So far, Verenex has drilled four appraisal
wells, and fourteen exploratory wells. The last four wells
drilled are yet to be tested. Verenex, Indonesia's Medco Energi
and Libyan National Oil Corporation (NOC) signed a 30-year
production-sharing agreement in 2005, where the two foreign
companies will take 13.7 percent of production and the NOC 86.3
percent. [Tripoli Post, 1/18/2009] 

¶11. (U) Shell Awards Seismic Contract: The UK/Dutch Shell Group
has awarded a seismic contract to BGP, the geophysical division
of Chinese oil company China National Petroleum Corporation
(CNPC), for a survey on the gas exploration block 89N in the
onshore Sirte Basin.  It is considered a difficult area to work
in due to the potential risk from landmines. Shell won blocks 1
and 3 in contract area 89 in the Sirte Basin in Libya's first
gas exploration licensing round in 2007. [MEED 1/20/08] 

¶12. (U) Mitsubishi, Libya University to Jointly Study Green
Energy: On January 28, the two parties signed a memorandum of
understanding to begin joint research and development of
reusable energy sources. Under the agreement, the Japanese
trading company will support research into reusable energy by
Libya's largest university, supplying test materials and sending
specialists to the university from 2009 to 2011. The first
initiative between the two will involve field-tests of solar
power generation systems at the university. The plan is for the
university to accumulate technology and expertise, and then
cultivate leaders for the new industry. [AsiaPulse, 1/26/2009] 

CONSTRUCTION 

¶13. (U) South Korea's Hanil Wins a $902.5 Billion Work Order in
Libya: South Korean builder Hanil Engineering and Construction
said that it had secured an order worth $902.5 billion from
Libya. Hanil said in a regulatory filing that Libya's
Organization for the Development of Administrative Centers
placed the order to build houses and infrastructure in Libya.
[Reuters, 12/22/08] 

¶14. (U) Indian Company Simplex Projects Ltd Gets Construction
Contract in Libya: The contract is to develop a housing project
in Libya, which comprises the construction of 2,000 houses, a
public building, and roads, drainage and sewage systems; the
project is scheduled to be completed in 36 months. This is the 

TRIPOLI 00000151  003 OF 006 

first overseas project for the Indian company. [Reuters,
1/13/2009] 

¶15. (U) Indian Company Wins $267 million U.S. Contract in Libya:
The Libyan Housing and Infrastructure Board awarded a $267
million U.S. dollars contract to the Indian construction and
engineering firm Punj Lloyd Ltd. The 40-month project involves
the engineering, procurement, construction and commissioning of
infrastructure networks including water mains, sewerage tunnels,
and roads in the Souk Al-Juma area, in Tripoli. In early January
Punj Lloyd was awarded a similar contract worth $214 million
U.S. dollars in a joint venture with the Public Works Company
Tripoli (PWCT). The four-year project involves upgrading the
infrastructure in the Arada area of Tripoli. [The Tripoli Post,
1/18/2009] 

¶16. (U) China Railway Wins $805 million dollars contract in
Libya: The contract worth $805 million dollars is to build a 172
kilometer railway that will connect Tripoli with the
Libya-Tunisia border. The construction of the line is expected
to take around 54 months. The deal follows a $2.6 billion dollar
contract, signed last year to build two other rail lines, a 352
kilometer railway along Libya's Mediterranean coast, and an 800
kilometer line in the south. The coastal railroad is slated for
completion in four years, and the southern line is expected to
be completed in three years. [libyaninvestment.com, 1/23/2009] 

FOREIGN TRADE 

¶17. (U) Italy-Libya Trade Tops 14 Billion Euros in 2008 First
Eight Months: While Libya tries to enter into Eni's capital,
trade relations with Italy continue to grow, with import-exports
in the first eight months of the year exceeding 14 billion Euros
and confirming the North African country as Italy's top trading
partner in the Mediterranean. The figures emerge from a study
made by the Milan Chamber of Commerce into the latest figures
for import-export between Italy and 13 Mediterranean basin
countries (Morocco, Algeria, Tunisia, Libya, Egypt, Malta,
Turkey, Cyprus, Lebanon, Syria, Israel, the Palestinian
Territories, Jordan). In January-August imports from Libya grew
by 40% compared with the first eight months of 2007, exceeding
12.4 billion Euros. Exports grew by 57%, exceeding 1.7 billion
Euros. The figure makes Libya the fifth largest market for Italy
in the Mediterranean. [ANSAmed, 12/09/08] 

REGIONAL ISSUES 

¶18. (U) Libya to Take Half Million Bangladeshi Workers:
Secretary of Manpower Training and Employment, Maa'touk Mohammad
Maa'touk, said that Libya would take half a million Bangladeshi
skilled, semi-skilled and general workers for different projects
soon. Maa'touk stressed that the Embassy of Bangladesh should
verify the issues of job, salary, housing and fringe benefits of
every worker before they could come to Libya from Bangladesh.
[www.nation.ittefaq.com, 12/13/2008] 

¶19. (U) Oman, Libya Sign $500 Million JV Deal: The Sultanate of
Oman and Libya have signed a $500 million deal to establish a
joint investment company to be based in Tripoli. The company
will invest in real estate, tourism, industrial, services and
energy projects and will also set up joint stock companies to
undertake different projects, according to a joint statement.
The State General Reserve Fund will represent Oman in the
Oman-Libya Investment Holding Company. [Khaleej Times,
12/14/2008] 

¶20. (U) Global Grain Rush Under Way as Rich Nations Snap up
Farmland Overseas: Under a proposed agreement with Kiev, Libya
would lease 247,000 acres of Ukraine's rich black land to grow
wheat. The harvest would then be shipped back to Libya, giving 

TRIPOLI 00000151  004 OF 006 

the desert nation a more secure supply of food in the face of
predictions about higher food prices and potential shortages in
decades to come. Ukraine, in turn, would get access to Libyan
oil fields, helping free it from dependence on Russia for its
energy needs. [Chicago Tribune, 12/14/2008] 

¶21. (U) Irrigation, Key for Africa's Food Security: On December
15, a conference on Water for Agriculture and Energy in Africa:
The Challenges of Climate Change opened. It was organized by FAO
together with the Libyan Government and in collaboration with
stakeholders including the African Union, the African Ministers'
Council on Water Development, the African Development Bank and
the Economic Commission for Africa. The conference aims at
setting the scene for moving from talk to action on a $65
billion, 20-year program for irrigation and hydroenergy
investments required in each country. [African Press
Organization (APO), 12/15/08] 

¶22. (U) Trade Exchange between Libya and Tunisia Reached 2.2
Billion Libyan Dinars during 2008: The trade exchange exceeded
the specified value by 10%; the Secretary of the Libyan General
People's Committee said that this value is expected to hit 2.5
billion by the end of 2008. The secretary mentioned that one of
the most important of these projects is laying a strategic gas
pipeline that will connect Libya with Tunisia; this project will
be executed by a Libyan-Tunisian Joint committee starting in
2009. Currently, there are teams working in the areas of
education, trade, and investment to boost bilateral integration
between the countries. [JANA, 12/27/08] 

¶23. (U) Libya to Invest in Oil Refinery in Egypt: Libya will
invest in an oil refinery and a number of construction projects
in Egypt under a deal signed in December 2008, during a visit to
Tripoli by Egyptian President Hosni Mubarak. Aside from the
refinery, Libya will also build service stations as well as an
industrial and residential complex in Egypt. The two countries
are also working towards establishing a free exchange zone on
their border. The number of Libyan companies working in Egypt
reached 236 companies, and Egyptian investment companies are
currently working in Libya.  Volume of trade exchange between
the two countries is expected to increase to two billion
dollars. [Tripoli Post, 1/1/2009] 

INVESTMENT 

¶24. (U) Libyan Fund in Talks over Kaupthing Unit-Luxembourg:
Talks have taken place over the possible sale of the Luxembourg
arm of troubled Icelandic bank Kaupthing to a Libyan sovereign
fund. Budget and Treasury Minister Luc Frieden, said there had
been discussions with several possible buyers which have to be
concluded by year's-end. The Libyan Investment Authority fund
had emerged as the front-runner to buy Kaupthing Luxembourg.
Other suitors that have been cited to have shown interest in
picking up the Kaupthing's Belgian customers include online bank
Keytrade Bank, a subsidiary of France's Credit Agricole and
German bank Landesbank Nord. [Reuters, 12/10/2008] 

¶25. (U) Libya Emerges from Sanctions with Investment: The Libyan
Investment Authority (LIA) is set to complete Libya's first UK
commercial property transaction since the suspension of economic
sanctions at the end of the 1990s. Part of the LIA has agreed to
buy a large office building in the City of London for about #120
million UK pounds from German fund manager IVG. The 172,000
square feet former Lloyds' City headquarters at 14 Cornhill will
be sold for a yield of about 6 per cent. DTZ and Knight Frank
are advising IVG. None of the parties involved would comment on
the sale. [Financial Times, 12/12/2008] 

¶26. (U) Libya to List Ten Companies on Libyan Stock Market:
Libya plans to sell shares in more state-owned companies as the 

TRIPOLI 00000151  005 OF 006 

government seeks to boost the economy and develop the bourse set
up last year. The state-run Economic and Social Development Fund
aims to offer foreign investors about 15 percent of 10
companies. Libya's Al-Jomhuria Bank is among the 10 companies
that may be sold on the stock market following further sales of
shares in Al Wahda Bank and Al Sahara Bank, both of which are
already traded on the exchange. Arab Bank, Jordan's largest
publicly traded bank, bought a 19 percent stake in Libya's Wahda
Bank in February for 210 million euros. BNP Paribas SA, France's
biggest bank, purchased 19 percent of Libya's state-owned Sahara
Bank for 145 million euros on Oct. 4. [Bloomberg, 12/17/2008] 

IT 

¶27. (U) STS PayONE Voucher powers Bank of Commerce and
Development in Libya: STS, MENA's leading enterprise ePayment
solutions provider and system integrator, furnished Bank of
Commerce and Development in Libya with an enterprise-level
platform for the management and distribution of its electronic
voucher service at several point-of-sale terminals located
throughout the Libyan retail outlets. Bank of Commerce and
Development will be able to support multiple service delivery
channels including dial-up, GSM, ATMS, IVR and SMS. It provides
management and dispensing capabilities for the GSM prepaid
airtime, with the ability to add more services and access
channels to achieve higher customer satisfaction and fulfill
expansion goals. [menafn.com, 12/1/2008] 

¶28. (U) UNESCO Reinforces Capacities of Public Administrations
through the Use of Free Software: The Arab Federation of
Technical Education, the UNESCO Office in Rabat, and ISESCO, in
cooperation with the Libyan Ministry of the Labor and Training,
organized a workshop at the Higher Institute of Computer
Technology in Tripoli, Libya. The workshop aimed to reinforce
capacities of public administrations through Free and Open
Source Software (FOSS). During the three-day workshop, experts
from the Maghreb countries presented best practices in using
FOSS in their respective countries. This enabled participants to
reinforce the capacities of universities in the field of
technical education through the use of FOSS, and to develop
tools in order to make public services more transparent.
[UNESCO, 12/19/2008] 

¶29. (U) Libya Introduces WiMAX Mobile Service: Libya Telecom and
Technology (LTT) launched on January 22, the WiMAX mobile
service in Libya. In the first phase, LTT aims to provide the
WiMAX mobile service to 300,000 subscribers in the country. LTT
worked along with Alcatel, ZTE, and Huawei companies for the
realization of the project. The WiMAX service is currently
available in eighteen Libyan cities. [libyaonline.com,
01/25/2009] 

TRANSPORTATION 

¶30. (U) Libya Buys Six Oil Tankers for $400 Million Dollars:
Libya's national maritime transport company announced on
Wednesday the purchase of six oil tankers valued at a total of
400 million dollars. The contracts were signed with Korean naval
construction group Samsung Heavy Industries and Japanese
constructor Sasebo Heavy Industries. Four tankers will be built
by Samsung and the other two by Sasebo. The tankers will have a
total capacity of 700,000 tons, or the equivalent of five
million barrels of crude. Headed by Hannibal al-Qadhafi, the
company exercises a near-monopoly in the transport of Libyan
oil. Its fleet currently comprises 18 tankers with a total
capacity of 11.8 million barrels. [AFP, 12/24/08] 

¶31. (U) Libya Bans Swiss Flights: Libya has banned Switzerland's
national carrier, Swiss International Air Lines, from flying to
Tripoli. This is the latest twist in ongoing diplomatic row 

TRIPOLI 00000151  006 OF 006 

between the two countries after the arrest of Muammar
al-Qadhafi's son, Hannibal. Switzerland's national carrier had
three weekly flights from Zurich to Tripoli until mid-July when
the Libyan authorities reduced them to one, citing "technical
reasons." Swiss Air Lines spokeswoman says the company received
a letter saying it had to stop its last remaining flight due to
technical reasons. [www.voa.com, 12/25/08] 

¶32. (U) U.S. Shipping Carrier Nordana Introduces New Service in
Libya: Beginning in February, Nordana will include the Port of
Misurata to its services in Libyan ports. The Port of Misurata
will be called on all sailings to Libya with a frequency of 17
to 18 days. Since trade relations reopened between the U.S. and
Libya in 2004, Nordana has been operating regular roll on / roll
off vessels and breakbulk services from the U.S. into Libya.
Nordana also serves the Libyan ports of Benghazi, Marsa El
Brega, and Tripoli. [breakbulk.com, 1/12/2009] 

LAW 

¶33. (U) Libyan Tax Authority Director Calls on Foreign Companies
to Abide by Law: The Director of the Libyan Tax Authority, Mr.
Al Bueshi Maa'toug Al Alafi, has called on both local and
foreign companies operating in Libya to help his organization by
abiding by the law and paying their taxes regularly. Mr. Bueshi
advised foreign companies operating in Libya to strictly
implement public laws and make sure that they are hiring
competent financial managers and good lawyers who would advise
them on legal matters accordingly. Mr. Bueshi made the call
during a symposium on reforming the Tax System held in Tripoli.
[Tripoli Post, 12/11/08] 

BANKING 

¶34. (U) Libyan Bank Named among the Best Emerging Market Banks
in Africa 2008: Global Finance magazine has named Wahda Bank of
Libya among the "Best Emerging Market Banks in Africa 2008".
Global Finance editors with input from industry analysts,
corporate executives and banking consultants selects the best
emerging market bank based on growth in assets, profitability,
strategic relationships, customer service, competitive pricing,
and innovative products within the region. Wahda Bank ranked
number 90 among 100 banks in Africa, but for it to be among the
best emerging market banks in Africa remains an important sign
that the banking system in Libya is advancing after many years
of total stagnation. [Tripoli Post, 12/13/08]
CRETZ

We are doing to make an effort to release the rest of the cables of interest to us before this year ends. They all come handy as references at a later date. █

Summary: Folks from MIT (home of the FSF/GNU) were said to be using “open-source software” for an “Intranet [that] would rely on radio and satellite data links to avoid dependence on Iraq’s telecom system” and more

“Gatti said MIT plans to set up the system using open-source software,” claims the following Cablegate cable, which speaks about setting up some communication infrastructure for post-invasion Iraq. Here is the full cable:

C O N F I D E N T I A L  ROME 002050 

SIPDIS 

SECDEF FOR OSD/AJTORRES
JOINT STAFF FOR SYIKE 

E.O. 12958: DECL: 05/22/2014
TAGS: EAID [Foreign Economic Assistance], EINT [Economic and Commercial Internet], PREL [External Political Relations], IT [Italy], IZ [Iraq], IRAQI FREEDOM
SUBJECT: IRAQ: SECURITY CONCERNS PUT E-GOV PROGRAM IN LIMBO 

Classified By: Economic Minister-Counselor Scott Kilner
for reasons 1.4 (b)(d) 

SUMMARY
------- 

¶1. (C) Italy's Ministry of Innovation and Technology (MIT) is
ready to send a team to Baghdad to start work on a Euro 11
million project to build an Intranet system for the Iraqi
government.  According to an aide to MIT Minister Lucio
Stanca, however, the Italian Foreign Ministry will not
approve the trip because of security concerns.  The completed
system would link 20-30 Iraqi government departments to each
other and the Internet using a mix of radio and satellite
links.  End summary. 

Safety Concerns Delay E-Government Project.
------------------------------------------- 

¶2. (C) Stefano Gatti (protect), Diplomatic Advisor to
Innovation and Technology Minister Lucio Stanca, recently
gave Econoff an update of Italy's Euro 10-11 million project
to provide the Iraqi government with a basic Intranet
infrastructure.  The MIT has a team ready to go to Baghdad to
conduct an initial survey of the Iraqi Ministries'
requirements; but, Gatti explained with some exasperation,
the Ministry of Foreign Affairs (MFA) is delaying approval of
the trip.  Gatti speculated that the MFA was nervous about
sending additional Italian officials to Baghdad given the
unresolved status of three Italian hostages, the death this
month of an Italian soldier in Nasiriyah, and the
assassination of Interim Governing Council President Ezzedine
Salim outside the Green Zone.  In this environment, Gatti
said, the GOI is reluctant to send more people to Baghdad.
Gatti said the MIT has pared down the team from eight to four
people in deference to the MFA's security concerns, but the
MFA is still withholding approval. 

Need for Iraqi Coordinator
-------------------------- 

¶3. (SBU) A second problem the project has encountered, Gatti
remarked, is finding an Iraqi agency to coordinate with the
MIT team.  He explained that, since the project involves
hooking up several Iraqi ministries to a central Intranet
hub, Italy must find an Iraqi authority capable of overseeing
such a government-wide project.  Gatti predicted, however,
that this problem would be overcome once the Ministry has its
own people on the ground in Baghdad. 

Background
---------- 

¶4. (SBU) MIT's proposed Euro 10-11 million Iraqi Government
Intranet project is designed to give the Iraqi government a
basic system for electronically linking ministries and,
possibly, municipal and provincial governments.  The initial
budget covers the cost of a central server bank, connections
for 20-30 government departments (each with 20 work
stations), a remote back-up system (possibly located in
Italy), plus training and technical support.  The Iraqi
Intranet would rely on radio and satellite data links to
avoid dependence on Iraq's telecom system.  In addition to
providing Iraqi officials with basic email and Internet
connectivity, the Intranet network could also be used for
telephone service among government departments.  Gatti said
MIT plans to set up the system using open-source software. 

(Note: A copy of Italy's proposal for the Iraqi Government
Intranet is available on Rome's Classnet homepage under the
section "Italy Background Notes."  Please do not distribute
this document outside the USG.  End note.) 

Start-up Funding Available from MFA and World Bank
--------------------------------------------- ----- 

¶5. (SBU) Gatti said the MFA already has Euro two million
available to start the project.  The MIT expects to receive
another Euro two million from the World Bank's Development
Gateway Foundation, he said.  The MIT, Gatti asserted, is
ready to start the project even though it has yet to secure
the full Euro 10-11 million in funding.  Gatti predicted the 

additional money would fall into place once the project got
underway.  (Note: The GOI is counting this project as part of
its Euro 200 million Madrid pledge. End note.) 

COMMENT
------- 

¶6. (C) The delay in sending the MIT team to Baghdad
demonstrates how the continuing Italian hostage ordeal and
recent violence around Nasiriyah is creating government
nervousness with negative consequences for reconstruction
work.  However, assuming the security situation stabilizes
and there are no more high-profile attacks or kidnappings
that target Italians, we expect that the MIT team will be
cleared to go to Baghdad in coming weeks. 

¶7. (U) MINIMIZE CONSIDERED. 

Visit Rome's Classified Website:
http://www.state.sgov.gov/p/eur/rome/index.cf m 

SEMBLER 

NNNN
        2004ROME02050 - Classification: CONFIDENTIAL

It is possible that a lot of systems were built with proprietary systems (contractors helping other contractors), but the above is noteworthy nonetheless. █

Summary: Two cables showing the use of Free software in Indonesia “in order to reduce dependence on proprietary systems.”

IN PREVIOUS posts about Indonesia we showed some good news but also a fair deal of mischief from Microsoft. In reverse-chronological order:

• Cablegate: Microsoft Attacks Free/Open Source Software in Indonesian Government With ‘Piracy’ Claims and a Secret 80% Discount, Breaks 1999 Monopolies Law
• Cablegate: With Microsoft Front Group Taking on Indonesia, a Call for Open Source Software Adoption
• Cablegate: Bill Gates Uses AIDS to Bring Microsoft Windows to Indonesia at Expense of Linux-based OLPC (Updated)
• OpenDocument Format in Indonesia and OOXML in Court
• Indonesia is Moving to OpenDocument Format (ODF)
• Will Microsoft Sign an MOU with Indonesia?

According to the following couple of Cablegate cables, “The Head of the Information and Computer Systems Division of Indonesia’s Agency for Technology Research and Application (BPPT) announced that BPPT is developing several computer applications using Free open source Software (FOSS) in order to reduce dependence on proprietary systems. Applications currently in development include e-office (Kantaya), e-learning (Kutahu), and Local Management Information System (Simda) software. BPPT is assisting several local governments (Jembrana, Pekalongan, Banyuwangi, Kuala Kapuas and Sawah Lunto) to implement FOSS-based applications. By 2014, BPPT plans to develop FOSS-based applications for computer driver and kernel technologies, mining data programs, Indonesian language processing, simulation and computerization.” In another cable (the second one) it says that “the international community has developed GIS applications using free open source software for use by countries such as Indonesia. Around 30 participants with key disaster mitigation responsibilities in the Indonesian government took part in the training.”

UNCLAS SECTION 01 OF 04 JAKARTA 001243 

SIPDIS 

DEPT FOR EAP/MTS, OES/ETC, OES/STC, OES/SAT, OES/PCI 

E.O. 12958: N/A
TAGS: SENV [Environmental Affairs], TPHY [Physical Sciences], TBIO [Biological and Medical Science], TRGY [Energy Technology], ENRG [Energy and Power], ID [Indonesia]
SUBJECT: INDONESIA ESTH HIGHLIGHTS: MAY 2008 

IN THIS ISSUE
------------- 

-- Government Phasing out Large-Scale AC Units
-- Papua Signs USD30 Million Forest Carbon Deal
-- Reclamation for an Integrated New City in Tangerang
-- Oil Palm Threatens Sentarum Lake National Park
-- Orangutans Close to Extinction
-- Rare Javan Rhino Caught on Video
-- Sumatran Tiger Population Critical
-- Legal Reform Initiative Seeks to Protect Habitat for Orangutans
-- Mangrove Planting in Surabaya
-- Lax Enforcement and High Waste Treatment Costs Blamed for
Continued Dumping
-- Mushroom Farmers Switch from Kerosene to Firewood
-- BPPT Developing Open Source Software
-- Nuclear Technology in High School Curriculum
-- Tackling HIV Infection Rates Among Surabaya's Children
-- No Blood Transfusion Facilities in Half of Country 

ENVIRONMENT: 

Government Phasing out Large-Scale AC Units
-------------------------------------------
¶1.  According to Tri Widayati, Director of Ozone Protection of the
State Ministry of Environment (MOE), most operators of
industrial-size chilling/air-conditioning units will have replaced
those units with new ones that use environmentally friendly Freon,
such as hydrochlorofluorocarbon (HCFC) 123 and hydrofluorocarbon
(HFC) 134, by the end of June 2008.  The MOE says that only 400
large-scale AC units remain in operation.  The Government of
Indonesia (GOI) banned the further importation of chlorofluorocarbon
(CFC) 11 and CFC 12 after January 1, 2008 to meet its obligations
under the Montreal Protocol.  This will lead to a gradual phase-out
of older AC units.  The MOE is helping to provide soft loans to
companies to finance the replacement of older units.  The Ministry
is also working with voluntary associations to disseminate
information to the public about the transition process. 

Papua Signs USD30 Million Forest Carbon Deal
--------------------------------------------
¶2.  Papua has signed a carbon deal worth up to USD 30 million for
100,000 hectares of forestland.  On May 13, Governor of Papua
Barnabas Suebu signed a Memorandum of Understanding with New Forests
Asset Management (NFAM) Pty Ltd.  During the following two months,
NFAM and the Papua Provincial Government will do a preliminary
survey to identify three locations for this carbon project.  At the
end of 2008, Papua will receive USD 10 million of guaranteed revenue
for the first five years and receive dividends totaling up to USD 20
million over the same period.  NFAM is collaborating with Generation
Investment Management, owned by former U.S. Vice President Al Gore. 

Tangerang Plans New Integrated City on Reclaimed Land
--------------------------------------------- --------
¶3.  On May 15, Head of Tangerang Land Use Office Didin Samsudin
confirmed that Tangerang Regency would reclaim 9,000 hectares of its
northern coastal areas for a planned new "integrated" city.  The
Tangerang Regent has already issued Local Regulation (Perda) No. 8
of 2007 on Reclamation.  This new development will contain hotels, a
marina, a business center, residential areas, and an integrated
container terminal and port.  The new city will cover approximately
8,000 hectares and cost Rp. 20 trillion or USD 1.3 billion.
Tangerang is about 21 km from Jakarta. 

Oil Palm Threatens Sentarum Lake National Park
--------------------------------------------- -
¶4.  Budi Suriansyah, the Head of Danau Sentarum National Park, says
that the palm oil plantation in the Kapuas Hulu region of West
Kalimantan threaten the 132,000-hectare park's ecosystem, which is
dependent on Betung Kerihun National Park.  The development of palm
oil plantations as well as illegal logging is causing water
pollution, and local fishers are finding it increasingly difficult
to find local endemic fish such as jelawat and arwana.  There are 11
palm oil plantation companies and 9 subsidiaries of PT Sinar Mas,
operating on 160 thousand hectares in areas bordering Betung Kerihun
National Park. 

Orangutans Close to Extinction
------------------------------
¶5.  On May 8, the Executive Director of the Center for Orangutan
Protection (COP) stated that, based on a COP study in Central 

JAKARTA 00001243  002 OF 004 

Kalimantan, orangutans will disappear from the region within 2-3
years.  The investigation found 242 palm oil plantations with
activities that having an impact on orangutans and their habitat.
According to COP, these companies include members of the Roundtable
on Sustainable Palm Oil (RSPO), such as Wilmar, IOI and Agro Group.
In 2004, a Population and Habitat Viability Assessment (PHVA)
reported that there were 58,575 orangutans left in Borneo, with an
annual decrease in population of 9 percent leading to extinction by
2015.  Darori, Director General for Forest Protection and Nature
Conservation, is skeptical of the investigation's projections, and
emphasizes that the government will not allow the conversion of
natural forest to other purposes such as palm oil cultivation. 

Rare Javan Rhino Caught on Video
--------------------------------
¶6. At the end of May, a video recorder installed by Ujung Kulon
National Park and the World Wide Fund for Nature-Indonesia
(WWF-Indonesia) caught footage of the extremely rare Javan
Rhinoceros (Rhinoceros sondaicus).  Speaking about the incident on
May 29, Agus Priambudi, Head of Ujung Kulon National Park, said the
recording would help researchers and conservationists learn more
about the Javan rhino's behavior, as well as assist efforts to
reduce threats to the remaining population.  The Java rhino is the
rarest among five rhino species in the world.  There are only an
estimated 50-60 Java rhinos in Ujung Kulon National Park.  The Java
rhino is on the International Union for Nature Conservation's "Red
List" of endangered species. 

Sumatran Tiger Population Critical
----------------------------------
¶7.  On May 25, the Coalition for Protected Animal Monitoring stated
that there were approximately 250 Sumatran tigers (panthera tigris
Sumatrae) left in the wild.  The decrease in this species'
population is due to hunting, conflict with humans, and illegal
logging and land clearing leading to the fragmentation of its
habitat.  Poachers hunt the animal for its skin, bones, fang/tooth
and claws.  Tiger skins sell for approximately 3-5 million Rupiah
(USD 322-537) apiece in local markets and up to USD 3,300 in
international markets.  Although Law No. 5 of 1990 on Natural
Resources Conservation and Ecosystem protects this species,
enforcement of the law is weak. 

Legal Reform Initiative Seeks to Protect Habitat for Orangutans
----------------------------------------
¶8.  The Orangutan Conservation Services Program (OCSP) and Wildlife
Conservation Society (WCS) launched a media campaign in late May, to
commemorate World Environment Day, in order to draw attention to the
urgency of legal protection for orangutan habitat and to support
survival of orangutans in the wild.  WCS is spearheading a policy
reform effort that seeks to protect habitat of endangered species
from conversion to non-forest land uses.  In Indonesia today, it is
illegal to kill an orangutan but it is still legal to convert the
little remaining orangutan habitat to non-forest uses.  Habitat
conversion effectively eliminates whole populations of orangutans
and other critically endangered species as their habitat becomes
fragmented and deforested. 

Mangrove Planting in Surabaya
-----------------------------
¶9.  On May 11, people from various organizations planted 8,000
mangroves along the seashore at Wonorejo in eastern Surabaya.
Wonorejo is poised to become a center for mangrove research,
cultivation, and tourism.  The Surabaya city government is actively
restoring mangrove forests in eastern Surabaya.  Illegal logging has
destroyed at least 40 percent of a total 6,000 hectares of mangrove
forest near Wonorejo.  According to the head of Wonorejo Mangrove
Farming Association, various groups in eastern Surabaya have planted
at least 25,000 more mangrove trees this year than last year.
Unfortunately, last year's mangroves were poorly protected.  For
example, 4,000 mangroves planted in the Kenjeran beach area in
January had died by the end of May, due to high ocean waves and poor
treatment. 

Lax Enforcement and High Waste Treatment Costs Blamed for Continued
Dumping
------------------------------------
¶10.  At least 16 companies in East Java have disposed of industrial
waste in the Brantas River through underground pipelines or during
the heavy rainy season through open ditches.  The companies have
waste treatment facilities but prefer to cut costs by dumping
untreated waste, according to Purnawan, a lecturer at Brawijaya
University and a member of East Java Walhi, an environmental NGO. 

JAKARTA 00001243  003 OF 004 

The phenol content of industrial waste these companies are dumping
in the Brantas is dangerously high, according to Purnawan.  Just
three hours south of Surabaya in Malang, waste from paper and
cassava-processing plants has reportedly resulted in serious
pollution and a major fish kill in the lake behind the Sutami Dam.
Local media report that Malang's city government is reluctant to
take action as paper factories are a major contributor to regional
revenue. 

Mushroom Farmers Switch from Kerosene to Firewood
--------------------------------------------- ----
¶11.  Mushroom farmers in Karawang, West Java, are switching from
kerosene to firewood because of the high cost and scarcity of
kerosene.  Mushroom farmers use fuel to boil water and use the
evaporated water to regulate the level of humidity required for
mushroom growth.  Kerosene's retail cost has increased from 2,310
Rupiah (USD 0.25) to between 2,500-3,000 Rupiah (USD 0.27-0.32),
making the price of firewood relatively cheaper.  During a planting
period of one month, the farmers require on average 80-120 liters of
kerosene or three cubic meters of firewood.  With the current
kerosene price, the farmers' production costs are between
200,000-300,000 Rupiah, but only 150,000 Rupiah if using firewood.
Besides the shift by many farmers to firewood, others have closed
down their mushroom production houses altogether. 

SCIENCE AND TECHNOLOGY: 

BPPT Developing Open Source Software
------------------------------------
¶12.  The Head of the Information and Computer Systems Division of
Indonesia's Agency for Technology Research and Application (BPPT)
announced that BPPT is developing several computer applications
using Free Open Source Software (FOSS) in order to reduce dependence
on proprietary systems.  Applications currently in development
include e-office (Kantaya), e-learning (Kutahu), and Local
Management Information System (Simda) software.  BPPT is assisting
several local governments (Jembrana, Pekalongan, Banyuwangi, Kuala
Kapuas and Sawah Lunto) to implement FOSS-based applications.  By
2014, BPPT plans to develop FOSS-based applications for computer
driver and kernel technologies, mining data programs, Indonesian
language processing, simulation and computerization. 

Nuclear Education in High School Curriculum
-------------------------------------------
¶13.  On May 2, Dr. Taswanda Taryo, Deputy Chairman for R&D
Productivity and Public Acceptance of Nuclear Science and
Technology, BATAN (National Nuclear Energy Agency), announced plans
for a program to include education on nuclear technology in school
curricula, especially high schools.  Eko Madi, Head of the
Subdivision for Nuclear Energy Science and Technology Dissemination,
BATAN, explained that BATAN and the Ministry of Education would
establish an expert team to begin drafting physics, chemistry, and
biology curricula on nuclear technology.  In addition, BATAN is
conducting outreach to educate teachers, students, and NGOs about
nuclear technology.  BATAN will also establish three Centers for
Nuclear Education and Information, including one in Jepara (Central
Java), which is close to Muria Bay, the location for a proposed
nuclear plant. 

HEALTH: 

Tackling HIV Infection Rates Among Surabaya's Children
--------------------------------------------- ---------
¶14.  The Surabaya City Health Department announced that 37 babies in
Surabaya contracted HIV/AIDS between January and March 2008.  At a
workshop on HIV/AIDS, Surabaya's Vice Mayor, Arief Afandi, confirmed
that HIV/AIDS cases are spreading in all 31 districts in Surabaya.
The Surabaya City government will take a new approach to the problem
by training students to be HIV/AIDS cadre who will provide
information and training to their peers.  The Surabaya City
government will also involve more children and students in future
HIV/AIDS workshops.  So far, it has selected 10 junior high schools
and 10 senior high/vocational schools in Surabaya as HIV/AIDS test
sites for this campaign. 

No Blood Transfusion Facilities in Half of Country
--------------------------------------------- ----
¶15.  During a public hearing before the Jakarta regional parliament
on May 12, Dr. Ratna Rosita, Director of Basic Medical Services and
Nutrition of the Ministry of Health, stated that Indonesia lacks
Blood Transfusion Units (UTDs) in 226 regions.  Ministry of Health
statistics (2006) show that only 231 of 457 regencies/cities in 

JAKARTA 00001243  004 OF 004 

Indonesia have UTDs, including those operated by the Indonesian Red
Cross (PMI), provincial governments and hospitals.  PMI's Chairman
Mari'e Muhammad and Adang Dorodjatun, Chairman of Indonesia Blood
Donors, also attended the public hearing.  PMI currently has 212
UTDs, of which 24 percent are located within hospitals and 76
percent outside of hospitals. 

HUME

Here is the second cable.

UNCLAS SECTION 01 OF 03 JAKARTA 003185 

SIPDIS 

SIPDIS 

DEPT FOR EAP/MTS AND OES/ETC 

E.O. 12958: N/A
TAGS: SENV [Environmental Affairs], TPHY [Physical Sciences], TBIO [Biological and Medical Science], TRGY [Energy Technology], ENRG [Energy and Power], ID [Indonesia]
SUBJECT: INDONESIA ESTH HIGHLIGHTS: AUGUST - OCTOBER 2007 

¶1. Summary: The Indonesian Supreme Court hosted a judiciary workshop
on wildlife crime and prosecution under the ASEAN Wildlife
Enforcement Network (WEN) program in August.  The Vice Governor of
Jakarta announced on September 27 that Jakarta could potentially
receive $2 million in funding from developed countries under the
Kyoto Protocol if it can reduce its CO2 emissions. A 2007 survey
found that despite overall decreases in other parts of the island,
Sumatran rhino populations in Bukit Barisan Selatan National Park
and Way Kambas National Park in Lampung increased by up to 30
animals.  On September 29, Vice President Yusuf Kalla announced that
starting in 2008, Indonesia would increase its reforestation target
from 1 million to 2 million hectares per year.  On September 25, the
Head of Forest Office of West Papua said that the Governors of Papua
and West Papua provinces would release a joint decree to ban log
exports from Papua.  The State Ministry of Environment announced on
September 15 that it aims to phase out imports of ozone-depleting
substances by the end of 2007 as set in the Montreal Protocol. On
October 7, Customs officials successfully foiled efforts to smuggle
70 rare animals through Soekarno-Hatta Airport in Jakarta.  The
State Ministry for Research and Technology and the United Nations
Development Programme conducted a "Train the Trainer" session on
open-source geographic information system software in Jakarta on
October 22-27. On October 3, the Jakarta provincial government
granted Rp 40 billion ($4.4 million) to improve health and education
services in eight of its satellite cities.  At a ceremony to
commemorate World Sight Day, the Ministry of Health (MOH) announced
that it would increase its focus on reducing the numbers of
vision-impaired children. Several residents of Wolotau Village in
the Kota Baru sub-district of the Ende Regency were stricken with
anthrax after eating contaminated buffalo meat in mid-October.  The
Anak Krakatau, or "Child of Krakatau" Volcano, began spitting out
flaming rocks and smoke in late October.  On October 23, the WWF
Program Coordinator for West Kalimantan Hermayani Putera announced
that poachers had smuggled rare plant species including orchids and
nepenthes (also known as tropical pitcher plants) from Kalimantan to
Malaysia. End Summary 

Indonesia Hosts ASEAN WEN Judiciary Training
--------------------------------------------- --- 

¶2.  The Indonesian Supreme Court hosted a judiciary workshop on
wildlife crime and prosecution under the ASEAN WEN program in August
in Jakarta. The two-day workshop brought together representatives
from Indonesia's judicial sector and focused on prosecution,
investigation, Indonesian laws governing protection of wild animals
and plants, local and trans-national cooperation with other
agencies, and ASEAN-wide initiatives on Mutual Legal Assistance.
Judicial officers from Thailand, Malaysia and the United States
joined the event in order to share best practices and increase
international cooperation to fight trans-national criminals involved
in the wildlife trade.  Indonesia plans a follow-up training for the
national police in February 2008. 

Jakarta May Be Eligible for Funding for CO2 Reduction
--------------------------------------------- -------- 

¶3.  On September 27, Vice Governor of Jakarta Fauzi Wibowo announced
that Jakarta could potentially receive $2 million in funding from
developed countries under the Kyoto Protocol if it can reduce its
CO2 emissions. To be eligible for the funding, Jakarta would have to
meet United Nations Environment Program (UNEP) certification
requirements.  Fauzi stated that the Jakarta administration is
implementing a clean air project to try to meet the UNEP standards.
Dollaris R. Suhadi, Project Manager of the Clean Air Project,
explained that achieving UNEP certification will take up to a year
of research and between $500,000 and $1 million in funding.  Jakarta
officials are optimistic that the city will be able to meet UNEP
requirements, citing for example that since the city's bus ways
became operational in 2004-2005, the total number of private
vehicles on the road has decreased by 14%. 

Survey Shows Sumatran Rhino Population on the Rise
--------------------------------------------- ----- 

¶4.  A 2007 survey conducted by the Rhino Protection Unit (RPU) and
Yayasan Badak Indonesia found that despite overall decreases in
other parts of the island, Sumatran rhino populations in Bukit
Barisan Selatan National Park and Way Kambas National Park in
Lampung increased by between 24 and 30 animals (to a total of 60 and
85 in each park, respectively).  Coordinator of the RPU Arief
Rubiyanto stated the increase was unexpected, considering the many
threats to the rare animals from poachers and territorial
encroachment due to illegal logging and forest conversion
activities.  RPU patrolling activities in both parks and the curbing
of poaching contributed to the improved numbers.  In recognition of 

JAKARTA 00003185  002 OF 003 

his efforts, Rubiyanto received the Disney Conservation Award from
the Walt Disney Corporation. 

Indonesia Reforestation Target Raised to 2 Million Hectares Per
Year
--------------------------------------------- ------ 

¶5.  On September 29, Vice President Yusuf Kalla announced that
starting in 2008, Indonesia would increase its reforestation target
from 1 million to 2 million hectares per year.  Kalla added that the
international community could not blame Indonesia for cutting its
forests in the past, since timber consuming countries such as the
U.S., Japan and Korea invested in the concession business. Note:
Although the central government's sets the target, responsibility
for implementation falls to the regional governments, who may face
difficulty meeting the increased level. 

Papua Provincial Government Bans Log Exports
--------------------------------------------- ---- 

¶6.  On September 25, the Head of Forest Office of West Papua
Province said that the Governor of Papua Barnabas Suebu and Governor
of West Papua Abraham O. Atururi would release a joint decree to ban
log exports from Papua.  The Papuan administration wants to push
investors to open wood processing facilities in Papua rather than
shipping logs out from Papua.  There are currently 25 concessions
within a 4.6 million hectare area, while there is only one wood
processing facility, which is located in Sorong.  The Papuan
government will implement the ban incrementally, beginning with a
moratorium on 30 percent of log exports. TIME magazine highlighted
Governor Suebu in October as an environmental hero for his
conservation efforts. 

Government to Halt Ozone-Depleting Imports
------------------------------------------- 

¶7.  The State Ministry of Environment announced on September 15 that
it aims to phase out imports of ozone-depleting substances by the
end of 2007 as set in the Montreal Protocol.  The Ministry said that
as of August, imports of chlorofluorocarbons (CFCs) for the year had
reached 193 metric tons, down from 2,331 metric tons in 2006.
Officials stated that the ministry had phased out the use of 1,209
metric tons of CFCs from several sectors in 2006 and would eliminate
use of CFCs from the industrial sector by June 2008. 

Indonesian Customs Officials Foil Animal Smugglers
--------------------------------------------- ------ 

¶8.  On October 7, Customs officials successfully foiled efforts to
smuggle 70 rare animals through Soekarno-Hatta Airport in Jakarta.
The Ministry of Finance's Investigation and Enforcement Section
reported that Indonesian citizen Jonathan Leo Nardha had tried to
smuggle the rare animals in speaker boxes.  Nardha was transporting
the animals from Malaysia for Indonesian customers in Jakarta. 

Disaster Data Base Training Conducted in Jakarta
--------------------------------------------- ----- 

¶9.  The State Ministry for Research and Technology and the United
Nations Development Programme (UNDP) conducted a "Train the Trainer"
session on open-source geographic information system (GIS) software
in Jakarta on October 22-27.  Francis Sarmiento III, Project Officer
for the UNDP's ASEAN Plus Three Sub-regional Node International Open
Source Network, explained that Indonesia needed good, efficient,
effective and fast local and national databases and information
systems to anticipate and manage natural disasters.  Sarmiento
explained that database and GIS implementation using closed software
sources is difficult for developing countries due budget
limitations.  To address this challenge, the international community
has developed GIS applications using free open source software for
use by countries such as Indonesia.  Around 30 participants with key
disaster mitigation responsibilities in the Indonesian government
took part in the training. 

Jakarta Grants Funding for Health Services
------------------------------------------- 

¶10.  On October 3, the Jakarta provincial government granted Rp 40
billion ($4.4 million) to improve health and education services in
eight of its satellite cities.  The grant would support efforts to
establish community health centers and reduce the number of
outbreaks of communal diseases.  The grant includes the surrounding
cities of Bogor, Depok, Bekasi and Cianjur in West java Province, as
well as Tangerang in Banten. 

JAKARTA 00003185  003 OF 003 

GOI Seeks to Reduce Vision Impaired Numbers
-------------------------------------------- 

¶11.  At a ceremony to commemorate World Sight Day, the Ministry of
Health (MOH) announced that it would increase its focus on reducing
the numbers of visually impaired children. The MOH has conducted
several programs under this initiative, including preventative
measures through early detection of blindness in community health
centers, provision of vitamin A supplements to combat deficiencies
that raise the risk of blindness, and subsidies for regular exams
and eyeglasses for poorer families. The MOH has established a
national commission to tackle blindness and other sight disorders. 

Anthrax attacks villagers in East Nusa Tenggara
--------------------------------------------- --- 

¶12.  The Head of East Nusa Tenggara (NTT) Sub Office of Veterinary
of Livestock Office, Maria Geong, reported on October 30 that
several residents of Wolotau Village in the Kota Baru sub-district
of the Ende Regency were stricken with anthrax after eating
contaminated buffalo meat.  Around 20 villagers were in critical
condition and hospitalized.  Geong instructed the Health and
Livestock Offices to isolate the area, and the Ende Health Office
sent medical teams to the village to support the effort.  Ende
Regency has been an endemic anthrax area since 1994, where anthrax
spores can live up to 60 years. 

Anak Krakatau Volcano Spits Flames
----------------------------------- 

¶13.  The Anak Krakatau, or "Child of Krakatau" Volcano, began
spitting out flaming rocks and smoke in late October. Saut
Simatupang of Indonesia's Center for Vulcanology and Geological
Hazard Mitigation predicted that the volcano would continue to
rumble for some time but posed little danger to the area.  Anak
Krakatau sits in the Sunda Strait between Java and Sumatra. 

"Nepenthes" Flies from Kalimantan
--------------------------------- 

¶14.  On October 23, the WWF Program Coordinator for West Kalimantan
Hermayani Putera announced that poachers had smuggled rare plant
species including orchids and nepenthes (also known as tropical
pitcher plants) from Kalimantan to Malaysia.  They hunted the plants
in the Meratus Mountain area and the Hampangin Forest, located in
the Katingan Ilir Sub-district of Katinan Regency (approximately 40
miles from Palangkaraya, Central Kalimantan).  Demand for these
species has increased in Malaysia, leading to an increase in
poaching in Indonesia.  The Indonesian Orchid Association expressed
worry that these activities are threatening the sustainability of
the species.  Malaysian consumers allegedly pay local people to
collect the rare and protected plants in Kalimantan's forests for
sale.  One pot of Nepenthes is worth Rp 20,000 (approximately
$2.00), and the price for a Black Orchid ranges from Rp 45,000 to Rp
75,000 (approximately $4.80 to $8.10). To minimize the threat of
poaching, the West Kalimantan Natural Resources Conservation Office
has trained local residents to develop nurseries for the endangered
plants. 

HUME

The story of Indonesia is an interesting one especially because of Microsoft’s response to ODF and FOSS adoption. It’s not unique to Indonesia and we have some antitrust material to show how Microsoft systematically identifies and then attacks deployments of FOSS. █

Summary: The abusive monopolist is caught trying to (and perhaps succeeding in) sabotage, using “piracy” for propaganda and blackmail

WHEN writing about Microsoft we typically write about a company of sociopaths who do not care about the law, do not respect the right of choice to exist, and work behind the scenes to engineer loopholes, bribe people, intimidate opposition, and sometimes overthrow or overtake positions of power. According to the following Cablegate cable, the Business Competition Supervisory Commission (KPPU) “said that many computers in the GOI were using open-source software…”

The Microsoft MOU would “hand Microsoft a monopoly,” KPPU argued. The cable also says that Microsoft used the “piracy” propaganda to fight against Free/open source software, quite frankly as usual. Here is another piece of propaganda about ‘savings’: “MS offered an 80% discount to put legitimate software on all GOI computers, estimate at 510,000 units. Total cost would be approximately $45 million, a savings to the GOI of $260 million.”

What a joke. For a country in a poor economic state this is still a high cost and Microsoft is just trying to establish more of a monopoly while expelling Free/open source software (While making a profit, too). For background also see:

• Cablegate: Bill Gates Uses AIDS to Bring Microsoft Windows to Indonesia at Expense of Linux-based OLPC (Updated)
• OpenDocument Format in Indonesia and OOXML in Court
• Indonesia is Moving to OpenDocument Format (ODF)
• Will Microsoft Sign an MOU with Indonesia?
• Cablegate: With Microsoft Front Group Taking on Indonesia, a Call for Open Source Software Adoption

Here is the full cable which also says that “the Ministry of Information and Communications Technology did not put in a request for funds for the MOU in the 2007 budget, and in March 2007, the Business Competition Supervisory Commission (KPPU) urged the GOI to annul the deal in an advisory, stating it violated the 1999 Monopolies Law.”

VZCZCXRO6802
RR RUEHCHI RUEHDT RUEHHM
DE RUEHJA #1388/01 1360856
ZNR UUUUU ZZH
R 160856Z MAY 07
FM AMEMBASSY JAKARTA
TO RUEHC/SECSTATE WASHDC 4748
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
INFO RUEHZS/ASSOCIATION OF SOUTHEAST ASIAN NATIONS
RUEHKO/AMEMBASSY TOKYO 0519
RUEHBY/AMEMBASSY CANBERRA 0752
RUEHBJ/AMEMBASSY BEIJING 4086

UNCLAS SECTION 01 OF 05 JAKARTA 001388 

SIPDIS 

SIPDIS
SENSITIVE 

DEPT FOR EB/TPP/MTA, EB/TPP/IPE AND EAP/MTS
TREASURY FOR IA-CIORCIARI
SINGAPORE FOR BAKER
USDOC FOR BERLINGETTE/4430
DEPT PASS USTR DKATZ, WEISEL, BAE 

E.O. 12958: N/A
TAGS: ETRD [Foreign Trade], KIPR [Intellectual Property Rights], EINV [Foreign Investments],
ECON [Economic Conditions], EMIN [Minerals and Metals],
KCOR [Corruption and Anti-Corruption], ID [Indonesia]
SUBJECT: USTR FINDS IPR PROGRESS, CHALLENGES IN INDONESIA 

REF: A) Jakarta 1212 - New Investment Law; 

     B) Jakarta 1326 - East Java-China Trade 

¶1. (SBU) Summary.  Visiting USTR officials Barbara Weisel and David
Katz reviewed efforts related to intellectual property rights (IPR)
protection and enforcement in Indonesia during their May 3-4 visit
to Jakarta.  Members of the National IPR Task Force noted that
difficult and ongoing challenges remained to improve policy
coordination by the Task Force, and U.S. business leaders reported
that prosecutions and convictions of IPR pirates remains low, and
dialog with private industry, especially on pharmaceuticals is weak.
 The Chairman of the Investment Coordinating Board (BKPM) Muhammed
Lutfi, in response to concerns that foreign investors will need a
letter of recommendation from BKPM to obtain a work visa (and thus a
"backdoor" approval) under the new investment law, said that the
BKPM will set up an immigration office in its headquarters to
facilitate.  A garment industry buyer said competition and
transshipments from China are hurting Indonesia's textiles and
garments sector, while a mining industry representative said that
mining is "flat on its back" in Indonesia, despite high
prospectivity, due to the unfriendly business climate.  In meetings
with ASEAN, Katz emphasized cooperation between the U.S. Food and
Drug Administration and ASEAN on pharmaceuticals issues.  USTR is
also encouraging ASEAN members to attend a Sanitary and
Phytosanitary workshop in Vietnam in July to learn more about
irradiation of tropical fruits to improve access to the U.S. market.
 End Summary. 

IPR: Progress and Challenges
---------------------------- 

¶2. (SBU) During a May 3-4 visit to Jakarta, visiting Assistant U.S.
Trade Representative (AUSTR) Barbara Weisel and USTR Director for
Southeast Asia and Pacific Affairs David Katz met with the American
business community, the National IPR Task Force, IPR advisors, ASEAN
officials, a member of Parliament's Commission VI, and a prominent
member of the Indonesian Chamber of Commerce.  At a May 3 AmCham
lunch, business representatives gave an update on several issues,
with emphasis on the continuing challenges of intellectual property
rights (IPR) enforcement in Indonesia.  The head of the AmCham IPR
Committee noted several problems in the IPR area: 

-- The National IPR Task Force still does not have a reliable
budget.  It also does not have a forum for dialog and consultation
with the private sector. 

-- Customs Law 10/95 was finally amended in November 2006 and allows
for Customs to take action without having to get court permission in
advance.  It still requires implementing regulations, however.
(Note: Embassy learned from Customs Human Resources Department Head
and former IPR Division Head Okto Irianto, that Minister Mulyani
will review the draft regulations for further inter-ministry
discussion.) 

-- Legal reform overall still lacks transparency, enforcement and
decisions need to be made public.  Judges need more training in IPR.
 More deterrence is needed for IPR piracy. 

National IPR Task Force: Still New
---------------------------------- 

¶3. (SBU) In a meeting with the National IPR Task Force (TF) on May
4, USTR Weisel congratulated Indonesia on remaining on the Watch
List, and noted that the formation of the IPR TF was big news.
Ansori Sunungan, the Director for Copyrights and Industrial Design,
said that the IPR TF has the goal of coordinating among relevant
agencies, show the seriousness of the GOI, and perform public
outreach and education to support IPR development in Indonesia.
Cooperation among law enforcement agencies remains a huge problem.
There is a view here that "piracy creates jobs," Ansori admitted.
"The high U.S. price for genuine DVDs is also challenging for the
market here," he argued.  For Global IP Day on April 26, Indonesia
held a series of seminars and events, including an "integrity
awards" ceremony at which Vice President Kalla was the keynote
speaker.  Kalla praised creativity and innovation in his speech, and
spoke of the importance of legal protections. 

¶4. (SBU) The National IPR TF plans to meet at least once a month,
and report every six months directly to President Yudhoyono.  The
IPR TF has five priorities through 2009, to be carried out by 

JAKARTA 00001388  002 OF 005 

special working groups: 

-- Law enforcement issues (Regulation 2004/29); 

-- Review and analyze applicable regulations; 

-- Outreach and public relations; 

-- Human resources and capacity building; 

-- International Cooperation. 

¶5. (SBU) The IPR TF also plans to set up a Secretariat.  AUSTR
Barbara Weisel asked about the TF's budget.  Ansori responded that
the budget is authorized under Presidential Decree No 4/2006 Article
11 "All costs associated with IPR Task Force activities is levied on
the Ministry of Justice and Human Rights budget."  The IPR TF has
submitted its budget request to the Ministry of Finance, but has not
yet received its own dedicated funding.  The IPR TF is also looking
at other budget sources as well.  There will be a Ministerial level
meeting with the IPR TF at least once a year, and three Ministers
are very actively engaged: Coordinating Minister for the Economy
Boediono, Trade Minister Pangestu, and the Minister of Law and Human
Rights. Ministry of Trade's Ambassador Halida Miljani urged U.S.
assistance in improving data collection on IPR violations, better
case management and training of judges in IPR matters.  Halida said
her goal is for all police, prosecutors and judges to have the same
level of knowledge on IPR. 

Food and Pharmaceuticals IPR Issues
----------------------------------- 

¶6. (SBU) Pharmaceuticals companies continue to face challenges and
complain there is "no level playing field" as domestic companies do
not have to comply with World Health Organization codes and
standards, while foreign companies do.  One AmCham member claimed
there is a nasty pattern of regulatory discrimination against
foreign investors.  Other representatives expressed their concern
that the GOI requirement that all branded pharmaceuticals include
the generic name of the medicine on the label at 80% of the size of
the brand name, and in the same font and color as the brand name,
could have a major impact.  Expert panels on nutrition do not
reflect the greater body of science.  The views of the experts are
often not shared, and industry is not permitted to respond or put
forth a position.  It is not clear how "experts" are selected for
the panel: they seem intended to simply create an artificial trade
barrier.  One drug company representative said there is "no
transparency" on pricing and labeling issues for pharmaceuticals.
"Not only are the GOI's doors closed, they are locked," she noted. 

Halal: Lack of Standards and Certifiers
--------------------------------------- 

¶7. (SBU) There is no standard or guidance for halal certification
and labeling in Indonesia, and a lack of certifiers, which affects
both the food and drug sectors.  The Ministries are not
communicating well with each other. USTR Weisel noted that this is a
global problem, with no agreement between religious groups and no
international halal standard.  Industry currently pays a nominal fee
for certifiers, but may eventually have to pay a much higher fee per
unit.  ASEAN may need to discuss having at least a regional halal
standard.  Currently, there is no consistency across borders.
Weisel noted the importance that the religious standards of halal
are met, but suggested that it would be useful to explore ways to
agree on a regional or international standard of halal to avoid
creating another non-tariff trade barrier. 

Optical Discs: More Enforcement Needed
-------------------------------------- 

¶8. (SBU) One of the Embassy's IPR advisors noted that there are 29
registered Optical Disc (OD) factories in Indonesia with a potential
capacity to produce at least 500 million ODs.  Industry estimates
the annual legal requirement domestically at only around 15 million
ODs.  Despite Customs efforts and a licensing requirement for
imports of optical-grade polycarbonate, large quantities continue to
be smuggled in each year to support illegal manufacture.  When OD
factories were registered and required to engrave Source
Identification Codes (SID) on production line molds, however, many 

JAKARTA 00001388  003 OF 005 

factories have resorted to obscuring the engraved SID codes using
heat resistant resins and they continue to produce illegal ODs.
Factory inspectors are having difficulties.  They have been kept
waiting outside for 30 minutes or more while factories "clean up."
When they finally enter, machines are warm but managers deny they
are active. 

¶9. (SBU) The Ministry of Industry representative said the Ministry
lacks sufficient law enforcement support.  It has the power of
inspection but not the power to enter the factories, which only the
police can do.  The head of the AmCham IPR committee noted that
President Yudhoyono has received the National IPR Task Force report,
but has not yet made any public comment on the report or a statement
on the need for improved IPR enforcement.  In a subsequent meeting
on May 5, the Embassy's two IPR advisors and a regional investigator
for the recording industry association (IFPI) said the lack of
continuity and documentation of raids is an ongoing problem.  There
is no timeline on what raids will occur where, and no follow-up
through prosecution by the courts.  The actions taken thus far by
the GOI have received - deservedly - a lot of recognition and
credit.  But we need to measure results by the actual reduction in
the availability of pirated material. 

¶10. (SBU) AUSTR Weisel noted with regret that Ratu Plaza, a center
for pirated OD vendors, was back up and running after two weeks of
closure, with a pirated copy of the just-released movie "Spiderman
3" available for $0.45.  The IPR advisors said that change to the
high-profile malls must be done incrementally, to gradually change
out pirates with vendors of genuine goods.  Gambling, narcotics and
OD piracy had been three major sources of funding for the police.
Now only OD piracy remains.  The IFPI investigator believes that OD
pirates have invested $400-500 million in pirated OD production in
Indonesia. 

End-User Piracy and Microsoft MOU
--------------------------------- 

¶11. (SBU) Microsoft representatives lamented that Indonesia has the
third worst software piracy in the world after Zimbabwe and Vietnam.
 The Memorandum of Understanding signed in November 2006 had as a
goal for the Government of Indonesia (GOI) to take steps to replace
the estimated 87% pirated software on GOI computers by March 31,
2007.  MS offered an 80% discount to put legitimate software on all
GOI computers, estimate at 510,000 units.  Total cost would be
approximately $45 million, a savings to the GOI of $260 million. 

¶12. (SBU) However, the Ministry of Information and Communications
Technology did not put in a request for funds for the MOU in the
2007 budget, and in March 2007, the Business Competition Supervisory
Commission (KPPU) urged the GOI to annul the deal in an advisory,
stating it violated the 1999 Monopolies Law.  Although not as strong
as a formal KPPU ruling, the advisory has shaken the GOI.    The
KPPU said that many computers in the GOI were using open-source
software, and that the MOU would "hand Microsoft a monopoly."  The
KPPU said the GOI and MS could face sanctions if it pursued the MOU. 

¶13. (SBU) Former MICT Minister Sofyan Djalil has subsequently said
MICT would have to review the estimate of 510,000 computers and
asked if the National Bureau of Statistics (BPS) could do it.
Microsoft has countered that if the estimate of 510,000 computers
was too high, it would adjust its price accordingly at the
discounted rate.  (Comment: The stalled MOU reflects a lack of
ownership in the GOI for solving pirated software use in the
government.  It is unclear which Ministry has the lead.  The GOI
does not currently appear to have any alternative strategy to the
MOU.) 

Textiles and Garments:
China Challenge
---------------------- 

¶14. (SBU) A representative of the garment industry noted that there
is not one brand or manufacturer her that does not understand the
challenge of China.  Indonesia has a window of opportunity to be
number two, but has to deal with the transshipment problem first
(reftel B).  The industry representative reported that growth in
Indonesia-based production of just one international brand was 40%
last year. 

JAKARTA 00001388  004 OF 005 

Mining: "Flat on Its Back"
-------------------------- 

¶15. (SBU) A representative of a major mining company noted that the
mining industry is "flat on its back" in Indonesia.  The Director
General for Mines recently stated at an international conference
that foreign investors may need to partner with a state-owned
company that will have 51% ownership.  The GOI is considering
requiring mining firms to process their ore domestically.  Under
current law, they have the option to export ore or process it
domestically.  In some cases, illegal miners outnumber legal ones.
Indonesia is in the top ten for geologic prospectivity but near the
bottom as an attractive place to invest, according to a widely
respected industry survey.  Data from Chile that poverty has been
alleviated by 40% in areas surrounding mines falls on deaf ears
here.  Significant elements of the legislative and executive
branches of the GOI seem to prefer to deal with Chinese, Korean and
politically well-connected domestic investors such as Bakrie.  They
are not interested in U.S. investment right now.  Mining and other
extractive industries are very concerned about Article 33 of the new
investment law, which criminalizes tax disputes (reftel).  This
article was not in the GOI's original draft, but inserted by
Parliament. 

Investment Issues: Negative List Pending
---------------------------------------- 

¶16. (SBU) In a meeting with the Chairman of the Investment
Coordinating Board (BKPM) Muhammad Lutfi, Lutfi said the new
investment law is not necessarily better than what we had in 1967.
Much of Indonesia's current problems with the business climate are
not related to laws or regulations, but implementation at the local
level.  "The problem is at the bottom of the pyramid," Lutfi noted.
"We can't control the harassing behavior of the Echelon IV and V
officials."  Lutfi said that the new negative list would be very
progressive, but would not give a timeline for its completion.  He
criticized Trade Minister Pangestu for asking line ministries for a
wish list for the negative list, stating this would only open it up
for expansion.  (Note: There is no love lost between Lutfi and Trade
Minister Pangestu.)  On the controversy surrounding the need for a
letter of recommendation for foreign investors to receive employment
visas (reftel A), Lutfi said that there will be an immigration
office in the BKPM itself.  Only foreigners who "misbehave" will
have any difficulty.  Regarding one-stop shops, eventually they will
be in every province that needs one. 

¶17. (SBU) In a meeting with Parliamentary Commission VI (Trade,
Industry, Cooperatives and State-Owned Enterprisses) Chairman Didik
J. Rachbini, he noted that the new investment law will bring three
levels of openness: completely open, open with conditions, and
closed.  The composition of the negative list is now in the hands of
the GOI.  Some national groups have criticized the new investment
law is too liberal.  The issue of natural resources is still under
discussion for implementing regulations.  If a sector is located in
one province only, it will be the decision of the provincial
government.  If an investment crosses two or more sectors, the
central government will be responsible.  However, all FDI will be
managed by the central government.  The BKPM will eventually open
provincial offices. 

¶18. (SBU) The DPR looked at the investment laws of several other
countries while crafting the law.  Rachbini opined that the labor
law amendments were very sensitive, and he was not optimistic about
any near-term progress, though he said there could be some progress
on labor in Special Economic Zones (SEZs) He said that nine or ten
provinces are competing for SEZs.  USTR Weisel asked about local
awareness of these investment issues.  Rachbini said there is not
much awareness about the investment debates in the capital.  When he
travels home, he noted, "There are three things people worry about,
the price of rice, the price of corn and the price of sugar." 

ASEAN Issues: Pharmaceuticals and SPS
------------------------------------- 

¶19. (SBU) In meetings with ASEAN officials, USTR David Katz focused
on the next steps to follow up the initial contact between U.S. Food
and Drug Administration (FDA) and ASEAN on pharmaceuticals issues.
The FDA suggested working through the Global Cooperation Group (GCG)
of the International Conference on Harmonization (ICH).  FDA experts
will participate in a GCG meeting in Japan in the fall and could 

JAKARTA 00001388  005 OF 005 

potentially meet with ASEAN afterwards.  Katz noted that it is rare
for the FDA to engage with international experts outside the ICH
framework, so ASEAN should take advantage of this opportunity.  Ms.
Giang Le Chau, the ASEAN Secretariat's Senior Officer of Standards
and Conformance, appreciated the need to follow up but cautioned
about some ASEAN sensitivity with the ICH, which is supported by
multinational corporations.  She says that even if the initial
pretext for the FDA to come to the region is the ICH, discussions
with ASEAN should be portrayed as "government-to-government,
regulator-to-regulator" talks.  She thought it would be useful to
develop a list of project for which ASEAN needs technical assistance
and provide that to the FDA. 

¶20. (SBU) Katz was not certain that such a list of assistance needs
would be a useful way to proceed, thinking that policy discussion
with the FDA, at least initially, would be useful to lay the
groundwork for more technical talks.  Katz suggested that if the FDA
and ASEAN were to engage in further discussions, this might improve
the prospects for further collaboration in the future.  The initial
key is to get the FDA out to ASEAN.  The ASEAN delegation had a
successful visit to the FDA Center for Drug Analysis and Research
(CDER) Forum in Washington in April.  USTR and the ASEAN
Secretariat, along with members of the ASEAN Consultative Committee 

SIPDIS
for Standards and Quality (ACCSQ) Pharmaceutical Products Working
Group (PPWG), will need to develop next steps for work under the
TIFA on the ASEAN Common Technical Dossier for pharmaceuticals
registration and approvals procedures.  Katz also made a pitch for
multinational corporations to be included in the dialogue sessions
with the ASEAN Working Group on Pharmaceutical Products.  Giang
noted there have been problems in the past resulting in restrictions
that only permitted ASEAN nationals to attend.  However, she thought
the Chairman of the group was showing signs of softening on this
tough position. 

¶21. (SBU) On Sanitary and Phytosanitary (SPS) issues, APHIS is
proceeding with the workshop in Ho Chi Minh City, Vietnam in July on
the irradiation of fruits and has sent invitations to all ASEAN
Member Countries except one.  Mr. Somsak Pippopinyo, Head of Natural
Resources Unit, said that the ASEAN Secretariat was willing to be
helpful to inform member countries of the event, but was not certain
of its role.  They expressed a willingness to inform the ASEAN
Experts on SPS Issues of the seminar, when it meets June 18-19 in
Kuala Lumpur, and asked whether APHIS would like to make a
presentation at the workshop.  Katz said APHIS liked the idea of
working at the regional level to be efficient at explaining the
requirements for access to the US market for fresh fruits.  However,
he doubted if APHIS had a budget to support an extra trip.  He
promised the Secretariat to provide the list of acceptances for the
seminar. 

¶22. (U) USTR contributed to and cleared on this message. 

HEFFERN

Microsoft is abusing its illegally-obtained monopoly, yet not many authorities seem to pay attention and react. This shows a systemic error in regulation. █

Summary: A diplomatic cable about IBM, Linux and Free/open source software

The following Cablegate cable talks about IBM and Linux. It also states that “[t]he use of an open source code Linux is another area of focus for IBM India. The company formed an IBM Linux Competency Center and Linux Solution Center in Bangalore to establish product standards, further Linux R&D as well as to localize products for an increasingly global customer base with local content requirements. State governments in India are big customers as they prefer open source code that enables development of local language fonts.”

Here is the Cablegate cable in full:

VZCZCXRO6031
RR RUEHBI RUEHCI
DE RUEHCG #2571/01 3260727
ZNR UUUUU ZZH
R 220727Z NOV 06
FM AMCONSUL CHENNAI
TO RUEHC/SECSTATE WASHDC 0443
INFO RUEHNE/AMEMBASSY NEW DELHI 2087
RUEHBI/AMCONSUL MUMBAI 4907
RUEHCI/AMCONSUL CALCUTTA 0647
Hide header
UNCLAS SECTION 01 OF 03 CHENNAI 002571 

SIPDIS 

SIPDIS 

E.O. 12958: N/A
TAGS: ECON [Economic Conditions], EINV [Foreign Investments],
EINT [Economic and Commercial Internet], IN [India; Andaman Islands;
Lakshadweep Islands; Nicobar Islands]
SUBJECT: IBM INVESTS BIG IN INDIA: HUMAN RESOURCES
ARE KEY 

REF: CHENNAI 1187 

¶1. (U) Summary:  Riding the crest of a $6 billion
investment, IBM India plans to expand its Bangalore
research and development (R&D) operations and in
doing so will unleash a new human capital thrust in
already talent-hungry south India.  The company
anticipates its Indian workforce will triple in the
next five years.  An expanding market in India for
U.S. manufactured mainframes and network software
services presents an opportunity the company does not
plan to miss. Increasing demand for remote management
of global client networks is another revenue stream
for IBM India. Simultaneous investments in open
source software protocol and capacity building
spearhead the companyQs effort to market e-governance
solutions in the Indian market.  To meet its expanded
human resource requirements, IBM plans to initiate
in-house staff training programs, marking a notable
shift from its past strategy of hiring employees away
from competitors.  Indian software companies, already
experiencing a human capital crunch, are now
struggling to quickly respond and prevent attrition,
fearful of losing skilled employees to their
competitors.  End summary. 

-----------------
All bets on India
----------------- 

¶2. (U) On June 6 Sam Palmisano, IBMQs Chairman,
announced investment plans in India of $6 billion
over a five year period (reftel).  The company
remains reluctant to disclose the details of its
investment strategy, but during a recent meeting in
Bangalore with visiting New Delhi DCM Pyatt, Inder
Thukral, Director Strategy and Business Development
at IBM India told post that emphasis will be on
research and development of telecommunication and
netware solutions for IBM operations worldwide.  The
desire to leverage even further IndiaQs large highly-
skilled labor force led to this investment move,
Shankar Annasamy, Managing Director IBM India told
us.  The company expects to triple its workforce from
the current 47,000 employees at 25 locations in the
next five years. 

-----------------------------------------
India: IBMQs research and development hub
----------------------------------------- 

¶3. (U) IBM India, with $2 billion in current
investments, is the proverbial Q800-pound gorillaQ of
IT research and development in the country.  The
companyQs India-based teams account for over 30% of
IBMQs global R&D on network and communications
solutions.  With its latest investment, the company
has rapidly diversified to meet its R&D needs:  The
IBM Innovation Center in Bangalore provides an
institutional platform for software service suppliers
and is a critical testing ground for new products in
both the Indian and global market. IBMQs India
Software Lab, with facilities in Bangalore and Pune,
also develops and supports IBM software products for
worldwide operations.  In addition, the high-
performance On Demand Lab develops specialized
software to automate and virtualize the complex
information technology infrastructure of clients
located in the south Asian region.  To further
hardware development, the Engineering and Technology
Services Center designs advanced chips, cards and
systems to meet customer requirements across Asia. 

------------------------------------------
India: A big market for US made mainframes
------------------------------------------ 

¶4. (U) IBMQs U.S. manufactured main frames have
captured the booming Indian main frame market.  The
company holds an 80 percent share of IndiaQs
estimated $250 million market for main frames.  The
market is currently growing at 55 percent, with much
of the growth coming from mid-sized Indian
businesses.  Main frames offered to the Indian market
are pre-positioned at the companyQs Bangalore-based
Innovation Center to enable potential customers to
experience the computing power and capabilities of
the machines.  IBMQs service oriented architecture
that facilitates communication between different
business segments located in various locations has 

CHENNAI 00002571  002 OF 003 

found favor in India and helped IBM secure a $100
million deal with Bharti-Airtel, one of IndiaQs
largest mobile phone service providers. 

-------------------------------------------
Open source products spearhead E-governance
------------------------------------------- 

¶5. (U) The use of an open source code Linux is
another area of focus for IBM India.  The company
formed an IBM Linux Competency Center and Linux
Solution Center in Bangalore to establish product
standards, further Linux R&D as well as to localize
products for an increasingly global customer base
with local content requirements.  State governments
in India are big customers as they prefer open source
code that enables development of local language
fonts. 

--------------------------------
IBMQs BPOs transform outsourcing
-------------------------------- 

¶6. (U) Leveraging IndiaQs large talent pool of
network managers, IBM India services clients around
the world via satellite and fiber optic networks from
its global operations hub in Bangalore.  IBM Daksh, a
back office unit which the company acquired in 2004,
accounts for nearly 50% of the companyQs staff in
India and is expected to contribute over half of the
company revenues in the next five years.  Similar to
other BPO operations such as local giants Infosys and
Wipro, Daksh provides services for clients involved
in retail, technology, banking, mortgage, energy and
life insurance.  The range of services includes
application processing, account maintenance, data
conversion services, logistics management, claims
processing, email support and financial services.
According to IBM executives, this line of business
registered some of the fastest growth rates for IBM
in recent history. 

----------------------------------------
In-house training to meet in-house needs
---------------------------------------- 

¶7. (U) IBMQs recent investment spike comes at a time
when a fiercely competitive hiring climate is forcing
top leadership to rethink its human resource
strategy. In the past the company notoriously
QpoachedQ experienced individuals from local firms.
Looking for new HR capacity building vehicles,
company executives are emphasizing university
recruitment to attract and train new waves of fresh
engineering graduates, or Qfreshers.Q  Yet this may
be a tall order in a time when A-list tech firms are
vying for talent, and freshers with experience under
their belt are job-hopping for bigger and better
packages.  Nonetheless, IBM executives are betting on
a combination of higher salaries and their global
brand equity to ensure a steady talent pool. 

¶8. (U) Strategic partnerships with elite Indian
technology institutions are also enabling IBM India
to further leverage local human capital expertise.
IBMQs Center for Advanced Studies, for example,
maintains a close relationship with prestigious
institutions such as the Indian Institute of
Technology (IIT) Chennai that leads directly into
software R&D.  The company has a similar program with
the Indian Institute of Science in Bangalore and
plans to expand its partnerships with other high-
caliber institutions across India. 

--------------------------------------------- --------
Expansion plans leave Indian software companies
scared
--------------------------------------------- --------
___ 

¶9. (U) Comment:  IBMQs investment announcement sent a
minor wave of anxiety through the Indian software
industry, which is already struggling to control
costs.  InfosysQ Human Resource Director told us his
company is trying to preempt potential attrition by
offering a 30% salary hike.  Mindtree Consulting, a
medium sized software development company, plans to
tap bright talent as early as the secondary school
level.  The company hopes to partner with U.S.-based
universities to offer recruits a degree in 

CHENNAI 00002571  003 OF 003 

engineering at the end of a five year stint.
Whatever strategy adopted, representatives of both
Infosys and Mindtree told us that IBMQs investment
plans will dramatically alter IndiaQs software
business landscape and long-term human capital
strategy. End comment. 

¶10. (U) This message was coordinated with Embassy New
Delhi. 

HOPPER

In later cable we are going to see some more evidence of warming up to FOSS. █

Summary: A look at Free software in China based on cables that Wikileaks released about a year ago to selected journalists

According to the following Cablegate cable, “if the USG [US government] provided free software that helped Chinese netizens overcome filters, this might politicize the issue of Internet freedom and force the PRC government to react.”

It is interesting in the context that, in another Cablegate cable, it says that “China’s 11th Five-Year Plan (2006-2011) calls for the development of embedded software [and] open source software,” so here are the two cables in full:

VZCZCXRO6497
OO RUEHBC RUEHCN RUEHGH RUEHKUK RUEHTRO
DE RUEHBJ #0183/01 0250728
ZNY CCCCC ZZH
O 250728Z JAN 10
FM AMEMBASSY BEIJING
TO RUEHC/SECSTATE WASHDC IMMEDIATE 7730
INFO RUEHOO/CHINA POSTS COLLECTIVE IMMEDIATE
RUCNIRA/IRAN COLLECTIVE IMMEDIATE
RHEHNSC/NSC WASHDC IMMEDIATE

C O N F I D E N T I A L SECTION 01 OF 05 BEIJING 000183 

SIPDIS 

DEPT FOR S, P, D, EAP/CM, EEB, AND H
NSC FOR BADER, MEDEIROS, AND LOI 

E.O. 12958: DECL: 01/23/2030
TAGS: PREL [External Political Relations], PGOV [Internal Governmental Affairs], ECON [Economic Conditions], PHUM [Human Rights], EINV [Foreign Investments], CH [China (Mainland)]
SUBJECT: SECRETARY'S INTERNET FREEDOM SPEECH: CHINA REACTION 

Classified By: DCM Robert Goldberg fo Reasons: 1.4(B), (D). 

Summary
-------
¶1. (C) Secretary Clinton's January 21 speech on Internet
Freedom touched a nerve in China.   Official reaction was
negative, with harsh criticism coming from the Ministry of
Foreign Affairs in an official statement and from other parts
of the Chinese system through critical articles and
editorials in the official press.  Chinese Internet censors
were deployed in force to block online commentary and
coverage of the Secretary's speech, and as of January 24,
sites in the United States that carried transcripts of the
speech were inaccessible without VPN or other
firewall-evading software.  The few Chinese netizens and
bloggers who did manage to access the speech and then dared
write about it were generally supportive of the Secretary's
message.  Other Embassy contacts, including academic
USA-watchers and journalists, lamented that the Secretary's
speech would strengthen and embolden those in the Chinese
system who advocated greater control over the Internet in
China.  They expressed concern that Internet freedom would be
made into an "us vs. them" issue rather than a "right vs.
wrong" issue.  Contacts warned that Chinese officials see
U.S. efforts to promote Internet freedom as an attack,
repeatedly invoking the specter of "color revolution."  Some
contacts in the tech industry praised the speech as being
"spot on" in its coverage of U.S. firms' difficulty with the
Chinese business environment.  Contacts outside Beijing were
cautious with their comments.  Embassy and consulate officers
will continue to follow the reaction to the Secretary's
remarks in the weeks ahead to assess their continuing impact
on government, think tank, media, blogger and business
actions with regard to the Internet.  End Summary. 

Official Reaction Negative
--------------------------
¶2. (C) In a January 22 statement in reaction to the
Secretary's Internet freedom speech, Chinese Ministry of
Foreign Affairs spokesperson Ma Zhaoxu, said "we firmly
oppose such words and deeds, which are against the facts and
harmful to U.S.-China relations."  Ma's remarks followed a
January 21 press conference by Vice Foreign Minister He
Yafei's in which he did not refer to the Secretary's speech,
but urged the United States to refrain from
"over-interpreting" the Google case, saying it should not be
allowed to impact bilateral relations.  Ma's statement was
much more negative than initial unofficial comment from
working-level MFA officers the morning of January 22.  Asked
about the speech, MFA North American and Oceanian Affairs
Department U.S.A. Division Director An Gang told poloff that
the MFA noticed that specific Chinese cases or individuals
were not mentioned in the speech, and that "we are very happy
about that."  (Comment: the contrast between the "softer"
comments from the USA desk and the harder language from the
Spokesman several hours later suggests that the negative
reaction to the speech originated at higher levels in the
foreign policy hierarchy.) 

Media Reaction Dutifully Echoes MFA Criticism
---------------------------------------------
¶3. (SBU) Chinese media coverage of the Secretary's speech
widely quoted the MFA statement.  January 22 coverage
included assertions that the Secretary's call for
unrestricted access to the Internet could be regarded "as a
disguised attempt to impose U.S. values in the name of
democracy."  Articles in the nationalist daily Global Times
stated that the bulk of Internet comment originated in the
West, "loaded with aggressive rhetoric against other
countries," against which other countries cannot hope to
defend.  Beijing University Professor of Communications Hu
Yong, quoted in the 21st Century Business Herald, said the
Secretary's discussion of sharing technology to allow users
to circumvent Internet censorship meant that the "Google
incident is only the beginning of a rolling snowball." 

¶4.  (SBU) Most regional reporting in China emphasized that
Internet freedom has now become embedded as a new diplomatic
tool the U.S. foreign policy.  Shanghai's influential Wenhui
Daily ran a January 23 commentary calling Secretary Clinton's
remarks "arrogant, illogical, and full of political shows and
calculations," accusing her of having a "Cold War mentality."
Some Chinese outlets rebutted U.S. charges by praising
Chinese Internet practices.  January 22 televised news
programming reported on the benefits for Chinese users of
Chinese governmental supervision of the Internet.  Shanghai
TV January 22 broadcast programming which painted Chinese
online police in a positive light. 

BEIJING 00000183  002 OF 005 

Blogger Community: Those that Saw it, Liked it
--------------------------------------------- -
¶5. (SBU) Chinese netizens accessed the Secretary's speech and
shared reactions through rough real-time translations on
Twitter, blogs, and Google.  The range of opinions among the
self-selecting demographic of Chinese netizens, who had
circumvented  Chinese government blocks to blog and
participate in Twitter-based discussions, ranged from
supportive to skeptical, with the majority expressing
agreement with the principles outlined in the Secretary's
speech.  In general, Chinese netizen comments focused on
speculation about linkages between the Secretary's speech and
Google's announcement that it was considering withdrawing
from China. 

¶6. (SBU) Many netizen reactions echoed the statements by
blogger Lian Yue who tweeted that Secretary Clinton's speech
"clarified the relation between Internet freedom and business
prosperity, which gave better guidance for American companies
operating in China."   A Chinese blogger named Zhou Shugang
wrote that the speech was "certain to have a positive effect
and was welcomed by Chinese Internet users regarding the
censorship problem in China."  Others commented that the
speech was an indication that the United States was leading
the U.S.-China relationship in the right direction. 

¶7. (SBU) Some Chinese bloggers viewed the Secretary's speech
as "confrontational," but nonetheless inspiring to the
Chinese people.
- Chengcheng, a cartoonist-blogger, depicted Secretary
Clinton as Joan of Arc, with a widely distributed graphic of
"Hillary leads the people."  Another Chinese Twitter user
wrote, "What a historic speech( it is the launching of an
Internet war, the confrontation between democracy and
authoritarianism becoming public, and the beginning of a new
Cold War."
- Wen Yunchao, a blogger based in Guangzhou, similarly
characterized the speech as "a declaration of war from a free
nation to an autocracy. It might be as important as
Churchill's Iron Curtain Speech... I will wait with hope. The
direct mention of China also calls for a frank and honest
discussion between Hu Jintao and Wen Jiabao."
-Gadfly artist and blogger Ai Weiwei, attending a Mission
sponsored event in Beijing (see para 21), said the
Secretary's speech "showed the power of the Internet to the
world" and raised the U.S. Internet strategy to a new level.
¶8. (SBU) Some bloggers expressed skepticism.
- Novelist and blogger Yang Hengjun tweeted, "the U.S.
government has been talking about supporting world-wide
Internet freedom for ages, but it hasn't done much yet."
- Rao Jin, the founder of anti-CNN.com, a website critical of
western media reporting, doubted the sincerity of the United
States' commitment to the freedoms mentioned in Secretary
Clinton's speech due to competing commercial and national
security interests.
Chinese bloggers, regardless of their outlook, have widely
reported that Chinese web monitors have been aggressively
deleting posts and content related to the Secretary's speech. 

China Watchers: Speech Will Provoke the Authorities
--------------------------------------------- ------
¶9. (C) Other contacts analyzed the Secretary's speech the way
bloggers did, but were pessimistic about the effect of the
speech on Chinese authorities.  On January 22 Chen Jieren
(protect), nephew of Politburo Standing Committee member He
Guoqiang and editor of a Communist Youth League website, told
poloff that following the controversy generated by Google's
announcement, the issue of Internet freedom had been
discussed several times within the Politburo Standing
Committee which had agreed that the issue of Internet freedom
had supplanted traditional human rights issues as a new
"battleground" between the United States and China.  Although
he was not aware of any specific Standing Committee
decisions, Chen said that President Hu Jintao had provided
general guidance that the issue should not be allowed to
cause major disruptions to U.S.-China relations.
¶10. (C) On January 21, speaking before the Secretary's
speech, Yang Jisheng, Deputy Editor of the reform-oriented
political digest Yanhuang Qunqiu, told poloff that the
Communist Party viewed Internet freedom initiatives as a
direct challenge to its ability to maintain social and
political stability and, therefore, its legitimacy.  He said
that, in this context, the Party would resist international
pressure on the Google issue and would increase restrictions
on the Internet in the period leading up to the 18th Party
Congress in 2012.  He predicted that the Secretary's speech 

BEIJING 00000183  003 OF 005 

would be viewed as directed at the Communist Party and would
therefore generate uncertainty about U.S. intentions towards
China.
¶11. (C) On January 23, a prominent Tsinghua University media
and public opinion researcher pointed out that most Chinese
media reactions to the Secretary's speech had simply
republished the MFA statement and were not printing any
quotations from the speech itself.  Given the political
sensitivity of the speech and the Google case, this was the
only safe thing to do, he said.  Any perceived support for
the Secretary's speech in the press would "cross a red line"
with censors.  The researcher said the Chinese public had
mixed feelings about the speech and the Google issue.  While
many in China were dissatisfied with Internet censorship,
they also resented public criticism from U.S. officials, he
said, predicting that the speech would increase nationalist
sentiment in China.  Another contact, a journalist at a
Communist Youth League magazine, agreed that while it might
cause a nationalist response, the Secretary's message "needed
to be said."  He predicted that the Chinese government would
attempt to appeal to nationalism to counter the Secretary's
speech.  However, he noted that most current media commentary
critical of the speech, and Google, was not being written by
well known journalists, intellectuals or scholars whose
silence could be read as a show of support for the speech -
and for Google.
¶12. (C) Beijing University School of International Studies
Assistant Professor Yu Wanli, one of Beijing University's
better-known U.S.A. experts, told poloff January 23 that he
had been "disappointed and depressed" when he read the
Secretary's speech.  "Those who tried to control the Internet
more in China never had much support before," he said.  "Most
people believe information should be open, and the Internet
should be open.  The conservative, security people were the
minority and many people just laughed at them."  The
Secretary's speech, however, gave great new energy to the
"controllers" who could now plausibly argue that the United
States was explicitly using the Internet as a tool for regime
change.  "The Internet belongs to every country," he
complained; "we all can go there, we all can add to it, we
all can learn from it.  We Chinese were free there.  Now the
United States has claimed it for itself and so it will become
an ideological battlefield."  He asserted that, in the past,
the Chinese authorities had paid relatively little attention
to controlling the Internet, focusing only on the issues that
were the most urgent and letting most netizens alone.  "That
is finished now.  The Secretary's 'information curtain'
remark will give the authorities what they need to
'harmonize' the Internet for all Chinese citizens."
(Comment: 'harmonize' is an acidly sarcastic term in Chinese
to describe official deletion or blockage of Internet
content.  Yu is nearly always laid back and even-tempered.
His commentary on this issue was more emotional and bitter
than poloff has seen from him in dozens of encounters over
three years, even on extremely sensitive issues such as the
Xinjiang riots or the demonstrations abroad against the
Olympic torch relay in early 2008.) 

¶13. (C) Yuan Peng, Director of the Institute of American
Studies at the Ministry of State Security-affiliated China
Institutes of Contemporary International Relations (CICIR),
warned that Google's announcement had become a new irritant
to the bilateral relationship with the potential to be even
more dangerous than the Taiwan and Tibet issue.  Yuan said
that many Chinese citizens believed that Google's decision
was part of a coordinated public/private effort by the USG to
impose U.S. values on China, what he referred to as an
"E-color revolution."  As confirmation of this theory, Yuan
cited Secretary Clinton's January 7 "21st Century Statecraft"
dinner with several tech sector CEOs (including Google),
Google's donations to President Obama's presidential
campaign, and Secretary Clinton's January 21 speech on
Internet freedom. 

¶14. (C) CICIR researcher Guo Yongjun warned that there were
people in China and other countries such as Iran who might
see the "shadow of color revolution" in recent USG policies
promoting Internet freedom and 21st century e-diplomacy.  For
example, Iranians might perceive Washington's new initiatives
on Internet freedom or the advocacy of new technologies such
as Twitter to be "aggressive" or harboring ulterior motives,
such as promoting regime change, said Guo.  Informed Chinese
netizens already know how to circumvent the Great Firewall to
access Facebook and Twitter, Guo said, including by using
commercially available software.  He feared, however, that if
the USG provided free software that helped Chinese netizens
overcome filters, this might politicize the issue of Internet
freedom and force the PRC government to react.  One possible 

BEIJING 00000183  004 OF 005 

consequence, warned Guo, was that China might make it illegal
to download either U.S.-provided or commercially available
software that helped Internet surfers circumvent the Great
Firewall. 

¶15. (C) Professor Xu Jianguo of Beijing University's National
School of Development said January 22 that restricting the
Internet access of Chinese netizens would theoretically
hamper development of cutting edge industries, but was
skeptical this had happened in reality.  Professor Wu
Bingbing, also of Beijing University, said in the same
meeting that the problem was that China's leaders did not yet
feel comfortable with these new communications technologies
and thus preferred to proceed cautiously.  The Google issue
and Secretary Clinton's speech were likely to prompt them to
shift from a low-profile to a higher-profile response on
Internet freedom. 

IT Industry: Speech Accurately Portrayed Business Environment
--------------------------------------------- ---------------- 

¶16. (C) The president of a strategic international trade
consulting business in Beijing and chair of AmCham's working
group on export controls, called the Secretary's speech "spot
on, "directly capturing industry concerns about a business
climate that is getting worse on a "day-to-day basis."  He
applauded the Secretary's speech as a means of bringing the
Chinese to the table to address key concerns about the
business environment and said the decision taken by Google
was of enormous magnitude, indicating the depth of concern
over issues it is facing here.  As a result, he believes, the
Chinese government's failure to respond to its people's
opposition to censorship would embolden the netizen community
in its efforts to evade government controls. 

¶17. (C) Another high-tech industry consultant expressed
concern that the Secretary's speech would dampen the
U.S.-China business climate and drive it "to a new low."  The
consultant observed that "China has noticed that the NSA and
the Pentagon have dominated cyberspace policy for over a
year."  Key officials, academics, and military leaders,
according to this consultant, hold paranoid fears that the
U.S. would one day launch a "zero-day" attack on all of
China's critical infrastructure.  The Secretary's speech and
Google's recent actions, would amplify this belief. 

¶18. (C) Reaction in northern China, where Intel has a
multi-billion dollar manufacturing factory investment under
construction, however, has thus far been limited.  Intel's
Dalian-based General Manager told Congen Shenyang poloff that
the Secretary's speech had thus far not created a stir.
Intel's GM had in the past several days met with several
Dalian Vice Mayors, and reported Google and Internet freedom
issues had not been raised. 

¶19. (C) South China-based Internet portal contacts were
reluctant to talk with ConGenoffs about ongoing media
coverage of Google or broader internet freedom issues.  A
public relations manager from Netease initially refused to
comment, saying it was not appropriate for her to offer an
opinion on policy matters, but then guardedly reverted to
official-sounding comments about why Internet regulation is
important for the well-being of Chinese users and the
maintenance of a positive online environment. 

¶20. (C) A working-level official from the Guangzhou Municipal
Informatization (sic) Office went further in sharing
pro-government comments with ConGenoff, saying that Google is
a business and should restrict itself to business matters,
rather than venturing into political territory.  The official
said 2009 was a very strong year for internet companies in
China and that internet restrictions had not dampened
individual user's online experiences or companies' earnings. 

Mission Outreach on the Secretary's Speech
------------------------------------------
¶21. (C) January 22, Embassy Beijing and Consulates General
Shanghai, Guangzhou and Shenyang hosted a simultaneous
digital video conference viewing of the Secretary's speech
for dozens of local bloggers, with an additional 300 netizens
attending via the Internet.  Mission estimates indicate
Twitter communications and blog entries will reach a combined
audience of millions of persons.  Following the speech,
participating bloggers, who were generally supportive of the
Secretary's message, engaged in a lively discussion focused
on what specific measures the United States government could
take to promote Internet freedom in China and whether the
speech constituted a new direction for U.S. foreign policy on 

BEIJING 00000183  005 OF 005 

China.
HUNTSMAN

And the second cable:

VZCZCXRO5289
RR RUEHCN RUEHGH RUEHVC
DE RUEHGZ #0562/01 1350859
ZNR UUUUU ZZH
R 150859Z MAY 07
FM AMCONSUL GUANGZHOU
TO RUEHC/SECSTATE WASHDC 6057
INFO RUEHC/DEPT OF LABOR WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/USDOC WASHDC
RUEHOO/CHINA POSTS COLLECTIVE
RUEHGV/USMISSION GENEVA 0445
RUEAIIA/CIA WASHDC
RUEKJCS/DIA WASHDC
RHHMUNA/HQ USPACOM HONOLULU HI

UNCLAS SECTION 01 OF 03 GUANGZHOU 000562 

SIPDIS 

SIPDIS 

USPACOM FOR FPA
STATE FOR EAP/CM, EA/CIP, AND EB/CBA
STATE PASS USTR FOR STRATFORD, WINTER
USDOC FOR 4420/ITA/MAC/MCQUEEN 

E.O. 12958: N/A
TAGS: ECON [Economic Conditions], ETRD [Foreign Trade], EINT [Economic and Commercial Internet], TSPL [Science and Technology Policy], CH [China (Mainland)]
SUBJECT:  Guangzhou's Software Industry:  Perspectives from a
Software Park and a Software College 

¶1. (U) Summary:  The development of Guangdong Province's software
industry has been a key priority in recent years for China's
Ministries of Commerce, Information Industry, and Education, among
others.  Guangzhou has emerged as a focal point for the
establishment of the province's leading software parks and schools
of software engineering.  Tianhe Software Park, Guangzhou's first
and largest, boasts 1,203 enterprises and was recently designated by
the Ministry of Science and Technology as a "Software Industry
Export and Innovation Base" with a mandate to boost China's
participation in the international software export and out-sourcing
markets.  The South China University of Technology School of
Software Engineering ranks 15th out of China's 36 software schools,
and is one of only two such schools in Guangdong.  Both the Software
Park and the SCUT Software School maintain extensive ties to leading
Chinese companies as well as multinational companies.  End Summary. 

Overview of the Software Industry in China
- - - - - - - - - - - - - - - - - - - - - 

¶2. (U)  According to Zhan Yanzun, Vice President of the China
Software Industry Base, Administrative Commission of Guangzhou,
Tianhe Software Park, the value of the domestic Chinese software
market is between RMB 100 billion to 150 billion (USD 13 - 19.5
billion) per year.  Currently, Beijing, Guangdong, and Shanghai are
the top three locations in the country in terms of the size of the
software industry.  China's 11th Five-Year Plan (2006-2011) calls
for the development of embedded software, open source software, and
middleware which are key focal points for Guangdong.  Zhan also
noted China's interest in pursuing overseas markets.  The National
Development and Reform Commission (NDRC) and the Ministry of
Commerce (MOFCOM) encourage domestic software companies to compete
in the international marketplace.  The Ministry of Science and
Technology (MOST) and MOFCOM have both recently sent delegations to
North America on market exploration trips.  According to Zhan, the
delegation's biggest target market is North America, followed by
Europe, and then Southeast Asia.  In the North American market,
Chinese government officials hope to set up representative offices
in San Francisco and New Jersey; they will be responsible for
collecting market information and carrying out marketing functions. 

The Making of Guangzhou's Top Software Park
- - - - - - - - - - - - - - - - - - - - - - 

¶3. (U)  Guangzhou Municipality boasts four software parks: the
Guangzhou Software Park, the Guangzhou Tianhe Software Park, the
Nansha District Software Park and the Huanghuagang Information Park.
 The Tianhe Software Park is the largest of the four in terms of
size (it is the largest among all 11 national-level software parks
in China, with a planned area of 12.25 square kilometers) and output
(70 percent of software output in Guangzhou).  Established in 1991,
it is also the oldest of the four.  In the last 16 years, Tianhe
Software Park has been named "National Hi-tech Zone" by the National
Commission of Science and Technology (or MOST), a "Software Industry
Export and Innovation Base" and "National Industry Base for Online
Games" by the NDRC and the Ministry of Information Industry (MII).
The Tianhe Software Park has 19 branch parks. 

¶4. (U)  By the end of 2006, according to Qiao Xizhong, Director of
Service Industries at Tianhe Software Park, there were 1,203
enterprises (290 were foreign-invested and the rest were domestic,
largely Guangdong local enterprises) in Tianhe Software Park,
employing about 50,000 persons, with a total annual output of RMB
25.3 billion (USD 3.3 billion).  Forty percent of the park's output
came from the telecom and value-added services, 25 percent from
financial services and the remainder from office automation (OA) and
business intelligence (BI).
-- The top three domestic enterprises in the park are Netease, which
had revenues of RMB 2.6 billion (USD 338 million) in 2006,
Digitalchina and Sinobest.
-- Other key enterprises, which have an annual output above RMB 120
million (USD 15.6 million), include ChinaWeal, Excellence, Asinfo,
Chuangxiang, and Keyou.
-- The top three foreign-invested enterprises are Ericsson from
Sweden, and two Hong Kong enterprises.
-- Other key foreign-invested enterprises include Trans Cosmos from
Japan and the RIB Group from Germany, both of which are engaged in
software outsourcing. 

GUANGZHOU 00000562  002 OF 003 

¶5. (U) Projects currently underway in the Park include:
-- the Internet Digital Center (IDC), which will house more than
3,000 servers.
-- the Southern R&D Center of China Mobile, which will cost RMB 1.7
billion (USD 221 million) in the first phase with a 490,000 square
meter work area,
-- a four-star hotel and apartment buildings for foreign staff,
namely project managers and technicians from countries such as
India, the United States, Germany, Japan, and Holland.
A road is also being built and this will cut travel time to ten
minutes between the software park and the Eastern Railway Station by
the end of this year. 

Encouraging the Growth of the Software Park and Industry
- - - - - - - - - - - - - - - - - - - - - - - - - - - - 

¶6. (U) Software Park Vice President Zhan noted that MOFCOM granted
the title "Software Exports and Innovation Base" to Guangzhou,
Nanjing, Hangzhou, Jinan and Chengdu in December 2006 to boost
China's participation in the international software market,
especially in software exports and outsourcing.  Zhan said 35
enterprises in the park are engaged in software outsourcing, and
that all are members of the park's Software Outsourcing
Association. 

¶7. (U) The Guangzhou Municipal Government released "No. 44 document"
in 2006 to attract investors to the software industry.  Incentives
offered to enterprises to settle in the park include house rental
subsidies, post-doctoral study subsidies, and income tax
preferential policies for top management members. 

Software Park Officials address IPR issues
- - - - - - - - - - - - - - - - - - - - - 

¶8. (U)  Zhan said that IPR protection has been a focus of both the
Guangzhou and Tianhe District governments alike.  He also noted that
the Tianhe Software Park is a member of the Guangzhou IPR Protection
Team, which is headed by Vice Mayor Wang Xiaoling.  The Software
Park is involved in drafting and implementing the team's action
plans on IPR protection. 

The Human Resources Component of the Park
- - - - - - - - - - - - - - - - - - - - - 

¶9. (U)  Zhan said Guangzhou's goal is to have 200,000 professionals
in the software and cartoon/animation industries by 2010.  Zhan
believed that there is a current shortage of high-end software
professionals in Guangzhou.  Enterprises in the park recruit both
new graduates and experienced workers, but company-specific training
is provided to both before they begin work.  Most enterprises
conduct training on their own, but Zhan said that enterprises will
likely utilize on on-site training center after completion.
Enterprises in the park last year recruited roughly 1,200 college
gradates from across China, with most coming from Guangdong.
According to Zhan, Sun Yat-sen University and the South China
University of Technology (SCUT) have excellent software schools so
they do not need to look far to recruit qualified graduates. 

South China University of Technology
- - - - - - - - - - - - - - - - - - 

¶10. (U) South China University of Technology (SCUT) was established
in 1952.  In 2003, SCUT ranked the 20th among the 570 universities
in China.  SCUT has been named a key university of China by the
Ministry of Education. The university is famous for engineering and
has 29 schools, 67 undergraduate programs, 177 master programs, and
75 doctoral programs.  SCUT has a state key laboratory, two national
engineering research centers, one "National Class A" architecture
design and research institute, and four key labs certified by the
Ministry of Education.  In 2005, SCUT professors published 2,326
papers in academic journals; in 2006, SCUT applied for and received
207 patents.  In 2006, SCUT won more than USD 43 million in funding
from the central and provincial governments. 

The Software Engineering College at SCUT
- - - - - - - - - - - - - - - - - - - - 

¶11. (U) China currently has 36 software engineering schools.  The
software school at SCUT was established in 2001 by MOE and the 

GUANGZHOU 00000562  003 OF 003 

Economy Development Planning Committee; it ranks 15th in China.  It
has been named one of the "National Pilot Schools for Software
Engineering".  The school includes master's programs for computer
software, theory, and software engineering, and also has an
undergraduate program in software engineering.  In 2006, the school
carried out 44 research projects and received RMB 7.78 million (USD
1 million) in government funding.  The school was awarded five
patents and registered 18 types of IPR in software.  According to
Deng Huifang, dean of the software school, MOE periodically
evaluates the schools' academic and research achievements and
decides if they measure up to established criteria.  At present,
Guangdong Province has only two national pilot schools of software
engineering, the other one at Sun Yat-Sen University.  With the
pilot school designation, SCUT can charge high tuition fees, which
are about 60 percent higher than other schools. 

¶12. (U) SCUT's School of Software Engineering currently has 30
full-time teachers and 46 part-time teachers.  Fifteen of the
teachers are from foreign countries.  Of the school's 1,475 students
are 1,132 undergraduate and 343 postgraduates.  Most of the students
are from Guangdong Province, the ratio of male students to female
students is 6:1.  Each year, the school graduates 300 with bachelor
degrees and 200 with a master's degree.  Most of the graduates
currently work in IT-related fields.  More than 70 per cent of the
graduates are working in private enterprises, and about two percent
are self employed.  About 96 percent of SCUT graduates found
employment rate in 2005 and 2006. 

Collaborating with Foreign Companies and Institutions
- - - - - - - - -   - - - - - - - - - - - - - - - - - 

¶13. (U) The School of Software Engineering of SCUT cooperates
extensively with multinational IT companies such as IBM China Ltd.,
Microsoft Asia Research Center, HP China Ltd., Intel China Ltd.,
Oracle Beijing, BEA, CISCO, and SUN.  The school currently has an
IBM mainframe education center, a Linux education training center,
eight labs which work jointly with the companies, three student
innovation studios and one student industrial practice center.
Companies like IBM and Microsoft not only provide funding and
equipment to the research centers, but also work with the centers to
design courses for the students.  To keep up with the development of
international software, the school also incorporates courses from
universities like North West University from U.S., York University
from U.K., SAP from Germany, and IIT from India. 

Guangdong's Software Exports
- - - - - - - - - - - - - - 

¶14. (U)  According to Deng, Guangdong's exports of software products
amounted to USD 1.9 billion in 2005, or 50 percent of the country's
total software industry exports, which stood at USD 3.8 billion.
Shenzhen, Guangzhou and Zhuhai are the top three cities in the
province in terms of software exports.  The major overseas markets
for Guangdong are Hong Kong, Japan, Southeast Asia, Taiwan, Europe,
and the U.S.  Guangdong currently has 1,181 software companies.
Guangdong has 14 of the top 100 software companies of China; six are
headquartered in Guangzhou, seven in Shenzhen, and one in Zhuhai.
These companies include Guangzhou GaoKe Communications Technology
Co., Ltd., Sinobest, Guangzhou Haige Communications Industry Group
Co. Ltd., and Guangzhou Ziguang North America Science and Technology
Ltd. 

GOLDBERG

That’s all from China for now. █

Summary: Cable from Burma shows American diplomats who “would also like to assist in distributing USB sticks Internews has developed, which allow the activists to utilize open source software”

According to the following Cablegate cable, activists and antagonists (even subversives) are seen as beneficial to US embassies if they support the tenets of democracy (usually something subservient to the West), so the government supports foreign activists in Burma and says: “We would also like to assist in distributing USB sticks Internews has developed, which allow the activists to utilize open source software to launch programs, and enables them to use web browsers without leaving a digital footprint.”

They also say: “We will need considerably more assistance from Washington to facilitate communications by the activists with the outside world.”

Previously in Techrights we covered back doors and spy ‘features’ that exist in proprietary software such as Microsoft’s. Here we may have more incidental concordance courtesy of Cablegate:

VZCZCXRO8235
OO RUEHCHI RUEHDT RUEHHM RUEHNH RUEHTRO
DE RUEHGO #0181/01 0670922
ZNY SSSSS ZZH
O 070922Z MAR 08
FM AMEMBASSY RANGOON
TO RUEHC/SECSTATE WASHDC IMMEDIATE 7276
INFO RHEHNSC/NSC WASHDC IMMEDIATE
RUCNASE/ASEAN MEMBER COLLECTIVE
RUEHGG/UN SECURITY COUNCIL COLLECTIVE
RUEHBY/AMEMBASSY CANBERRA 0976
RUEHNE/AMEMBASSY NEW DELHI 4529
RUEHUL/AMEMBASSY SEOUL 8067
RUEHKO/AMEMBASSY TOKYO 5628
RUEHCHI/AMCONSUL CHIANG MAI 1444
RHHMUNA/CDR USPACOM HONOLULU HI
RUCNDT/USMISSION USUN NEW YORK 1392
RUEKJCS/SECDEF WASHDC
RUEKJCS/JOINT STAFF WASHDC

S E C R E T SECTION 01 OF 02 RANGOON 000181 

SIPDIS 

SIPDIS 

DEPT FOR EAP/MLS, DRL, AND IO
PACOM FOR FPA 

E.O. 12958: DECL: 03/06/2018
TAGS: PGOV [Internal Governmental Affairs],QL, PHUM [Human Rights], BM [Burma]
SUBJECT: BURMA: SUPPORTING STRATEGIES FOR THE REFERENDUM 

REF: A. RANGOON 153
     B. RANGOON 145
     C. RANGOON 134
     D. CARL-YODER-COPE 10/15/2007 E-MAIL 

RANGOON 00000181  001.2 OF 002 

Classified By: P/E Chief Leslie Hayden for Reasons 1.4 (b) & (d) 

¶1.  (S/NF) Burma's pro-democracy opposition continues to
struggle to organize a coordinated effort to respond to the
upcoming constitutional referendum.  We expect the regime
will continue its severe restrictions on free speech and
association, making it impossible for the opposition to carry
out a widespread, public campaign.  Activists inside Burma
plan to carry out a "vote no" educational campaign via
word-of-mouth, and using posters, stickers, and T-shirts.
What would most help them succeed is funding for travel and
equipment such as memory sticks, MP3 players, and cell
phones.  We are confidant we could discreetly distribute
these items.  $200,000 in additional funding to this Embassy
would enable us to quickly assist the activists.  End summary. 

-------------
Reality Check
------------- 

¶1.  (C) Burma's fractured pro-democracy opposition continues
to grapple with how to address the regime's upcoming
constitutional referendum (Refs B and C).  The only group
that has outlined a concrete plan to us (and this includes
U.S.- funded exile groups on the Thai-Burma border) is 88
Generation Students.  NLD spokesman Nyan Win told us today
that the NLD still had not finalized a concrete plan for
their "vote no" campaign.  He anticipated they would have it
ready by next week.  Ethnic pro-democracy leaders inside
Burma told us last week that they had no concrete plan to
oppose the referendum either, even though most oppose the
referendum. 

¶2.  (C) In the lead-up to the referendum, we do not
anticipate the regime will loosen the tighter restrictions
imposed since the September protests.  We expect a massive
military and police presence as the date of the referendum
approaches to prevent any protests or civil unrest.
Activists are likely to be closely watched during this time.
Likewise, anyone attempting to approach polling stations to
conduct an exit poll not sanctioned by the regime is certain
to be arrested. 

¶3.  (C) Regardless of these restrictions, 88 Generation
activists who are not in prison, and remain in Burma, are
determined to go forward with their "vote no" campaign.  The
campaign will rely mostly on education via word-of-mouth.
They plan on using sympathetic monks to educate their
constituencies on why the constitution, in its present form,
is not a step forward for democracy in Burma.  Additionally,
they will dispatch members of their organization throughout
Burma to distribute educational materials by hand. 

--------------
What They Need
-------------- 

¶4.  (S/NF) 88 Generation has requested approximately $4,300
for "vote no" posters, $2,600 for stickers, and $2,000 for
its members to travel throughout Burma to coordinate with
their members in other states and divisions.  We can use the
Embassy print shop and copiers to assist them in making
flyers and pamphlets for their campaigns. 

¶5.  (S/NF) In addition, the opposition needs memory sticks
and MP3 players, which they intend to load with educational
material and distribute throughout the country.  The players
and memory sticks can be hidden and hand delivered from town
to town by the activists during their travels. 

¶6.  (S/NF) Cell phones in Burma are prohibitively expensive,
costing approximately $2,300 each.  Since many of their cell
phones were confiscated after the September protests, 

RANGOON 00000181  002.2 OF 002 

activists urgently need cell phones to facilitate
communication and coordination.  Their traditional suppliers
from Thailand have not been able to get them the equipment.
Since cameras are very dangerous to carry, the opposition
would like to procure cell phones with cameras so they can
discreetly take pictures of their campaigns and document
abuses by the regime during the referendum process. 

¶7.  (S/NF) Since September, internet communication has been
monitored much more closely by the regime, and Special Branch
Police confiscated many of the activists' computers.  Post
again recommends support for the wireless internet connection
we proposed last October (Ref D), to assist the activists in
communicating with pro-democracy groups inside and outside
Burma to organize a coordinated response to the referendum. 

¶8.  (S/NF) We would also like to assist in distributing USB
sticks Internews has developed, which allow the activists to
utilize open source software to launch programs, and enables
them to use web browsers without leaving a digital footprint.
 These would be invaluable tools for aiding their
communication with each other. 

¶9.  (S/NF) Comment:  The faster we can move this equipment
and money to the activists the better.  The regime plans on
holding its referendum in May, and their "vote yes" campaign
is already in full force.  A large, sophisticated, public
campaign will not happen in Burma: the regime shows every
intent of halting any sign of public opposition.  The Embassy
has gained experience in distributing small amounts of funds
without attracting additional regime scrutiny of the Embassy
or our recipients.  The activists need funds now to prepare
for a vote that could take place as early as two months from
now.  We estimate that $200,000 would enable us to assist the
activists with their equipment needs.  We will need
considerably more assistance from Washington to facilitate
communications by the activists with the outside world.  End
comment. 

VILLAROSA

Without ascending (or descending) to politics, the important point here is that Free software helps people’s freedom. █

Summary: Another roundup of dubious incursions inside the FOSS community/ies

Friends of Microsoft, such as the 'Microsoft press', are still trashing Free/open source licences and firms that are headed by former Microsoft managers are making new announcements about ‘fogification’ (cloud) of software and the relevance of licences. We are talking about OpenLogic, which just like Black Duck is a proprietary software company whose products are pimped under “open source” banner in the news. The main business model is getting rich by trashing FOSS licences or creating a scare around FOSS. Here is the press release [1, 2] which openwashes this product. Microsoft is trying to buy itself a voice inside the “Open Source” community also by pushing press releases that are said to be giving us a survey. So, Microsoft is now conducting Open Source surveys too? On whose behalf? This is the recipe for controlling one’s opposition. Mind the latest extortion from Acacia, which is also manned by former Microsoft staff (see our wiki page about Acacia).

It was only days ago that we warned about GPL FUD coming from Microsoft circles. Watch out and stay alert. Black Duck is placeboware — something to check a box with and spend money on for alleged fear of “non compliance” (excepting code search for other FUD like common security issues). As Microsoft MVP Miguel de Icaza put it a few weeks ago:

Koders is part of Black Duck, and searching for the term renders a bunch of matches. Not a single one of the results displayed actually contain a single use of the kSecReturnData constant. And not a single one of the snippets actually show the kSecReturnData constant. It is as useful as configuring your browser to use StumbleUpon as your search engine

We urge people to be suspicious of firms that were created by former Microsoft marketing managers. They know how to make money by deceiving people. It’s what they are professionally trained to do with a straight face. █