This record is a partial extract of the original cable. The full text of the original cable is not available.

111750Z Jan 06

UNCLAS SECTION 01 OF 02 PARIS 000200 
 
SIPDIS 
 
SENSITIVE 
 
STATE ALSO FOR E, EB, EB/TPP, EUR/ERA, AND EUR/WE 
COMMERCE FOR ITA 
STATE PLEASE PASS USTR (ALLGEIER, DWOSKIN, DONNELLY) 
GENEVA FOR USTR 
 
E.O. 12958: N/A 
TAGS: ETRD EAGR FR WTRO
SUBJECT:  FRANCE TO WORK WITH GERMANS ON WTO INITIATIVE 
 
 
¶1.  (SBU) SUMMARY.  France intends to work with Germany to 
develop a trade proposal for the EU that would be focused on 
services and non-agricultural market access (NAMA) according 
to Trade minister-delegate Christine Lagarde's staff.  Trade 
Minister Lagarde's advisor Eric Peters (protect) told 
Econoff Jan 10 that she believed France was pleased with the 
way the Hong Kong ministerial had turned out. While France's 
agricultural (and political) interests were protected, she 
believes the time has now come to pursue France's economic 
interests in terms of services and access to developing 
country markets for industrial goods. French officials see 
working with the new German government as a way to protect 
the GOF's flanks within the EU and as a way to piggyback on 
Germany's success as Europe's top exporter. END SUMMARY. 
 
¶2. (SBU) Trade Minister Lagarde's advisor Eric Peters 
(protect) told Econoff that France had begun to meet with 
German counterparts to fashion a "Franco-German" WTO 
initiative to present to EU member states before the Davos 
meetings at the end of January.  The substance of the 
initiative would focus on non-agricultural market access 
(NAMA) and services.  He said both sides shared a broadly 
similar analysis of NAMA and services, and had begun to 
identify in detail specific industries by sector and 
country. 
 
SERVICES 
-------- 
¶3.  (SBU) Peters said that Trade Minister-delegate Lagarde 
had been pleased with the results of the Hong Kong WTO 
ministerial.  He said she believed it was necessary 
politically to rein in EU Commissioner Peter Mandelson and 
to defend the EU's commitments on the Common Agricultural 
Policy (CAP).  Now, however, the ministry was working 
quietly with the private sector to emphasize to others in 
and outside the GOF how important services and exports were 
to the French economy.  Close to 70 percent of French jobs 
are in the services sector, and 75 percent of France's GDP 
is related to services. Peters said the GOF was not 
chagrined that the numerical benchmarks in the Commission's 
services proposals were gone.  France, however, took this 
issue seriously, and was looking for other ways to hold 
developing countries' feet to the fire on their services 
commitments. 
 
HELPING EXPORTS 
--------------- 
¶4. (SBU) France also sees a "European" advantage to working 
with the Germans.  He said the GOF believes the new German 
government's momentum in economic affairs could rub off on 
French efforts.  France is Germany's top source for imports 
at close to 10 percent.  French officials, whose own export 
performance is distinctly less dynamic, view Germany's 
position as Europe's top exporter with envy. Recent numbers 
show a serious gap, with Germany posting a surplus of 155 
billion Euros in 2004, and France a deficit of 8 billion 
Euros. 
 
PRESSING THE BRAZILIANS? 
----------------------- 
¶5.  (U) Peters said that Lagarde and other French observers 
were impressed with the performance of the U.S. delegation 
at the Hong Kong WTO Ministerial. "They played their hand 
well", he said.  However, echoing a frequent theme of French 
trade policy, he said Lagarde and others had expressed 
concern that the U.S. was working so closely with the 
Brazilians, a dangerously competitive exporter. He asked 
how, in that light, could the U.S. and the EU work together 
to challenge developing countries like India and Brazil on 
market access? 
 
COMMENT: A SLOW SHIFT? 
--------------------- 
¶6. (SBU) COMMENT.  Having successfully defended its 
political interests within the European Union and the WTO, 
France can now pursue its offensive agenda.  But by focusing 
now on services and NAMA, France has hardly put its 
agricultural interests behind it. The GOF has solid economic 
reasons to propose a NAMA and services initiative. But the 
move also seems to reflect what analysts have called a "slow 
shift" of elite public opinion in France on agricultural 
support programs. The shift is due in part to criticism from 
other European partners in the course of the recent EU 
budget debates, and to a wave of editorial and academic 
criticism of the cost and poor implementation of the CAP 
that appeared in the local and international media following 
the government's defeat in last spring's European 
constitutional referendum.  But however costly and however 
poorly implemented, the broad public continues to be largely 
supportive of a significant government role in agriculture - 
especially when financed by Brussels.