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

UNCLAS SECTION 01 OF 02 VIENNA 000718 
 
SIPDIS 
 
SENSITIVE 
 
E.O. 12958: N/A 
TAGS: ECON ETRD BEXP AU WTO
SUBJECT: SPECIAL REPRESENTATIVE MERMOUD'S DISCUSSIONS WITH 
THE AUSTRIAN GOVERNMENT AND U.S. BUSINESS REPRESENTATIVES 
 
Summary 
------- 
 
¶1.  (SBU) Special Representative for Commercial and Business 
Affairs Frank Mermoud met with Austrian Government officials 
and U.S. business representatives in Austria on February 23 
to discuss market access concerns, GoA views on the Doha 
Round, the EU's Services Directive, and U.S.-EU economic 
cooperation.  Martin Eichtinger, the Minister of Economy's 
Chief of Staff, highlighted the GoA's hope that WTO 
negotiators could make progress on NAMA and services. 
However, Eichtinger cautioned that the current EU offer on 
agricultural market access represented a red line, beyond 
which the EU would not venture.  Eichtinger characterized the 
amended Services Directive as a good compromise, which 
fostered liberalization and protected Member States against 
social dumping.  Melitta Schubert, the MFA's Transatlantic 
Coordinator for the EU Presidency, praised USG-EU cooperation 
on regulatory reform.  Schubert listed regulatory reform, IPR 
cooperation, innovation, and energy security as possible 
economic deliverables for a U.S.-EU Summit.  Christoph Leitl, 
President of the of the Austrian Chamber of Commerce, 
stressed the need for a stronger entrepreneurial spirit 
throughout Europe.  Representatives of U.S. pharmaceutical 
companies outlined difficulties in obtaining reimbursement 
approvals for innovative drugs.  Microsoft Austria pointed 
out how the high cost of patents in Europe hindered 
innovation.  End Summary. 
 
 
Ministry of Economy Views on WTO and the Services Directive 
--------------------------------------------- -------------- 
 
¶2.  (SBU) Martin Eichtinger, the Minister of Economy's Chief 
of Staff, told Special Representative for Commercial and 
Business Affairs Frank Mermoud that commercial relations 
between the U.S. and Austria remain strong.  According to 
Eichtinger, there are 450 Austrian companies in the U.S., 
employing 8,000 workers.  The 600 U.S. firms in Austria 
provide 30,000 jobs for the Austrian economy.  Eichtinger 
noted that Informal Commercial Exchange talks continue to 
provide an excellent forum to discuss bilateral trade issues. 
 
¶3.  (SBU) On WTO negotiations, Eichtinger said the GoA is 
pleased that the WTO is dealing with agriculture, services, 
and NAMA as one package.  Eichtinger noted that Austria is 
especially eager to see tangible progress on NAMA and 
services, because 40% of Austria's GDP comes from exports of 
goods and another 15% of GDP from exports of services. 
Eichtinger cautioned that, on agricultural market access, the 
current EU offer reflects a red line, beyond which Member 
States are not willing to allow the Commission to venture. 
Eichtinger argued that the EU had already registered 
impressive reforms of the Common Agriculture Policy in recent 
years, which the current WTO negotiations should acknowledge. 
 
¶4.  (SBU) On the Services Directive, Eichtinger characterized 
the European Parliament's (EP) recently amended Services 
Directive as a "good compromise between liberalization and 
protection against social dumping."  The EP, in Eichtinger's 
opinion, is beginning to assert its views and meaningfully 
affect policy debates.  Eichtinger predicted that the 
Commission will present a new proposal, based on the EP's 
version, to the Competitiveness Council at the end of May. 
Eichtinger stressed that Minister of Economy Martin 
Bartenstein wanted to finish work on the directive during the 
Austrian Presidency. 
 
 
Ministry of Foreign Affairs on U.S.-EU Economic Cooperation 
--------------------------------------------- -------------- 
¶5.  (SBU) Melitta Schubert, Head of the MFA's Economic 
Relations Department and the MFA's Transatlantic Coordinator 
for the EU Presidency, briefed Mermoud on the MFA's 
preliminary views concerning economic issues that might arise 
during a possible U.S.-EU Summit during the Austrian EU 
Presidency.  Schubert highlighted cooperation on regulatory 
reform as a possible deliverable for a summit.  Schubert 
praised the work of the OMB in this area, but acknowledged 
that there is still much work to do.  Schubert added that the 
U.S. and European business communities are interested in 
promoting this issue, because they are both suffering from 
administrative burdens.  Schubert underlined that it would be 
very important to consult with the business community on this 
and other U.S.-EU economic deliverables.  She suggested that 
the Transatlantic Business Dialogue would be a good vehicle 
to ensure business input into summit preparations. 
 
¶6.  (SBU) Schubert listed several other economic issues that 
might warrant inclusion in a summit, including IPR 
cooperation, an air services agreement, and energy security. 
On IPR, Schubert opined that recent signals from the 
Commission indicate it is willing to intensify cooperation 
with the USG, especially in the context of third countries. 
On energy security, Schubert confided that there is an 
internal debate within the EU, with some arguing for a 
"common energy policy."  The Commission's Green Paper would 
most likely provide more direction on energy issues. 
 
 
Austrian Chamber of Commerce on Entrepreneurial Spirit 
--------------------------------------------- --------- 
 
¶7.  (SBU) Christoph Leitl, President of the influential 
Austrian Chamber of Commerce (WKO), told Mermoud that the 
WKO's main priority during the Austrian Presidency is to 
stimulate economic growth and reduce unemployment.  Leitl 
said that, across Europe, it is necessary to restore consumer 
and investor confidence as a prerequisite to higher GDP 
growth.  Leitl noted that Europe needed more entrepreneurial 
spirit, with "less employees and more employers."  At the 
same time, governments need to invest more in workers and 
physical and technological infrastructure.  In Leitl's 
opinion, innovation is the nexus for all of these issues. 
 
 
U.S. Business Community Concerns 
-------------------------------- 
 
¶8.  (SBU) During a roundtable with Mermoud, U.S. company 
representatives of the Research Based Pharmaceutical Forum 
(FOPI) outlined market access concerns.  FOPI members 
complained that the GoA process to grant reimbursement status 
for innovative drugs is unduly burdensome and discriminatory. 
 The process to obtain reimbursement status, which FOPI 
claims is the third longest in the EU, takes an average of 
400 days.  This long process naturally cuts into the patent 
life of the drugs, which FOPI implied might be the GoA's 
intention in dragging out reimbursement approvals.  Moreover, 
FOPI lamented that, because the entity responsible for 
reimbursement policy is independent from the Ministry of 
Health, there is little political incentive to reform the 
system.  Mermoud urged FOPI to focus on the "big picture," 
not the details, and to engage the GoA as a "health care 
partner." 
 
¶9.  (SBU) Thomas Lutz, Spokesman for Microsoft Austria, told 
Mermoud that Microsoft had three priorities in Austria: 
advocating for minimal IT regulation; promoting innovation; 
and broadening the information society to all demographic 
segments.  Lutz noted that about 25% of the Austrian 
population is over 60 years old, and most of this group is 
not particularly proficient with computers.  Microsoft hopes 
to integrate these groups into the information society.  On 
promoting innovation, Lutz lamented that patents in Europe 
cost an average of $30,000, while the average U.S. patent 
costs $2,400.  On Internet governance, Lutz said the IT 
sector appreciated the USG's efforts to fight back 
supranational control of the Internet at the November 2005 
WSIS.  However, he warned that the idea of creating a 
supranational organization to control the Internet may only 
be dormant. 
 
¶10.  (U) EB/CBA Special Representative Mermoud has cleared on 
this message. 
McCaw