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UNCLAS SECTION 01 OF 03 ROME 002877 
 
SIPDIS 
 
SIPDIS 
 
DEPARTMENT PASS TO USTR 
 
E.O. 12958: N/A 
TAGS: ECON ETRD ETTC AF CH IT
SUBJECT: MINISTER OF TRADE: ITALY RETHINKING APPROACH TO 
CHINA; COMMITTED TO WTO 
 
REF: 2004 ROME 2829 
 
ROME 00002877  001.2 OF 003 
 
 
¶1.  (U) This is an action request.  See paragraphs 9 and 12. 
 
¶2.  (U) Summary:  In a courtesy call by Ambassador Spogli 
October 3, Trade Minister Anna Bonino outlined her views on 
Italy's trade relationship with China and the need for 
Italian firms to be more aggressive in promoting their brands 
internationally.  She expressed enthusiasm for the 
Ambassador's Partnership for Growth Program, and said the GOI 
is committed to the success of the current round of WTO 
negotiations but predicted continued European inflexibility 
in the run-up to elections in France.  Bonino noted 
cooperation between the GOI and USG in export control regimes 
and expressed strong interest in bilateral consultations on 
export controls in the coming year.  Bonino expressed 
interest in a proposal by the Ambassador to bring Afghan 
women to Italy to "tell their story" and to make clear the 
need for continued coalition efforts to prevent a resurgence 
of Taliban influence in Afghanistan.  End summary. 
 
The China Challenge 
------------------- 
 
¶3.  (U) Bonino, who recently returned from a six-day 
(September 13-18) trade mission to China, said that for 
Italy, the key issues with respect to China are respect for 
intellectual property rights (IPR) and helping Italian 
businesses take advantage of the opportunities that the 
Chinese market presents.  Bonino raised the issue of Chinese 
respect for IPR, including the problem of counterfeit goods, 
during her meetings with Chinese officials in Beijing and 
Guangzhou.  She believed they were sensitized to the issues 
and aware of the need to improve China's track record on IPR. 
 She was especially struck by the fact that local officials 
"are beginning to realize they have to do something about IPR 
violations" and "are uneasy" about IPR norms in China. 
Bonino said European Commission Vice President Gunter 
Verheugen will travel to China in the near future and that 
IPR issues are high on his agenda.  Verheugen is especially 
concerned about the manufacture of counterfeit Bosch car 
parts in China. 
 
¶4.  (U) Bonino said the greatest challenge is to change the 
way Italian businesses think about China.  "The outcome of 
the mission depends on whether Italians can stop viewing 
China as a threat and start to take advantage of the 
opportunities that China presents."  Bonino cited as an 
example the Italian machine-tool industry, which has been 
very proactive in establishing itself in the Chinese market. 
She said that infrastructure (construction) businesses need 
to be more aggressive in entering the Chinese market, and 
noted the huge potential of the Chinese infrastructure 
sector, mentioning specifically the construction of the port 
of Tianjin. 
 
¶5.  (U) Bonino observed that Italian companies need to make a 
determined effort to establish their brands in China, and 
that Chinese patronize Starbucks ("the McDonald's of coffee") 
and Pizza Hut instead of purchasing Italian products, such as 
Illy coffee or "real Italian pizza."  "When Chinese think of 
well-designed furniture, they should think of Italy, not 
Ikea."  Using China and the United States as examples, she 
said that "there is the opportunity for a greater Italian 
presence, but Italian companies need to go there and assert 
themselves." 
 
WTO And The Doha Round 
---------------------- 
 
¶6.  (U) Bonino said the GOI is committed to the success of 
the Doha round and to "giving the WTO relevance."  "Failure 
is not to our advantage, and we have no interest in weakening 
the WTO," she said.  She noted progress in the current round 
is hampered by the timing of various elections, including 
U.S. elections in November and French elections early next 
year.  She said the EU's ability to move on trade issues will 
be limited in the run-up to the French elections and 
predicted a hardening of EU positions until after elections 
and the ensuing French political reshuffling. 
 
¶7.  (U) Bonino told the Ambassador that Italy will host trade 
meetings with Brazil on October 23, at which time WTO 
Director General Lamy will also be in Rome.  These talks will 
be followed by meetings on November 6 with Indian Trade 
Minister Kamal Nath, also in Rome.  Bonino said NAMA and 
 
ROME 00002877  002.2 OF 003 
 
 
"definition of origin" (geographical indications) are the key 
issues in the current round for Italy, but also noted that 
the Italian economy is an industrialized one and that Italian 
trade policy should reflect this. 
 
¶8.  (U) Within the WTO, Bonino said there is a need to be 
tough on anti-dumping.  She specifically said that "China has 
to learn to play by the rules," adding that China should be a 
"responsible player" within the WTO system.  She noted 
Italy's shoe manufacturers have been especially hard hit by 
cheap Chinese imports, and that it is difficult to get other 
EU countries to act because much of the dumping is being done 
by European companies (she named Adidas as an example) which 
have factories in China. 
 
Export Controls 
--------------- 
 
¶9.  (U) The Ambassador raised the issue of cooperation 
between the United States and Italy on export controls, 
noting that we have not had bilateral consultations on this 
issue since 2004, reported reftel.  Bonino agreed "it is 
important to keep the dialogue on export controls between the 
U.S. and Italy open," and expressed in resuming the biennial 
export control meeting between U.S. and Italian experts. 
Action Request:  Post requests Washington guidance on the 
availability of USG export control officials to participate 
in bilateral consultations.  End action requested. 
 
Afghanistan 
----------- 
 
¶10.  (U) Turning to the issue of Afghanistan, the Ambassador 
told Bonino the Embassy hopes to bring a group of Afghan 
women to Italy before the end of the year to tell their 
stories, to illustrate why the international community must 
remain engaged in Afghanistan, and why the Taliban cannot be 
allowed to have a role in Afghan politics.  Bonino, who was 
briefly kidnapped by the Taliban during a 1997 trip to 
Afghanistan when she was EU Commissioner for Humanitarian 
Affairs, expressed interest in the project and asked to be 
kept informed.  Bonino said the GOI is "determined" not to 
leave Afghanistan, and to deny the Taliban a role in the 
government there. 
 
¶11.  (U) Bonino told the Ambassador that it is her personal 
belief that stabilization and security in Afghanistan need to 
occur "from outside and inside."  Her view is that 
stability within Afghanistan will impossible to achieve 
unless Afghanistan's relations with Pakistan and Iran 
stabilize.  She expressed concern over the influence that 
Pakistan and Iran have in Afghanistan's border regions and 
noted the strong Iranian political influence in Herat. 
 
¶12.  (U) Returning to a personal opinion, Bonino said that 
"we are totally wrong on the issue of drugs," and that 
current opium poppy eradication policies do not work.  She 
argued that "in some areas of Afghanistan, opium is the only 
thing that can be grown," and that "telling Afghans not to 
harvest opium is like telling the Saudis not to pump oil." 
Bonino has long advocated what she terms a "more pragmatic" 
approach on the drug trade in Afghanistan, including 
legalized cultivation of opium for use in morphine 
manufacture.  She proposed that Afghanistan, along with other 
licit producers of opium, could participate in a quota system 
administered by the International Red Cross.  In Bonino's 
view, the drug trade in Afghanistan, because it cannot be 
eradicated, should be controlled.  This, she said, would help 
fight corruption, augment the Afghan government's budget, and 
help deprive the Taliban of an important source of funding. 
 
Comment 
------- 
 
¶13.  (SBU) Bonino is a spirited interlocutor, in comfortable 
command of her brief after six months as Trade Minister.  In 
a meeting conducted entirely in fluent English, she did not 
hesitate to plunge into the issues and talk business, 
eschewing diplomatic formalities.  While we will continue to 
have differences with the GOI and the Ministry of Trade on 
issues such as geographical indications, Bonino is a 
forward-thinking Trade Minister, committed to the success of 
the Doha Round, who may be more flexible than her predecessor 
in finding ways to re-start the stalled WTO Round.  She sees 
her views on opium production as "pragmatic," though they are 
not in synch with our own.  Post will follow up to provide 
 
ROME 00002877  003.2 OF 003 
 
 
briefing materials to Bonino's office on USG views on 
counter-narcotics efforts in Afghanistan.  SA A/S Boucher is 
also visiting October 17-18 and will be able to engage Bonino 
and others on Afghan issues.  Finally, we note that her 
portrayal of Chinese officialdom's relatively positive 
attitude toward the neuralgic issue of the counterfeiting 
issue seemed unrealistic.  End comment. 
SPOGLI