VZCZCXRO2758
RR RUEHAG RUEHDF RUEHIK RUEHLZ RUEHROV
DE RUEHMD #2978/01 3341455
ZNR UUUUU ZZH
R 301455Z NOV 06
FM AMEMBASSY MADRID
TO RUEHC/SECSTATE WASHDC 1393
INFO RUCNMEM/EU MEMBER STATES COLLECTIVE
RUEHLA/AMCONSUL BARCELONA 2262

UNCLAS SECTION 01 OF 02 MADRID 002978 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
EUR/WE 
 
E.O. 12958: N/A 
TAGS: ECON ETRD KIPR EAGR EAID TBIO SP EAIR EINV
SUBJECT: MADRID WEEKLY ECON/AG/COMMERCIAL UPDATE REPORT 
 
 
MADRID 00002978  001.2 OF 002 
 
 
¶1. Agriculture: Wheat product import and export 
¶2. KIPR: pursuit of possible patent law change 
¶3. Biotech site visit 
¶4. Basrah Childrens Hospital funds 
¶5. Spain Grants A&T Status to CSI Agents 
 
Agriculture: 
 
¶1.  (U) Due to tight global wheat supplies and resulting 
record world price levels, Spain's wheat importers have 
sharply reduced their orders of U.S. high-quality wheat. 
Spanish wheat flour millers have negotiated long-term 
contracts with domestic bakers, and need high-quality wheat 
(U.S. or Canadian Northern Spring Wheat) to blend with 
lower-quality domestic wheat to meet their flour-quality 
specifications.  As a result of these blending needs, Spain 
has historically been one of the top two European markets for 
high-quality U.S. wheat. 
 
¶2. (U) In an effort to encourage Spanish wheat importers, 
U.S. Wheat Associates visited Spain this week to extol the 
quality of this year's wheat crop.  In presentations in 
Barcelona and Madrid, U.S. Wheat Associates emphasized this 
year's excellent crop qualities, including high protein 
content and excellent baking properties.  However, given 
current very high prices, the dearth of orders thus far, and 
the imminent closing of the St. Lawrence Seaway, the  2006-07 
marketing year imports of U.S. high-quality wheat may be well 
off the nearly 500 thousand metric tons imported last year. 
 
KIPR 
 
¶3. (U) U.S. R & D based Pharmaceutical Industry in Spain 
continues to seek patent law change: American pharmaceutical 
industry representatives told Commercial Counselor and 
EconOff on November 17 that they would continue to seek a 
change to Spain's patent laws that would provide retroactive 
product patent protection for drugs that only benefited from 
process patent protection prior to 1992.  The industry 
intends to cite in its conversations with the GOS a number of 
court cases it has won recently and continue to make a public 
policy case for amending the patent law.  The pharmaceutical 
representatives said that the current Minister of Industry 
seems more receptive to their concerns than his predecessor. 
American and Swiss government lawyers say that international 
trade agreements such as TRIPS do not obligate the Spanish 
government to provide this retroactive protection (drugs 
protection), but we have made the argument to the GOS that it 
should continue its dialogue with the sector in order to help 
roster good conditions for the innovation-based 
pharmaceutical industry.  EconOff explained industry' 
priorities to an official at the office of the Presidency on 
November 21 - the official had no reaction. 
 
ECON/AG Biotech Visit 
 
¶4. (U) AgCouns and EconOff met with a prominent biotech corn 
grower in Catalonia on November 13 who was concerned about 
the proposed decree but not concerned enough to become more 
actively engaged against it.  He seemed to think he could 
find a way to go on growing  biotech corn despite the decree. 
 AgCouns and EconOff also met in Aragon on November 13 with a 
organic farming advocate and a cooperative farm advocate. 
Predictably, the organic farmer was all in favor of the 
decree, while the cooperative farm representative was more 
nuanced in his comments because he represents conventional, 
biotech and organic farmers.  They both seemed to think 
though that the 220 meter requirement would not mean the end 
of biotech farming in Spain.  Comment: Our sense is that the 
biotech farmer simply felt he could somehow finesse the 
decree if it passes in its current form, although, he was at 
pains to show that he complied with Catalonia's voluminous 
agricultural documentation requirements.  We are not sure 
what to make of this, but we think that strong farmer support 
for biotech, as well as seed company and USG advocacy, are 
necessary to get a better coexistence decree.  Ambassador is 
following up with a letter to President Zapatero's outgoing 
Economic Adviser Miguel Sebastian. 
 
Basrah Children's Hospital Update 
 
¶5. (SBU) The Spanish Agency for International Cooperation 
(AECI - Spain's USAID equivalent) informed the Embassy 
November 22 that Spain would sign a legal instrument with 
UNDP in New York City this same day that would finalize 
Spain's transfer of USD 22 million for the Basrah Children's 
Hospital.  AECI believes the Apanish funds will arrive in the 
designated UNDP/IRFFI account by November 30.  Over the 
course of the last week, the Embassy obtained a copy of the 
 
MADRID 00002978  002.2 OF 002 
 
 
Spain-UNDP agreement as well as the names of the UNDP 
officials managing both the Spanish funds transfer and the 
eventual passage of these funds to the U.S. Army Corp of 
Engineers.  U.S. officials are using this information to 
negotiate the requisite arrangement between the USG and 
UNDP/IRFFI to allow the Spanish funds to be passed to the 
U.S. Army Corps of Engineers prior to the Army's December 15 
deadline. 
 
Spain Grants A&T Status to CSI Agents 
 
¶6. (U) On November 10, Post received a diplomatic note from 
the Ministry of Foreign Affairs announcing the GOS, intent 
to grant administrative and technical diplomatic status to 
the Container Security Initiative agents to be posted to 
Spanish ports.  Econ successfully renegotiated this 
agreement, which had recently been rejected by the Ministry 
of Industry and Spain's Tax Authority, Econ had negotiated an 
original agreement in 2005.  DHS now hopes to have the CSI 
agents in the ports of Algeciras, Barcelona, and Valencia by 
the beginning of 2007. 
AGUIRRE