VZCZCXRO7406
PP RUEHAG RUEHDF RUEHIK RUEHLZ RUEHROV
DE RUEHRL #1842/01 2780524
ZNR UUUUU ZZH
P 050524Z OCT 07
FM AMEMBASSY BERLIN
TO RUCNMEM/EU MEMBER STATES COLLECTIVE PRIORITY
RUCNFRG/FRG COLLECTIVE PRIORITY
RUEHBS/USEU BRUSSELS PRIORITY
RUEHC/SECSTATE WASHDC PRIORITY 9419
INFO RUEHRC/DEPT OF AGRICULTURE USD FAS WASHINGTON DC PRIORITY 0073
RHMFIUU/DEPT OF ENERGY WASHINGTON DC PRIORITY
RULSDMK/DEPT OF TRANSPORTATION WASHINGTON DC PRIORITY
RUEFHLC/HOMELAND SECURITY CENTER WASHINGTON DC PRIORITY
RHEHAAA/WHITE HOUSE WASHINGTON DC PRIORITY

UNCLAS SECTION 01 OF 02 BERLIN 001842 
 
SIPDIS 
 
SIPDIS 
PLEASE PASS TO NSC FOR LCATIPON AND AHUBBARD; OMB FOR S. 
DUDLEY; STATE FOR EEB: DSULLIVAN AND CMOORE, EUR/ERA AND 
EUR/AGS 
 
E.O. 12958: N/A 
TAGS: ETRD EFIN PREL ECIN EU GM
SUBJECT: TEC: GERMAN CHANCELLERY WORRIED ABOUT LOST MOMENTUM 
 
REF: A. BERLIN 1328 
     ¶B. BERLIN 1254 
     ¶C. MEMCON: AMBASSADOR TIMKEN'S MAY 31 MEETING WITH 
        BDI'S MANAGING DIRECTOR 
 
¶1. (C) SUMMARY: Chancellor Merkel's chief economic adviser is 
concerned that work on the Transatlantic Economic Council 
program has slowed since Portugal took over the EU 
Presidency.  Other German government and industry 
representatives report progress on the TEC's work program and 
structure although they see problems ahead on U.S. secure 
trade requirements.  Germany will seek to closely monitor and 
guide the TEC through the EU Troika. End summary. 
 
--------------------------------------------- --- 
MAINTAINING MOMENTUM: The Chancellery's Concerns 
--------------------------------------------- --- 
 
¶2. (C)  Jens Weidmann, Chancellor Merkel's chief economic 
adviser, told EMIN on September 28 that he was frustrated 
wtih Portugal's lack of engagement on TEC issues, and feared 
the initiative was losing momentum.  Although action on the 
TEC naturally belonged to the Commission, and communication 
between Hubbard and Verheugen appeared to be intense and 
productive, he feared implementation of TEC priorities could 
become lost in the Brussels bureaucracy.  Progress on 
standards was key, he told us, emphasizing that Chancellor 
Merkel herself was keenly interested in this area as it could 
have an enormous impact on business.  Yet more than dollars 
and cents were involved, he told us.  Mutual recognition and 
adoption of common standards could help Europe and America 
meet growing "globalization challenges" (read: Chinese 
competition in the world marketplace).  To help ensure 
Germany's views are heard, Weidmann plans to attend the TEC's 
November 9 meeting in Washington, D.C. 
 
--------------------------------------------- ---- 
SUNNIER VIEW FROM ECONOMICS MINISTRY AND BUSINESS 
--------------------------------------------- ---- 
 
¶3. (C)  Officials at the Ministry of Economics, the lead 
agency for TEC within the government, and representatives of 
the German Federation of Industries (BDI) agreed that 
Portugal's European Union Presidency has not prioritized TEC 
as Germany did.  Adrian Bothe, the Head of External Economic 
Policy/North America at the Ministry of Economics, regarded 
Slovenia, the next in line for the Presidency, as more 
promising (i.e. free-market oriented), but inexperienced. 
That's why it was so advantageous, in the view of the 
Economics Ministry, that the Commission was in charge of the 
TEC work program.  On the whole, the Ministry was not unhappy 
with progress on the TEC to date.  (The Ministry also said it 
works effectively through COTRA to make its views known in 
Brussels.) 
 
¶4. (C)  German business also appears satisfied with how 
things are going.  Sigrid Zirbel, BDI's Regional Director for 
North and Latin America, said the strong commitment from 
political leaders, the high-level engagement by Al Hubbard 
and Commissioner Guenther Verheugen in the TEC structure, and 
the increased accountability and clear deadlines associated 
with these two parties all set TEC's work apart from past 
U.S.-EU economic cooperation initiatives.  BDI President 
Juergen Thumann will be the next co-chair of the 
Transatlantic Business Dialogue (TABD) and will continue 
promoting BDI's primary interest in horizontal and key 
sectoral issues.  BDI believes its enlarged role in TABD will 
ensure it remains strongly engaged in TEC. 
 
---------------- 
AREAS OF CONCERN 
---------------- 
 
¶5. (C)  Delivery for November 9:  The Ministry of Economics 
stated the German business community will not be satisfied 
with anything less than tangible deliverables.  The Ministry 
shared USG concerns that TEC would suffer if it became a 
forum for complaints over policy differences.  The key is to 
focus on underlying areas of cooperation as identified by the 
lighthouse projects in the Framework Agreement. 
 
¶6.  (C) Financial Reporting Standards: Weidmann was upset 
 
BERLIN 00001842  002 OF 002 
 
 
that the deadline for mutual recognition of accounting 
standards -- regarded as a potential early milestone for TEC 
at the June 28 kickoff (Ref A) -- had slipped.  BDI itself 
did not foresee any big stumbling blocks, maintaining that 
differences between the EU and U.S. versions were minor.  BDI 
said EU Member States have amended International Financial 
Reporting Standards (IFRS) on the margins because EU-wide 
adoption of a single set of comprehensive standards would 
require the EU Parliament's approval. 
 
¶7. (C)  Secure Trade:  German interlocutors repeatedly 
indicated that the EU will raise the 9/11 Act's 100 percent 
scanning requirement at TEC's November 9 meeting.  BDI said 
it is dissatisfied with developments to date.  BDI's 
representative said, "This is not the kind of cooperation we 
understood.  This is a step backward in our view."  BDI said 
industry faces too much uncertainty surrounding 
implementation dates and methods to commit to the significant 
investments required to comply with the requirement.  BDI's 
representative asked if the requirement would be immediately 
enforced in the event of a terrorist incident involving a 
shipping container.  TABD and BDI are organizing a supply 
chain security conference to be held October 31 in 
Washington, D.C. 
 
¶8. (C)  Regulatory concerns:  Bothe noted European regulatory 
agencies' history of "giving up regulatory sovereignty" 
through EU compromises.  He also argued that governments must 
act as referees or watchdogs to ensure that no economic 
sector uses TEC to push through one-sided regulatory changes. 
 Economics Ministry officials asked whether regulatory 
cooperation within NAFTA had implications for TEC and German 
companies operating within North America. 
 
¶9.  (C) Role of Congress: The Economics Ministry suggested 
that Congress has significantly more power in the regulatory 
arena than their European counterparts, as Congress sets 
budgets and establishes headcounts to pursue specific 
regulatory goals.  The Ministry and BDI both inquired about 
the level of Congressional support for TEC and indicated they 
believe such involvement is necessary for the effort to 
succeed. 
 
¶10. (C) Comment:  German interlocutors may differ on how well 
the TEC is progressing, but in the end, it will all depend on 
whether the November 9 meeting succeeds in delivering 
concrete, short-term results.  With Merkel's name and 
prestige on the line, we expect Berlin to weigh in if 
difficulties arise. 
 
 
TIMKEN JR