VZCZCXRO2468
OO RUEHAG RUEHDF RUEHIK RUEHLZ RUEHROV
DE RUEHWR #1236/01 2971359
ZNR UUUUU ZZH
O 231359Z OCT 08
FM AMEMBASSY WARSAW
TO RUEHC/SECSTATE WASHDC IMMEDIATE 7202
RUCPDOC/USDOC WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RUEHRC/DEPT OF AGRICULTURE WASHDC
INFO RUEHKW/AMCONSUL KRAKOW 2176
RUCNMEM/EU MEMBER STATES

UNCLAS SECTION 01 OF 03 WARSAW 001236 
 
SENSITIVE 
SIPDIS 
 
DEPT FOR EUR/CE/DMORRIS 
DEPT PASS USTR FOR LYANG 
COMMERCE FOR 4232/ITA/MAC/EUR/OECA/MROGERS,JBURGESS,CRUSNA K 
USDA for FAS/OSTA BMACKE; FAS/OCRA DSALMON, DSEIDBAND; 
FSIS/RKISHORE 
 
E.O. 12958: N/A 
TAGS: ETRD EINV ECON BEXP PL
SUBJECT: EXPERTS LEVEL ECONOMIC/COMMERCIAL DIALOGUE(ECD) CONTINUES 
IN WARSAW, SOME ROGRESS ON LOGSTANDING ISSUES 
 
WARSAW 00001236  001.2 OF 003 
 
 
Summary 
------- 
 
¶1. Commerce/ITA DAS for Europe Paul Dyck held a series of meetings 
Oct. 1-2 in Warsaw with U.S. industry and the Ministry of Economy as 
a part of continuing our Bilateral Economic and Commercial Dialogue 
(ECD) with the Polish government. He was accompanied by Commerce/ITA 
Director for European Country Affairs Jay Burgess.  Prior to meeting 
with his counterpart at the Ministry of Economy, Dyck met with local 
U.S. innovative pharmaceutical companies who were members of the 
American Chamber of Commerce "LAWG".  He also met with local Cargill 
representatives regarding the delay in payment of an arbitration 
award they won in March against the GOP and with members of the 
Board of the American Chamber of Commerce. The Embassy requested a 
separate meeting for Dyck with Deputy Minister of Health Twardowski 
to discuss pharma issues, but the Ministry did not grant this 
meeting.  The Embassy then requested a meeting with Ministry of 
Health (MOH) Drug Policy Director Falek, but was also refused. 
Falek was supposed to be at the Ministry of Economy meeting, but he 
did not show up.  [NOTE: subsequently, Deputy Minister Twardowski 
did travel to Washington the week of Oct. 6-10 where he did meet 
with USDOC Deputy U/S O'Neill, HHS Deputy Secretary Troy, and State 
DAS Murphy. END NOTE] 
 
¶2.  Undersecretary of State Marcin Korolec chaired the meeting on 
the Polish side at the Ministry of Economy.  He was accompanied by 
several other representatives from his ministry.  Both Dyck and 
Korolec noted the overall positive nature of trade and investment 
relations between the United States and Poland.  DAS Dyck assured 
the Polish side of USDOC's continuing commitment to the ECD process 
and to working with the Ministry of Economy into the new year. 
There was good news on the Dell land acquisition case, with a final 
resolution almost at hand, but some disappointing news on the 
Cargill arbitration case, as the U.S. side was informed that the 
Ministry of Economy would officially appeal the award and, thus, 
delay a final payout.  There was much discussion on energy security 
issues, with the Poles expressing some pessimism on how fast the new 
nuclear power project for the Ignalina facility in Lithuania might 
go forward.  The Polish side, as expected, raised the issue of 
access for their poultry to the U.S. market and the U.S. side 
explained that it was not prepared to respond at this time.  The 
U.S. side also raised our pharma issues, advocacy for U.S./Canadian 
joint venture Europort, Motorola Tetra, as well as other issues such 
as GMOs and Poland's anti-biotechnology voting record in the EU and 
alcohol labeling, with little Polish comment.  Discussions were 
cordial and productive, with both sides agreeing to continue the ECD 
on a larger scale in 2009 with fuller inter-agency participation. 
Commerce officials invited either U/S Korolec or Director Tomasz 
Ostaszewicz to come to Washington in the first quarter of 2009 for 
that purpose. 
 
--------------------------------------------- -------- 
Pharmaceutical Market Access and Lack of Consultation 
--------------------------------------------- -------- 
 
¶3.  At Dyck's meeting with the LAWG, the U.S. company 
representatives raised the new issue of a pending Health Ministry 
regulation that would restrict sales calls by drug company staff to 
outside of doctors' office hours.  While this affected all drug 
company sales staff equally, the LAWG explained that it hurt them 
disproportionately because their members needed more time with and 
repeated calls on doctors to educate them about their innovative 
drugs, whereas Polish industry, all of whom are generic producers, 
dealt mainly with wholesalers and drug stores.  LAWG claimed that 
the industry employs 12,000 sales staff in Poland and this new 
regulation would disrupt their operation and could lead to layoffs. 
There was virtually no consultation with industry and minimal lead 
time on implementation, LAWG claimed, since the new regulation would 
take effect in mid-November.  The LAWG also raised the longstanding 
issue of access to the reimbursement list, lack of transparency in 
this process and lack of access to the Health Ministry for its 
members.  Dyck used this opportunity to again ask for specific 
examples of delays in applications to the reimbursement list. 
 
¶4.  At the formal meeting with the Ministry of Economy, Dyck duly 
raised the new issue regarding the Health Ministry regulation 
restricting sales calls and the continuing issue of the 
reimbursement list and access.  Undersecretary of State Korolec 
noted our concern, but since there was no Health Ministry 
representative, there was no discussion. 
 
 
WARSAW 00001236  002.2 OF 003 
 
 
--------------------------- 
Advocacy for U.S. Companies 
--------------------------- 
 
¶5.  At the Ministry of Economy meeting DAS Dyck formally raised 
three U.S. company advocacy cases:  Dell, Cargill and Europort.  On 
Dell, the Ministry informed us that the Council of Ministers had 
approved increasing the amount of state aid to Dell to PLN 36 
million which was designed to close the gap between the price for 
the land that Dell was willing to pay and the price demanded by the 
Polish side.  Since this involved additional state aid payments 
under EU rules, there remained a final approval necessary from the 
European Commission, which was expected by Oct. 8. Dyck thanked the 
Polish Government for its sustained effort to bring this 
longstanding case to a successful conclusion.  On Cargill, the Poles 
tried to convey as a positive step forward the fact that the Polish 
Government had formally decided to appeal the arbitration award in 
Paris and would thus begin negotiations with Cargill.  Burgess 
interjected that while Poland certainly had the right to appeal, 
grounds for such an appeal were very narrow, that the costs to 
Poland of an appeal would be substantial (legal fees, interest, and 
penalties), and that the USG expected Poland to pay the award. 
Korolec explained that the Polish Government bureaucratically had to 
appeal the decision to demonstrate that it had exhausted all 
avenues.  On Europort, Korolec responded that the Ministry of 
Treasury, the appropriate interlocutor in this matter, had agreed to 
a meeting with the U.S. and Canadian Embassies on October 8. 
(Comment:  this meeting did take place on October 8 with the U.S. 
Embassy DCM, Commercial Counselor and Canadian Embassy Senior Trade 
Commissioner, and the Deputy Minister of Treasury Jan Bury and the 
head of the Port of Gdansk Management Board.  There was no progress 
on bringing the two sides together for a settlement and it was clear 
that the Polish Government would let the on-going process in Polish 
arbitration courts come to a close and that it expected to win. End 
Comment) 
 
¶6.  Dyck also raised the longstanding Motorola Tetra project for 
emergency communication systems for the Ministry of Interior.  He 
expressed again Motorola's desire to participate in this project in 
any way.  Korolec took note. 
 
---------------- 
Energy Security 
---------------- 
 
¶7.  Maciej Wozniak, Director of the Oil and Gas Department at the 
Ministry of Economy, and soon to be the energy advisor to the Prime 
Minister, briefly presented some natural gas projects.  He first 
provided an update on the long-planned LNG terminal on the Baltic 
coast at Swinoujscie.  Gaz System, a 100% state-owned company, would 
now have the lead in the project, while the former owner of the 
project, Polish Oil and Gas, would still remain a partner.  Planning 
for the project was to be completed by the end of the year with 
construction commencing some time in 2009.  The U.S.-Canadian firm 
SNC Lavilan had won the contract for construction.  Wozniak also 
mentioned well-known plans for a natural gas pipeline from Norway to 
Denmark, through Germany and then to Poland.  Norwegian firm Statoil 
needed to agree to sell the gas for this proposed pipeline, but they 
had not formally done this. The Poles asked our help in encouraging 
Statoil to do so. 
 
¶8.  Dyck asked about the status of the planned project to build a 
new nuclear electric power plant at Ignalina in Lithuania after the 
existing nuclear plant was finally decommissioned in 2009.  To date 
the GOP has been very involved in this project with Lithuania, 
Estonia and Latvia, and related plans to build an electric power 
bridge between Poland and Lithuania.  Poland would like to take up 
to 1000 megawatts from the new plant and would have to invest about 
2 billion Euro in the power bridge and another 8 billion Euro for up 
to 600 km of new power distribution lines.  That being said, Korolec 
added that he believed that the new plant might not be built because 
the intentions of the Baltic countries did not seem clear.  He 
suggested that they might want to prolong the operation of the 
existing nuclear power plant at Ignalina beyond 2009.  (Comment: 
this would obviously run afoul of EU requirements to decommission 
the old plant. End comment.) He also noted possible Russian plans to 
build a new nuclear electric power plant in the Kaliningrad region 
adjacent to Poland, with construction possibly starting in three 
years.  He hastened to add, however, that a new Ignalina plant 
remained very important to Poland as a cheap source of electricity 
and as a way to reduce their own CO2 emissions. 
 
WARSAW 00001236  003.2 OF 003 
 
 
 
------------------------------------- 
Poultry and Other Agricultural Issues 
------------------------------------- 
 
¶9.  Korolec raised the issue of access of Polish poultry products to 
the U.S. market and gave the U.S. side a non-paper on this subject. 
Dyck responded that the USG was not at this time in a position to 
give a response on this issue and said that we expected to be able 
to respond at the next full ECD meeting in 2009.  Non-paper was 
conveyed to USDA via the Office of Agricultural Affairs, Embassy 
Warsaw. 
 
¶10.  Dyck then raised the issue of the Polish voting record in the 
EU on matters related to Genetically Modified Organisms in 
agriculture.  He explained that Polish votes against new varieties 
of soybeans as feed could hurt the Polish livestock industry in 2009 
since there would not be enough animal feed to satisfy demand.  Dyck 
also raised the issue of a new Polish regulation requiring a very 
large warning label on bottles for alcoholic beverages and that 
there had been no consultation with industry regarding this 
significant regulatory change. 
 
¶11. As our allotted time for the meeting was running out, Korolec 
simply took note of the above issues. 
 
ASHE