VZCZCXYZ0001
RR RUEHWEB

DE RUEHTV #0156/01 0201329
ZNR UUUUU ZZH
R 201329Z JAN 09
FM AMEMBASSY TEL AVIV
TO RUEHC/SECSTATE WASHDC 0101
INFO RUEHFR/AMEMBASSY PARIS 0752
RUCPDOC/DEPT OF COMMERCE WASHDC
RHEHAAA/WHITE HOUSE WASHDC

UNCLAS TEL AVIV 000156 
 
SIPDIS 
 
NEA/IPA FOR ASACHAR 
EEB/TPP FOR SKEAT 
USTR FOR FRANCESKI,GROVES,MOWREY 
PARIS FOR USOECD MHAWLEY-YOUNG 
 
E.O. 12958: N/A 
TAGS: ECON KIPR IS
SUBJECT: IPR/ISRAEL: OCR DOES NOT RESULT IN AGREEMENT 
 
REF: A. TEL AVIV 2173 
     ¶B. TEL AVIV 2709 
 
¶1.  SUMMARY:  The Special 301 Out-of-Cycle Review (OCR) for 
Israel, which could have resulted in significant progress on 
improving Israeli intellectual property (IP) regime in the 
area of research-based pharmaceuticals, has not yielded an 
agreement despite strong efforts by the USG to reach one.  A 
proposed exchange of letters formalizing the work of the past 
eight months was rejected by the GOI as not providing enough 
incentive to work out a package deal.  Rachel Hirschler, 
Deputy Director of the Foreign Trade Administration, blamed 
internal factors for Israel's inability to complete 
negotiations, particularly the current transition period in 
Israel prior to the upcoming election and a lack of 
high-level efforts to press key stakeholders to compromise. 
In addition, Hirschler said that some in the GOI are hoping 
that by holding out until the next U.S. presidential 
administration, Israel's name will disappear from the Special 
301 Priority Watchlist. The GOI has indicated it would still 
like to work on IP issues in 2009. END SUMMARY. 
 
OCR: THE POST MORTEM BEGINS 
 
¶2.  Announced last April, the OCR was meant to provide Israel 
with a special window of opportunity to address the 
problematic issues of data exclusivity and patent-term 
extension, the two key IP issues that have resulted in 
Israel's placement on the Special 301 Priority Watchlist for 
the past three years.   The Office of the United States Trade 
Representative (USTR) led a delegation to Israel in September 
and met with key stakeholders from both the research and 
generic pharmaceutical industries, in addition to holding an 
interministerial meeting with representatives from the 
Ministries of Health, Justice, Trade and Finance (Ref A). The 
meeting was the first time all the relevant ministries were 
present in one room to discuss IP issues with the USG.  While 
not resulting in an agreement, the visit helped set the terms 
of the negotiating agenda and seemed to lay the groundwork 
for further progress. 
 
¶3. By the second interministerial meeting (Ref B) in 
November, negotiators began closing the gaps on substantive 
issues, but the GOI's inability to commit made it impossible 
to complete a deal.  The Ministry of Health, responsible for 
approving pharmaceutical patents and implementing the terms 
for data exclusivity, did not wish to commit to a package, 
although it did negotiate on specific terms of data 
exclusivity -- without reaching final agreement.  According 
to Rachel Hirschler, it appears that TEVA, Israel's largest 
generic pharmaceutical company, was not in favor of proposals 
for patent-term extension and was encouraging certain key 
players to wait until the next U.S. administration, which in 
its view might adopt a less firm stance on IP issues. 
 
¶4.  Hirschler also stated to econoff that perhaps more 
problematic for the Israeli side was the lack of high-level 
government (i.e. ministerial level) support, due to political 
events and a weak government.  The Knesset will likely not 
meet for at least two months after the general elections (set 
for February 10) thus making any passing of legislation 
nearly impossible in the first quarter of 2009.  The current 
situation in Gaza may even result in the elections being 
postponed, further muddying the prospects for a quick 
resolution of the IP situation.  Our key contact at the 
Ministry of Health, Yoel Lipshitz, was recently summoned to 
the Gaza Strip as part of his reserve duty, effectively 
ending his availability to negotiate on IP.  In a brief 
respite from military duty, he met with Econoffs, and 
emphasized that waiting for the next administration in both 
the United States and in Israel was not for reasons of 
ascertaining a better deal, but rather would ensure that an 
agreement would have the high-level buy-in necessary for 
legislation in 2009. 
 
¶5.  USTR sought to formalize IP commitments from Israel in an 
exchange of letters.  Hirschler said that Israel could not 
commit to putting anything in writing. She added that in 
exchange for promises to address data exclusivity and 
patent-term extension, Israel would require firm USG 
commitments regarding the Special 301 process. 
 
NEXT STEPS? 
 
¶6.  The GOI has emphasized that it still wishes to work with 
USTR and even proposed a meeting in February on the IP issue. 
 
 However, by that time, the regular Special 301 review 
process will have begun and Israel will likely still not have 
the high-level leadership in place to move forward. 
According to Lipshitz, the GOI still very much hopes to meet 
with USTR in 2009 on this issue. 
 
COMMENT 
 
¶7.  While the inability of Israel to complete the OCR is 
disappointing, gains were made during the process that 
hopefully can be capitalized on in the future.  USTR was 
closing the gaps on substantive issues, and at times the 
discussion seemed to bring the parties very close to an 
agreement.  It is unfortunate that certain unpredictable 
factors such as timing did not work in favor of an agreement 
at this time, as it is very difficult to predict the position 
of a future Israeli government on IP issues.  That being 
said, Post encourages the relevant USG agencies to meet with 
the GOI and to keep the pressure on Israel to improve its IP 
regime, both informally and through formal channels like the 
Special 301 process and Israel's accession to the 
Organization of Economic Cooperation and Development (OECD). 
 
 
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