VZCZCXRO8178
RR RUEHLA
DE RUEHMD #1039 2961108
ZNR UUUUU ZZH
R 231108Z OCT 09
FM AMEMBASSY MADRID
TO RUEHC/SECSTATE WASHDC 1369
RUEATRS/DEPT OF TREASURY WASHDC
INFO RUEHLA/AMCONSUL BARCELONA 4167
RUCPDOC/DEPT OF COMMERCE WASHDC
RHEHNSC/NSC WASHDC

UNCLAS MADRID 001039 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EUR/WE AND EEB/IFD/OMA; 
TREASURY FOR OIA:R.JOHNSTON AND OTP:JHARRINGTON; 
COMMERCE FOR 4212/DON CALVERT 
 
E.O. 12958: N/A 
TAGS: EFIN SP
SUBJECT: SPANISH PRESIDENT ZAPATERO CALLS FOR RENEGOTIATION 
OF DOUBLE TAXATION TREATY 
 
Action Request in Para 4 
 
1.(U) In an October 21 speech to the American Business 
Council (ABC), President Zapatero announced that the GOS was 
ready to begin the process of revising the 1990 bilateral tax 
treaty.  In a conversation afterwards, Zapatero told post's 
Commercial Counselor that the USG should follow up with 
Secretary of State for Finance and Budget Carlos Ocana and 
his staff. 
 
2.(SBU) The announcement surprised and delighted several 
representatives of U.S. companies who were present.  The ABC 
and the separate American Chamber of Commerce in Spain 
(AmCham) have during the past few years regularly called for 
renegotiation of the treaty.  Spanish companies with 
investments in the U.S. have also asked the GOS to 
renegotiate.  Finance Ministry officials have in the past not 
indicated that renegotiation was a priority for them.  Just 
before Zapatero's meeting with the President last week, the 
AmCham sent the Presidency its list of recommended changes to 
the treaty.  Post will forward that document to State and 
Treasury. 
 
3.(SBU) Comment: Our conversations with GOS economic 
officials suggest that the GOS' sudden willingness to 
renegotiate the treaty is a result of the positive impact of 
Zapatero's meeting with the President.  In his speech, 
Zapatero cited the willingness to renegotiate as one part of 
a broad effort by the USG and the GOS to create jobs by 
promoting investment in both countries.  (Septel reports his 
comments on fighting internet piracy; he also announced that 
the two governments were considering establishing a bilateral 
investment forum.)   Our belief that the meeting made the 
difference is strengthened by the fact that the Presidency 
did not inform the ABC that Zapatero was willing to address 
it until October 16, after the Washington visit. 
 
4.(U) Action Request:  Post understands that Treasury's 
Office of Tax Policy had informed treaty negotiators who work 
for Ocana last year, and had informed the Spanish ambassador 
in Washington early this year, of USG interest in 
renegotiating the treaty.  Zapatero's statement is a clear 
demonstration of GOS interest.  Presidency Economic Office 
head Javier Valles said after the speech that the GOS would 
like a formal expression of interest from Treasury in order 
to proceed.  Post seeks guidance on next steps.  End Action 
Request. 
CHACON