VZCZCXRO8444
RR RUEHIK
DE RUEHMD #0086/01 0261810
ZNR UUUUU ZZH
R 261810Z JAN 10
FM AMEMBASSY MADRID
TO RUEHC/SECSTATE WASHDC 1762
INFO RUCNMEM/EU MEMBER STATES COLLECTIVE
RUEHLA/AMCONSUL BARCELONA 4322
RHMCSUU/DEPT OF ENERGY WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RULSDMK/DEPT OF TRANSPORTATION WASHDC

UNCLAS SECTION 01 OF 04 MADRID 000086 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EUR/WE, EEB/TPP/IPE, EEB/IFD/OIA, EEB/TRA/AN 
STATE PASS USTR FOR D.WEINER 
COMMERCE FOR 4212/DON CALVERT 
ENERGY FOR PIA/K.BALLOU AND EERE/D.BIRNS 
TREASURY FOR OIA/OEE/R.JOHNSTON AND OTP/M.CORWIN 
 
E.O. 12958: N/A 
TAGS: BEXP ECON EINV ENRG KIPR SP
SUBJECT: AMBASSADOR SOLOMONT'S JANUARY 25 CALL ON 
INDUSTRY/TOURISM/COMMERCE MINISTER SEBASTIAN 
 
REF: A. MADRID 80 
     ¶B. MADRID 67 
 
MADRID 00000086  001.3 OF 004 
 
 
Summary 
------- 
1.(SBU) On January 25, Minister Sebastian and the Ambassador 
emphasized their desire to work together to strengthen 
bilateral business and economic ties.  State Secretary Ros 
reviewed his January 20-21 Washington meetings on 
intellectual property rights and the status of proposed 
legislation to combat internet piracy.  The Minister 
encouraged the Ambassador to engage the Madrid regional 
government president on internet piracy.  The Ambassador 
emphasized the importance he placed on favorable GOS 
consideration of two proposed solar electricity investments; 
Sebastian and State Secretary Marin explained that it would 
be difficult for the GOS to approve the SolarReserve project, 
but the Minister promised to take another look.  The 
Ambassador suggested considering how to integrate President 
Zapatero's goal of a bilateral economic and investment forum 
into the existing U.S.-Spain Forum.  A Foreign Trade 
Institute official agreed to check on the status of the 
Spanish treasury's response to a U.S. Treasury letter on 
renegotiating our bilateral income tax treaty.  Minister 
Sebastian also asked for help getting information from 
General Motors on the company's plans for Opel.  He noted the 
GOS, strong interest in hosting a U.S.-EU summit during 
Spain,s EU presidency, cited concerns by Spanish 
infrastructure companies over Buy American restrictions, and 
raised the Iberia/One World Alliance application for 
antitrust immunity for the Iberia-BA merger.  End Summary. 
 
2.(U) The Ambassador paid an introductory call on Spanish 
Minister of Industry, Tourism, and Commerce Miguel Sebastian 
on January 25.  Sebastian was accompanied by Secretary of 
State (deputy minister) for Telecommunications and the 
Information Society Francisco Ros, Secretary of State for 
energy Pedro Marin, Foreign Trade Institute (ICEX) CEO Angel 
Martin-Acebes, and two staffers.  The Ambassador was 
accompanied by the economic and commercial counselors.  The 
Ambassador opened by referring to his January 22 meeting with 
President Zapatero (ref A) and the importance he placed on 
strengthening business ties between the two countries. 
Internet Piracy 
--------------- 
3.(SBU) The Ambassador highlighted the difficulties faced by 
the U.S. movie and recording industry in Spain as a result of 
internet piracy.  He acknowledged that some thought the 
Special 301 process was unfair but stressed that the issue 
needed to be addressed.  He emphasized the USG,s desire to 
help address the problem (though he did not want to take a 
position on details of the legislation) and said that he had 
met the previous week with the head of the opposition Popular 
Party (PP) (ref B) to encourage a constructive approach. 
State Secretary Ros indicated that it would be helpful for 
the Ambassador to continue to encourage the PP. 
 
4.(SBU) Minister Sebastian noted that immediately upon taking 
office in 2008 he had met with the Ambassador's predecessor, 
who had told him Spain had been placed on the Watch List. 
Since that time, the GOS had made considerable progress on 
two of the issues that had been cited at the time, illegal 
software and street sales of counterfeit products. 
 
5.(SBU) On the third (comment: and most important) issue, 
unauthorized internet downloads of movies and music, 
Sebastian said that many Spaniards thought the "digital 
canon" private copy levy on recording instruments and media 
gave them the right to download whatever they wanted.  In 
addition, going after individual users was difficult for the 
GOS, which did not want to jeopardize families, access to 
the internet just because one member downloaded unauthorized 
items.  He said the GOS had gotten the ISP association to 
negotiate with the Coalition of content providers.  He 
described the political tension around the issue, saying the 
GOS considered unfair both the MPAA's claim that it was 
overly permissive and the PP's and the internet users groups' 
claim that it was almost as repressive on internet issues as 
Iran or China or Cuba.  The Minister called "very worrisome" 
 
MADRID 00000086  002.3 OF 004 
 
 
the PP's initial reaction to the government's first 
legislative proposal.  He was particularly concerned that the 
Madrid regional government had been organizing meetings with 
internet users.  He understood the national party seeking 
political advantage, but he was concerned about the 
institutional aspects of the regional government getting 
involved, and he said it would be helpful if the Ambassador 
could encourage the regional president to stop.  The 
Ambassador agreed to raise the issue when he meets with the 
regional president. 
 
6.(SBU) Secretary Ros said that in his meetings in Washington 
the previous week, Spain's efforts had been generally very 
well received.  The software companies were "fine," and the 
movie industry was also "happy."  However, the music industry 
still had problems, acted as if the GOS had done nothing, and 
was not patient enough to wait for implementation of the law 
as would be necessary.  (Comment: The U.S. music industry 
says the draft legislation's emphasis on closing websites 
will do very little to address direct peer-to-peer (P2P) 
filesharing, which is more of a problem for music than for 
movies.  The GOS says the legislation will have some impact 
on P2P filesharing as well.)  Ros said everyone was waiting 
to see what happened with the draft law, which was now in a 
consultation stage that could last a month or a month and a 
half.  Afterwards it would go to the Congress, where the 
government is just short of a majority.  If the PP supported 
it, it could move quickly.  If the PP opposed it and proposed 
language changes, it could take longer.  Ros also said that 
Spain,s problem was like those in other countries and that 
fundamentally the industries' business models needed to 
change.  He and Minister Sebastian both cited the importance 
of promoting legal downloads, which the Ministry is seeking 
to do. 
 
7.(U) Ros also said his telecoms-related meetings had gone 
well and that his interlocutors had agreed to set up working 
groups  to address issues such as cybersecurity, net 
neutrality, and next generation networks. 
 
8.(SBU) Comment:  Ros had emphasized in his Washington IPR 
meetings the importance of USG engagement with the PP, and 
this meeting confirmed the GOS' interest.  Post will continue 
our efforts to encourage national PP figures to take a 
constructive approach toward the GOS' proposed legislation. 
We will also engage with the regional government. 
 
Double Taxation Treaty 
---------------------- 
9.(SBU) The Ambassador noted that both he and the Minister 
wanted to promote business and jobs in our two countries and 
said that one issue companies raised was the need to revise 
the bilateral double taxation treaty.  The USG was awaiting a 
response to a letter that had been sent from Treasury's tax 
negotiating office to its Spanish counterparts.  Minister 
Sebastian said his ministry often pushed the issue with 
Spain,s treasury.  Martin-Acebes said the treasury was 
working on a response, and he agreed to the Ambassador's 
request that he look into the issue and let us know when a 
response might be ready. 
 
Strengthening Business Ties 
--------------------------- 
10.(U) The Ambassador and the Minister emphasized their joint 
interest in strengthening U.S.-Spain business ties. 
Sebastian had traveled to the U.S. four times in 2009, and he 
described his involvement in the launch of the "Made in 
Spain, Made by Spain" awareness campaign in the U.S.  The 
Ambassador noted President Zapatero's interest in a US-Spain 
investment and economic forum he had proposed during his 
October visit to the White House.  Martin-Acebes said the 
presidency was working on the idea.  The Ambassador 
recommended considering how to integrate Zapatero's goals 
into the existing U.S.-Spain Council and U.S.-Spain Forum, 
which benefited from the commitment of Senator Menendez and 
others.  The Minister expressed concern about the 
multiplication of different business groups that did not talk 
to each other, citing the U.S. Chamber of Commerce in Spain 
(AmCham) and the American Business Council.  He said that 
 
MADRID 00000086  003.3 OF 004 
 
 
adding a new forum/council would be difficult. 
 
U.S. Companies' Solar Power Projects 
------------------------------------ 
11.(U) In emphasizing the importance he places on 
strengthening the bilateral economic relationship in order to 
create jobs, the Ambassador noted that Spanish companies were 
the largest recipients in the U.S. of stimulus funding for 
renewable energy projects.  He said the USG was glad to 
promote these investments, which resulted in U.S. jobs.  He 
also wanted favorable consideration of U.S. companies, 
proposed investments in Spain.  He mentioned two planned 
solar thermal electricity investments by U.S. companies, 
saying that both were important symbolically as well as for 
the direct amounts of investment and jobs they would bring. 
The investment by Florida Power and Light subsidiary NextEra 
now appeared to be in good shape and would be the largest new 
U.S. investment in Spain in several years.  It would be an 
example of the two governments' shared confidence in 
renewable energy. 
 
12.(SBU) A greater concern was the difficulties faced by a 
large project by SolarReserve that was important both in 
terms of economic activity and technology development. 
Minister Sebastian responded by explaining how the GOS had 
seen a bubble develop in solar photovoltaic electricity 
projects in 2008 and was seeing one in solar thermal projects 
in 2009.  In both cases, far more companies had applied to 
build projects and receive the generous guaranteed feed-in 
tariffs than the GOS had expected, and the result was going 
to be very expensive to consumers for many years.  He noted 
that the GOS had changed its registration process to burst 
these bubbles, and that many Spanish companies were very 
upset with the GOS for doing so. 
 
13.(SBU) Secretary of State Marin said Solar Reserve had 
presented its application in December, several months after 
the May 6 deadline, and that the original GOS target had been 
500 MW of projects but that the GOS had allowed 2,500 MW to 
be scheduled between now and 2013.  The GOS could not predict 
now what the guaranteed feed-in tariff would be after 2013 
because it would have to see how the technology evolved, 
though the tariff certainly would be lower.  It would be 
difficult for the GOS to allow Solar Reserve to "jump the 
queue" ahead of all the other companies (Sebastian said 
"thousands of megawatts") that had applied between May and 
December.  Marin also noted that the company was seeking 
authorization for a larger project than the 50 MW allowed by 
the GOS decree-law.  He added that the company's interest in 
using an alternative provision of the existing royal decree 
could not be accommodated because of overall capacity limits. 
 He commented that the GOS had authorized much new renewables 
capacity at a time when overall electricity demand was 
falling, and there might not be demand for new capacity for a 
while. 
 
14.(SBU) The Ambassador acknowledged Sebastian's and Marin's 
comments.  He noted that the company was willing to accept a 
tariff that was significantly lower than the tariff other 
companies were receiving (note: this is a condition of the 
alternate legal route) and urged the Minister and the 
Secretary to look at the company's arguments again and see if 
anything could be done.  He said the USG interest was partly 
in business terms and partly because of the symbolic 
importance.  Marin noted that his team had met with company 
officials recently and that he was familiar with their 
arguments. 
 
Other Issues 
------------ 
15.(SBU) Minister Sebastian asked for help getting 
information from General Motors about the company's plans for 
Opel (which has a factory in Zaragoza province).  He said the 
company was keeping the British government informed, but that 
the GOS had to learn about developments in the press. 
Sebastian had been pleased with GM's decision to keep Opel 
but wanted more information, or at least as much as the 
British were getting. 
 
 
MADRID 00000086  004.3 OF 004 
 
 
16.(SBU) Minister Sebastian said Spanish infrastructure 
companies were concerned about Buy America legislative 
provisions.  Upon being questioned by the Ambassador, 
Martin-Acebes could not come up with an example of a Spanish 
investment that had been prevented because of national 
government restrictions.  He instead cited a Texas state 
action and general concern by construction companies about 
state and local actions, adding that the perception could 
become a deterrent to investment.  Commercial counselor noted 
that Spanish infrastructure companies were doing very well in 
the U.S. and that the CAF railroad car manufacturer had 
recently reached an agreement; the company would do more 
manufacturing in the U.S. than it had originally envisioned, 
but it appeared to be satisfied.  The Ambassador noted that 
the Embassy could address a perception of barriers by 
highlighting the success Spanish companies were having in the 
U.S. 
 
17.(SBU) Minister Sebastian noted GOS concern about the One 
World Alliance's application for anti-trust immunity for the 
BA-Iberia airline merger.  He also noted the GOS' strong 
interest in having a U.S.-EU summit in Madrid during Spain's 
EU presidency.  He added that he expected the Defense 
Minister (whom the Ambassador saw the next day) to raise the 
interest of the Spanish company EADS-Casa (Airbus Military) 
in the revised DOD tender for new refueling tanker aircraft. 
 
Comment 
------- 
18.(SBU) Minister Sebastian was clearly interested in 
establishing a productive relationship with the Ambassador. 
Sebastian made a point of assuring the Ambassador as the 
meeting broke up that his ministry "would try" on Solar 
Reserve but that it would be very difficult.  Another sign of 
the importance he placed on the relationship was the presence 
in the meeting of two deputy ministers, an agency head, and 
two other staffers, many more than usually attend such 
meetings. 
SOLOMONT