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Cablegate: Madrid Weekly Econ/Ag/Commercial Update Report

VZCZCXRO4383
RR RUEHAG RUEHDF RUEHIK RUEHLZ RUEHROV
DE RUEHMD #0312/01 0530834
ZNR UUUUU ZZH
R 220834Z FEB 07
FM AMEMBASSY MADRID
TO RUEHC/SECSTATE WASHDC 1902
INFO RUCNMEM/EU MEMBER STATES COLLECTIVE
RUEHLA/AMCONSUL BARCELONA 2457

UNCLAS SECTION 01 OF 02 MADRID 000312

SIPDIS

SENSITIVE
SIPDIS

EUR/WE

E.O. 12958: N/A
TAGS: EAGR EAID EAIR ECON EFIN ENRG ETRD SENV TBIO
SP, EINV, UK
SUBJECT: MADRID WEEKLY ECON/AG/COMMERCIAL UPDATE REPORT

MADRID 00000312 001.2 OF 002


EFIN: Peseta vs. Euro
EMIG/EFIN: Immigrants send 3.2 billion home
EAGR, BEXP: U.S. Farm Bill proposal under study
EAGR: U.S. Almonds must be inspected for Aflatoxin
SOCI/TBIO: Avian Influenza readiness
ENRG, ECON, KIPR: Ambassador's meeting with Economic Advisor


SURVEY SAYS...PESETA OVER EURO

1. (U) A Financial Times survey shows over two thirds of
Spaniards would like a return to the peseta: The FT also
found similar majorities against the euro in France and
Italy, but a smaller majority opposed to the euro in Germany.
Majorities in all these countries thought the euro was good
for Europe, but not for their country. (Comment: In Spain,
opinion is mixed about the euro. Many people understand that
euro membership has allowed for historically low interest
rates, and hence a very long real estate boom benefiting
people who bought three or four years ago. On the other
hand, the popular perception is that adoption of the euro
allowed for a steep one-off increase in real prices, for
instance in the cost of a glass of beer or cup of coffee --
not a trivial perception to a bar and cafe- frequenting
people like the Spaniards.) (ABC, 1/30/07)

SPAIN BEATS GERMANY AS IMMIGRANTS TOP REMITTANCE LIST

2. (U) EU Report shows Spanish immigrants at the top of the
EU remittance league: According to an EU survey, Spanish
immigrants sent about Euros 3.2 billion back to their home
countries in 2004. The runner up was Germany where
immigrants sent a little over Euros 2 billion back. (Note:
2005 was, according to press reports, the first year
remittances flowing out of Spain topped remittances flowing
into Spain. This change reflects the switch in Spain from a
country of emigration to a country of immigration. End
note.) (ABC, 1/30/07)

SPAIN PLEAS NO COMMENT ON U.S. FARM BILL

3. (U) The Bush Administration's proposal to "modernize" the
U.S. Farm Bill was greeted with some consternation by
European Commission officials and representatives of some
European Union producer groups, but on the Iberian Peninsula,
there has been no, absolutely no reaction. Spanish and
Portuguese Government officials indicate that they will not
likely make any public pronouncements even after they are
finished evaluating the proposal. Spanish agricultural
advocacy groups have also refrained from comment, again while
they study the proposal.

AFLATOXIN INSPECTION FOR U.S. ALMONDS

4. (U) The European Commission (EC) will soon announce that
100 percent of U.S. almonds shipped to Europe must be
inspected for aflatoxin unless exported under the California
Voluntary Aflatoxin Sampling Program (VASP). Only five
percent of VASP shipments will need to be inspected.
Government of Spain's Health Ministry (MOH) believes that it
is prepared to comply with the expected EC directive, but MOH
officials also expect that most U.S. almond shippers will
sign up under VASP, thus drastically reducing the need for
inspections.

5. (U) Embassy Madrid recommended to FAS/Washington that
USDA/FAS/Madrid needs to be very forthcoming with MOH
regarding U.S. almond exporter intention and ability to sign
and export up under VASP. To the extent possible, we will be
working with USDA/FAS/Washington and the California Almond
Board to identify the potential number of almond containers
MOH will need to inspect during the very busy export months
of August, September, October, and November, so that the
potential delays will be minimized.

SPAIN USES UK BIRD FLU OUTBREAK TO REITERATE ITS AVIAN
INFLUENZA READINESS

6. (U) Spain convened its "Inter-Ministerial Avian Influenza
Tracking/Information Commission" on February 5, in the
aftermath of the Bird Flu outbreak in the Holton, United
Kingdom. Following the meeting, the Commission announced
that Spain would keep all its protective measures in place.
The Commission noted that the fact that Spain has had only
one infected bird (found in July 2006 in the Basque Region)
demonstrates the efficiency of both Spain's Avian Influenza
Vigilance Plan for Domestic and Wild Birds, as well as
Spain's overall Veterinary Alert System. The Commission

MADRID 00000312 002.2 OF 002


also reiterated that Spain's Avian Influenza Preparation and
Response Plan has implemented all EU and WHO recommendations.
Finally, the Commission noted that Spain's Avian Influenza
planning had been reviewed in October 2006 by the European
Center for Disease Control and that the results of the review
were "very positive." The Commission's communique ended by
reiterating the now standard Spanish position that the risk
of a human-to-human outbreak of Bird Flu "has not changed and
continues to be extraordinarily low."

AMBASSADOR'S 2/15/07 MEETING WITH PRESIDENT ZAPATERO'S
ECONOMIC ADVISOR DAVID TAGUAS

7. (U) Taguas asked to meet with the Ambassador informally
at the Residence. Both agreed to consult with the Spanish
and U.S. business communities regarding the AmCham's proposal
to change the U.S.-Spain double taxation treaty. Taguas said
the tax authorities would continue to look into some
inspections AmCham had complained about. Visiting GE CEO
Jeff Imelt had agreed with President Zapatero to participate
in a carbon sequestration project. Taguas and Ambassador
agreed to coordinate further on the June 22-24 U.S.-Spain
Council meeting in Salamanca. Taguas talked about arranging
a June 26 Energy Seminar focused on renewables. He said
President Zapatero might attend. The Ambassador said if the
choice was between the U.S.-Spain Council meeting and the
energy seminar, we prefer President Zapatero to attend the
Council meeting. Taguas said President Zapatero is committed
to the 220 meter biotech coexistence requirement but said he
would talk to Environment Minister Narbona to see if this
could be modified. The Economic Advisor said it was his
impression that Prime Minister Blair is very committed to
addressing global warming with the Germans and French less
enthusiastic. Taguas said he would try to set up a meeting
(probably in connection with the U.S.-Spain Council meeting)
to discuss ways in which American firms can compete for
public sector construction projects in Spain. Ambassador and
Taguas talked about making rail transportation in Spain more
consistent with European standards. The Ambassador noted
that the Canaries might be an interesting place for
pharmaceutical companies to invest in because of the
favorable tax regime there. Taguas talked a great deal about
health care challenges in Europe. (Comment: Taguas clearly
wants to have good relations with us, but we are skeptical
his office can deliver on hard issues. Our sense is that he
and his team are reluctant to take on Ministries on
controversial topics. Nonetheless, Taguas is a worthwhile
interlocutor because of his proximity and access to President
Zapatero.)

8. (U) Health Ministry shows signs of slightly more
flexibility on pharmaceutical patent issue: Econ heard in a
2/15/07 lunch with Moncloa Economic Office staff that Health
Minister Salgado might be willing to be more flexible on the
issue of providing product patent protection for a number of
drugs (as a practical matter, for the most part a number of
the "blockbuster" drugs used to control cholesterol) that
currently only benefit from process patent protection in
Spain. EconOff confirmed this in a 2/16/07 telcon with
Pfizer Spain CEO. (Comment: If true, this would be good
news, but the GOS has still not developed the mechanism
whereby such additional protection would be granted. We
cannot therefore declare victory yet.)
AGUIRRE

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