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Cablegate: Special 301 Results Controversial, Cl's Blamed For

VZCZCXRO2105
RR RUEHCHI RUEHDT RUEHHM RUEHNH
DE RUEHBK #2542/01 1270155
ZNR UUUUU ZZH
R 070155Z MAY 07 ZDK
FM AMEMBASSY BANGKOK
TO RUEHC/SECSTATE WASHDC 6690
RUCNASE/ASEAN MEMBER COLLECTIVE
RUEHGV/USMISSION GENEVA 1825
RUCPDOC/USDOC WASHINGTON DC
RUEAUSA/DEPT OF HHS WASHINGTON DC

UNCLAS SECTION 01 OF 02 BANGKOK 002542

SIPDIS

SENSITIVE

SIPDIS

STATE PASS USTR FOR B. WEISEL, C. WILSON
STATE PASS USPTO
HHS/OHGA FOR AMAR BHAT
USDOC FOR JKELLY

E.O. 12958:N/A
TAGS: ECON ETRD KIPR TH
SUBJECT: SPECIAL 301 RESULTS CONTROVERSIAL, CL'S BLAMED FOR
DOWNGRADE

REF: SECSTATE 56533

BANGKOK 00002542 001.2 OF 002


1. Summary: Thailand's placement on USTR's Special 301 Priority
Watch List (PWL) for IPR violations sparked controversy and
recrimination, but also an RTG commitment to work with the USG to
improve IPR protection and find a way off the list. As expected,
RTG officials, press and general public presumed the primary factor
for the PWL decision was the recent controversy over compulsory
licenses on pharmaceutical products, and glossed over most other IP
concerns. Commerce officials and private sector groups are nervous
that the PWL decision will affect their eligibility for GSP benefits
and will further damage Thailand's image as a favorable destination
for investment. Department of Intellectual Property officials
reacted defensively to the USG decision, but are anxious to return
to the good graces of the U.S. End Summary.

2. On April 30, in advance of the release of the USTR Special 301
report, Econoff and USPTO Attache met with Department of
Intellectual Property (DIP) Director General Ms. Puangrat Asvapisit
and broke the news that Thailand would be elevated to Priority Watch
List. DIP officials were disappointed but not surprised by the
decision. As expected, officials assumed the decision was driven by
USG displeasure over the RTG action in late 2006 and early 2007 to
issue compulsory licenses (CLs) on three patented drugs, including
two HIV/AIDS medicines patented by U.S. companies. Econoff
explained that while the compulsory licenses were cited as a concern
in USTR's report, the issue was only one of many cited and not the
deciding factor. DG Puangrat countered that raids, seizures and
arrests for IP crimes had increased in 2006 and saw no other
significant deterioration of IP protection that would warrant a
downgrade other than the compulsory license actions. Nevertheless,
Emboffs engaged in a fruitful discussion with DIP of Thailand's IP
shortcomings and agreed to meet again to discuss means to address
USG concerns. DIP was relieved that Thailand's GSP benefits would
not be directly affected by their placement on PWL.

3. In a press briefing on May 1, the Ambassador explained the
Special 301 decision and the underlying reasons behind Thailand's
elevation to PWL. English language and Thai papers gave front page
placement for the news and have continued to give prominent, though
mostly negative, treatment to the story throughout the week.
"Outrage grows at US trade pressure", screamed a front page headline
on Thursday's English language daily The Nation. Most papers picked
up the Ambassador's explanation of the reasons for the downgrade to
PWL, and the context of the compulsory license issue. Nevertheless,
typical stories declared CLs as the primary reason and included
defiant statements from the Minister of Public Health that his
Ministry would not back down under USG pressure and would maintain
the CLs in force. The Minister blamed the PWL decision on pressure
on USTR from U.S.-based pharmaceutical companies. However, several
papers also detailed the long list of other IP concerns mentioned in
the 301 report and explained in the press conference.

4. Early press stories before the 301 announcement predicted a PWL
decision would result in an immediate cut off of Thailand's trade
benefits under the Generalized System of Preferences (GSP) program.
The Ambassador's statement that PWL would not trigger a change in
the GSP program toned down ensuing stories, but press reports
nevertheless characterized the move as a trade retaliation, and
quoted industry concerns about future cuts in trade benefits. RTG
officials and local business also expressed angst over yet another
blow to Thailand's investment environment, following on
controversial capital controls and proposed amendments to the
Foreign Business Act that would restrict foreign investment.

5. In a bizarre twist to the story, the RTG discovered that a
pro-pharma NGO in the U.S., USA for Innovation, that was advocating
Priority Watch List for Thailand was linked to former PM Thaksin.
The NGO's executive director, Ken Adelman, is a senior adviser to
Edelman Public Relations, a firm also contracted by Thaksin.
Accusations flew that Thaksin had somehow used the connection to
influence USTR's decision to further discredit the current
government.

6. On May 3, 30-40 demonstrators representing a local HIV/AIDS
organization protested the PWL decision in front of the U.S.
Embassy. Ambassador invited the group's leaders to discuss the
issue but was rebuffed; one protestor said, "We came to shout at
you, not to talk to you." After two hours of protests the group
dispersed. Local press widely covered the demonstration, but also
noted the group's refusal to meet with the Ambassador.


BANGKOK 00002542 002.2 OF 002


Minister of Health takes to the Hustings
----------------------------------------

7. Press reported PM Surayud was concerned over the PWL placement
and has decided the answer is, naturally, for the RTG to better
explain its decision to issue CLs. Having postponed an earlier trip
due to medical reasons, Minister of Public Health Mongkol na
Songkhla will be traveling to the U.S. May 21-22 to meet with USG
officials on the topic. Before meeting in Washington, he also plans
to travel to New York City on May 8 to sign a deal with the Clinton
Foundation on bulk procurement of drugs. From there he travels to
Geneva for World Health Assembly meetings. The Minister reportedly
is scheduled to meet health officials from other developing
countries to discuss the use of CLs. In a pre-departure
conversation with the Ambassador, the Minister said the CLs were
"over" and that he was "getting bored" of the issue. The Minister
responded favorably to Ambassador's suggestion he meet with pharma
company headquarters during his visit to New York.

Next steps
----------

8. DIP officials have agreed to meet with Embassy on May 11 to
discuss next steps and a possible IPR Action Plan to guide the way
for eventual removal from PWL. Embassy plans to discuss a Plan
oriented toward improving enforcement activities and reforming
judicial practices that have hampered enforcement efforts in the
past. Commerce officials have already announced plans to form an
interagency group of IPR-related agencies to discuss issues with the
U.S.

9. Comment: Controversy over Thailand's downgrade to Priority
Watch List was inevitable. Months of emotional arguments in favor
of and against compulsory licenses primed the Thai public for what
is now considered the U.S.'s retribution. Criticism has been severe
at times, and the story continues to have legs. However, fears that
the issue would be seized upon by the coup-installed government or a
political party to stake out a nationalist position have not yet
materialized. As hoped, lower level officials in DIP and the
Ministry of Commerce have not let their disappointment become a
rejection of U.S. concerns on intellectual property and seem
prepared to work with Embassy on new initiatives. The year will see
if the RTG is prepared to bring forth a more serious approach to
enforcement, but we remain cautiously optimistic that today's
negative story will still bear fruit tomorrow.
BOYCE

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