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Cablegate: Requesting Coordinated Action With

VZCZCXRO9401
PP RUEHDE RUEHDIR RUEHHT RUEHPOD RUEHROV
DE RUEHC #8022/01 1020341
ZNR UUUUU ZZH
P R 110335Z APR 08
FM SECSTATE WASHDC
TO RUEHRH/AMEMBASSY RIYADH PRIORITY 6878
INFO GULF COOPERATION COUNCIL COLLECTIVE
EUR COM POST COLLECTIVE

UNCLAS SECTION 01 OF 02 STATE 038022

SIPDIS

SIPDIS

E.O. 12958: N/A
TAGS: ETRD USTR SA EU SZ
SUBJECT: REQUESTING COORDINATED ACTION WITH
EU AND SWISS EMBASSIES ON TRANSPARENCY
IN SAUDI ARABIA'S RULE-MAKING PROCESS

REF:
A. 07 RIYADH 1346
B. 07 RIYADH 1347
C. 07 RIYADH 2139
D. 07 RIYADH 2149

-------
Summary
-------

1. (U) Embassy is requested to engage with officials from the
European Commission (EC) and the Swiss government in Riyadh to
coordinate action to address Saudi Arabia's Ministry of Health's
(MOH) failure to implement the Kingdom's world trade organization
(WTO) obligations on transparency in the rule-making process with
regard to the recent changes by the Ministry for prices of registered
pharmaceuticals. Despite efforts by Embassy Riyadh, the Department,
USTR, Commerce, and the U.S. private sector since September 2007, the
MOH has yet to provide detailed information on the criteria and
definitions used in the recent pricing regulation that is necessary
for interested parties to have an adequate basis to assess the draft
regulation and develop substantive comments. The MOH has not yet
confirmed that it will provide a period of no less than 60 days to
provide comments on that information as spelled out in detail in
Saudi Arabia's WTO working party report. USTR has discussed the
issue in detail with EC and Swiss officials, and we have agreed to
request that our respective officials in Riyadh coordinate action to
address this issue. USTR requests that Embassy share the non-paper
on this issue with EC and Swiss officials (which has been shared with
contacts in Brussels and Bern) and consider appropriate Embassy
actions to ensure that Saudi Arabia implements its WTO obligations.
End summary.

----------
Objectives
----------

2. (U) Embassy Riyadh is requested to share the non-paper in
paragraph seven on Saudi Arabia's WTO obligations on transparency in
the rule-making process with EC and Swiss officials and consider
appropriate Embassy actions to ensure that Saudi Arabia implements
its international trade obligations in this area.

------------------
Reporting deadline
------------------

3. (U) Embassy should report results of efforts by cable to Jason
Buntin at USTR and NEA/ARP by April 21. Please slug response for
USTR (Jason Buntin and Jennifer Groves), NEA/ARP (Bagwell), and EEB
(Scheibe).

----------
Background
----------

4. (U) The Saudi MOH initially stated its intention, in October
2006, to reduce pharmaceutical prices in the Kingdom by 1 percent for
each year a product has been on the market. In September 2007, the
MOH stated that it would issue regulations reducing prices for more
than 6,000 medicines during the September-October period of Ramadan.
Although delayed for several months, the price cuts took effect on
February 2, 2008.

5. (U) As a result of efforts by Embassy Riyadh, the department,
USTR, Commerce, and the U.S. private sector, the MOH has via its
website notified the public of the opportunity for interested parties
to send suggestions on the changes directly to the ministry.
However, the MOH has yet to provide detailed information on the
criteria and definitions used in this pricing regulation that is
necessary for interested parties to have an adequate basis to assess
the draft regulation and develop substantive comments. The MOH has
also not confirmed that it will provide a period of no less than 60
days to receive comments on that information as spelled out in detail
in paragraph 36 of Saudi Arabia's WTO working party report in the
specific context of pharmaceutical pricing and more generally in
paragraph 305.

6. (U) USTR has discussed the issue in detail with EC and Swiss
officials and agreed to request that our respective representatives
in Riyadh coordinate action to address this issue. USTR has
developed the attached non-paper to share with EC and Swiss officials
and consider appropriate Embassy actions, possibly similar to the
joint meeting that the EC, Swiss, and Belgian ambassadors held with
the minister of health in September 2007, to ensure that Saudi Arabia

STATE 00038022 002 OF 002


---------
Non-paper
---------

7. (U) Begin text:

Saudi Arabia's WTO working party report (available at
http://www.WTO.org) includes commitments by the Kingdom regarding
transparency in the rule-making process. Paragraphs 301-305 of the
report include general information and commitments by Saudi Arabia on
implementation of the transparency requirements prescribed in the WTO
agreements. In particular, paragraph 305 includes a commitment by
Saudi Arabia to publish promptly "all laws, regulations, decrees,
judicial decisions and administrative rulings of general application
pertaining to or affecting customs issues, trade in goods, services,
intellectual property, and the control of foreign exchange" in the
umm al-Qura in a manner that fulfils WTO requirements and a
commitment that "no such law, regulation or other normative act or
measure would become effective or be enforced prior to such
publication." Saudi Arabia also committed to "establish or designate
an official website (and possibly a supplemental official journal or
an expanded umm al-Qura), updated on a regular basis and readily
available to WTO members, individuals, associations and enterprises,
dedicated to the publication of all regulations, decisions, orders,
administrative rulings of general application, and other measures
pertaining to or affecting trade in goods, services and trips prior
to enactment." The commitment noted that "the publication of such
regulations and other measures would include, as appropriate, the
names of the authorities (including contact points) responsible for
implementing a particular measure and the effective date of the
measure." Saudi Arabia also committed to "provide a reasonable
period, i.e., no less than 60 days, for members, individuals,
associations and enterprises to provide comments to the appropriate
authorities before such measures were adopted, except for those
regulations and other measures involving national emergency or
security, or for which the publication would impede law enforcement."

Paragraph 36 of the working party report includes specific
information and commitments by Saudi Arabia regarding pharmaceutical
pricing including a commitment that "the ministry of health and other
agencies participating in the price control and registration process
would comply with Saudi Arabia's commitments on transparency and
would provide adequate opportunities to interested parties to become
familiar with and provide comments on draft proposals."

Saudi Arabia's ministry of health initially stated its intention in
October 2006 to reduce prices of pharmaceutical products in the
private market in the Kingdom, and issued similar announcements until
the price reductions took effect on February 2, 2008. However,
contrary to Saudi Arabia's WTO commitments noted above, none of these
announcements provided the text of the government measure, including
specific criteria and definitions, implementing these changes, or
provided information on a process for interested parties to submit
comments on the changes.

The ministry of health's website now notifies the public of an
opportunity for interested parties to submit suggestions on the price
changes directly to the ministry. However, the ministry has yet to
provide detailed information on the criteria and definitions used as
a basis for the changes that would be necessary for interested
parties to have an adequate basis to assess the draft regulation and
develop substantive comments. The MOH has also not yet confirmed
that it will provide a period of no less than 60 days to provide
comments on that information.

End text.

----------------
Point of contact
----------------

8. (U) Please contact Jason Buntin at (202) 395-9564 or
jason_buntin@USTR.eop.gov for any necessary further background
information or assistance to meet these objectives.
RICE

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