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Cablegate: Experts Level Economic/Commercial Dialogue(Ecd) Continues

VZCZCXRO2468
OO RUEHAG RUEHDF RUEHIK RUEHLZ RUEHROV
DE RUEHWR #1236/01 2971359
ZNR UUUUU ZZH
O 231359Z OCT 08
FM AMEMBASSY WARSAW
TO RUEHC/SECSTATE WASHDC IMMEDIATE 7202
RUCPDOC/USDOC WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RUEHRC/DEPT OF AGRICULTURE WASHDC
INFO RUEHKW/AMCONSUL KRAKOW 2176
RUCNMEM/EU MEMBER STATES

UNCLAS SECTION 01 OF 03 WARSAW 001236

SENSITIVE
SIPDIS

DEPT FOR EUR/CE/DMORRIS
DEPT PASS USTR FOR LYANG
COMMERCE FOR 4232/ITA/MAC/EUR/OECA/MROGERS,JBURGESS,CRUSNA K
USDA for FAS/OSTA BMACKE; FAS/OCRA DSALMON, DSEIDBAND;
FSIS/RKISHORE

E.O. 12958: N/A
TAGS: ETRD EINV ECON BEXP PL
SUBJECT: EXPERTS LEVEL ECONOMIC/COMMERCIAL DIALOGUE(ECD) CONTINUES
IN WARSAW, SOME ROGRESS ON LOGSTANDING ISSUES

WARSAW 00001236 001.2 OF 003


Summary
-------

1. Commerce/ITA DAS for Europe Paul Dyck held a series of meetings
Oct. 1-2 in Warsaw with U.S. industry and the Ministry of Economy as
a part of continuing our Bilateral Economic and Commercial Dialogue
(ECD) with the Polish government. He was accompanied by Commerce/ITA
Director for European Country Affairs Jay Burgess. Prior to meeting
with his counterpart at the Ministry of Economy, Dyck met with local
U.S. innovative pharmaceutical companies who were members of the
American Chamber of Commerce "LAWG". He also met with local Cargill
representatives regarding the delay in payment of an arbitration
award they won in March against the GOP and with members of the
Board of the American Chamber of Commerce. The Embassy requested a
separate meeting for Dyck with Deputy Minister of Health Twardowski
to discuss pharma issues, but the Ministry did not grant this
meeting. The Embassy then requested a meeting with Ministry of
Health (MOH) Drug Policy Director Falek, but was also refused.
Falek was supposed to be at the Ministry of Economy meeting, but he
did not show up. [NOTE: subsequently, Deputy Minister Twardowski
did travel to Washington the week of Oct. 6-10 where he did meet
with USDOC Deputy U/S O'Neill, HHS Deputy Secretary Troy, and State
DAS Murphy. END NOTE]

2. Undersecretary of State Marcin Korolec chaired the meeting on
the Polish side at the Ministry of Economy. He was accompanied by
several other representatives from his ministry. Both Dyck and
Korolec noted the overall positive nature of trade and investment
relations between the United States and Poland. DAS Dyck assured
the Polish side of USDOC's continuing commitment to the ECD process
and to working with the Ministry of Economy into the new year.
There was good news on the Dell land acquisition case, with a final
resolution almost at hand, but some disappointing news on the
Cargill arbitration case, as the U.S. side was informed that the
Ministry of Economy would officially appeal the award and, thus,
delay a final payout. There was much discussion on energy security
issues, with the Poles expressing some pessimism on how fast the new
nuclear power project for the Ignalina facility in Lithuania might
go forward. The Polish side, as expected, raised the issue of
access for their poultry to the U.S. market and the U.S. side
explained that it was not prepared to respond at this time. The
U.S. side also raised our pharma issues, advocacy for U.S./Canadian
joint venture Europort, Motorola Tetra, as well as other issues such
as GMOs and Poland's anti-biotechnology voting record in the EU and
alcohol labeling, with little Polish comment. Discussions were
cordial and productive, with both sides agreeing to continue the ECD
on a larger scale in 2009 with fuller inter-agency participation.
Commerce officials invited either U/S Korolec or Director Tomasz
Ostaszewicz to come to Washington in the first quarter of 2009 for
that purpose.

--------------------------------------------- --------
Pharmaceutical Market Access and Lack of Consultation
--------------------------------------------- --------

3. At Dyck's meeting with the LAWG, the U.S. company
representatives raised the new issue of a pending Health Ministry
regulation that would restrict sales calls by drug company staff to
outside of doctors' office hours. While this affected all drug
company sales staff equally, the LAWG explained that it hurt them
disproportionately because their members needed more time with and
repeated calls on doctors to educate them about their innovative
drugs, whereas Polish industry, all of whom are generic producers,
dealt mainly with wholesalers and drug stores. LAWG claimed that
the industry employs 12,000 sales staff in Poland and this new
regulation would disrupt their operation and could lead to layoffs.
There was virtually no consultation with industry and minimal lead
time on implementation, LAWG claimed, since the new regulation would
take effect in mid-November. The LAWG also raised the longstanding
issue of access to the reimbursement list, lack of transparency in
this process and lack of access to the Health Ministry for its
members. Dyck used this opportunity to again ask for specific
examples of delays in applications to the reimbursement list.

4. At the formal meeting with the Ministry of Economy, Dyck duly
raised the new issue regarding the Health Ministry regulation
restricting sales calls and the continuing issue of the
reimbursement list and access. Undersecretary of State Korolec
noted our concern, but since there was no Health Ministry
representative, there was no discussion.


WARSAW 00001236 002.2 OF 003


---------------------------
Advocacy for U.S. Companies
---------------------------

5. At the Ministry of Economy meeting DAS Dyck formally raised
three U.S. company advocacy cases: Dell, Cargill and Europort. On
Dell, the Ministry informed us that the Council of Ministers had
approved increasing the amount of state aid to Dell to PLN 36
million which was designed to close the gap between the price for
the land that Dell was willing to pay and the price demanded by the
Polish side. Since this involved additional state aid payments
under EU rules, there remained a final approval necessary from the
European Commission, which was expected by Oct. 8. Dyck thanked the
Polish Government for its sustained effort to bring this
longstanding case to a successful conclusion. On Cargill, the Poles
tried to convey as a positive step forward the fact that the Polish
Government had formally decided to appeal the arbitration award in
Paris and would thus begin negotiations with Cargill. Burgess
interjected that while Poland certainly had the right to appeal,
grounds for such an appeal were very narrow, that the costs to
Poland of an appeal would be substantial (legal fees, interest, and
penalties), and that the USG expected Poland to pay the award.
Korolec explained that the Polish Government bureaucratically had to
appeal the decision to demonstrate that it had exhausted all
avenues. On Europort, Korolec responded that the Ministry of
Treasury, the appropriate interlocutor in this matter, had agreed to
a meeting with the U.S. and Canadian Embassies on October 8.
(Comment: this meeting did take place on October 8 with the U.S.
Embassy DCM, Commercial Counselor and Canadian Embassy Senior Trade
Commissioner, and the Deputy Minister of Treasury Jan Bury and the
head of the Port of Gdansk Management Board. There was no progress
on bringing the two sides together for a settlement and it was clear
that the Polish Government would let the on-going process in Polish
arbitration courts come to a close and that it expected to win. End
Comment)

6. Dyck also raised the longstanding Motorola Tetra project for
emergency communication systems for the Ministry of Interior. He
expressed again Motorola's desire to participate in this project in
any way. Korolec took note.

----------------
Energy Security
----------------

7. Maciej Wozniak, Director of the Oil and Gas Department at the
Ministry of Economy, and soon to be the energy advisor to the Prime
Minister, briefly presented some natural gas projects. He first
provided an update on the long-planned LNG terminal on the Baltic
coast at Swinoujscie. Gaz System, a 100% state-owned company, would
now have the lead in the project, while the former owner of the
project, Polish Oil and Gas, would still remain a partner. Planning
for the project was to be completed by the end of the year with
construction commencing some time in 2009. The U.S.-Canadian firm
SNC Lavilan had won the contract for construction. Wozniak also
mentioned well-known plans for a natural gas pipeline from Norway to
Denmark, through Germany and then to Poland. Norwegian firm Statoil
needed to agree to sell the gas for this proposed pipeline, but they
had not formally done this. The Poles asked our help in encouraging
Statoil to do so.

8. Dyck asked about the status of the planned project to build a
new nuclear electric power plant at Ignalina in Lithuania after the
existing nuclear plant was finally decommissioned in 2009. To date
the GOP has been very involved in this project with Lithuania,
Estonia and Latvia, and related plans to build an electric power
bridge between Poland and Lithuania. Poland would like to take up
to 1000 megawatts from the new plant and would have to invest about
2 billion Euro in the power bridge and another 8 billion Euro for up
to 600 km of new power distribution lines. That being said, Korolec
added that he believed that the new plant might not be built because
the intentions of the Baltic countries did not seem clear. He
suggested that they might want to prolong the operation of the
existing nuclear power plant at Ignalina beyond 2009. (Comment:
this would obviously run afoul of EU requirements to decommission
the old plant. End comment.) He also noted possible Russian plans to
build a new nuclear electric power plant in the Kaliningrad region
adjacent to Poland, with construction possibly starting in three
years. He hastened to add, however, that a new Ignalina plant
remained very important to Poland as a cheap source of electricity
and as a way to reduce their own CO2 emissions.

WARSAW 00001236 003.2 OF 003

-------------------------------------
Poultry and Other Agricultural Issues
-------------------------------------

9. Korolec raised the issue of access of Polish poultry products to
the U.S. market and gave the U.S. side a non-paper on this subject.
Dyck responded that the USG was not at this time in a position to
give a response on this issue and said that we expected to be able
to respond at the next full ECD meeting in 2009. Non-paper was
conveyed to USDA via the Office of Agricultural Affairs, Embassy
Warsaw.

10. Dyck then raised the issue of the Polish voting record in the
EU on matters related to Genetically Modified Organisms in
agriculture. He explained that Polish votes against new varieties
of soybeans as feed could hurt the Polish livestock industry in 2009
since there would not be enough animal feed to satisfy demand. Dyck
also raised the issue of a new Polish regulation requiring a very
large warning label on bottles for alcoholic beverages and that
there had been no consultation with industry regarding this
significant regulatory change.

11. As our allotted time for the meeting was running out, Korolec
simply took note of the above issues.

ASHE

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