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Cablegate: Ambassador Presses Deputy Prime Minister On Intellectual Property; 301 Decison Having Salutory Effect

This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLASSIFIED ZAGREB 001187

SIPDIS

SENSITIVE

STATE PASS USTR
STATE FOR EB/IPC AND EUR/SCE

E.O. 12958: N/A
TAGS: ETRD PREL KIPR PREL KIPR HR HRETRD
SUBJECT: AMBASSADOR PRESSES DEPUTY PRIME MINISTER ON INTELLECTUAL PROPERTY; 301 DECISON HAVING SALUTORY EFFECT

REF: ZAGREB 541

SENSITIVE BUT UNCLASSIFIED -- PLEASE HANDLE ACCORDINGLY.

SUMMARY
-------

1. (SBU) ON MAY 21, THE AMBASSADOR MET WITH DEPUTY PRIME
MINISTER SIMONIC TO DISCUSS CROATIA'S DESIGNATION ON THE
SPECIAL 301 WATCH LIST FOR FAILING TO PROTECT U.S.
INTELLECTUAL PROPERTY. SIMONIC IS IN CHARGE OF HEALTH AND
MINORITY ISSUES. SIMONIC ACKNOWLEDGED THE OBLIGATION CROATIA
HAD TO RATIFY THE BILATERAL INTELLECTUAL PROPERTY MOU, AND
SAID A KEY GOAL WAS TO PASS THE DRAFT DRUG LAW, WHICH
CURRENTLY INCLUDES LANGUAGE ON DATA EXCLUSIVITY. SUBSEQUENT
NEWS ITEMS QUOTED SIMONIC AS WILLING TO TRY TO PRESS THE
CABINET TO SEND THE MOU TO THE PARLIAMENT FOR RATIFICATION,
BUT MINISTER OF HEALTH VLAHUSIC WAS SQUARELY AGAINST
RATIFYING THE MOU. END SUMMARY.

UNCLASSIFIED

PAGE 03 ZAGREB 01187 01 OF 02 271602Z
2. (SBU) ON MAY 21, THE AMBASSADOR REVIEWED FOR DEPUTY PRIME
MINISTER SIMONIC THE CONTEXT IN WHICH THE 1998 INTELLECTUAL
PROPERTY MOU WAS SIGNED. THE U.S. NEGOTIATED THE MOU IN THE
CONTEXT OF SUPPORTING CROATIA'S BID TO JOIN THE WTO AND IN
CONJUNCTION WITH A BILATERAL INVESTMENT TREATY (BIT).
CROATIA WAS NOW A MEMBER OF THE WTO, THE BIT WAS IN FORCE,
AND THE MOU WAS STALLED, DESPITES YEARS OF DISCUSSIONS, BOTH
IN WASHINGTON AND IN ZAGREB. HE WAS VERY DISAPPOINTED THAT
GOC FAILURE TO ACT HAD ALLOWED CROATIA TO "DRIFT" ONTO THE
WATCH LIST. WHILE OUR GOAL WAS TO SOLVE PROBLEMS, THE 301
PROCESS DID CONTAIN MECHANISMS THAT COULD WELL LEAD TO TRADE
SANCTIONS DOWN THE ROAD IF THE GOC DID NOT ACT.

3. (SBU) THE AMBASSADOR NOTED APPROVINGLY THE NEWS THAT THE
LATEST ITERATION OF THE DRAFT PHARMACEUTICAL LAW CONTAINED
LANGUAGE ON DATA EXCLUSIVITY DRAWN FROM THE EU MODEL. (THE
LANGUAGE HAS BEEN IN AND OUT OF THE DRAFT AT LEAST ONCE
BEFORE.) HE HOPED THAT DATA EXCLUSIVITY WOULD REMAIN IN THE
LEGISLATION, BE ENACTED AND IMPLEMENTED SOON.

4. (SBU) SIMONIC REMARKED THAT HE WAS RELATIVELY NEW IN THE
GOVERNMENT. ONE OF HIS AND HIS PARTY'S (HSS -- CROATIAN
PEASANT'S PARTY) MAIN PRIORITIES WAS TO PASS A NEW DRUG LAW.
UPON ENTERING THE GOVERNMENT, HE LEARNED ABOUT THE ISSUE OF
THE MOU. SIMONIC CONCLUDED THAT THE GOC HAD AN OBLIGATION TO
THE U.S. TO RATIFY THE MOU. CROATIA ALSO HAD TO FOLLOW
INTERNATIONAL RULES, SUCH AS THOSE OF THE WTO, STABILITY PACT
AND THE EU. HE WAS NOT AN ECONOMIST, AND ADMITTED THAT HE
HAD NOT BEEN ABLE TO OBTAIN DATA ON WHAT THE EFFECT WOULD BE
ON THE CROATIAN HEALTH SYSTEM OR ON CROATIAN COMPANIES OF
INTRODUCING DATA EXCLUSIVITY. SIMONIC SAID HE WAS PUSHING
UNCLASSIFIED

PAGE 04 ZAGREB 01187 01 OF 02 271602Z
FOR THE DRUG LAW, WHICH WAS IMPORTANT FOR CROATIA AND HIS
PARTY, AND HE BELIEVED THE MOU WOULD BE RATIFIED AS WELL.
HOWEVER, HE WARNED, THE MINISTRY OF HEALTH WOULD HAVE TO
COMMENT ON THE DRAFT LEGISLATION. SIMONIC FLAGGED THE MOU'S
PROVISION FOR PIPELINE PROTECTION OF DRUGS AS A CONCERN AS
WELL.

5. (SBU) THE AMBASSADOR THANKED SIMONIC FOR HIS RECOGNITION
OF THE GOVERNMENT'S OBLIGATION TO RATIFY THE MOU. WHILE ANY
COUNTRY COULD EXPERIENCE DELAYS IN RATIFICATION, WHAT HAD
BEEN OF CONCERN IN CROATIA WAS THE LACK OF EXECUTIVE
COMMITMENT TO PUSH FOR RATIFICATION.

6. (U) THE MEDIA COVERED THE VISIT FAIRLY EXTENSIVELY, AND
FOR THE FIRST TIME REPORTED ON THE 301 ANNOUNCEMENT.
(SIMONIC HAD ARRANGED AN UNUSUAL POOL SPRAY AT THE TOP OF THE
MEETING). AFTER THE MEETING, SIMONIC TOLD THE PRESS THAT THE
GOVERNMENT WOULD WORK HARD TO GET CROATIA OFF THE WATCH LIST,
AND SAID HE WOULD PRESS FOR MOU RATIFICATION WITHIN THE
CABINET. HE NOTED THAT WHILE CROATIA WAS ON A LIST WITH
COUNTRIES SUCH AS PAKISTAN AND JAMAICA (PRESUMABLY NOT A GOOD
THING), THERE WERE OTHER EUROPEAN COUNTRIES SUCH AS ITALY ON
THE LIST AS WELL.

7. (U) THE MEDIA ALSO INTERVIEWED MINISTER OF HEALTH
VLAHUSIC, WHO WAS LESS FORTHCOMING. VLAHUSIC (FOR REPORT OF

UNCLASSIFIED

UNCLASSIFIED PTQ2786

PAGE 01 ZAGREB 01187 02 OF 02 271602Z
ACTION EB-00

INFO LOG-00 NP-00 AF-00 AID-00 CEA-01 CIAE-00 CTME-00
INL-00 DODE-00 DOEE-00 ITCE-00 SRPP-00 DS-00 EXME-00
EUR-00 E-00 UTED-00 VC-00 FRB-00 H-01 TEDE-00
INR-00 IO-00 ITC-01 LAB-01 LOC-01 L-00 VCE-00
AC-01 NSAE-00 NSCE-00 OES-00 OIC-02 OMB-01 OPIC-01
PA-00 PER-00 PM-00 PRS-00 ACE-00 P-00 SCT-00
SP-00 SSO-00 SS-00 STR-00 TEST-00 TRSE-00 T-00
USIE-00 PMB-00 DSCC-00 PRM-00 DRL-01 G-00 NFAT-00
SAS-00 SWCI-00 /011W
------------------6B584D 271602Z /38
P 271543Z MAY 03
FM AMEMBASSY ZAGREB
TO SECSTATE WASHDC PRIORITY 0304
INFO AMEMBASSY BELGRADE PRIORITY
AMEMBASSY BRATISLAVA PRIORITY
AMEMBASSY BUCHAREST PRIORITY
AMEMBASSY BUDAPEST PRIORITY
AMEMBASSY LJUBLJANA PRIORITY
AMEMBASSY SARAJEVO PRIORITY
AMEMBASSY SKOPJE PRIORITY
AMEMBASSY TIRANA PRIORITY
AMEMBASSY WARSAW PRIORITY
DEPT OF COMMERCE WASHDC PRIORITY
USEU BRUSSELS PRIORITY
USMISSION GENEVA PRIORITY

UNCLASSIFIED

PAGE 02 ZAGREB 01187 02 OF 02 271602Z
UNCLAS SECTION 02 OF 02 ZAGREB 001187

SIPDIS

SENSITIVE

STATE PASS USTR
STATE FOR EB/IPC AND EUR/SCE

E.O. 12958: N/A
TAGS: ETRD PREL KIPR PREL KIPR HR HRETRD
SUBJECT: AMBASSADOR PRESSES DEPUTY PRIME MINISTER ON
INTELLECTUAL PROPERTY; 301 DECISON HAVING SALUTORY EFFECT

AMBASSADOR'S FEBRUARY MEETING WITH THIS MINISTER, SEE
REFTEL), TOLD NATIONAL RADIO THAT WHILE THERE WAS LANGUAGE IN
THE DRAFT DRUG LAW WHICH WOULD PROVIDE DATA EXCLUSIVITY,
CROATIA WAS DOING SOMETHING THAT IT DID NOT REALLY HAVE TO DO
UNTIL EU ACCESSION. IN ANOTHER PRINT INTERVIEW, HE IS QUOTED
AS SAYING THAT "WITH THE NEW LAW ON DRUGS, AND BY JOINING THE
WTO, CROATIA HAS ACCEPTED EVERYTHING THAT RELATES TO THE
PROTECTION OF INTELLECTUAL PROPERTY... THE U.S. IS ASKING
CROATIA TO SIGN SOMETHING THAT HAS NOT EVEN BEEN SIGNED BY
SOME EU MEMBERS."

8. (SBU) WE HAVE HEARD FROM INDUSTRY SOURCES THAT VLAHUSIC
MAY PLAN TO SUGGEST AMENDMENTS TO THE DRAFT DRUG LAW THAT
WOULD DELAY IMPLEMENTATION UNTIL EU ACCESSION. THE
AMBASSADOR SENT A LETTER MAY 21 TO MINISTER VLAHUSIC, SHORTLY
BEFORE THE MEETING WITH DPM SIMONIC (TEXT EMAILED TO USTR, EB
AND THE DESK), URGING SPEEDY RATIFICATION OF THE BILATERAL IP
MOU.

9. (SBU) COMMENT: THE 301 ANNOUNCEMENT HAS HAD THE EFFECT
UNCLASSIFIED

PAGE 03 ZAGREB 01187 02 OF 02 271602Z
OF HIGHLIGHTING THE MOU AND THE GOVERNMENT'S BILATERAL
COMMITMENTS TO THE U.S. THIS HAS STRENGTHENED THE HAND OF
OUR ALLIES IN THE GOVERNMENT -- THE MFA, THE MINISTRY OF
ECONOMY, AND EVEN THE STATE INSTITUTE OF INTELLECTUAL
PROPERTY -- AND RAISED THE AWARENESS LEVEL OF THOSE WHO WERE
HARDLY AWARE OF THE ISSUE BEFORE, FOR EXAMPLE, THE DEPUTY
PRIME MINISTER IN CHARGE OF HEALTH ISSUES. THE 301
ANNOUNCEMENT POINTS UP THE FALLACY OF THE HEALTH MINISTER'S
ARGUMENTS TO US (REFTEL) -- THAT IS, THAT SINCE THE GOC IS
COMPLYING WITH TRIPS, IT DOES NOT NEED TO RATIFY THE MOU --
AND EXPOSES HIS POSITION AS PANDERING TO THE LOCAL INDUSTRY.
WHILE THERE IS MORE MOMENTUM THAN BEFORE TO RATIFY THE MOU,
THERE WILL ALSO BE A TEMPTATION ON THE PART OF THE
GOVERNMENT, LOOKING AT THE LONG TIMELINE BEFORE THE NEXT 301
REVIEW, TO PUT THIS ON THE BACK BURNER. WE WILL DO OUR BEST
TO KEEP THE HEAT ON.
ROSSIN

UNCLASSIFIED

>

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