Cablegate: Madrid Weekly Econ/Ag/Commercial Update Report

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RR RUEHAG RUEHDF RUEHIK RUEHLZ RUEHROV
DE RUEHMD #2978/01 3341455
ZNR UUUUU ZZH
R 301455Z NOV 06
FM AMEMBASSY MADRID
TO RUEHC/SECSTATE WASHDC 1393
INFO RUCNMEM/EU MEMBER STATES COLLECTIVE
RUEHLA/AMCONSUL BARCELONA 2262

UNCLAS SECTION 01 OF 02 MADRID 002978

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SENSITIVE
SIPDIS

EUR/WE

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

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1. Agriculture: Wheat product import and export
2. KIPR: pursuit of possible patent law change
3. Biotech site visit
4. Basrah Childrens Hospital funds
5. Spain Grants A&T Status to CSI Agents

Agriculture:

1. (U) Due to tight global wheat supplies and resulting
record world price levels, Spain's wheat importers have
sharply reduced their orders of U.S. high-quality wheat.
Spanish wheat flour millers have negotiated long-term
contracts with domestic bakers, and need high-quality wheat
(U.S. or Canadian Northern Spring Wheat) to blend with
lower-quality domestic wheat to meet their flour-quality
specifications. As a result of these blending needs, Spain
has historically been one of the top two European markets for
high-quality U.S. wheat.

2. (U) In an effort to encourage Spanish wheat importers,
U.S. Wheat Associates visited Spain this week to extol the
quality of this year's wheat crop. In presentations in
Barcelona and Madrid, U.S. Wheat Associates emphasized this
year's excellent crop qualities, including high protein
content and excellent baking properties. However, given
current very high prices, the dearth of orders thus far, and
the imminent closing of the St. Lawrence Seaway, the 2006-07
marketing year imports of U.S. high-quality wheat may be well
off the nearly 500 thousand metric tons imported last year.

KIPR

3. (U) U.S. R & D based Pharmaceutical Industry in Spain
continues to seek patent law change: American pharmaceutical
industry representatives told Commercial Counselor and
EconOff on November 17 that they would continue to seek a
change to Spain's patent laws that would provide retroactive
product patent protection for drugs that only benefited from
process patent protection prior to 1992. The industry
intends to cite in its conversations with the GOS a number of
court cases it has won recently and continue to make a public
policy case for amending the patent law. The pharmaceutical
representatives said that the current Minister of Industry
seems more receptive to their concerns than his predecessor.
American and Swiss government lawyers say that international
trade agreements such as TRIPS do not obligate the Spanish
government to provide this retroactive protection (drugs
protection), but we have made the argument to the GOS that it
should continue its dialogue with the sector in order to help
roster good conditions for the innovation-based
pharmaceutical industry. EconOff explained industry'
priorities to an official at the office of the Presidency on
November 21 - the official had no reaction.

ECON/AG Biotech Visit

4. (U) AgCouns and EconOff met with a prominent biotech corn
grower in Catalonia on November 13 who was concerned about
the proposed decree but not concerned enough to become more
actively engaged against it. He seemed to think he could
find a way to go on growing biotech corn despite the decree.
AgCouns and EconOff also met in Aragon on November 13 with a
organic farming advocate and a cooperative farm advocate.
Predictably, the organic farmer was all in favor of the
decree, while the cooperative farm representative was more
nuanced in his comments because he represents conventional,
biotech and organic farmers. They both seemed to think
though that the 220 meter requirement would not mean the end
of biotech farming in Spain. Comment: Our sense is that the
biotech farmer simply felt he could somehow finesse the
decree if it passes in its current form, although, he was at
pains to show that he complied with Catalonia's voluminous
agricultural documentation requirements. We are not sure
what to make of this, but we think that strong farmer support
for biotech, as well as seed company and USG advocacy, are
necessary to get a better coexistence decree. Ambassador is
following up with a letter to President Zapatero's outgoing
Economic Adviser Miguel Sebastian.

Basrah Children's Hospital Update

5. (SBU) The Spanish Agency for International Cooperation
(AECI - Spain's USAID equivalent) informed the Embassy
November 22 that Spain would sign a legal instrument with
UNDP in New York City this same day that would finalize
Spain's transfer of USD 22 million for the Basrah Children's
Hospital. AECI believes the Apanish funds will arrive in the
designated UNDP/IRFFI account by November 30. Over the
course of the last week, the Embassy obtained a copy of the

MADRID 00002978 002.2 OF 002

Spain-UNDP agreement as well as the names of the UNDP
officials managing both the Spanish funds transfer and the
eventual passage of these funds to the U.S. Army Corp of
Engineers. U.S. officials are using this information to
negotiate the requisite arrangement between the USG and
UNDP/IRFFI to allow the Spanish funds to be passed to the
U.S. Army Corps of Engineers prior to the Army's December 15
deadline.

Spain Grants A&T Status to CSI Agents

6. (U) On November 10, Post received a diplomatic note from
the Ministry of Foreign Affairs announcing the GOS, intent
to grant administrative and technical diplomatic status to
the Container Security Initiative agents to be posted to
Spanish ports. Econ successfully renegotiated this
agreement, which had recently been rejected by the Ministry
of Industry and Spain's Tax Authority, Econ had negotiated an
original agreement in 2005. DHS now hopes to have the CSI
agents in the ports of Algeciras, Barcelona, and Valencia by
the beginning of 2007.
AGUIRRE

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