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Cablegate: Mofcom Dg Wang Discusses Steel Dialogue with Austr


DE RUEHBJ #2878/01 2062236
P 242236Z JUL 08






E.O. 12958: N/A
SUBJECT: Mofcom DG Wang discusses Steel Dialogue with AUSTR


1. (SBU) Ministry of Commerce (Mofcom) Director General for Foreign
Trade Wang Shouwen met with AUSTR Timothy Stratford in Beijing on
July 14 to discuss plans for the next U.S.-China Steel Dialogue.
Wang and Stratford agreed that the Dialogue will include discussion
of the competitiveness of the steel industry in both economies.
Stratford proposed that the Dialogue take place the week of
September 8 and encouraged the inclusion of labor and environmental
issues in the official agenda. He also proposed that the PC strand
industry participate in the Dialogue, pointing out that the Chinese
regard PC strand as a steel product itself. Wang agreed to discuss
the above points with the relevant government authorities and the
Chinese steel industry.

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Dates and agenda for Steel Dialogue still under review
--------------------------------------------- ---------

2.(SBU) Following up on a prior exchange of letters, AUSTR Stratford
and DG Wang discussed possible dates and agenda items for the
upcoming Steel Dialogue. Stratford proposed holding the Dialogue the
week of September 8, and mentioned that the weeks of October 13 and
20 may also work for the U.S. side. Wang replied that he will
discuss these dates with industry and provide a response to USTR

3. (SBU) Turning to the agenda, Stratford noted that both sides had
already agreed to discuss the competitiveness of the steel industry
in the U.S. and China. Stratford asked Wang to reconsider adding
labor and environmental issues to the list of topics addressed in
the Dialogue. (Note: In previous meetings and in written
correspondence, Wang argued that these topics should not be included
in the Steel Dialogue, as labor and climate change dialogue
mechanisms have already been established between relevant
counterpart departments of the two governments. End note.)
Stratford pointed out that the U.S. understands China's request to
include trade remedy issues that are unique to the steel industry in
the Dialogue. By the same logic, he explained, there are certain
labor and environmental issues that apply uniquely to the steel
industry and the Steel Dialogue provides an appropriate channel for
discussing these specific issues.

4. (SBU) Wang responded that it is not appropriate to discuss
environmental or labor issues in the Steel Dialogue, noting that
Chinese environmental protection and labor ministries should be in
the lead on these topics. He stated that the first Steel Dialogue
came about as a result of a Section 421 petition, so trade remedies
should continue to be included in the agenda. Stratford agreed that
trade remedies should stay on agenda, and pointed out that labor
played a major role in the 421 petition that prompted the Steel
Dialogue. He explained that although USTR is not the lead U.S.
agency on labor or environmental issues, it is authorized to discuss
these issues in the broader context of trade. He asked Wang whether
it would be possible to carve out a space to discuss these issues on
the sidelines of the Dialogue if not on the primary agenda. Wang
replied that the Embassy should request these meetings and said that
he would ask Mofcom's North American Affairs Department to follow up
on the request.

PC strand industry participation to be determined
--------------------------------------------- ----
5. (SBU) Stratford referred to a letter he received in late June
from Wang, which came in response to an earlier request by USTR that
the Dialogue include the PC strand industry as a representative of
downstream industries. Stratford pointed out that, according to
Wang's letter, China considered PC strand to be a steel product
itself, so it could not represent the downstream industry in the
Steel Dialogue. Stratford stated that if China considers PC strand
to be a steel product, then it makes sense for the PC strand
industry to participate in the Dialogue as a member of the steel
industry. Wang replied that while he does not oppose the
participation of the PC strand industry, Chinese steel producers may
oppose it. He agreed to follow up with the Chinese steel industry
on this issue.

Mofcom concerned about poultry issues
6. (SBU) Wang raised concerns regarding certain restrictions on
poultry trade between the U.S. and China. Stratford told Wang that

the U.S. and China share common interests in resolving poultry
issues and said that USTR welcomed the recent visit of a Chinese
delegation that visited Washington to discuss this issue. Wang
agreed that this was a positive development and further underscored
Mofcom's concerns about poultry issues.

Mofcom inquires about textile transshipment quotas
--------------------------------------------- -----
7. (SBU) DG Wang raised concerns about a recent U.S. Customs
decision regarding transshipment of Chinese textiles through other
countries to the United States in 2006-2007. DG Wang noted that, if
indeed there were transshipments, the volume amount of quota
involved in the transshipments should be counted against the
2006-2007 textile quotas and not the current 2008 quotas under the
U.S. - China Textile Agreement. Stratford noted that USTR's Special
Textile Negotiator, Scott Quesenberry, was handling this matter and
has been in communication with Minister Counselor for Economic and
Commercial Affairs Dai at the Chinese Embassy in Washington.


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