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Cablegate: Pa Interest in Wto Observer Status

VZCZCXRO4045
OO RUEHAG RUEHDF RUEHIK RUEHLZ RUEHROV RUEHSL RUEHSR
DE RUEHGV #0783/01 2680638
ZNR UUUUU ZZH
O 250638Z SEP 09
FM USMISSION GENEVA
TO RUEHC/SECSTATE WASHDC 9318
INFO RUCNMEM/EU MEMBER STATES COLLECTIVE IMMEDIATE
RUEHTV/AMEMBASSY TEL AVIV 4627
RUEHJM/AMCONSUL JERUSALEM 0890
RUEHBS/USEU BRUSSELS
RUEHKO/AMEMBASSY TOKYO 6904
RUEHOT/AMEMBASSY OTTAWA 5718
RUEHBY/AMEMBASSY CANBERRA 6537
RUEHSW/AMEMBASSY BERN 8524
RUEHNY/AMEMBASSY OSLO 2039
RUEHKV/AMEMBASSY KYIV 0939
RUEHRH/AMEMBASSY RIYADH 0719
RUEHEG/AMEMBASSY CAIRO 2005
RUEHAM/AMEMBASSY AMMAN 1063
RUEHAK/AMEMBASSY ANKARA 1810

UNCLAS SECTION 01 OF 03 GENEVA 000783

SENSITIVE BUT UNCLASSIFIED

SIPDIS

DEPT PASS USTR
TEL AVIV FOR AMB, DCM, AND ECON
USTR FOR CKLEIN, AVENKATARAMAN,SFRANCESKI, MMOWREY

E.O. 12958: N/A
TAGS: ETRD WTRO ECON PREL KWBG IS
SUBJECT: PA INTEREST IN WTO OBSERVER STATUS

Reftel: Jerusalem 1607

1. (SBU) SUMMARY: On 24 September 2009, A team from the Palestinian
Authority (PA) led by Ambassador Khraishi called upon USTR/Geneva
Charge Shark to seek U.S. support for a request by Palestine to
obtain observer status from the WTO General Council. The PA intends
to formally submit its application for observer status on 28
September with a request that it be placed on the agenda for the
20-21 October 2009 meeting of the General Council. They said that
the PA will not take no for an answer. However they also said that
they do not want to politicize the process, nor go against the
consensus-based WTO process, nor to be against any country. The
Palestinian team noted that it had received expressions of support
from several country groupings, including EC, EFTA, Africa, ASEAN
and ACP groups, and asked for U.S. support. They also asked the
United States to help convince Israel to not oppose its application.
The Palestinian delegation repeatedly noted that WTO observership
would contribute to its ability to develop WTO-compliant legal
framework and institutions necessary for the development of a viable
state. Responding with Washington talking points, Charge noted that
the United States supports Palestinian observership at the upcoming
Geneva WTO Ministerial Conference; supports the WTO's technical
assistance efforts for the PA; and does not want to discourage the
PA's institution-building efforts. However, based upon its
understanding of WTO rules governing membership, the United States
cannot give its support at this time to General Council observership
and will likely not be ready by the October General Council meeting.
The response of the PA team was friendly but firm. They plan to go
ahead with their request and are hoping we will support it. They
noted that their Prime Minister has raised this issue directly with
us before and that we should expect him to do so again. End summary.


2. (SBU) The Palestinian delegation was led by Ambassador Ibrahim
Khraishi, Permanent Observer of Palestine to the United Nations and
other International Organizations in Geneva. It included Saeb
Bamya, Economic Consultant and Trade Policy Advisor and Saad Khatib,
Policy Advisor in the Ministry of Economy. Ambassador Khraishi
recalled that this is a follow-up to Palestine's efforts in 1999 to
obtain WTO observership. There had been a good atmosphere at that
time with respect to its request and Palestine had then even secured
Israeli support. However, the effort to pursue observership was
suspended, for several reasons, including breakdown at the Camp
David talks and Palestine's domestic political situation. In 2005,
Palestine again undertook efforts to obtain WTO observership.
Pursuant to advice received from United States and Israel, Palestine
obtained ad hoc observer status for the Hong Kong Ministerial
Conference, while it undertook preparations of its application for
General Council observership. Palestine also opened a WTO reference
center to provide information and to raise awareness about the WTO.

3. (SBU) Ambassador Khraishi said a decision was taken in Ramallah
on 15 September to pursue again WTO observership. WTO observership
is an important part of Palestine's efforts to establish all the
institutions necessary for the establishment of a Palestinian state.
Khraishi said the 15 September decision is consistent with the
POTUS call for a two-state solution. The process to reactivate
efforts to obtain observership began in Ramallah in meetings with
diplomats and there have also been contacts in Washington. The item
was also raised at the United Nations and positive responses were
received. Ambassador Khraishi said the Palestinian Minister of
Economy, who has the lead on the WTO observership, was present in
Geneva on 22 September to attend an UNCTAD meeting. On the occasion
of that visit, he met with the WTO Director General and the General
Council Chair. He also met representatives from several groupings
including the European Communities, EFTA, Africa, ASEAN and ACP
countries, and received expressions of support from them all. They
are seeking U.S. support and help in dealing with Israel.

4. (SBU) Charge responded per guidance from Washington, noting that
there have been extensive interagency discussions in Washington over
the past few days regarding Palestine's application for full

GENEVA 00000783 002 OF 003


observer status at the WTO. He noted that the United States will be
able to support Palestine's request for observer status at the
upcoming Ministerial Conference and continues to support the WTO's
technical assistance activities for the PA. He encouraged them to
work with USTR to develop a plan for technical assistance for
institution building. Regarding Palestine's request for full
observer status, based upon our interpretation of WTO rules
governing membership, we are not in a position now to say yes.
While discussions are going on, he said he was not convinced that
the United States would be in a position to provide the support they
are seeking by the October General Council meeting and the agenda
closes soon. The United States supports Palestine's
institution-building efforts and its desire to have a WTO- compliant
trade regime.

5. (SBU) Mr. Bamya responded that action on Palestine's observer
request is ten years overdue and Palestine has already been an
observer at a Ministerial Conference. He said the United States was
able to secure observer status for Iraq in two weeks. Palestine
does not want to politicize this process and it wants U.S. support.
Palestine is serious about its state-building efforts and WTO
observership would support those efforts. Palestine needs a
positive signal at the trade level from the United States. On the
technical level, it was noted that Palestine had obtained U.S.
support in 2006, what has changed? The Palestinian delegation is in
Geneva to ensure that this application is on the agenda for the
General Council meeting, it will not lower its expectations and it
needs U.S. help in convincing Israel.

6. (SBU) Mr. Khatib asked Charge Shark to explain the U.S.
technical concerns with its application. He went on to note that
Palestine has already placed on the table a proposal for a new free
trade agreement where the United States would deal with Palestine as
a separate entity. Khatib expressed Palestine's appreciation for
the technical assistance that has been provided by the United
States, noting that it has been positive and results-oriented.

7. (SBU) Ambassador Khraishi noted that elections are coming in
Palestine and his group represents the pro-peace movement. He
registered concern that his group could be "cornered" if U.S.
support is not forthcoming. The Ambassador emphasized that
Palestine is seeking observer status, it is aware that accession to
the WTO takes a lot of time and effort. Palestine hopes to achieve
independence within five years. He maintained that observership
will not cause a problem for Israel, which supported it in 2005.
Palestine does not want to have another United Nations-style
political "front," but it wants to see the United States implement
POTUS' objective of developing a Palestinian state. He requested
U.S. good offices to convince Israel that this is an effort to
obtain economic peace.

8. (SBU) Charge expressed appreciation that Palestine was making its
request on a WTO consensual basis and that it did not want to
politicize the issue. He said he noted well the comments made and
would refer them to Washington. Responding to Bamya's comment
regarding the timing of Iraq's observership, Shark noted that he had
personally been involved in that process and it took months of hard
work, not two weeks as claimed. (Note: From their reaction it
appears that they knew this.) He noted that Palestine should not
assume from his comments that when we speak of legal issues, we mean
something else. With respect to Khatib's question about the
specific technical concerns relating to the application as a
separate customs territory, Shark responded that it would be
inappropriate for him to go into detail as we are still reviewing
the matter but that it relates to the question of whether Palestine
"has full autonomy" over all aspects of its trade regime.

9. (SBU) Mr. Khatib said Palestine's trade regime is based upon a
customs union with Israel, which was created as a transitional
arrangement to avoid a shock to the system when Palestine is
separated. Under the customs union, Israel performs customs
clearance, but other aspects, including intellectual property

GENEVA 00000783 003 OF 003


protection, antidumping, investment, are under Palestinian control,
so Palestine has effective control over its market. Palestine is
now instituting a structure to perform its own customs clearance and
Palestinian agents have performed clearance under view of Israel,
with EU observers. Palestine is also in the process of redrafting
its competition law, has adopted patent and copyright laws and is
finalizing its trademarks law.

10. (SBU) The meeting concluded with Mr. Bamya saying that Palestine
will put in its observership application to the General Council on
Monday, 28 September. "Palestine will insist until the last minute
that it will not accept no as answer and will use its friends." It
asked for U.S. support and expressed hope that Israel will not play
politics. Palestine does not want to go against the WTO consensus
basis nor against any country.

Shark

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