Cablegate: Pa Interest in Wto Observer Status

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UNCLAS SECTION 01 OF 03 STATE 099831

SENSITIVE BUT UNCLASSIFIED
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AMCONSUL JERUSALEM FOR CONGEN
GENEVA FOR USTR/DSHARK

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

Reftel: Jerusalem 1607

1. (SBU) Summary and Action Requested, for Tel Aviv,
Jerusalem, and USTR/Geneva: Drawing on the points and
background below, please respond to requests from host
government and others for the U.S. position on efforts
by the Palestinian Authority (PA) to secure full
observer status in the General Council of the World
Trade Organization (WTO) and subsidiary bodies. The
request for full observer status raises a number of
complex political and legal issues, including questions
about PA capacity and control over external commercial
relations. The USG is determined, however, to continue
to seek ways to provide the PA with technical assistance
and informal consultations to build the capacity and
institutions necessary to support a future bid for
accession. In addition, the United States would support
inviting the PA to attend the upcoming WTO Ministerial
as an observer.

2. (SBU) For USTR/Geneva only: Talking points below
may be used in contacts with the PA/PLO and with other
delegations when requesting their views and reporting
back to Washington. Please confirm our support for
extension of an invitation to the PLO to observe the
upcoming Ministerial Conference and for further informal
consultations that will assist the PA in in its
institution-building efforts. End Summary and Action
Requested.

3. (SBU) Background: We understand that the
Palestinian Authority (PA) intends to submit a request
for full observer status in the WTO for consideration at
the October 20-21 General Council meeting. The PA
announced its request formally before the diplomatic
community on September 15 in Ramallah, and PA
representatives are in Geneva the week of September 21
to promote its proposal. (reftel)

4. (SBU) According to reftel, the PAs argument for
full observer status is that (1) the Paris Protocol
recognizes the PA as a separate customs territory and
grants it broad autonomy to conduct trade policy, and
(2) the PA is in the process of establishing the
institutions of statehood and that the process of
accession to the WTO as a separate customs territory
will hasten, while not presuppose, its integration into
the WTO rule-based system as a state.

5. (SBU) We appreciate the PA desire to seek closer
association with the WTO, and we have supported the
previous participation of representatives of the PA in
WTO technical assistance projects to that end. As
possible, we have promoted technical assistance to the
PA that prepares it for complying with WTO provisions
and supports the best practices found in the global
trading system. We support inviting the PA to
participate as an observer to the upcoming Seventh
Ministerial Conference of the WTO to be held in Geneva
in late November in the same status that it attended the
previous Ministerial in 2005 in Hong Kong.

6. (SBU) Full observer status in the WTO, however, is
intended to prepare states and separate customs
territories to initiate negotiations for WTO membership
within five years of requesting observership (see
paragraphs 3-4 of Annex 2 to the Rules of Procedure for
Sessions of the Ministerial Conference and Meetings of
the General Council, WTO Document WT/L/161). Under the
Agreement Establishing the WTO, negotiations may be

STATE 00099831 002 OF 003

initiated only by States and separate customs
territor[ies] possessing full autonomy in the conduct of
its external commercial relations and other matters
provided for in this Agreement and the Multilateral
Trade Agreements.

7. (SBU) There currently is no state of Palestine.
Therefore, according to WTO rules, in order to be
capable of initiating accession negotiations and thereby
be eligible for observer status, the territory
represented by the PA must be a "separate customs
territory possessing full autonomy in the conduct of its
external commercial relations and other matters provided
for in this Agreement and the Multilateral Trade
Agreements." The basis for the PA trade regime, and the
foundation upon which it currently operates, is Annex IV
to the Gaza-Jericho Agreement (also known as the Paris
Protocol). Rather than evidencing the requisite
autonomy, however, the Paris Protocol appears to confirm
that the territory represented by the PA lacks such
autonomy. For example, full autonomy appears to be
lacking in the following areas: customs tariffs and
procedures for ALL goods; import licensing; standards
and technical regulations; sanitary and phytosanitary
measures (see Paris Protocol, paragraphs 10, 11, and 16
of Article III; paragraph 6 of Article VIII). Based on
these issues it would be difficult to argue definitively
that the PA is a separate customs territory. A similar
conclusion was reached when the PA sought observer
status in the World Customs Organization in June 2009.
In addition, it is unlikely that Israel would support
WTO membership or observer status for the PA at this
time. We are encouraging the PA to engage in direct
bilateral discussions with Israel about its accession
efforts.

8. (SBU) Therefore, the PAs proposed request for full
observer status appears premature on technical grounds.
However, we still are developing a final policy position
in response to the PAs application, which we will
convey separately. The USG wishes to promote necessary
economic reforms and help lay the groundwork for longer-
term policy objectives that will help the PA expand its
trade. In this regard, we look forward to working with
the PA, the WTO Secretariat, and other WTO Members to
prepare for a closer WTO association for the PA as it
develops its trade regime.

9. (SBU) SUGGESTED TALKING POINTS:

-We have had extensive interagency discussions in
Washington over the past few days regarding your
application for full observer status in the WTO.

-Based on our understanding of the WTO rules
governing membership, I am concerned that we will
not be able to give your team the support that it
is seeking at this time. Further, I am not
convinced that we will be ready by the General
Council meeting in October.

-However, we do not want to discourage your
institution-building efforts.

-We are committed to help you build your trade
capacity. Instead of pursuing observership in
Geneva now, we recommend that your team work
closely with USTR to develop a plan for technical
assistance that supports your agenda, and chart a
course for future observership and application for
membership that we can get behind.

-If you agree, we will help connect you with the
appropriate experts at USTR. We will also be able
to support your request for observer status at the

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WTO Ministerial Conference November 30 -December 2.

End Suggested Talking Points.
CLINTON

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