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Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Joe Hillings X-To: Steven J Kean X-cc: X-bcc: X-Folder: \Steven_Kean_June2001_4\Notes Folders\Discussion threads X-Origin: KEAN-S X-FileName: skean.nsf Current Situation: US and the European Community have proposed launching limited negotations in early 2001 with the appointment of working groups who would negotiate a limited number of items (as of yet unidentified) with a view towards reaching agreement by 2002. 14-16 WTO members believe energy services should be negotiated. Many believe that a number of the energy services we have identified are already included in the General Agreement on Tariff Services (GATS) and merely need to be tweaked for defination purposes. There is also recognition that a number of energy services are thought to be included under the existing financial services provisions. We believe this is good news because it reduces the amount of bargaining that pro-energy services negotiators may find necessary. Our trade counsel (Hills and Co with Bob Fisher as our day-to-day counsel)has been very involved in the e-commerce issues and starting to get up to speed on financial services discussions. Both are quite contentious even among US industry. USTR is unable to come up with a common agreed position to advance in this sector because of these differences. A new element called audio-visual has emerged which Bob Fisher, Steve, Chris and I believe applies to our interest in "streaming." It too is quite contentious especially with the Europeans who want to control this potential item. Cross-cutting Issues: You will recall in our earlier inside-Enron discussions we had made reference to the similarities in a set of general principles overlapping energy services, e-commerce and financial services. In a horozontal type of negotiation, effectiveness and vigilance in identifying cross cutting issues can become critical. These are now emerging as we had expected. This means are interests cross over throughout these sectors and each presents an opportunity to get liberalization in one sector which has application in the others or a bad term in one can have a very negative effect. Concerns? The USTR has been telling various US industry groups that the energy services sector is far ahead of others and the USTR feels comfortable in an early effort to begin negotiating an energy services piece. That is good news. However, the joker in the deck is how agriculture will be handled. The Uruguay Round agreed to negotiate services and agriculture. Agriculture has the strongest political interest and controversy and could hold services hostage unless getting their way. What do we need? Trade Ministers will be meeting in September to consider China's accession. The politics is to get China admitted to WTO at an earlier date. The WTO Working Party has discovered a number of problems and issues that China wants addressed in their entry document. Such an item as price controls on energy services and e-commerce. We're uncertain how important that is to Enron but we do know it is of concern to some US companies. The politics of getting China admitted could sweep those type of issues under the table. The WTO Committee on Specific Committments meets in October and could recommend an agenda for negotiations to the WTO General Council. The critical task is for the WTO to get the support of the developing nations to launch a negotiation. USTR has asked the Energy Services Coalition to organize and present information on energy services in a workshop setting in Geneva in early October before the Committee on Specific Committments meets. Attendees would be WTO delegations and staff. To put our best foot forward, we need to get energy companies in non-US countries actively involved in the presentation. Some potential countries with energy sectors who are strong politically in the WTO are Venezuela, Brazil, India, Egypt and South Africa. That will take work between now and October 1st to get organized. We have also asked AEI to get one of their contacts with developing nation standing to do a paper on the value of an energy services provision using Rachel Thompson's paper as a basis. We need this by September but don't know if AEI will comply. We met with Claude Barfield three weeks ago but he has not responded to our suggestion as yet. Rachel Thompson has proposed an outreach strategy run by APCO and Associates which is her employer. We would prefer to have Hills and Company run the program with people like Rachel providing assistance. Budget: I have asked Hills and Company to prepare a budget proposal for 2001 based on the assumption that Enron will continue to lead and provide the biggest amount to fund the US effort. If we can get GE, Halliburton and others to put in funds that would be excellent but is unlikely to materialize without Ken Lay speaking directly to GE, Halliburton and whatever other players we can identify. I see from the energy trade press (Energy Daily) on Thursday or Friday that Chevron has started an energy services division so as a member of ESC they too might contribute. Our basic cost to maintain what we are currently doing will be approximately $320,000 for 2001. The outreach as I see it would require another $200,000. Hills and Co. would be responsible for what they are currently doing on energy services and e-commerce, the administration of the ESC and the outreach program. It would be great if we could get others to put in funds. Successful to date: We have made good progress to date and believe that we are likely to be one of the sectors scheduled for negotiation. The additional interest in e-commerce and possibly financial services seems to make our leadership and involvment commercially important. Joe
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