Message-ID: <21621391.1075846393671.JavaMail.evans@thyme>
Date: Sat, 29 Jul 2000 06:35:00 -0700 (PDT)
From: joe.hillings@enron.com
To: steven.kean@enron.com
Subject: Your Voice Mail On Friday Re: WTO Energy Services Activity Report
 Update
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X-From: Joe Hillings
X-To: Steven J Kean
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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