Policy is made at different stages of various processes. With upstream policy, the preparatory phase(s) are meant, analogous to the industrial use of "upstream".

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Note added at 39 mins (2009-11-06 23:24:03 GMT)
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Let me fine-tune my answer. Reading more context, I would say the notion of upstream relies on a distinction between up and down as it is used in the expression "top-down", so as a policy hierarchy, but it also implies a policy chronology.

In the three contexts provided we deal with large, bureaucratic, international organisations, where "up" at the higher levels policy is prepared, while it is increasingly concrete and specific "down", where it is implemented. In the upstream policy phase/level, fundamental decisions are made. And that is why it is so interesting to the EC in the first example, to get involved in a upstream policy dialogue. In the preparatory policy phase or at the preparatory policy level the most important decisions are made.

Participation in planning the general direction and focus of policy, before "going downstream"-funding and implementing the policy.