Is "Foreign Government Information" Automatically Classified?

Reuters argues:

Since at least 2003, they have emphasized that information mutual by a foreign government with an expectation or agreement of confidentiality is the only kind that is "presumed" classified. The State Department's own regulations, as laid out in the Foreign Affairs Manual, have been undeniable since at least 1999: all department employees "must ... safeguard foreign government and NATO RESTRICTED information as U.S. Government Confidential" or higher[.] [My emphasis.

I reckon Reuters is misunderstanding the applicable rules. Reuters appears to be referring to 12 FAM 534.1(d):

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