NIGERIA: POST PERSPECTIVE ON JUNE 24 TIFA COUNCIL

C O N F I D E N T I A L SECTION 01 OF 03 ABUJA 001811

SIPDIS


DEPT PASS TO USTR FOR WHITAKER AND COLEMAN


E.O. 12958: DECL: 06/17/2012
TAGS: ETRD EINV ECON NI
SUBJECT: NIGERIA: POST PERSPECTIVE ON JUNE 24 TIFA COUNCIL


REF: ABUJA 1606



1. Classified by CDA Andrews for reasons 1.5 (B) and (D).



2. (C) The Nigerian delegation to the June 24 Trade and
Investment Framework Agreement Council in Washington will be
headed by Minister of Commerce Engineer Mustafa Bello. The
annual Council meeting provides an opportunity for senior
level policy discussion and for both sides to take stock of
major issues on the bilateral trade and investment agenda.
However, GON preparedness may not be what we would hope.
They may not yet have in mind specific goals or a plan of
action they would like to see come from the meeting. To make
the meeting as productive as possible, we should develop an
agenda that includes general policy discussion as well as
concrete steps that can be taken by both sides to advance
bilateral trade and investment. We should maintain a careful
balance between the issues we push on and what we can do to
help them.



3. (C) We suggest that the U.S. delegation take this
opportunity to encourage GON economic reform, especially
tariff reduction and rationalization and exchange rate and
monetary policies. We should thank the GON for their support
of U.S. positions at multilateral fora including the Doha WTO
meeting, and enlist their continued assistance on these and
other issues such as those which may arise at the World
Summit on Sustainable Development coming up in August in
South Africa. We should push for movement on a number of
outstanding issues including ratification of the OPIC and
Open Skies agreements.



4. (C) Nigeria will not enact appropriate legislation for
AGOA eligibility prior to this TIFA Council. We should use
this meeting to reach final agreement on regulatory language
for the AGOA visa regime, and encourage the GON to resolve
the legislative roadblock on transshipment penalties that has
kept Nigeria from enjoying full AGOA benefits. We should
discuss agricultural and textile opportunities. While giving
the GON recognition for progress made in instituting due
process for capital projects, we should encourage the GON to
exercise fiscal restraint and enter in a program with the IMF
at the earliest opportunity. We also should encourage
greater transparency in government contracting, including the
petroleum sector.



5. (U) Below is the text of the Objectives of the Second TIFA
Council meeting submitted by the Nigerian Ministry of
Commerce. This is the only documentation we have received
from the GON regarding the TIFA meeting.


BEGIN TEXT:


It is pertinent to recall that the overall objective of the
TIFA is to develop further for both countries the
international trade and economic interrelationship. This
objective is to be achieved through:
(1) Fostering an open and predictable environment for
international trade and investment;
(2) Mutual resolution of trade and investment problem
between the two countries;
(3) Removal of trade and investment barriers between our
two countries;
(4) Increased participation of both countries private
economic operators in foreign direct investment;
(5) Elimination of non-tariff barriers in order to
facilitate great access to markets of both countries;
(6) Providing adequate and effective protection and
enforcement of intellectual property rights etc;


The TIFA Council is essentially put in place to ensure full
implementation of these objectives and the inaugural Session
at Abuja addressed some of these issues. The focus of
Washington meeting therefore, should be to:
(1) Review the issues discussed at the inaugural Council
and perhaps assess the extent of implementation;
(2) Discuss issues still constituting impediments to
unfettered and fair trade between our two countries and
proffer solutions to them;
(3) Discuss new strategies to increase US-Nigeria trade and
investment flows;
(4) Apprise the Council of Nigerian efforts at implementing
AGOA;
(5) Explore new areas of technical assistance in developing
agriculture and empowerment of Nigerian women;
(6) Cooperate in areas such as agriculture and
Biotechnology and irrigation projects;
(7) Seek further grant assistance from the US Trade
Development Agency (TDA) and increased involvement of
Overseas Private Sector Investment Corporation (OPIC) in
Nigeria;
(8) Further identify the funds which OPIC is making
available to Africa, so as to enable Nigeria to take
advantage of it
(9) Create a forum for bilateral trade and investment
discussions between the two countries business entrepreneurs
that will be on the delegation;
(10) Match potential Nigerian business partners with
American investors through the US "Strategic Alliance
programme";
(11) Seek Technical assistance in Bilateral and Multilateral
Trade Negotiations
(12) Apprise the Council of Nigerian Government of efforts
at facilitating Trade etc.


It is hoped the above will meet the request of the U.S.
Government in firming up arrangements for the 2nd TIFA
meeting.


END TEXT.

6. (U) The Nigerian Delegation is:


(1) Engr. Mustafa Bello, Honorable Minister of the Federal
Ministry of Commerce and Leader of the Delegation;
(2) Mr. E.I. Ogbile, Director of External Trade Department
of the Federal Ministry of Commerce;
(3) Alhaji Dogara Shehu, Special Assistant to the
Honorable Minister of Commerce;
(4) Mr. Y.F. Agah, Federal Ministry of Commerce;
(5) Mr. Y.S. Labaran, Federal Ministry of Commerce;
(6) Mr. David I. Adulugba, Nigerian Export Promotion
Council;
(7) Dr. Julius Bala, Nigerian Investment Promotion
Commission;
(8) Mr. A.I. Sole, Federal Ministry of Industries;
(9) Mr. V.O.E. Adeoba, Federal Ministry of Finance



7. The Ministry of Commerce still wants private sector
participation but they have not yet communicated to the
Mission the members of this group.


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Post-suggested Specific Action Items
--------------



8. (C) General Policy Reform


- The Importance of Fiscal Discipline


The USG should stress the negative effect of excessive
government spending on interest rates, inflation, private
investment, and long-term growth.


- Importance of Re-establishing a Program with the IMF


The USG should emphasize the benefits to Nigeria of resuming
a formal program with the IMF. Particularly useful is to
describe the difficulties in debt rescheduling or reduction
while Nigeria is not part of a program.


- Exchange Rate Unification


Again, we should stress the costs to their economy of
maintaining the parallel exchange rate system. If numbers
can be generated to represent the cost to the Nigerian
economy of "round tripping," it would focus political
attention on an issue that is usually ignored, or considered
a perquisite for those officials Nigerians traveling with
dollars purchased at the IFEM rate.


- Transparency in Granting of Government Contracts


The USG can use the information from Reftel on due process in
capital projects to emphasize the positive benefit of
reducing corruption. However, U.S. firms are getting the
cold shoulder on a number of projects in a less than
transparent process with NNPC contracts.



9. (C) AGOA


- Regulation for Apparel and Textile Visas


We should be ready to reach agreement on a final draft from
the GON at the meeting.


- Legislation for Transshipment Penalties


We should ask that the Nigerian government put pressure on
the National Assembly to pass legislation increasing
penalties for transshipment immediately. This may require
separating the current language from the Customs Excise
Management Act (CEMA) where it has been attached.
- Identification and Promotion of Niche Market
Products


The Council should review progress on identified products
(gum arabic, ginger, prawns) and efforts to identify new
ones.


- Export Shipment Alternatives Pending Reform of Ports
-
The GON should look at the window of opportunity for direct
foreign investment in AGOA apparel and textiles. Can the
industry wait for port reform and rehabilitation? Discuss
alternatives such as special Export Processing Zones (EPZ) or
shipment through neighboring ports.


- Leather and Footwear


What is the potential for this industry and how should the
GON attract investment?



10. (SBU) Follow Up on US-Nigerian Agreements


- Open Skies
- OPIC



11. (C) USG Assistance for Capacity Building in Trade and
Investment


- USAID-sponsored Capacity Building Programs
- Other Initiatives



12. (SBU) Cash Calls and Any Other Outstanding Oil-sector
Issues



13. (SBU) Recognition of Nigerian Economic Accomplishments


- Successful privatization process


Though the NITEL bidders were unable to complete their
purchase when the world telecom market crumbled, the GON has
maintained its commitment to privatization. Each
privatization has faced political opposition, and the GON
should be commended for keeping with the program despite
considerable pressure to keep many items off the auction
block.


- Restructuring of Telecom Sector and GSM Success


GSM telephones more than doubled Nigeria's telephone capacity
in less than six months. The work of the NCC has made
possible the near-term renovation of the sector and created
the largest market for direct investment outside the oil
sector.


- Partial Deregulation of the Downstream Oil Sector


Note the success of the partial deregulation of the
downstream oil sector in increasing supplies of gasoline
throughout the country and how that availability is an
important democracy dividend.


ANDREWS