UAEG TAKES TOUGH STANCE ON WTO SERVICES

C O N F I D E N T I A L ABU DHABI 001030 SIPDIS STATE FOR NEA/ARP, NEA/RA AND EB/TPP/MTA/IPC STATE PASS USTR - KALVAREZ AND JBUNTIN USDOC FOR USPTO USDOC FOR 4250/DOC/MAC/ONE/CLOUSTAUNAU GENEVA PASS USTR E.O. 12958: DECL: 03/02/08 TAGS: PREL KIPR ETRD TC SUBJECT: UAEG TAKES TOUGH STANCE ON WTO SERVICES NEGOTIATIONS ¶1. (U) Classified by DCM Richard Albright for reasons 1.5 (b) and (d). 2.(C) In advance of the March 3-6 WTO services negotiations in Geneva, UAE Ministry of Economy Director of WTO Affairs Saeed Al-Nasibi publicly announced on March 2 that the UAE does not intend to open its banking, insurance, telecommunications and other services sectors to foreign investors at this time -- despite expected pressure from "industrialized nations," left unnamed, later this week. Comment: While such a position may be unhelpful, the UAE is under no obligation to open up those sectors it specifically set aside under the terms of its accession to the WTO in 1996; they are in fact "unbound," and the UAE's exemptions are indefinite in duration. End comment. ¶3. (C) According to Al-Nasibi, the UAE has little incentive to license new foreign banks because it is the "most over-banked country in the world, based on the number of banks per capita" -- foreign banks outnumber national banks, 26 to 21. He elaborated, however, that foreign banks are permitted to open representative offices here. (Note: This is a well-worn argument of the UAE Central Bank, which since 1987 has largely enforced a ban on new foreign full- service banking operations. End note.) Al-Nasibi also stated that the UAEG would continue to give preference to UAE nationals -- in effect denying national treatment to foreign investors -- in the services sector to encourage citizens to invest in their country. ¶4. (U) According to press reports, Al-Nasibi will chair the UAE delegation to Geneva for the March 3-6 WTO services negotiations. Representatives from the UAE Labor Ministry, Central Bank, Etisalat (the UAE's monopoly telecom provider), and the Federations of Chambers of Commerce will also attend. Wahba