Identifier
Created
Classification
Origin
03SANAA1202
2003-05-31 08:32:00
CONFIDENTIAL
Embassy Sanaa
Cable title:  

MIDDLE EAST TRADE INITIATIVE: YEMEN

Tags:  ETRD ECON EINV YM COM 
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C O N F I D E N T I A L SECTION 01 OF 02 SANAA 001202 

SIPDIS

STATE FOR EB, NEA/NGA AND EB/CBA,
COMMERCE FOR ITA/MAC/ONE (CHERIE LOUSTAUNAU AND CARL OBERG)
STATE PLEASE PASS TO USTR FOR DOUG BELL

E.O. 12958: DECL: 05/26/2013
TAGS: ETRD ECON EINV YM ECON COM
SUBJECT: MIDDLE EAST TRADE INITIATIVE: YEMEN

REF: A) SECSTATE 135263 B) TUNIS 1273

Classified By: By DCM Alan G. Misenheimer for 1.5 (b.) and (d.)

C O N F I D E N T I A L SECTION 01 OF 02 SANAA 001202

SIPDIS

STATE FOR EB, NEA/NGA AND EB/CBA,
COMMERCE FOR ITA/MAC/ONE (CHERIE LOUSTAUNAU AND CARL OBERG)
STATE PLEASE PASS TO USTR FOR DOUG BELL

E.O. 12958: DECL: 05/26/2013
TAGS: ETRD ECON EINV YM ECON COM
SUBJECT: MIDDLE EAST TRADE INITIATIVE: YEMEN

REF: A) SECSTATE 135263 B) TUNIS 1273

Classified By: By DCM Alan G. Misenheimer for 1.5 (b.) and (d.)


1. (C) Summary: The ROYG will respond very positively to the
Middle East Trade Initiative. Yemen should accede to the
World Trade Organization in five years and that process
should help reinvigorate efforts to conclude a Bilateral
Investment Treaty. Sub regional FTAs could have wide
benefits for Yemen; GCC membership for example is a top
economic policy objective for Yemen To qualify, Yemen will
need technical assistance in WTO accession, privatization,
regulatory enforcement and public relations. End Summary.



2. (C) The Middle East Trade Initiative will be welcomed by
the ROYG as an excellent avenue to develop business
infrastructure and investment climate as a means to raise
Yemen's standard of living and institutionalize economic
reform. Several contacts in business and government sectors
are seeking USG assistance in meeting WTO accession
requirements and expansion of USG investment in Yemen. The
Middle East Trade Initiative will also compliment USAID and
MEPI assistance projects.

--------------
WTO Accession: Four to Five Years
--------------


3. (C) In October 2002, Yemen submitted its Memorandum of
Foreign Trade Regime to the World Trade Organization.
Accession for Yemen is still four to five years away; Yemen
is currently working hard to answer questions from the
European Union, the United States and Australia. The EU has
pledged 7 million Euros to help Yemen accede, and the Dutch
and World Bank plan on holding Yemen's Integrated Framework
Conference in June.


4. (C) We believe this initiative will also reinvigorate our
efforts to conclude a bilateral Investment Treaty that we
have been working on with the Ministry of Finance for the
past year. Progress has stalled as Yemen works on meeting
the USG's core text requirements.

--------------
Subregional FTAs: Bridging the Gap

between Yemen and other Gulf Countries
--------------


5. (C) Subregional FTAs would be beneficial for Yemen,
especially if Yemen gains admission to the Gulf Cooperation
Council. However, we note Embassy Tunis' (Reftel B) concerns
that intra-region politics may hamper the development of
subregional free trade agreements. Our contacts have told
us that Gulf countries compete with each other in similar
economic sectors, such as oil and transshipment business, the
two core aspects of the Yemeni trade economy. To counteract
such competition, we suggest that the Middle East Trade
Initiative encourage the development of complimentary sectors
in subregional countries.


--------------
Investment Climate: Micro-Enterprise
and Export Industry Development
--------------


6. (C) Post is already engaged in developing
Micro-Enterprise projects and expanding business related
education as part of our MEPI strategy. Expansion of export
tied financing programs could help USG firms do business in
Yemen. Yemenia Airlines representatives told Pol/econoff that
they prefer to buy Boeing planes, however loan terms offered
by Airbus were too good to pass up and therefore they placed
their last order with Airbus.

--------------
Technical Assistance: WTO Accession,
Privatization, and Public Relations
--------------



7. (C) The following are possible areas for technical
assistance:

-- WTO Accession (A): Fortifying Yemen's copyright protection
enforcement is one area that where USG technical assistance
would aid Yemen. Post does not assess intellectual copyright
issues to be a major problem for Yemen, but developing a
sound legal structure would greatly assist the accession
process. Any help that we can provide to ensure that future
IPR problems do not occur will encourage both trade and
investment in Yemen.
-- WTO Accession (B): Export industries should be made aware
of the benefits of WTO status: a technical assistance program
for exporters to meet quality control and world trade
organization standards for their goods would provide
significant future dividends for domestic industry.

-- Privatization: Assistance programs to encourage ROYG
efforts to privatize the banking industry and national gas
companies would help diversify the economy.
-- Public Relations: Our contacts at the General Investment
Authority and at the Ministry of International Cooperation
are eager for Public Relations assistance that would promote
Yemen's tourism, industry and trade.


-------------- --------------
Comment: Foreign Direct Investment a Key to Yemen's Future
-------------- --------------


8. (C) Comment: Foreign direct investment is an imperative
for Yemen, which could eventually lose as much as one-third
of its GDP as oil incomes decline in the next twenty years
and its twenty plus million population is increasing at a
rate of 3.7% a year. Free trade agreements are crucial to
encouraging direct investment, and will be a valuable asset
in our encouragement and assistance to help Yemen diversify
its economy.
MISENHEIMER