TREASURY UNDER SECRETARY TAYLOR AND GHANA TRADE

UNCLAS SECTION 01 OF 02 ACCRA 001203

SIPDIS

SENSITIVE

STATE PASS USTR -- PATRICK COLEMAN

E.O. 12958: N/A
TAGS: EAID ETRD GH
SUBJECT: TREASURY UNDER SECRETARY TAYLOR AND GHANA TRADE
MINISTER DISCUSS KIGALI MEETING OF AFRICAN TRADE MINISTERS

REF: ACCRA 1200

Summary
--------------

1. (SBU) Treasury Under Secretary John Taylor met May 31 with
Trade Minister Alan Kyerematen, who had just returned from
the African Union trade ministers' meeting in Kigali.
Responding to recent U.S. and EU WTO proposals, the ministers
drafted an African strategy for WTO negotiations. It calls
for special/differential treatment, greater market access,
and a timeline for cuts in agricultural subsidies.
Kyerematen complained that the trade component in Poverty
Reduction Strategy Papers (PRSP) is weak and applauded the
MCA's emphasis on growth. Ghana plans to urge faster trade
liberalization at the ECOWAS heads of state level. End
Summary.

Kigali Consensus
--------------

2. (SBU) Kyerematen said African trade ministers developed a
proposal for a post-Cancun strategy ) the "Kigali consensus"
) that calls for enhanced market access for African products
and for specific timelines for reducing and eliminating trade
distorting supports for agriculture. The ministers wanted to
capitalize on recent U.S. and EU indications of flexibility,
and the idea was to come up with a useful proposal that could
move the process forward.


3. (SBU) African countries are unable to take advantage of
market opportunities, Kyerematen said, because of non-tariff
barriers ) sanitary and phytosanitary (SPS) and technical
barriers to trade (TBT). He asked the U.S. to provide more
technical assistance to improve African businesses ability to
meet these difficult developed world requirements. Taylor
responded that the U.S. has emphasized trade capacity
building.


4. (SBU) Kyerematen said the Kigali consensus calls for
definite timelines for eliminating agricultural export
subsidies, which the African ministers realize the U.S.
supports, and also for reducing domestic supports and
subsidies. Taylor responded that the U.S. proposal includes
increasing market access, eliminating export subsidies and
reducing domestic supports, but accepted Kyerematen's point
that the African ministers were looking for set timelines.
Kyerematen commented that the EU is prepared to eliminate
trade distorting supports on products important to developing
countries, postponing broader reductions. However, he agreed
with Taylor that the point is for developing countries to
eventually become developed, so the African countries do not
want the EU to develop a fixed list of products that cannot
be expanded.


5. (SBU) On tariff escalation, Kyerematen said the ministers
understand the U.S. and EU want developing countries to bind
tariffs at present levels. The Kigali proposal reiterates
calls for special and differential treatment, to allow
developing countries to build industrial capacity. He added
that the ministers expected the EU and U.S. would not
pressure African countries for immediate or rapid tariff
reductions.


6. (SBU) Kyerematen was less clear on the Kigali ministers'
position on cotton. They apparently agreed to consolidate it
into the overall agricultural talks. However, they proposed
including it on the priority list and setting a set time
period for elimination of developed country supports to the
sector ) three years for subsidies and four years for
domestic supports. (Note: Kyerematen told econoff June 7
that he understands the U.S. has agreed to the principle of
time limits, but was not sure if the U.S. had accepted a set
timeframe. End Note) His only comment regarding Singapore
issues was that the general consensus was to negotiate on
trade facilitation and postpone the other three issues.

ECOWAS Trade Liberalization
--------------

7. (SBU) Ghana is concerned that Nigerian trade barriers and
export expansion grants are interfering with ECOWAS trade
liberalization efforts. Kyerematen asserted that the GoG is
committed to the ECOWAS common market and will raise this at
the next heads of state meeting.

Pro-Growth Strategies, Trade, and the MCA
--------------

8. (SBU) Kyerematen complained that pro-growth strategies,
especially the trade component of economic development, are
under-represented in PRSPs, which stress poverty reduction
and social programs. Taylor agreed, adding that growth and
trade were also not main features of the UN's Millennium
Development Goals. Kyerematen was pleased to hear U/S Taylor
state that growth is at the heart of the MCA. (Note: U/S
Taylor's MCA discussions reported reftel. End Note)


9. (SBU) Kyerematen pointed to the Kufuor administration's
Presidential Special Initiatives as an example of the GoG's
policies to promote growth. He disputed criticism that the
initiative is government intervention in the economy, or
"picking winners," as is commonly alleged. Rather, he called
it government &engagement8 in strategic sectors to foment
export-driven growth and employment generation. The GoG is
focusing on industrial starch, using cassava, oil palm
products, and industrial salt. He hopes the salt industry
will serve as the basis for developing a chemicals industry
in Ghana. Kyerematen called it "government engineering" of
the economy: the GoG is helping to identify bottlenecks,
organize farmers into cooperatives, and assisting SMEs to
access technology, financing and professional management.


10. (SBU) Despite the GoG's efforts, private sector
investment, especially foreign direct investment, is growing
slowly. Kyerematen blamed this on collateral damage from
regional instability, which makes it especially difficult to
attract small and medium sized investment from the U.S. and
Europe. He asked the U.S. to help Ghana improve its image by
promoting success stories. Ambassador Yates reiterated a
comment she has delivered before to Kyerematen that Ghana has
a perception problem: many investors believe it does not
have a welcoming investment climate. (Comment: As usual,
Kyerematen misunderstood the Ambassador's criticism of the
investment environment. Rather than accept this as an area
the GoG should work on, he blamed the problem on investors'
lack of information on Ghana. End Comment)


11. (SBU) Kyerematen criticized donors for not really
understanding or supporting the private sector, and mentioned
that he has requested assistance from the U.S. Small Business
Administration (SBA). He said the SBA has agreed to visit
Ghana to explore ways to provide assistance. Taylor agreed
that many donors are more focused on poverty alleviation, but
pointed out that in addition to the MCA focus on growth, IDA
funding can now be used to support the private sector, since
SME lending was negotiated into IDA 13 (for the first time).

Yates