COMMERCE MINISTER ON FTA, SAUDI CRITICISM

C O N F I D E N T I A L SECTION 01 OF 02 MUSCAT 002190

SIPDIS

STATE FOR EB/TPP/BTA, NEA/RA, NEA/PI, AND NEA/ARPI
STATE PLEASE PASS USTR/JBUNTIN
USDOC FOR 4520/ITA/MAC/AMESA/OME/MTALAAT

E.O. 12958: DECL: 12/17/2014
TAGS: ETRD PREL BEXP MU
SUBJECT: COMMERCE MINISTER ON FTA, SAUDI CRITICISM
(C-NE4-01168)


Classified By: Ambassador Richard L. Baltimore, III.
Reasons: 1.4 (b) and (d).


1. (C) Summary: Omani Minister of Commerce and Industry
Maqbool bin Ali bin Sultan reassured visiting NEA DAS Philo
Dibble that Oman remains firmly committed to signing a
bilateral FTA with the U.S. Bluster from the Saudis
notwithstanding, Maqbool reiterated that the Omani cabinet
has already approved the decision to move forward with an FTA
along the lines of the U.S.-Bahrain agreement. While
backdoor negotiations between the Bahrainis and Saudis
concerning alleged incompatibility between bilateral trade
pacts and the GCC charter have failed to yield a definitive
resolution, Maqbool is confident that Sultan Qaboos will
maintain his unwavering support for a bilateral agreement
during the upcoming GCC Summit in Bahrain December 20-21.
DAS Dibble emphasized USG support for GCC integration and
pledged that we would be willing to work with Oman and other
nations to address Customs Union and other concerns during
the negotiations. End Summary.

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Getting Down to Business
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2. (C) On December 12, during a half-hour morning meeting
with visiting NEA DAS Philo Dibble and the Ambassador, Omani
Minister of Commerce and Industry Maqbool bin Ali bin Sultan
pointedly and repeatedly emphasized Oman's desire to move
forward on a bilateral free trade agreement (FTA) with the
United States. DAS Dibble stressed the USG belief that
regional integration would be strengthened through the FTA
process, and that the U.S. is willing to work with the GCC on
addressing its concerns that bilateral FTAs would undermine
the GCC Customs Union.

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All Fingers Point to Riyadh
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3. (C) Maqbool asserted that the Saudis were caught off guard
by the speed with which the U.S. concluded its FTA with
Bahrain. In his view, Riyadh believed that it could achieve
WTO accession prior to any deal being struck between
Washington and Manama. When the Bahrain discussions ended in
four months and Oman and the UAE were recently announced as
upcoming FTA partners, the Saudis felt their only option was
to make a public statement cajoling the other GCC states into
honoring the GCC Charter and renouncing bilateral agreements.
(Note: As an aside, Maqbool stated that Saudi Arabia will
encounter many bumps along the path to WTO accession,
particularly with the EU over its gas sector (NFI).)


4. (C) In spite of such bluster, Maqbool said that Sultan
Qaboos and the Omani Cabinet of Ministers agree with the U.S.
position that Oman should negotiate a bilateral FTA. He also
indicated that progress was being made behind the scenes in
the GCC on the issue of FTAs, and that Oman has made its
position very clear to the other members. Maqbool predicts
that the December 20-21 GCC Summit in Bahrain will yield an
accord on moving forward with bilateral agreements,
especially in light of Bahrain already having signed its FTA.
In the end, the Saudis' biggest concern is the integrity of
the GCC Customs Union and its industrial protection policies.
Maqbool suggested that a public statement of support for the
GCC from the USG would be extremely helpful in resolving the
current impasse. DAS Dibble noted this request and reassured
the Omani minister that the USG's intent is not to undercut
the GCC in any way.

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Taking the Necessary Steps
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5. (C) Maqbool stressed the need to conclude FTA negotiations
by July, and mentioned that the Omani government is taking
numerous steps to prepare for this aggressive timetable.
Economic expert Dr. Said al-Riyami will be posted to the
Omani Embassy in Washington, the Ministry expects to hire
other consultants and/or legal advisors to assist in the
negotiations and implementation of an FTA, and the Minister
acknowledged the need to cultivate contacts on Capitol Hill.
DAS Dibble noted that lawyers helped greatly in the Bahrain
negotiations. In comparison with the relatively
straightforward ratification system in Oman, Maqbool
expressed a newfound appreciation for the complexity of
getting FTA ratification in the U.S. Nevertheless, he
insisted that an FTA is still Oman's primary goal: "I'm sure
it's worth it; we're committed and we're moving forward.
We'll get it done."

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Comment
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6. (C) Maqbool demonstrated a keen grasp of the intricacies
and accelerated timetable necessary to achieve an FTA, and
his Ministry has been reacting noticeably more quickly in
their interactions with the Embassy. While he was reluctant
to completely dismiss Saudi recalcitrance on the bilateral
FTA dilemma within the GCC, Maqbool appeared confident that
the Saudis would have no choice in the end but to accept the
reality that the U.S. is moving forward with willing partners
in the region.
BALTIMORE