SHEIKH HAMDAN DISTURBED BY LACK OF FTA PROGRESS IN

C O N F I D E N T I A L SECTION 01 OF 02 ABU DHABI 004306

SIPDIS

STATE FOR NEA, NEA/ARPI
STATE FOR EB/TPP/BTA
STATE PASS USTR FOR SHAUN DONNELLY AND DOUG BELL

E.O. 12958: DECL: 10/12/2015
TAGS: ETRD ECON PREL TC
SUBJECT: SHEIKH HAMDAN DISTURBED BY LACK OF FTA PROGRESS IN
LONDON


Classified By: CDA Martin Quinn for reasons 1.4 (b & d).


1. (C) Summary: On October 11, UAE Deputy Prime
Minister/Minister of State for Foreign Affairs Sheikh Hamdan
bin Zayed told Charge and Econ Counselor that he was
disturbed by the performance of both sides during the high
level FTA talks in London on October 7. He stressed that FTA
negotiations were not going well and that both sides needed
to work toward compromise. He said that if the negotiations
continued the way they were going, they would not succeed in
the time frame desired. Sheikh Hamdan also said that the
negotiations were too important to leave to "employees"
(&muwathafiin8) and that he would be taking a much closer
high level interest on the UAE side. Although Sheikh Hamdan
did not discuss detailed problem areas, areas of concern that
we know about include: telecommunications liberalization, the
jurisdiction of the agreement, and visas. Charge stressed
that we were partners in this endeavor, noting also that
there were areas where legally we had little room to
maneuver. End Summary.


2. (SBU) Deputy Prime Minister/Minister of State for Foreign
Affairs Sheikh Hamdan bin Zayed (HbZ) convoked Charge on
October 11 at 8 p.m. to discuss his concerns about ongoing
FTA negotiations. Hamdan was accompanied by MFA U/S Abdullah
Rashid Al-Noaimi, A/US for International Cooperation Mohammed
Abdul Jalil, UAE Ambassador to Washington Al Asri Al-Darer,
and HbZ's translator Zaki Al-Nusaiba. There were no
representatives from either the Ministry of Finance or the
Ministry of Economy (the co-leads on the FTA negotiations).

London Talks Went Badly
--------------


3. (C) HbZ explained that he had been disturbed by reports
about the October 7 meeting between lead FTA negotiators in
London. He said that he was not happy with what he had heard
about the performance of either side, adding that he had
gotten the impression that both sides were trying to "hector"
or score points, rather than trying to achieve the common
goal of an FTA. Charge said that he understood the talks in
London had been frank, but that some progress was made.
Al-Noaimi interjected that the whole discussion had been
one-sided: focusing on necessary UAE concessions. When the
UAE looked for concessions on the U.S. side, the answer was
always "no." HbZ said that it appeared that the new head of
the U.S. delegation was trying to get the UAE to make more
concessions than his predecessor had, and this "was not going
to happen."

It Can't Continue Like This
--------------


4. (C) HbZ emphasized that, from the start of negotiations,
the UAE had offered negotiation "concessions" without
comparable movement on the U.S. side. He stressed that the
FTA should be "50-50" with neither side getting everything it
wanted. HbZ acknowledged that there would be areas on both
sides that were not subject to negotiation because they were
matters of sovereignty. He noted, however, that he thought
there was room to come to agreement on many issues. Charge
told HbZ that we welcomed the partnership we have with the
UAE in many areas, and that we want the same type of
partnership in our trade relations -- which will benefit both
nations. He said that we viewed the negotiations as a
partnership, but stressed that there were areas where the USG
had very little flexibility, because of U.S. law and the need
to work with Congress to ratify any agreement.


5. (C) HBZ said that the UAE also needed to work with its
constituents in the public and private sector. The UAE, he
said was "determined to succeed" but if the U.S. presented
unacceptable conditions, it would make it impossible for the
UAEG to build consensus to support the agreement. He added
that the government was already feeling pressure from
constituents due to concessions it had made. HbZ said that
if the negotiations continued the way they had gone, both
sides would be "unable to achieve agreement" within the
expected timeframe.

High Level Push Needed
--------------


6. (C) HbZ also stressed that he thought the negotiations
were too important to be left in the hands of the "working
level employees" on either side. The negotiating teams were
representing the interests of their respective governments
and needed to be "instructed" to work toward agreements "at
the mid-point." HbZ then explained that he would be paying
attention to the negotiations at "a high level." Subsequent
to this meeting, Minister of Information Sheikh Abullah bin
Zayed conveyed a similar message by phone to A/S Welch.

Comment
--------------


7. (C) The high level intervention by two influential
Al-Nahyan brothers shows the seriousness with which they are
taking the negotiations and their concern that things are not
moving as quickly -- or as positively -- as hoped. Both HbZ
and Sheikh Abdullah have previously committed themselves to
the success of the negotiations. Although HbZ did not
mention specifics during his conversation, there are several
areas of concern for both sides. These include:

-- Visas: The UAE has asked to include provisions for
temporary entry, citing FTAs with Singapore and Chile as
precedent. USTR has clearly said that we do not have the
authority to include visas in an FTA.

-- Federal-Emirate Jurisdiction: The UAE has explained that
an FTA can only bind the UAEG, not the individual emirates.
The problem with this position is that the UAEG makes up a
very small part of the overall UAE economy. The Emirate of
Abu Dhabi, for example, has more government procurement than
the UAEG.

-- Telecommunications: The UAE refuses to open up its
telecommunications sector for 10 years, citing a need to let
a second telecommunications company establish itself.

-- Security of Assets: The Abu Dhabi Investment Authority has
significant investments in the United States and wants a
formal mechanism to review the potential freezing of UAEG or
Abu Dhabi government assets under the Patriot Act or OFAC
sanctions, etc.

-- Agencies and Companies Laws: During the meeting with
Charge, Al-Noaimi cited UAE movement on these laws, as an
example of how the UAE has made a concession on an issue of
U.S. concern.

Comment (continued)
--------------


8. (C) HbZ,s comments about the UAE,s being obliged to take
a step that could have negative repercussions, could be an
elliptical allusion to the Arab League Boycott of Israel.
UAEG officials have previously told us that UAE policy is to
not implement the secondary and tertiary boycotts, but that,
as members of the Arab League, they are not prepared to move
on the primary boycott. We understand from USTR that Sheikha
Lubna (Minister of Economy) and Dr. Mohammad Khirbash
(Minister of State for Finance and Industry) became irate
over discussion of the primary boycott issue in London. End
Comment.
QUINN