Identifier
Created
Classification
Origin
05KUWAIT1295
2005-03-30 07:52:00
CONFIDENTIAL
Embassy Kuwait
Cable title:  

U.S.-KUWAIT "MINI-TIFA" TALKS

Tags:  ETRD PREL ECON EINV KU 
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C O N F I D E N T I A L SECTION 01 OF 07 KUWAIT 001295 

SIPDIS

STATE PLEASE PASS USTR JFENNERTY

E.O. 12958: DECL: 03/21/2015
TAGS: ETRD PREL ECON EINV KU
SUBJECT: U.S.-KUWAIT "MINI-TIFA" TALKS

REF: A. KUWAIT 1172

B. KUWAIT 1146

C. KUWAIT 989

D. KUWAIT 900

E. KUWAIT 729

F. 04 KUWAIT 2010

Classified By: Ambassador Richard LeBaron, Reason 1.4(b)

C O N F I D E N T I A L SECTION 01 OF 07 KUWAIT 001295 SIPDIS STATE PLEASE PASS USTR JFENNERTY E.O. 12958: DECL: 03/21/2015 TAGS: ETRD PREL ECON EINV KU SUBJECT: U.S.-KUWAIT "MINI-TIFA" TALKS REF: A. KUWAIT 1172 ¶B. KUWAIT 1146 ¶C. KUWAIT 989 ¶D. KUWAIT 900 ¶E. KUWAIT 729 ¶F. 04 KUWAIT 2010 Classified By: Ambassador Richard LeBaron, Reason 1.4(b) ¶1. (SBU) Summary and Comment. On March 16-17, USTR's John Fennerty met with members of Kuwait's Trade and Investment Framework Agreement (TIFA) team (participant list in para 31) in a series of "mini-TIFA" meetings, to assess Kuwait's progress since the May 2004 inaugural TIFA Council meeting in Washington. Fennerty complimented the TIFA team on leading reform efforts in Kuwait, and conveyed AUSTR Catherine Novelli,s regards to the Minister of Commerce. To deepen the Kuwaitis' understanding of what a free trade agreement (FTA) would entail, Fennerty described the general structure of an FTA and stressed that the minimum starting point of an FTA is WTO compliance, although FTA requirements would be above and beyond those commitments. Working TIFA Committee Chair Hamad Al-Ghanim reported that Kuwait had been trying to do its best this past year to press for changes, and noted that the Kuwaitis felt a little discouraged that the UAE and Oman have moved into FTA negotiations while Kuwait has had only one TIFA Council meeting. ¶2. (SBU) On telecom, Fennerty received an overview of the ministry's plans to liberalize the sector, and learned that Kuwait will submit its plan to the WTO for approval within the year. In discussing Kuwait's International Conformity Certification Program (ICCP),the Kuwaitis welcomed U.S. technical assistance to help devise an acceptable replacement for the ICCP. With regard to intellectual property rights, the TIFA team said the GOK had created an interministerial IPR committee, but there had been no progress on legislation. A Central Bank representative outlined new legislation that has opened up the banking sector to foreign banks and foreign investors. The Kuwaitis also said they would submit a WTO services offer before May 2005. On insurance, the Kuwaitis admitted that no changes have occurred since the last meeting, although the Ministry of Commerce is drafting new legislation. The team had little new information on Kuwait's overly restrictive shelf-life regulations. ¶3. (SBU) Concerning government procurement, the cabinet is drafting a new law that still has serious
shortcomings, including national treatment concerns. The Ministry of Finance would like Kuwait to accede to the WTO Government Procurement Agreement, but according to the Finance representative, there is a lack of political will within the GOK more broadly. Kuwait's labor representative said that a new draft labor law is with the National Assembly, but he predicted it would not be debated until fall. This law would, he said, bring Kuwait into conformity with ILO provisions. Finally, a representative from Kuwait's Chamber of Commerce and Industry (KCCI) outlined new changes to encourage foreign investors, and said that KCCI had asked the Prime Minister to suspend Kuwait's 55 percent tax rate for foreign corporations until a new tax law is passed. ¶4. (C) Comment. Although in arguing for a second TIFA Council meeting the GOK contended it had made significant progress since the first meeting, it was clear following these discussions that little progress was achieved over the past year. Many of the proposals the GOK has made to open its economy are still in the drafting stage with line ministries; other draft laws are sitting with a parliament that has shown little willingness to buy into the GOK's liberalization vision. The Kuwaiti team also demonstrated that in some key areas, its technical expertise is rather thin; in others, the representatives gave incorrect or misleading information (notably on labor and insurance). Its unwillingness to allow the U.S. or industry groups to review draft legislation before it is submitted to the National Assembly is problematic, as changing legislation once it is passed into law is a very time-consuming prospect in Kuwait. The Kuwaiti TIFA team (and Al-Ghanim particularly) seems to be laboring under the misimpression that Kuwait will be given an FTA even absent significant economic change because it is a key U.S. ally, despite Fennerty's -- and post's -- repeated representations to the contrary. To help correct this, post will draft a presentation for the Ambassador, outlining the steps the GOK must take to move forward with the TIFA. This speech, which we will clear with State and USTR, will then form the basis for additional public diplomacy efforts in support of the TIFA/FTA process. End Summary and Comment. Introduction and Overview -------------- ¶5. (SBU) On March 16-17, USTR's John Fennerty met with members of Kuwait's Trade and Investment Framework Agreement (TIFA) team in a series of "mini-TIFA" meetings, to assess Kuwait's progress since the May 2004 inaugural TIFA Council meeting in Washington (participant list in para 31). To deepen the Kuwaitis' understanding of what a free trade agreement (FTA) would entail, Fennerty described the agreement's general structure and stressed that the minimum starting point of an FTA is WTO compliance, although FTA requirements would be above and beyond those commitments. He explained that USTR's decision to begin negotiating bilateral FTAs in the Middle East and North Africa (MENA) was part of President Bush,s larger goal of a Middle East Free Trade Agreement (MEFTA) by 2013. He emphasized that, contrary to some press reported claims that the U.S. is using bilateral FTAs to undermine the Gulf Cooperation Council (GCC),the U.S. very much supports the GCC and views regional integration as a key component/objective of MEFTA. Finally, he illustrated the benefits of an FTA by citing the case of Jordan, whose exports to the U.S. have increased by more than a 1000 percent since signing the FTA in 2000. ¶6. (SBU) Fennerty complimented the TIFA team on leading reform efforts, and praised Kuwait,s team in Washington. He also conveyed AUSTR Catherine Novelli,s regards to the Minister of Commerce, explaining that although she was not able to visit Kuwait at this time due to other pressing commitments, she had asked Fennerty to come and review prgoress since the May 2004 TIFA Council meeting. Fennerty added that USTR would like to continue information exchanges between U.S. and Kuwaiti experts to move the process forward. On an administrative note, Fennerty said that the GOK's habit of transmitting documents in hard copy via its Embassy in Washington was slowing progress; he requested that the GOK provide documents in electronic format as much as possible, to facilitate dissemination among U.S. agencies. ¶7. (SBU) As the working chair of the Kuwaiti TIFA committee, Ministry of Commerce and Industry Assistant Undersecretary for Foreign Trade Affairs Hamad Al-Ghanim welcomed Fennerty and reported that Kuwait had been doing its best this past year to press for changes. He also noted, as he has in the past, that the Kuwaitis feel a bit discouraged that the UAE and Oman have moved into FTA negotiations (even though they signed their TIFAs after Kuwait did),while Kuwait has had only one TIFA Council meeting. Fennerty explained that the U.S. has had TIFAs with some countries for many years without regular meetings: it is the pace of progress on reforms that dictates the timing of meetings and FTA negotiations. He also reiterated the importance of compliance with WTO commitments and urged the GOK to focus its efforts on this. A summary of the discussions by sector follows below. Telecommunications -------------- ¶8. (SBU) Fennerty met with Ministry of Communications Undersecretary Hamad Khajah on March 16 to discuss the telecom chapter. Fennerty expressed the U.S. government,s appreciation for the actions the ministry took to resolve its long-standing dispute with AT&T (ref F),saying that this showed that the ministry is serious about reform. Such reforms would be key to an FTA, Fennerty added, since U.S. companies view telecommunications infrastructure as essential for doing business in a foreign country. He also informed Khajah that there would be an e-commerce component of the FTA. Khajah provided Fennerty with an overview of the ministry's plans to liberalize the sector (reported in detail in ref B). Khajah said that Kuwait planned to submit its plan to the WTO for approval within the year. Fennerty noted that signing on to the WTO Basic Agreement and adopting reference paper commitments would send a strong signal of GOK commitment to liberalization. Khajah commented that he believed that Kuwait should not wait for all GCC countries to submit their papers before doing so itself. ¶9. (SBU) Khajah offered to meet with USTR experts for further discussions when he is in the U.S. in mid-April. He frankly admitted that he has been trying to liberalize the telecom sector for three years, but has faced strong opposition in the National Assembly. Now, Khajah said, he can use (and has done so successfully) the TIFA as leverage to force change. Technical Barriers to Trade -------------- ¶10. (SBU) In his March 16 discussion with Public Authority for Industry (PAI) Director of Standards and Metrology Khaled Al-Fahad and Ministry of Commerce Assistant U/S Al-Ghanim, Fennerty discussed Kuwait's International Conformity Certification Program (ICCP),which the U.S. had long identified as a technical barrier to trade (TBT). Fennerty said that, based on GOK coments over the past few week, he sensed that the GOK might benefit from some carefully targeted technical assistance from the U.S. on how to proceed (ref D). He cautioned, however, that there are limits to technical assistance, and he asked that the Kuwaiti experts discuss further with U.S. TBT experts how best to target U.S. assistance. Al-Fahad said that Kuwait would be happy to discuss technical assistance and what kind of program would be appropriate, given Kuwait's infrastructure. ¶11. (SBU) Al-Fahad told Fennerty that the GCC Secretary General has commissioned a study to devise a conformity assessment program for the entire GCC, to go into effect within six months. Since any modification to Kuwait,s scheme would need to conform to the GCC plan once the latter is implemented, Al-Fahad suggested that a U.S. TBT expert visit Kuwait within the next three months. Fennerty said that the U.S. would consider it, but reiterated that U.S. and Kuwaiti experts must talk first. Fennerty also emphasized the importance of GOK representatives attending WTO TBT workshops, so that they might have exchanges with other experts. ¶12. (SBU) Fennerty stressed that the U.S. believes that when Kuwait reshapes its program, the base assumption should be that, in the absence of identifiable problems with imported U.S. goods (of which there has been none to date),there would be no need for regulation beyond market surveillance and spot checking. If problems do emerge, then there might be a need for greater GOK intervention. At present, however, Kuwait is insisting on conformity assessment for products that the GOK readily admits have presented no problems. Intellectual Property Rights -------------- ¶13. (SBU) On March 17, Fennerty and USPTO copyright expert Jennifer Ness met with the remainder of the TIFA team in one long session to discuss progress in other sectors. (Ness later held a break-out session with Ministry of Information copyright expert Khaled Al-Hendi and Ministry of Commerce patent and trademark expert Nasser Al-Mubarak on the specifics of Kuwait's IPR legislation.) The discussion began with intellectual property rights (IPR),which Fennerty characterized as one of the most important issues, since it affects many other chapters. Fennerty complimented the Customs Service and the Ministries of Commerce and Education for their enforcement efforts, adding that industry believes Education has a model program for protecting textbook copyrights. Kuwait's most serious enforcement problem, however, is the lack of deterrence resulting from low penalties and no threat of jail time for copyright and trademark violators. In the U.S.,s experience, Fennerty said, the only way to reduce piracy is to make it more expensive. Fennerty reiterated that the base starting point in FTA negotiations is WTO compliance, but cautioned that on IPR, FTA requirements would be significantly more stringent than WTO commitments. The first task for Kuwait, then, would be ensuring that its laws, regulations and enforcement are TRIPs-compliant. Once that occurs, the U.S. and Kuwait may begin discussions of moving beyond TRIPs. He urged the Kuwaitis to look at the U.S.,s FTAs with other countries to see what is required. ¶14. (SBU) Al-Ghanim gave a brief overview of some IPR developments, telling Fennerty that the GOK has decided to establish an interministerial committee on IPR including the Ministries of Information and Commerce, the Customs Service, and Kuwait municipality; this committee will act as a central data-collection body. Fennerty asked whether the Ministry of Interior (MOI) would be included in the new committee. The Kuwaitis said that the decision had been left to MOI, but remarked that they felt it was unnecessary since, they claimed, it is easier now to get MOI involved in IPR cases. Fennerty commented that the U.S. has found in other countries that involving MOI is key, because the police work 24 hours every day and can target pirates at their weakest times. When combined with harsher penalties, this would have a greater deterrent effect. Al-Ghanim also noted that the GOK had issued a draft law on patents, which had been provided to the U.S. for comment. Ministry of Information IPR Committee Chief and Legal Advisor to the Minister Khaled Al-Hendi said that his ministry had begun to increase enforcement during the past month under the leadership of new Assistant U/S Ibrahim Al-Nouh and in cooperation with industry. He also noted that Information is seeking to have a formal relationship with Interior on IPR. Banking -------------- ¶15. (SBU) Al-Ghanim said that under Ministerial Order 28/2004, foreign banks may now open branches in Kuwait. The Central Bank of Kuwait's (CBK) Basel Al-Haroon told Fennerty that BNP Paribas, the Abu Dhabi National Bank and HSBC have all been approved to open branches in Kuwait, and Citigroup,s application is currently under review. Fennerty outlined what the U.S. would expect under an FTA. With regard to financial services, national treatment would be very important: foreign banks should be permitted to operate wholly owned subsidiaries in Kuwait and should be allowed 100 percent ownership shares in Kuwaiti banks. When Fennerty asked if foreign banks were limited to opening only one branch; Al-Haroon said that although that is not specified in the law, in practice it was true and was being done to determine the feasibility of foreign bank,s operations. Al-Haroon said that foreign ownership of local banks is limited to 49 percent, except with approval from CBK and the Council of Ministers. Alternatively, an investor could go through the process outlined in Kuwait,s foreign investment law, which would allow for full foreign ownership. (Note. This 2001 law authorizes foreign-majority and 100 percent foreign ownership in certain industries including infrastructure projects; investment and exchange companies; insurance companies; information technology and software development; hospitals and pharmaceuticals; air, land and sea freight; tourism, hotels, and entertainment; housing projects and urban development. However, implementing regulations were not passed until 2003, and representatives of the American Business Council complained to Fennerty that the process is overly cumbersome. End Note.) ¶16. (SBU) Fennerty asked if capitalization outside Kuwait was excluded when calculating capital requirements. Al-Haroon concurred that it was, but said that the capital requirement for foreign banks is less than for local banks (15 million Kuwaiti dinar versus 75 million). Fennerty then asked if Kuwait would put forward a WTO services offer before May 2005; Al-Haroon said yes. Fennerty asked for a copy of the offer, noting that in general, the U.S. is lacking up-to-date information from Kuwait across sectors. Insurance -------------- ¶17. (SBU) Faiez Al-Saiegh from the Ministry of Commerce and Industry told Fennerty that Kuwait opened its insurance sector to foreign companies in 2001. He said foreign insurance companies may open a branch office in one of two ways: first, through the process outlined in the foreign investment law, or second, by using a local agent. If the foreign investment law requirements are met, the insurance company's application is forwarded to the Ministry of Commerce for approval. Fennerty asked about foreign ownership of Kuwaiti insurance companies; Al-Saiegh said it is limited to 40 percent for non-GCC foreign nationals, and 49 percent for GCC nationals. Fennerty pointed out that this is inconsistent with national treatment principles. Al-Saiegh hastily replied that foreign companies can apply for full ownership of Kuwaiti companies under the foreign investment law instead. ¶18. (SBU) Fennerty asked if Kuwait's prohibition against foreign licenses was still in effect; Al-Saeigh asserted that it was not. However, when asked what legal authority overrode the prohibition, Al-Saiegh admitted that this was a provision in a new draft law on insurance, which is not yet in effect. Indeed, the legislation is still with the ministry, and has not yet been submitted to the cabinet for approval (which would be necessary before the legislation could be sent to the National Assembly for ratification). When asked what the timeline might be for approval, Al-Saiegh said that he had no idea. Fennerty asked if the U.S. could see a copy of the draft legislation, to allow the U.S. to provide feedback; Al-Saiegh said that he would try to provide this. Agriculture -------------- ¶19. (SBU) Fennerty explained that in an FTA, agriculture would be included in the market access chapter. He noted that, like textiles, this is often a sensitive chapter. With regard to Kuwait specifically, Fennerty raised Kuwait's remaining ban on beef imports from Washington state (ref C). Ahmad Al-Oqab from the Public Authority for Agriculture Affairs and Fish Resources (PAAAFR) was not aware of any changes in the ban's status. On shelf-life restrictions, Fennerty noted that the U.S. believes that such restrictions should be scientifically based, which Kuwait,s are currently not. Al-Oqab promised to look into shelf-life restrictions. Fennerty also asked if Kuwait had considered joining the UPOV convention on protection of new varieties of plants; Al-Oqab confirmed that they had started the process. Al-Oqab requested that the U.S. provide technical assistance in areas such as agriculture, animal husbandry, and fisheries. Fennerty promised to talk to USDA about the request for technical assistance, perhaps using MEPI funds. He added that it would be good for PAAAFR and U.S. experts to have a discussion on how best to target U.S. assistance. Government Procurement and Investment -------------- ¶20. (SBU) Ishaq Abdulkarim from the Ministry of Finance told Fennerty that a draft law on government procurement is in the works, but frankly admitted that there are still shortcomings (including national treatment concerns) that would require futher amendment before it could be submitted to the National Assembly. Fennerty asked if the U.S. could see the draft law, to evaluate its conformity with FTA structural and market access requirements. Specifically, he noted that offsets would not be permitted, regulations requiring local partners would not be acceptable, and bid protest procedures would need to be specified. He also pointed out that it would be more difficult to correct deficiencies once the draft was passed into law. Abdulkarim was reluctant to provide the draft, saying it was not normally permitted. Fennerty asked if Kuwait's government procurement process was on-line. Abdulkarim said he had asked the cabinet about this, and was told there was a plan to do it in the future. Ness pointed out that a provision in the government procurement chapter requires governments to devise a software acquisition, use and monitoring policy for all ministries, and asked if Kuwait had one in place. Abdulkarim said that the GOK does have such a policy; Ness requested that he provide a copy to the U.S. ¶21. (SBU) Abdulkarim noted that the Ministry of Finance would like Kuwait to accede to the WTO Government Procurement Agreement. However, he added, political will within the GOK would need to be forged before Finance would be authorized to proceed. Abdulkarim also cautioned that the GOK is very worried about opening up the government procurement process. Fennerty replied that one benefit to Kuwait under an FTA would be the reciprocal government procurement obligations for the U.S., which would allow Kuwait access to the U.S. government procurement market and would require suspension of Buy America provisions. ¶22. (SBU) Turning to investment, Abdulkarim asked if a bilateral investment treaty (BIT) was included in an FTA. Fennerty said that a country without a BIT with the U.S. would have an investment chapter in its FTA. Abdulkarim then indicated that the Ministry of Finance would like a separate investment agreement, as Bahrain has. Fennerty pointed out that the U.S. and Bahrain already had a BIT before negotiating the FTA. A further advantage of including investment as a chapter in an FTA, Fennerty added, is that the U.S. Congress either approves or rejects the agreement in whole. Al-Ghanim complained that Kuwait,s investments in the U.S. are highly taxed, and Abdulkarim raised the issue of double taxation. (Note. The U.S. and Kuwait do not have tax treaty. End Note) Fennerty said that these would not be part of an FTA, but would have to be covered under a separate treaty negotiated by the Treasury Department. Abdulkarim asked if Fennerty could convey the GOK,s desire for such a treaty. Environment -------------- ¶23. (SBU) Fennerty explained that environment is one of two FTA chapters mandated by Congress (labor is the other),with the core principle being high-level environmental protection. Shaker Madi from the Environment Public Authority, who is acting as the GOK's lead on environment, told Fennerty that he met with USTR's Jennifer Prescott in November in Geneva, and passed her documents on Kuwait's environmental regulations. Fennerty provided Madi with additional written questions from Prescott, noting that our impression is that, although Kuwait has some environmental laws in place, it is in the early stages of developing implementing regulations. Madi disputed this, saying that environmental standards are guaranteed by Kuwait,s Environment Council, and asserting that inspectors are authorized to issue violations and shut down facilities. Fennerty asked if Madi could provide him with the technical regulations, which Madi said were available on EPA,s website. (Note. Only the agency's lengthy 2001 by-laws, which include environmental regulations, are posted at www.epa.org.kw. End Note.) ¶24. (SBU) Madi outlined Kuwait,s history of cooperative work with U.S. environmental agencies and individuals, and Fennerty suggested that these contacts be expanded. He also said that the experts should try to identify specific areas in which the U.S. could provide technical assistance (fisheries development, for example). Fennerty cautioned, though, that it would be important for the GOK to prioritize where it would like assistance to be targeted. Fennerty concluded by saying that Prescott is ready to continue her dialogue with Kuwait's environmental experts, and said the U.S. was prepared to pay for two Kuwaitis to attend environmental workshops in the U.S. Al-Ghanim asked Fennerty to provide him with more information on the workshop. Labor -------------- ¶25. (SBU) Fennerty opened by noting that there is significant U.S. domestic interest in labor, a sensitive and Congressionally mandated chapter of the FTA. Before any FTA is submitted to Congress, Fennerty explained, Kuwait would need to demonstrate that implementation of its labor laws was underway and these laws were consistent with ILO provisions. Adnan Al-Omar from the Ministry of Social Affairs and Labor said that a draft labor law that would increase labor protections and result in ratification of ILO conventions was currently with the National Assembly. (Note. At the May 2004 TIFA Council meeting in Washington, Al-Omar vigorously asserted -- incorrectly -- that Kuwait had ratified all ILO conventions. End Note.) Fennerty asked if the new labor law included protection for foreign laborers, which Al-Omar confirmed. He guessed that the legislation might be passed in September or October, but not during the National Assembly's current session. He added that he would be meeting with the Minister of Social Affairs and Labor after his meeting with Fennerty, and would use the TIFA meeting to prod the minister to encourage the National Assembly to act. ¶26. (SBU) Fennerty asked if child camel jockeys were a problem in Kuwait. Al-Omar played down the extent of the problem, saying that Kuwait was only "at 10% of the level of the UAE," and claimed that violators of the Council of Ministers decree prohibiting child jockeys were currently being prosecuted. Fennerty then inquired about the right to strike, which Al-Omar said is permitted (both for Kuwaitis and foreign nationals). Al-Omar acknowledged that foreign workers do not have the right to be officers in unions, contending that foreign workers' lack of connections in Kuwaiti society would render them unable to solve problems even if they were elected. Fennerty asked if the government may dissolve unions; Al-Omar said it may do so through the courts for reasons of national security or national interest. Views from the Private Sector -------------- ¶27. (SBU) Salah Al-Marzouk, a member of the Kuwait Chamber of Commerce and Industry's (KCCI) board of directors, offered a view from the private sector. According to Al-Marzouk, Kuwait's economy was opening up substantially as a result of the GOK's initiatives. He noted that the GOK had decided to provide visas on arrival for some nationalities, and said that a number of draft laws had been submitted to the National Assembly to liberalize the economy. He said that KCCI had held a fruitful discussion with the National Assembly,s Economic and Finance Committee about the draft tax law, which will revise Kuwait's 1955 tax law that imposes a 55 percent tax on foreign corporations' profits. According to Al-Marzouk, although the GOK "never imposes the 55 percent tax obligation on foreign corporations," KCCI has asked the Prime Minister to suspend the 1955 law until a new one is passed. ¶28. (SBU) Fennerty asked about the draft tax law,s provisions. Al-Marzouk said that it would provide for a 10-15 percent corporate tax rate and would offer a tax holiday. He said that KCCI would like involve the private sector more in economic reform. He noted that the stock exchange has been booming, with $26 billion in total market capitalization. He also pointed out that KCCI has been receiving trade and investment delegations from all over the world. Fennerty said that the U.S. consults regularly with the private sector, and would encourage KCCI to keep in touch with U.S. companies. He cited the Pepsico tax dispute (ref E) as a classic case that discourages U.S. businesses from working in Kuwait. According to Al-Marzouk, the Prime Minister has promised that this case would be solved. ¶29. (SBU) Fennerty asked for an overview of key changes in the draft commercial law. Al-Marzouk said that the goal is to facilitate investment and give investors more flexibility. Al-Ghanim added that this legislation, which is already with the National Assembly, will be similar to the foreign investment law. Fennerty asked when it would be passed; Al-Marouk said it would not be debated until after the women's rights issue is resolved. ¶30. (SBU) Fennerty then outlined the six core FTA provisions regarding investment: 1) respect for national treatment requirements; 2) no performance requirements; 3) guarantees that companies may choose their top management (from among all nationalities); 4) compensation for expropriation; 5) no delays in transferring profits out of the country; and 6) resolution of disputes through international arbitration. Regarding the final point, Al-Marzouk said it would depend on the magnitude of the dispute. He claimed that Kuwait,s arbitration center has a clean record going back more than 40 years, and that discretion is given to companies to choose the route of dispute resolution. Participants -------------- ¶31. (U) Ministry of Commerce: Hamad Al-Ghanim (chair),Asst. U/S for Foreign Trade; Khaled Al-Azemi, Foreign Relations Controller; Nefal Al-Doeseri, International Organizations Director; Faiez Al-Saiegh, Insurance Department Director; Nasser Al-Mubarak, Patents and Trademarks Director Ministry of Communications: Hamad Khajah, U/S Public Authority for Industry: Khaled Al-Fahad, Standards and Metrology, Director Public Authority for Agriculture Affairs and Fish Resources: Ahmed Al-Ogab, Asst U/S Kuwait Chamber of Commerce and Industry: Salah Marzouk, Board Member Ministry of Information: Khaled Al-Hendi, IPR Committee Chief Ministry of Finance: Ishaq Abdulkarim, International Economic Cooperation Director Central Bank of Kuwait: Basel Al-Haroon, Offsite Supervision Department Manager Environment Public Authority: Shaker Madi, Information Systems Center Director Ministry of Social Affairs and Labor: Adnan Al-Omar, Assistant U/S ¶32. (U) USTR's John Fennerty cleared this cable. LEBARON

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