COMMERCE MINISTER ON TIFA PROGRESS, ECONOMIC

UNCLAS SECTION 01 OF 02 KUWAIT 004185

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E.O. 12958: N/A
TAGS: ETRD ECON KIPR PREL KU
SUBJECT: COMMERCE MINISTER ON TIFA PROGRESS, ECONOMIC
REFORM PRIORITIES, AND SAUDI WTO ACCESSION

This cable is sensitive but unclassified; please protect
accordingly. Not for Internet distribution.


1. (SBU) Summary and Comment: During a September 24 meeting,
Commerce Minister Abdullah Al-Taweel told the Ambassador that
Kuwait would like another TIFA Council Meeting, and that the
U.S. "must understand that changing laws in Kuwait takes
time." He said that he would soon be sending a letter to
USTR Portman outlining where he sees the current status of
the TIFA/FTA negotiations. He said that economic reform and
trade are top priorities of the GOK and that the Prime
Minister would focus on these issues in his speech at the
opening session of the National Assembly in October. The
Commerce Ministry's particular focus would be on trade with
Iran, Iraq and the rest of the GCC, and on moving forward
with new legislation on privatization, taxation and copyright
protection. Al-Taweel said that Saudi Arabia's imminent
accession to the WTO would be a positive force in Saudi
Arabia and the region, adding that "the Saudis will listen
more to the WTO than to the GCC."


2. (SBU) Comment: Al-Taweel was clearly frustrated but
resigned to the lack of progress towards an FTA. While it is
true that changes must be made to certain laws in order for
Kuwait to qualify for an FTA, if a second TIFA Council
Meeting were to be held in the near future it would go far to
encourage people like Al-Taweel and others who have pushed
hard to make progress on the many issues within the
TIFA-to-FTA negotiations. Given the generous support from
Kuwait for the U.S. forces in Iraq and the large contribution
for Katrina aid, post believes scheduling a TIFA Council
meeting would be a very useful signal at this time. We have
also seen new energy in IPR protection and progress on other
U.S. trade objectives. This progress, and those in the GOK
who are pushing for it, deserve and need recognition and
support as they push for more economic reforms. End Summary
and Comment.

Go Ahead, Grill Me
--------------


3. (SBU) Ambassador met September 24 with Minister of
Commerce Abdullah Al-Taweel in order to catch up with the
Minister on various trade and economic reform issues. Also
attending the meeting were Undersecretary Rasheed
Al-Tabtabaei, Assistant Undersecretary for Foreign Trade
Affairs Hamad Al-Ghanim, Embassy Commercial Attache and Econ
Officer. (The Minister's thoughts on political reform and
democratization in Kuwait are reported by septel.) Asked
about the possibility of being grilled in the upcoming
National Assembly session, Al-Taweel said that "the MPs are
ready (to grill him),but they don't know why." Shrugging it
off as just politics, he added that "it was (originally)
about high prices, and now they are widening the scope." He
then listed a number of other ministers who are likely to be
grilled in the upcoming legislative session, indicating that
all face the same difficulties from a contentious parliament.

Looking for FTA Progress
--------------


4. (SBU) The Minister did not mince words on his frustration
with the slow pace of the FTA process. He said that "the
U.S. must understand that changing laws in Kuwait takes
time," and that he believed that otherwise, Kuwait had made
significant progress on the important issues within the Trade
and Investment Framework Agreement (TIFA). He asked for
another TIFA Council Meeting to be held, "the sooner the
better." He added that he would soon be sending a letter to
U.S. Trade Representative Portman detailing where he sees the
current status of the FTA negotiations and outlining the
progress that Kuwait has made. He welcomed the new USTR team
and looked forward to renewing the engagement on progress
towards an FTA.


5. (SBU) Comparing the U.S. - Kuwait FTA negotiations to the
GOK's current FTA negotiations with Singapore, Al-Taweel said
that the Singapore FTA was "almost ready" and might be
finalized soon. "They are tougher than you," he added, "but
they listen to us." He said that the Singapore FTA was the
only one besides the one with the U.S. that Kuwait was
negotiating bilaterally, and that other FTAs, with China and
Europe, were being negotiated through the GCC. Commenting on
the slow process of GCC FTA discussions, Al-Taweel said "we
don't mind the negotiations, but we do mind the delays,"
referring to the stately pace of GCC group decision-making.


6. (SBU) Al-Taweel provided specific information on a number
of issues that fall under the U.S. - Kuwait TIFA/FTA
negotiations. He said that the copyright law was being
worked on, and that he was coordinating closely with the
Minister of Information to bring all of the IPR protection
and enforcement functions within the Ministry of Commerce.
He expected the end result to be a consolidated IPR group
within his ministry. Al-Taweel said he was still looking for
a new leader for the Foreign Investment Office (FIO) and
hoped to make the office a separate entity outside of the
Ministry. He expressed fears that some MPs would restrict
his reorganization of the FIO with unnecessary amendments
should he try to reorganize it through a law, but seemed
determined to move ahead with creating a useful, functioning
office. He expected the recently reactivated Offset Program
to be split off from the Finance Ministry and set up as a
separate entity as well, noting that the World Bank had found
that the program was useful but poorly managed. Finally,
Al-Taweel said that the International Certification
Conformity Program (ICCP) would be canceled completely in
March 2006, and that he would mention this in his letter to
USTR Portman.

Economic Reform and Trade as the Top GOK Priority
-------------- --------------


7. (SBU) Al-Taweel said that economic reform and trade had
become a top priority for the GOK, and that the Prime
Minister would focus his speech on these subjects when he
opened the next National Assembly session in October.
Al-Taweel explained that his office was helping to draft the
speech, and it would include a push for a positive vote on
the northern oilfields renovation project, as well as
movement on privatization and taxation laws. "The speech
will focus on (the) delays," he added.


8. (SBU) Trade with Iran, Iraq, and the rest of the GCC
would be the top trade priorities over the next year,
according to Al-Taweel, and he looked forward to a meeting of
GCC trade ministers in November. He also said that he would
be traveling to Amman in a few days for an Arab trade
ministers meeting to prepare for the WTO meeting in December.

Thoughts on Saudi WTO Accession
--------------


9. (SBU) Assistant Undersecretary Al-Ghanim asked the
Ambassador about the recent news concerning Saudi Arabia's
WTO accession, to which the Ambassador explained that
progress Saudi Arabia has made in its WTO accession will
prepare them for a possible FTA. The Minister said that it
was better to have Saudi Arabia be within the WTO than
outside of it. He concluded that Saudi Arabia's imminent
accession to the WTO would be a positive force in Saudi
Arabia and the region, adding that "the Saudis will listen
more to the WTO than to the GCC."

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