MOZAMBIQUE: RESPONSE ON WTO SERVICE NEGOTIATIONS

UNCLAS MAPUTO 001315 SIPDIS STATE FOR AF/S - HTREGER AND AB/TPP/MTA NISSEN USTR FOR AHORAN, CBLISS AND PCOLEMAN COMMERCE FOR KBOYD E.O. 12958: N/A TAGS: ECON ETRD MZ SUBJECT: MOZAMBIQUE: RESPONSE ON WTO SERVICE NEGOTIATIONS INFORMATION REQUEST REF: STATE 176381 ¶1. (U) On October 6, Emboff discussed Mozambique's stance on WTO service negotiations with Ministry of Industry and Commerce National Director Luis Sitoe. Sitoe informed that Mozambique has not stated that its submission of a revised services offer is linked to negotiations of other aspects of the Doha Round, such as agriculture or non-agricultural market access. Sitoe stated that Mozambique would be prepared to table offers in services while awaiting movement in other areas. Mozambique's only significant commitment at present is in the banking sector, which was made some years ago. ¶2. (U) Sitoe stated that relevant ministries (i.e. Tourism, Agriculture, Public Works, Health, Transport, Communications, etc.) will play a key role in decisions on service negotiations, as will the remaining major parastatals, including those operating in the airline, airport, rail, port, and fixed line communication sectors. According to Sitoe, all interested parties would have to agree to offers in their respective area before they could be offered up in the WTO. The legislature would not play a significant role. ¶3. (SBU) There is a significant constituency within the ruling Frelimo party that believes the remaining parastatals should remain at least under partial state control, even if some limited private management or concessioning is allowed. Tourism and construction are already fairly open to private ownership and control, while the health sector remains a mixed system with much of the private provisions delivered or owned by individuals with close connections to the Ministry of Health. ¶4. (SBU) Comment: The parastatals are not likely to retreat quietly from the service sector in Mozambique, and some have considerable political influence, particularly those operating in the port, rail, airline and energy sectors. The political establishment guards its privileges carefully, sometimes implementing measures that can serve to impede investment (e.g. making it difficult for qualified outsiders, whether foreign or Mozambican, to get licenses in sensitive areas). Further complicating the issue, the GRM has paid little attention to the services question in preparation for Hong Kong, as it has yet to fully understand what advantages can be gained by making services offers. A convincing argument will need to be made as to the benefits of trade in services, if we hope to engage Mozambique in this area. DUDLEY