U.S. - MOZAMBIQUE TIFA TALKS

UNCLAS SECTION 01 OF 02 MAPUTO 001332

SIPDIS
SENSITIVE
STATE FOR AF/S - TREGER
USDOC FOR KBOYD
USTR FOR PCOLEMAN AND FLISER
E.O. 12958: N/A
TAGS: ECON EINV ETRD EAID MZ TIFA
SUBJECT: U.S. - MOZAMBIQUE TIFA TALKS


1. (U) Summary: Assistant United States Trade Representative
Florizelle Liser led an interagency visit to Mozambique
October 1 to October 5. During the visit, the delegation met
with government officials to conduct bilateral consultative
talks under the Trade and Investment Framework Agreement
(TIFA),discussed opportunities under AGOA with
representatives from the business community, held a joint
press conference with the Minister of Industry and Commerce,
and heard from the private sector on intellectual property
rights protection in Mozambique. The delegation included
USTR Director for African Affairs Patrick Coleman, Department
of Commerce Director for Africa Kevin Boyd, and U.S. Trade
and Development Agency Manager for Sub-Sahara Africa Doug
Shuster. AUSTR Liser discussed the opportunities for an
expanded trading relationship between the U.S. and Mozambique
and encouraged Mozambique to continue work on improving the
business environment. A draft work plan for the TIFA was
agreed upon. A senior Ministry official asked the USG to
consider Mozambique as an FTA partner and expressed a strong
interest in pursuing an FTA in 2006. End Summary.


2. (U) On October 3 AUSTR Liser and Mozambique,s Minister of
Industry and Commerce Antonio Fernando led bilateral
discussions on strengthening cooperation between the United
States and Mozambique on trade and investment issues. Talks
focused on identifying priority areas to be addressed under
the TIFA signed between the United States and Mozambique in
June 2005. AUSTR Liser also took the opportunity to
encourage the GRM to take a more active role in Doha,
stressing the need for Sub-Saharan Africa to make its voice
heard in the WTO. Minister Fernando was appreciative of the
support that the USG has provided in trade capacity building
to date, and stated he looked forward to working with the
U.S. to help improve the business environment in Mozambique -
one of six goals he has set out for his ministry. The goal
of improving Mozambique,s business climate was echoed during
discussions later in the day with the Integrated Framework
Committee, a cross-functional group made up of ministry
officials, civil society, donors and the private sector to
look at key trade issues. During an afternoon press
conference, both Liser and Fernando underscored Mozambique,s
significant bilateral trade potential with the United States
(Note: Trade between the two countries reached only USD 87.2
million in 2004, and Mozambican exports to the U.S. accounted
for only one percent of Mozambique,s total exports. End
note). Fernando also stressed the need for Mozambique to
improve its trade stance by increasing the competitiveness of
its products.


3. (U) During a roundtable discussion on AGOA, AUSTR Liser
heard from Mozambican entrepreneurs in the seafood,
handicrafts, and garment sectors on the challenges businesses
face in exporting products to the United States under AGOA,
which include poor infrastructure, limited access to credit,
and high labor costs. Garment manufacturer Alibhai Dassat
described how he was forced to close his factory due to high
labor and transportation costs in the face of increased
competition from low-priced Asian producers. Others
explained that limited access to credit severely constrained
their ability to expand and export more under AGOA. On
October 5 members of the delegation also heard from
representatives of Unilever, Colgate-Palmolive, British
American Tobacco, and Nestle on GRM efforts to improve
intellectual property rights protection (IPR) in Mozambique.
The group stated that the GRM had recently established the
Intellectual Property Institute (IPI) and was working with
the private sector to create a cross-functional taskforce to
deal with IPR issues. The taskforce is composed of
representatives from the Ministry of Industry and Commerce,
Ministry of Finance, Ministry of Interior, Ministry of
Justice, Trade Marks Office, a private law firm, and the
private sector.


4. (SBU) On October 5 Coleman and Boyd met with a
multi-sectoral GRM team, which included a private sector
representative, to discuss in detail the TIFA draft work
plan. The draft work plan was jointly developed and will now
be taken to the respective government officials for final
approval. Priority areas agreed upon under the draft plan
included improving customs procedures, trade and investment
facilitation, AGOA implementation, agricultural trade support
infrastructure, technical regulations, and commercial law
legislation. In addition, strengthening of the financial
sector and improving access to trade finance, including
promotion, protection and regulation of investment were
agreed upon priorities. At the GRM,s request, transport was
added to the list of areas to be covered in TIFA discussions.


5. (SBU) Coleman also briefed the GRM on requirements for a
future Free Trade Agreement (FTA) between the U.S. and
Mozambique. Coleman noted that FTAs with the U.S. were
extremely comprehensive, warning that they can be time
consuming and difficult to negotiate. Ministry of Industry
and Commerce National Director Luis Sitoe expressed a strong
interest in pursuing an FTA with the United States in 2006.
Although he acknowledged that the MIC had no mandate to
negotiate an agreement at this time, he asked the United
States to consider Mozambique as an FTA partner, and he
wanted to learn more about the process. (Note: Coleman
cautioned that many countries were currently "in line" for
FTAs, and that it was not likely one could be negotiated
between the U.S. and Mozambique until after the U.S. FTA with
the Southern African Customs Union was completed. End note.)
Sitoe also asked USTR to consider providing technical
assistance to the GRM in trade negotiation, admitting that
the GRM did not have experience negotiating in key areas such
as services and government procurement.


6. (U) Comment: This USTR-led interagency visit reinforced
the positive and supportive USG stance towards Mozambique.
In her meetings AUSTR Liser repeatedly expressed her
satisfaction with recent progress on strengthening the
U.S.-Mozambique trade and investment relationship, as
evidenced by Mozambique,s ratification of the Bilateral
Investment Treaty (BIT) and signing of the TIFA. The visit
also provided a valuable opportunity for Liser to stress
first-hand to senior GRM officials and the private sector the
important work that is still to be done in making Mozambique
a more competitive business environment and a higher profile
destination for foreign investment. End Comment.


7. (U) This message was cleared by USTR.
DUDLEY