COMMERCE U/S ON FTA, TRADE ISSUES (C-NE4-01168)

UNCLAS SECTION 01 OF 03 MUSCAT 000210

SIPDIS

SENSITIVE

STATE FOR EB/TPP, NEA/ARPI
STATE PASS TO USTR/JBUNTIN AND JFENNERTY
USDOC FOR 4250/ITA/MAC/AMESA/OME/MTALAAT

E.O. 12958: N/A
TAGS: ETRD EINV ECON KIPR TBIO PINR MU
SUBJECT: COMMERCE U/S ON FTA, TRADE ISSUES (C-NE4-01168)

REF: A. MUSCAT 142

B. MUSCAT 165

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Summary
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1. (SBU) In a February 5 introductory call by the Ambassador,
new Ministry of Commerce and Industry Under Secretary Ahmed
al-Dheeb offered an optimistic outlook on impending
U.S.-Omani Free Trade Agreement talks. Noting that labor
issues under the FTA will require some work, he likewise laid
down a marker for special consideration on rules of origin in
light of the importance of Oman's industrial sector.
Al-Dheeb described developments in several key sectors,
including port development and tourism. The Ambassador
raised a possible IPR violation involving a Viagra knock-off,
and expressed hope that Bechtel will win a tender to
construct an aluminum smelter in Sohar. Al-Dheeb sought the
Embassy's help in attracting to Oman any U.S. firms seeking
to depart Saudi Arabia. He shared some of his biographic
background. End summary.


2. (SBU) On February 5, the Ambassador paid an introductory
call on Ministry of Commerce and Industry (MOCI) Under
Secretary Ahmed bin Hassan al-Dheeb. Al-Dheeb was appointed

SIPDIS
to the position by Sultan Qaboos on January 3 to fill the
vacancy left when Ali al-Sunaidi became the new Minister of
Sports Affairs. Al-Dheeb previously served as CEO of the
Public Establishment for Industrial Estates (PEIE) -- see
biographic details in paras 9-10.

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FTA: Labor, Rules of Origin
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3. (SBU) Al-Dheeb quickly underscored to the Ambassador how
keen MOCI is to sign a Free Trade Agreement (FTA) with the
U.S. While the Minister, Maqbool Sultan, will lead the
negotiations from the Omani side, al-Dheeb said he would be
playing a supporting role. One of the Under Secretary's
first meetings after being transferred to MOCI was with
Assistant U.S. Trade Representative for Labor, William
Clatanoff (ref A). Al-Dheeb said MOCI's expectations right
now are that the FTA negotiations should proceed fairly
smoothly, although there are some issues on labor and some
other matters that will require work. He felt AUSTR
Clatanoff had expressed good ideas in their January meeting,
and said that as long as Oman's FTA labor text remained close
to Bahrain and Jordan FTA's, "we should be OK." He asked
that we bear in mind that, particularly when housing,
transportation and other benefits are added to salaries,
Oman's expatriate workforce is significantly better
compensated than expat labor elsewhere in the region.


4. (SBU) Perhaps reflecting his industrial background,
al-Dheeb indicated that rules of origin issues will be a
vital concern from Oman's viewpoint. Noting that Bahrain's
economy is more service-oriented and less industrial than
Oman's, he envisions seeking adjustments to the Bahrain FTA
text to provide Oman with a more liberal calculation of what
constitutes local content in manufactured goods. Overall,
the Under Secretary sought the Ambassador's views on whether
a U.S.-Oman FTA will in fact be signed. The Ambassador noted
the positive statements during their recent visits to Oman of
Deputy Secretary (and former US Trade Representative) Robert
Zoellick and House Ways and Means Committee Chairman Bill
Thomas as solid indications of the USG's serious intent to
achieve an FTA with Oman in an expedited manner.

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IPR Issues, Pharmaceuticals
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5. (U) Asked for his assessment on intellectual property
rights protections in Oman, al-Dheeb acknowledged that there
are always some minor violations but that, overall, IPR
protections in Oman compare favorably in his view with those
in some of the U.S.'s other FTA partners. The Ambassador
then took the opportunity to broach a potential problem
concerning a drug produced and marketed in Oman under the
name "Aladin." A representative of the Pharmaceutical
Research and Manufacturers of America (PhRMA) had notified
the Embassy February 2 that "Aladin" violated Phizer's Viagra
patent. The manufacturer of "Aladin," the National
Pharmaceutical Industries Co. (NPI),is partly owned by the
Omani Ministry of Health. Al-Dheeb was unfamiliar with
"Aladin," but as a former director of the Rusayl Industrial
Estate where NPI is located, he said he was quite familiar
with the company. He asked that the Embassy provide him with
all of the pertinent details as to why PhRMA believes this to
be an IPR violation. Al-Dheeb assured the Ambassador that
MOCI and the Ministry of Health would take prompt action
against NPI to take "Aladin" off the market should PhRMA's
complaint prove legitimate.

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Port Development
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6. (SBU) Recalling his upbringing in the southern Omani port
city of Salalah, al-Dheeb remarked on the rapid growth of
that and other ports in the Sultanate. He expects the
long-awaited Salalah Free Trade Zone to finally start
operations within the next 18 months, and extolled its great
potential for warehousing. He was not certain, however, that
the port itself could be much increased beyond the current
expansion project that will add 2 berths and extend the
breakwater. He also indicated that another long-simmering
project, the development of a dry dock and commercial port in
the remote Central Omani port of Duqm, would also soon be
getting underway. He indicated that Duqm was well placed to
build up Oman's fishing industry and exploit mineral deposits
for processing (limestone, cement) or export. The Ambassador
brought to al-Dheeb's attention an investment dispute still
working its way through the Omani courts involving a joint
U.S.-Omani shrimp farm investment that had been displaced
from Duqm by the port project.


7. (SBU) The Ambassador turned the conversation to the Sohar
Industrial Port, which is rapidly growing based on gas-fed
industries including a USD 3 billion investment from American
chemical giant Dow. Al-Dheeb emphasized the Sultanate's plan
to spread economic development as broadly among the nation's
eight regions as possible. The country's five most
significant current or planned ports (Muscat, Sohar, Salalah,
Sur and Duqm) are each located in a separate region.
Obviously, he said, the gas-based industry in Sohar is
currently the most prospective, with massive foreign and
state investment pouring in. In that vein, the Ambassador
noted U.S. firm Bechtel's strong bid for the aluminum smelter
contract in Sohar, and hoped a favorable decision from the
Tender Board would add yet another significant U.S.
investment to the Omani economy. Al-Dheeb in turn asked for
the Embassy's assistance in steering toward Oman any U.S.
firms that may be seeking to relocate from Saudi Arabia.

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Tourism
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8. (U) The Under Secretary feels the tourism industry in Oman
is still a few years away from really taking off. He said
the government is working hard to complete a number of road
and other infrastructure projects in the next 2-3 years that
will give visitors much more than merely nice hotels to enjoy
during their stays. He pointed to recently completed road
projects along the scenic coast between Quriyat and Sur, and
into the idyllic valley oasis of Wadi Bani Khalid. The
massive 3-hotel Shangri La resort complex just south of
Muscat will add 450 hotel rooms by the end of the year. The
Ambassador apprised the Under Secretary of the Smithsonian
Institution's annual Folklife Festival on the Washington
Capital Mall, which this summer will make Oman the first Arab
country to be individually featured. Al-Dheeb acknowledged
he had heard about it, and agreed that the millions of
expected visitors will give Oman an unprecedented chance to
market itself as a tourist destination and trade partner.

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Biographic Notes
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9. (SBU) Ahmed bin Hassan bin Alawi al-Dheeb Ba-Umar
originally hails from Salalah, capital of the southern Dhofar
Governorate. (Note: Of cabinet members, only the Foreign
Minister and Minister of Regional Municipalities join the
Sultan as native Dhofaris. End note.) Born in 1964, he is
currently married and has four sons and one daughter. He
resides in the Muscat suburb of al-Khuwayr, near the U.S.
Embassy. Al-Dheeb received his B.Sc. in Industrial
Engineering from the University of Miami (Florida) in 1989,
and his MA in Industrial Development from the University of
East Anglia (UK) in 1993. He began his employment at the
Rusayl Industrial Estate (in Muscat) in 1989 as an industrial
engineer before becoming director of the RIE Technical
Department in 1992 and finally Director of RIE from 1993-96.
In 1996, al-Dheeb was promoted to Managing Director of the
Public Establishment for Industrial Estates, and served as
PEIE Executive President from 1997-2005. He has attended
numerous training programs and workshops in Europe and Asia.
Of his new duties, al-Dheeb said he finds them to be very
similar to his experience at PEIE. He noted inheriting a
number of committee assignments from his predecessor,
including the chair of the "Omani-American Joint Commission"
(which, from his explanation, we believe he means the Trade
and Investment Framework Agreement (TIFA) Council although he
could be referring to the long-defunct, USAID-funded
development program of the identical name).


10. (SBU) Al-Dheeb has excellent English language skills, and
retains a strong fondness for Miami despite not having been
back there since 1989. He claims to follow avidly the Miami
Dolphins football team. Al-Dheeb recounts with humor the
trouble he had in Florida of not speaking Spanish, since many
people assumed him to be Hispanic from his complexion. He
also liked to show off by climbing coconut trees in Miami,
the same way he routinely climbed them in his native Dhofar.
Al-Dheeb's last visit to the U.S. was in 1996, when he
attended a one-week seminar on small and medium enterprise
development that took place in the World Trade Center in New
York City. He remembers being shocked at the fast pace of
New Yorkers, but said by his third day he found himself
walking fast like everyone else.
BALTIMORE