OPEN SKIES: ALGERIA OFFERS REDUCED WEIGHT ON

UNCLAS ALGIERS 000887

SIPDIS

SENSITIVE
SIPDIS

STATE FOR EB/TRA

E.O. 12958: N/A
TAGS: EAIR ETRA EBEXP KTIA ECON AG
SUBJECT: OPEN SKIES: ALGERIA OFFERS REDUCED WEIGHT ON
POSTAL RESTRICTIONS BY 2008, TRANSITION PERIOD UPON
SIGNATURE, WRITTEN ACCEPTANCE OF U.S. LANGUAGE ON EXCHANGE
RATES

REF: A. STATE 67681


B. ALGERIA MAY 8 DIPLOMATIC NOTE 305

C. ALGIERS 801


1. (SBU) Embassy received May 13 an MFA diplomatic note (Ref
B) providing Algeria's response to our Open Skies proposals
of March 11 concerning exchange rates, intermodal transport,
and transition period start date. The latest proposals
(faxed to NEA/MAG) overtake Ref A instructions, which had not
yet been delivered pending an appointment with the relevant
minister, and may be Algeria's response to Ambassador's
strong "push" (Ref C) with Transport Minister Maghlaoui to
accelerate the pace of the negotiations, in order to allow
for completion by mid-summer at the latest. The latest
proposals would appear to resolve two of the three
outstanding issues in the negotiation and signal potentially
important movement on the third. Specifically, the GOA has:
1) agreed in writing to accept our Article 8 Para 5 language
on exchange rates; 2) offered to have the five-year
transition period begin upon the signing of the agreement
(i.e., even before ratification, which had been our demand);
and 3) indicated that in 2008 it would lower the weight
definition of a postal letter from 250 grams to 50 grams (1.7
oz).


2. (SBU) While it was implied, the note was not/not explicit
in affirming that following the end of the transition period,
firms would be able to handle intermodal transport without an
Algerian subsidiary. However, Transport Minister Maghlaoui
assured Ambassador May 16 that at the end of the transition
period, firms would be able to provide intermodal services
without using a national subsidiary. Regarding postal
services, Maghlaoui said that the reduction of the weight
definition from 250 grams to 50 grams "in 2008" paralleled
undertakings Algeria had made in the context of WTO accession
talks. MFA Americas Deputy Director separately confirmed to
us May 16, after checking with Transport Ministry Director
General Benchamam, that the definition of "postal
services"(from 250 to 50 grams) would occur automatically on
January 1, 2008 according to executive decree 01-418 of
December 20, 2001 and modified on December 6, 2004 in
executive decree 04-397. For additional information you can
log on to www.joradp.dz.


3. (SBU) In order not to lose momentum, now that the Algerian
side has accepted our wording or better on both exchange
rates and entry into force/transition period, and shown some
"give" on the postal services issue, Embassy recommends we
turn around our response as quickly as possible. We also
recommend consideration of sending an Open Skies team to
close the deal and determine next steps, if the consensus is
that we are now within striking distance and that the Jan. 1,
2008 date for the reduced definition of postal services meets
our minimum needs. (End Summary and Recommendation)


4. (SBU) Begin unofficial translation:

Open Skies Agreement

Response of the Algerian Party to the U.S. Proposals of March
11, 2006

Article 8 paragraph 5 second sentence (transfer of receipt
surplus):
To show goodwill and advance negotiations, the Algerian party
would be willing to accept the proposal of the American side
regarding this point. In return, the Algerian side would
like its concerns over article 8 paragraph 8 be taken into
consideration.

Article 8 paragraph 8 (intermodal transportation):

The Algerian side affirms that it cannot respond favorably to
the American request to exempt American carriers from the
fees required by regulations (reglementation) in force
concerning intermodal transport. Such an exemption could be
interpreted by other foreign carriers as preferential
treatment favoring American companies.



It is worth noting that:

The carrying out of postal services is regulated by the
relevant provisions of Law No. 2000-03 of August 5, 2000,
which sets general rules related to post and
telecommunications, and by implementing regulations, notably
Decree No. 01-418 of December 20, 2001, regarding operating
regulations applied to all postal services.

International express mail is subject to the authorization
regulations. The authorizations are granted by the
regulation authority of Post and Telecommunications (ARPT).
This category of activity is open to competition based on the
conditions set by the aforementioned decree. Currently, four
foreign operators -- namely DHL, UPS, FALCON (FedEx) and
Chronopost -- are providing these services.

The postal category pertaining to letters not weighing over
250 grams is regulated by a requirement of simple
declaration. This weight (ceiling) will be reduced to 50
grams in 2008.

Article 18 and Annex IX (Entry into Force and the
Transition Period):

The Algerian side suggests that the transition period start
upon the date of signature instead of the date of initialing.

End unofficial translation.


ERDMAN