ECONOMIC MINISTER ENDORSES FTA, LOOKS FOR UPSIDE OF DPW

UNCLAS DUBAI 005780

SIPDIS

SENSITIVE
SIPDIS

TREASURY FOR DAS CLAY LOWERY AND OFFICE OF DEPUTY SECRETARY FOR
CATHERINE DOWNARD
STATE PASS USTR FOR AUSTR DONNELLY
STATE FOR E, EB/IFD/OIA, EB/TPP/BTA, NEA/ARP

E.O. 12958: N/A
TAGS: PGOV PREL ECON ECIN ETRD AE
SUBJECT: ECONOMIC MINISTER ENDORSES FTA, LOOKS FOR UPSIDE OF DPW
ISSUE WITH AMERICAN BUSINESS COUNCIL

REF: ABU DHABI 2461


1. (SBU) Summary: Sheikha Lubna Al Qassimi, UAE Minister of
Economy and Planning, spoke to Dubai's American Business Council
(ABC) September 13. In prepared remarks, she affirmed the UAE's
commitment to free trade, and said a bilateral FTA with the US
would benefit both the US and UAE. During the question and
answer session, she said the UAE remains fully committed
economically and politically to close ties with the U.S.,
despite the Dubai Ports World (DPW) episode. Recognizing the
UAE's need to engage and inform both the Congress and US
populace to avoid another DPW, Sheikha Lubna said her efforts to
stress the number of American jobs UAE investment in the United
States positively affects had borne fruit in the Doncasters
deal. She indicated the UAE is focused on investing in the
hi-tech and service industries at home, where she believes the
UAE can have a comparative advantage. Responding to a question,
Sheikha Lubna said the UAE's agency laws would not be addressed
this year, but may be subject to review/revision next year. End
Summary.

2.(SBU) Sheikha Lubna spoke to roughly 100 American business
people in a lunch attended by the Ambassador and Consul General.
She offered a broad outline of the UAE's current economic
situation, and affirmed its commitment to free trade, including
the US FTA negotiations. She said conclusion of an FTA would
benefit both the US and the UAE, noting "FTAs play a positive
role in breaking down protectionist barriers," a UAE goal.

3.(SBU) In response to a question, Sheikha Lubna said "the UAE
remains fully committed economically and politically to the
United States," despite the DPW episode. Sheikha Lubna thanked
American businesses for lobbying in the US on the UAE's behalf
in the DPW case. Citing her personal efforts, Sheikha Lubna
stressed that she hoped to find opportunity in the adversity of
the DPW issue. She underscored the importance of the UAEG
working to share information and engage in outreach to both
Congress, and America's general public, to avoid similar
problems with UAE investment in the US. She said her efforts to
highlight the number of American jobs this investment positively
affects had been particularly effective. Sheikha Lubna pointed
out that the subsequent UAE purchase of the Doncaster's Group's
US holdings had gone smoothly, and expressed hope that greater
dialogue will result in a permanent positive change in US
perceptions of UAE and its commitment to security.

4.(SBU) In a broader discussion of the UAE's economy, Sheikha
Lubna said the country is focused on capital investment in
hi-tech and service industries, where it can have a comparative
advantage. In five years, she believes Dubai's GDP will be most
defined by the service and tourist industries. Regarding UAE
agency laws - a particular bane to the expat business community
-- Sheikha Lubna said that while the agency law has its roots in
a much different UAE economy of the past, it would be unfair and
a mistake to simply wipe out all agency agreements. She
stressed the need to dismantle the agency laws piece by piece,
so UAE entities that have invested significant amounts of money
establishing and promoting the presence of foreign companies
here are not mistreated. She said the legislative committee she
chairs does not plan to do away with agency laws this year, but
may address them next year.


5. (SBU) Comment: Sheikha Lubna's positive remarks demonstrate
the UAE's continued public commitment to the FTA. Privately,
UAE officials also continue to stress the UAE's commitment to an
FTA. They are, however, expressing concern about the very
serious remaining gaps, including in the energy sector and in
labor rights. In June, Sheikha Lubna told the Ambassador that
she was facing increasing local opposition to the FTA in the
wake of the DP World incident (reftel). The UAE is taking some
steps to amend the Agencies law with an eye to making it less
onerous, including requiring mutual consent to renew an
agreement and limiting the agency agreement to the term of the
contract. However, it is still too early to tell whether how
effectively these changes will be implemented in practice. On
September 11, U.S. business representatives told Ambassador and
visiting EB A/S Dan Sullivan that Emiratis still viewed agencies
agreements as "evergreen" (i.e., perpetually renewable). The
press reports that the UAE de registered 720 trade agencies in
the first 8 months of 2006 and that 2349 trade agencies
agreements were renewed during the same period of time.

6.(U) This cable has been cleared by the Ambassador.

SUTPHIN