TUNISIA ECONOMIC HIGHLIGHTS: SEPTEMBER 1 - 15

UNCLAS SECTION 01 OF 02 TUNIS 002418

SIPDIS

SENSITIVE
SIPDIS

STATE FOR NEA/MAG (HARRIS) AND EB/CIP
STATE PASS USTR (BELL),USPTO (ADLIN AND ADAMS),USAID
(MCCLOUD)
USDOC FOR ITA/MAC/ONE (ROTH),ADVOCACY CTR (JAMES),AND
CLDP (TEJTEL)
CASABLANCA FOR FCS (ORTIZ)
LONDON AND PARIS FOR NEA WATCHER

E.O. 12958: N/A
TAGS: ECON ETRD ELAB EAIR EINT ECPS KTEX TS
SUBJECT: TUNISIA ECONOMIC HIGHLIGHTS: SEPTEMBER 1 - 15

REF: A. TUNIS 2303


B. TUNIS 1741

C. TUNIS 629


1. (U) This cable contains highlights of recent economic
developments in Tunisia on the following topics:


A. Unemployment Holds Steady at 14.2 Percent

B. Tunisia and Morocco Continue Dialogue on Cooperation

C. Emirates Lands in Tunisia

D. Italy's Benetton Invests in Tunisian Textiles

E. Tunisie Telecom Launches Mobile Internet and Email
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Unemployment Holds Steady at 14.2 Percent
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2. (U) According to the Tunisian Central Bank's (BCT) annual
report, the 2005 unemployment rate remained at 14.2 percent
of the working population, which is 3.4 million workers, for
the second consecutive year. The unemployment rate among
university graduates reached 14.8 percent, up slightly from
14.1 percent in 2004.


3. (SBU) Comment: While the unemployment figures are not
surprising, they remain troubling for the GOT-- especially
when coupled with an overall slowdown in the economy. In
2005, economic growth dropped to 4.2 percent from 5.8
percent in 2004. In spite of the GOT's efforts to spur job
creation, private sector job growth has not increased to
meet the demand. The higher unemployment rate among
university graduates, however slight, is also an acute
concern, which the government says it plans to address by
providing job training for graduates. End Comment.

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Tunisia and Morocco Continue Dialogue on Cooperation
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4. (U) On September 7, Tunisian Prime Minister Ghannouchi
visited Morocco for the 13th meeting of the Moroccan-
Tunisian Joint High Commission. Officials from the two
countries discussed the implementation of previously signed
trade agreements and the acceleration of bilateral trade and
investment. The two parties signed a Memorandum of
Understanding (MOU) targeting increased cooperation and
setting out a number of joint priorities in the mining
sector, which is an important industry in both countries.
The two counties also signed an agreement for reciprocal
recognition of trading standards certificates, in an effort
to eliminate legal issues surrounding bilateral trade and
exchange. Other agreements, covering tourism, poverty
alleviation, and media were also signed. In 2005, trade
between Tunisia and Morocco reached 220 million dinars
(roughly 166 million USD),up from 122 million dinars (90
million USD) in 2000.


5. (SBU) Comment and Background: The talks with Morocco
represent a broader GOT focus on increasing intra-Maghreb
trade. In August, Tunisian officials participated in a
similar series of meetings at the 19th session of the Libyan-
Tunisian Joint High Commission (ref A). Although the
Maghreb countries have signed agreements to allow duty-free
trade in principle, in practice many barriers still remain.
In addition, both Morocco and Tunisia are signatories to the
2004 Agadir agreement, which will create a free trade zone
with Egypt and Jordan but has not been fully implemented.
End Comment and Background.

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Emirates Lands in Tunisia
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6. (U) Dubai-based Emirates airlines announced that it will
begin flights to Tunis on October 29. The company will
serve Tunis five times a week, with several direct flights

TUNIS 00002418 002 OF 002


between Tunis and Dubai and other flights via Tripoli. The
opening of Emirates services in Tunisia is a sign of the
growing bilateral economic interests between Tunisia and the
UAE. (ref B). Earlier this year, a GOT delegation to the
UAE discussed investment opportunities with both corporate
and government entities. The bilateral talks are expected
to facilitate investments by Dubai-based enterprises in the
following sectors: seaports, tourism, communications,
insurance, power generation, water desalination and oil
refining.
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Italy's Benetton invests in Tunisian Textiles
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7. (U) According to local press, the Italian Benetton group
plans to invest 28 million USD in a textile finishing
factory to be built in Sahlin, a city on the Eastern coast
of Tunisia. In addition, the group announced a project in
Kasserine, central-western Tunisia. The project was
presented by Tunisian Minister of Industry, Energy and Small
Business, Afif Chelbi, after a meeting with a delegation of
Benetton managers. Benetton Tunisia is among the most
important groups in the Tunisian textile sector, employing
over 7,000 people and producing nearly 21 million pieces
annually.


8. (SBU) Comment and Background: After the end of the
quotas that existed under the Multifiber Agreement, the
Tunisian textile sector has faced increased competition from
Chinese textiles. In order to promote continued investment
and job creation in textiles, the GOT has granted favorable
tax and customs concessions to foreign investors such as
Benetton. Textile production employs roughly 250,000 people
and, according to official figures for 2005, the textile and
apparel share in total exports is 32.6 percent. End Comment
and Background.

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Tunisie Telecom launches Mobile Internet and Email
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9. (U) Tunisie Telecom (TT) has launched two new services,
internet and e-mail on mobile phones, aimed at increasing
internet penetration in the country. The new services,
which were activated September 1 for all mobile phone
subscribers, are Mobimail, which allows sending and
receiving e-mails through the cell phones, and Mobinet,
which provides full access to the Internet. The phone
company accompanied the launch of the new services with
promotions for free connections until the end of November.


10. (SBU) Comment and Background: The new services highlight
the benefits of increased competition and privatization for
Tunisian consumers (ref C). Prior to the entrance of
Tunisiana, Tunisia's only fully- private cellular operator,
TT had a monopoly in the Tunisian telecom market. Since
entering the market in late 2002, Tunisiana has gained at
least a 40 percent share of the Tunisian market for cellular
phone service based on its lower prices, flexible
subscription plans, and extra services. TT's additional
services and aggressive marketing follow the March 2006
privatization of a 35 percent stake in TT by the UAE
company, TECOM-DIG. The GOT retains a 65 percent stake in
TT. End Comment and Background.
BALLARD