NIGERIA: COMMERCE MINISTER SPEAKS ON U.S. RELATIONSHIP

UNCLAS SECTION 01 OF 02 ABUJA 002593 SIPDIS SIPDIS SENSITIVE DEPARTMENT PASS TO USTR-AGAMA, EXIM-JRICHTER, TDA-EEBONG TREASURY FOR PETERS AND HALL DOC FOR 3317/ITA/OA/KBURRESS, 3130/USFC/OIO/ANESA/ DHARRIS, AND USPTO - JKOEPPEN AND PSALMON DOJ FOR MKOUAME DOE FOR CGAY AND GPERSON DOT FOR MARAD E.O. 12958: N/A TAGS: ETRD ECON EFIN EINV NI SUBJECT: NIGERIA: COMMERCE MINISTER SPEAKS ON U.S. RELATIONSHIP REF: A. ABUJA 2403 ¶B. ABUJA 2178 SENSITIVE BUT UNCLASSIFIED - HANDLE ACCORDINGLY ¶1. (SBU) Summary. In a meeting prior to the December 11 Trade and Investment Framework Agreement (TIFA) Council meeting, the Minister of Commerce and Industry Charles Ugwuh expressed appreciation for AGOA and contrasted USG understanding of what countries like Nigeria need to expand trade relative to the position taken by the EU in EPA talks. He noted that the GON would not be signing an EPA by the end of 2007. In response to concerns expressed by AUSTR Liser about GON import bans and high tariffs, the Minister noted that it was "premature" to discuss their removal given limited agricultural and manufacturing capacity. He highlighted new medium term industrial policy to develop clusters of small enterprises. He also pushed for more U.S. investments in Nigeria especially in petrochemicals and infrastructure. Ugwuh did not commit to when the GON would fully implement the Economic Community of West African States (ECOWAS) Common External Tariff (CET) scheme. End Summary. ¶2. (SBU) On December 10, Florizelle Liser, Assistant United States Trade Representative for Africa met with Charles Ugwuh, Minister for Commerce and Industry, as a prelude to the 5th U.S. - Nigeria TIFA Council meetings held in Abuja on December 11. Liser brought up U.S. concerns regarding Nigeria's trade policy regime. She specifically mentioned conflicting signals from Nigeria about removing import bans by January 2008; high tariffs; and aligning Nigeria's tariffs with the ECOWAS CET by the end of 2007. . MINISTER RESPONDS -------------- . ¶3. (SBU) Ugwuh said the GON is working on solving the problems facing Nigeria's industrial sector. He said that though he does not support the bans, it might be too early to remove them if the GON's plan to improve the industrial sector is yet to yield the expected dividends. ¶4. (SBU) On tariffs, Ugwuh said he expects no immediate movement. He informed us that he is willing to assist on specific issues of concern to the U.S. whenever such issues are brought to his notice but import bans and tariffs are right now "political landmines" that he is not willing to touch. ¶5. (SBU) Ugwuh reiterated the GON desire to diversify its economy and requested AUSTR Liser's help in convincing U.S. oil companies such as ExxonMobil and Chevron to invest in Nigeria's downstream oil and gas sector. He said he wants investment in petrochemicals, and sees no reason why U.S. oil majors have been reluctant. . MANUFACTURERS AGAINST TRADE LIBERALIZATION -------------- . ¶6. (SBU) In a side meeting following the meeting with the Minister, Ochi Achinivu, Director of Trade at the Ministry, reported that the minister had made a presentation to the cabinet on the negative signals Nigeria's import bans and high tariffs send to Nigeria's trading partners. He commented that lobbying from the Manufacturers Association of Nigeria (MAN) has made it difficult for the GON to remove trade bans and high tariffs. (NOTE: Ugwuh was the immediate past president of MAN. END NOTE) COMMITTEE INVESTING TRADE IMPACT -------------- ¶7. (SBU) Embassy contacts tell us that the GON is unable to make any commitment on tariffs and import bans because a team is investigating the use of waivers, concessions, tariff exemptions, trade incentives, execution of the Export Processing Zones, exemptions under customs and excise tariffs, existing incentives such as the Export Expansion Grant (EEG),ECOWAS Trade Liberalization Scheme (ETLS),the Manufacturers Export In-Bond Scheme (MEIBS),and the impact of the CET on the fiscal policy objectives of the GON. The team was assembled in September and is expected to come up with their findings by the end of 2007. It is ABUJA 00002593 002 OF 002 unlikely that the GON will take steps to remove import bans and lower tariffs until the report is concluded. COMMENT -------------- . ¶8. (SBU) Ugwuh was the immediate past president of MAN and appears to lack the political gravitas to win the battle against his primary constituency. His knowledge of TIFA details appeared sparse considering the TIFA Council meeting was scheduled the following day. He noted concerns that he might not be available to host the Council meeting because of possible travel to the U.S. with President Yar'adua. (NOTE: The Minister did not travel with the President and was in Abuja on the day of the Council meeting. END NOTE). SANDERS