DEMYSTIFY THE MOROCCO-U.S. FTA TO PROMOTE IT

C O N F I D E N T I A L SECTION 01 OF 02 CASABLANCA 000195

SIPDIS

SIPDIS

STATE PLEASE PASS TO USTR FOR PAUL BURKHEAD

E.O. 12958: DECL: 10/01/2017
TAGS: ECON EINV ETRD EFIN MO

SUBJECT: DEMYSTIFY THE MOROCCO-U.S. FTA TO PROMOTE IT

REF: A. RABAT 1397


B. CASABLANCA 169

Classified By: Principal Officer Douglas Greene for reasons 1.4 (B)
AND (D)


1. (SBU) Summary: The Morocco-U.S. FTA has brought many successful
results, but Moroccan and American companies continue to seek ways to
better understand and take advantage of it. While many Moroccans
remain uncertain of how and if they can benefit from the FTA, many
Americans remain unaware of Morocco and the opportunities it offers.
Further education, resources and support are needed on both sides of
the equation to demystify the FTA, and to enable Moroccan and
American businesses to partner and take full advantage of it. End
Summary.

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MOROCCANS HESITANT, AMERICANS UNAWARE
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2. (SBU) As reported previously (ref A),the Morocco-U.S. Free Trade
Agreement (FTA) has brought many positives, including increased U.S.
investment in Morocco, growth in Moroccan exports to the U.S.
(particularly in textiles),and constructive cooperation between the
U.S. and Morocco. Nearly two years after the FTA went into effect on
January 1, 2006, however, many Moroccans and Americans are still
trying to grasp how to take advantage of it.


3. (SBU) Lack of information on both sides of the Atlantic explains
part of the lag in pursuing FTA opportunities. Many Moroccans feel
that the U.S. is too far away, both geographically and culturally,
and are hesitant to leave the comfort zone of doing business with
Europe. As MFA FTA expert Houda Marrakchi put it, "the U.S. is
difficult for them mentally."


4. (SBU) Given Moroccan perceptions of doing business with the U.S.,
generating interest, in some quarters, has been an uphill struggle.
This year, Al Akhawayn University budgeted USD 180,000 for three
trainings at its Executive Education Center - one on the FTA, one on
arbitration in U.S. business law, and a third on export opportunities
to the U.S. All three programs were cancelled due to insufficient
demand. Reflecting Morocco's Europe-centered focus (with ambitious
outreach to China and other key economic players in Asia),Said
Bendidi, Chairman and CEO of palace-controlled Omnium Nord Africain
(ONA),indicated in a recent meeting that most Moroccan businesses do
not find the FTA significant (ref B).


5. (SBU) At the same time, many American businesses do not know
Morocco and are unaware of the FTA. Recognizing this fact, the
Moroccan-American Trade and Investment Council (MATIC) sponsored the
Brand Morocco contest in the spring of 2007. Students from American
business schools competed to create the most effective campaign to
educate American businesspeople about what Morocco can offer. In his
work as Country Director for USAID's New Business Opportunities (NBO)
program in Morocco, Michael Blakeley has noticed that U.S. companies
are surprised to learn that an FTA with Morocco exists.

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MORE INFORMATION, EDUCATION NEEDED
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6. (SBU) For those who are aware of the FTA, education is needed to
demystify it. According to Amina Lamrani, Deputy Director of the
General Federation of Moroccan Enterprises (CGEM),the FTA is not
well understood in Morocco. Despite the general perception that
Moroccan businesses prefer to deal with Europe than the U.S., she
insists they are interested in the FTA, but need to know more about
it. To this end, her organization plans to work with the American
Chamber of Commerce in Casablanca to disseminate sector-specific
information to CGEM's 2000-plus members.


7. (U) Others suggest the need not only for user-friendly
information, but also for practical guidance on how to assess the
FTA's benefits. FTA provisions may reduce the duty on certain goods
to zero percent, but this in itself does not mean that trade in these
goods is necessarily advantageous. Moroccan businesses could benefit
from training on the wide range of factors to consider when
evaluating the pros and cons of trade with the U.S. under the FTA.


8. (C) Those working to promote U.S.-Morocco trade find that the lack
of resources dedicated to raising Morocco's profile in the U.S. is a
missing piece in their overall efforts. While technical programs
assist Moroccan businesses, NBO's Blakeley believes there is a need
to examine the "reverse angle" and get funding back to the U.S. to
promote Morocco among American companies. The Department of
Commerce's (DOC) Kim-Bang Nguyen, Deputy Director of the Office of

CASABLANCA 00000195 002 OF 002


Textiles and Apparel (OTEXA),shares this sentiment and would like to
be able to fund trips for DOC representatives to visit U.S. textile
companies to build awareness about opportunities with Morocco.

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...AS WELL AS MORE SUPPORT
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9. (SBU) For Moroccans to feel more at ease in their efforts to take
advantage of the FTA, many feel they need more technical support. An
executive from the Moroccan plastics company ExcelPlast noted that he
is very satisfied doing business with an American supplier, but knows
there are others with whom he could work - if only he could find
them. Similarly, Star Olives, a client of USAID's Morocco Integrated
Agriculture and Agribusiness (AAI) program, was able to locate a
California distributor and later one in New York, but admitted the
process requires patience and persistence even with AAI's help.
Regardless of sector, numerous, intricate steps are required to move
from identifying potential partners to a bona-fide deal, and
companies may need intensive guidance from the get-go. Given this
reality, some technical support providers feel it would be more
effective to focus, at this stage, on a smaller number of companies
that are prepared to go through the intensive deal-making process
than to try to get numerous companies involved in the FTA.


10. (SBU) Moroccans interested in the FTA also point out that the
European Union (EU) offers not just technical support, but financial
assistance as well. Unlike U.S. businesses, many European suppliers
give Moroccan companies open accounts, with insurance companies
covering the risk of payment default. Moroccans ranging from the
MFA's Marrakchi to private sector businessmen wonder why U.S.
companies do not offer a similar service, both as an incentive to
Moroccan businesses and to stay competitive with the EU.


11. (SBU) Networking and sharing success stories is one form of
support that may be underutilized in Morocco. A Fulbright scholar
studying the FTA hypothesizes that this is in part because Moroccan
businesspeople hesitate to help those they perceive as competitors by
sharing the secrets to their success. Nevertheless, those who have
taken advantage of the FTA have important information to convey and
stand to learn from others as well.


12. (SBU) American businesspeople have also expressed the need for
support from their Moroccan counterparts. Emad Shoeb, President and
CEO of the TGIFridays franchise in Morocco, was mildly surprised at
how long it took to start a business in Morocco, given delays in
purchasing equipment and obtaining licenses and permits. Although
the GOM is "willing and able" to help investors, the on-the-ground
reality was tougher than Shoeb had expected, and he felt it would
have been helpful to have an office or person to whom he could direct
questions and concerns.


13. (C) Comment: Despite efforts to get the word out about the
Morocco-U.S. FTA, Moroccans and Americans continue to need practical
information and sector-specific, hands-on help to take advantage of
it. Given the success of the FTA to date, the opening of the
Tangier-Med port and Morocco's strong record of economic growth, now
seems like a crucial time to push the FTA forward further by
addressing misconceptions, clarifying procedures and offering
assistance where needed. End Comment.

GREENE