GUINEA'S EXPORT BAN RELAXED

UNCLAS CONAKRY 000438

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E.O. 12958: N/A
TAGS: ECON PREL PGOV ELAB PINS GV
SUBJECT: GUINEA'S EXPORT BAN RELAXED

REFS: (A) Conakry 129
(B) Conakry 392

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Summary
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1. (U) In brokering a suspension of the general strike that
crippled Guinea beginning in January 2007, the former Guinean
government agreed to questionable economic concessions, including a
ban on agricultural exports. Initially scheduled to last through
December 2007, the export ban has proved unsustainable (Ref A). In
a series of recent meetings with the labor unions, the "Patronat"
(Guinea's employers union),and an informal council of prominent
merchants, the new government negotiated a compromise that relaxes
the export ban and generally satisfies all negotiating parties.
This revision of the export ban agreement should strengthen economic
stability as Guinea begins to respond more to market forces. End
Summary.

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EXPORT BAN PROVES UNTENABLE
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2. (U) On January 27, the former government of Guinea, the labor
unions, and the Patronat signed a tripartite accord to suspend the
general strike then paralyzing the country. That agreement, which
still forms part of the underlying deal amongst the parties now that
a new government in place, included a ban on export or re-export of
fuel and agricultural and seafood products (Ref A). On March 24 and
April 12, representatives of the labor unions, the Patronat, and
GOHA, Guinea's largest association of private businessmen, met with
the new Minister of Commerce, Mamady Traore, and Minister of
Agriculture, Mamadou Camara, to discuss a revision of the ban. All
parties agreed that the initial benefits of domestic abundance had
proved useful during and after Guinea's crises earlier this year.
They also agreed that since Guinea is no longer operating in a
crisis mode, a longer-term trade strategy is necessary, and the
trade ban should be repealed. They disagree on the details of the
scope of the export ban repeal and the timeline.

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GOVERNMENT AND MERCHANTS AGREE ON FULL REPEAL
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3. (SBU) On April 16, Econoff spoke with Mohamed Cheriff, president
of GOHA. Cheriff said the government representatives share GOHA's
opinion that the ban should be completely repealed. Cheriff said
the Minister of Commerce was particularly concerned that the export
ban breaches ECOWAS, Mano River Union and WTO protocols. Cheriff
said union and Patronat representatives understand the larger trade
issues, but feel the "immediate needs of the Guinean people" are
more important than any perceived violations of trade accords.

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LABOR UNIONS AND PATRONAT FAVOR GRADUAL REPEAL
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4. (SBU) According to Cheriff, representatives of the labor unions
and Patronat agreed to again export sweet potatoes, peppers, eggs
and certain seafood. They refused to cede products the unions
consider "staples of the Guinean people" such as rice, palm oil,
beef, poultry, and all other fruits and vegetables. Cheriff said he
suspects the Patronat representatives favor full repeal, but are
hesitant to counter the unions' position.

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GUINEANS SEE NO INCREASED PURCHASING POWER
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5. (SBU) The unions maintain the export ban is necessary in order
to stabilize prices. The Guinean franc (GNF) has maintained its
recent gains and has traded near 4000 GNF:1 USD for the past week
(Ref B). Although the GNF is valued some 30 percent higher than its
average 2006 rate of 5200 GNF:1 USD, average goods in the market are
not significantly cheaper throughout the country. Guinea's fertile
interior has an abundance of produce, partially because of the
export ban, and partially because it is now harvest season for much
local produce. Despite this abundance, prices for local produce
have not been substantially reduced.


6. (U) Imported goods, including most of the commercially available
rice, remain expensive because they were purchased in hard currency.
Cheriff said consumers understand why foreign goods remain
expensive, and grudgingly accept high prices for foreign goods.
However, many merchants are at a loss to explain to consumers why
domestic goods are not significantly less expensive if the official
GNF is truly stronger as the new exchange rate suggests.

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COMMENT
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7. (SBU) By addressing the export ban, the new Guinean government
has tackled the issue of economic stability and wisely brought all
major players to the negotiating table. The government has allowed
the unions who brokered the export ban to follow its repercussions
to their logical end, and in doing so garnered their support. While
the government is likely mindful of the political clout the unions
wield, the approach is reflective of what seems to be this
government's general consultative manner. We are not sure if a full
repeal of the export ban is imminent, but it is clear the government
favors that and may achieve it through political adeptness.

MCDONALD