COMMERCE DEPUTY SECRETARY HEARS OMANI FRUSTRATION

C O N F I D E N T I A L MUSCAT 000207 SIPDIS SIPDIS STATE FOR NEA/ARP STATE PASS TO USTR/JBUNTIN COMMERCE FOR DEPUTY SECRETARY E.O. 12958: DECL: 02/27/2017 TAGS: ECON ETRD PREL MU SUBJECT: COMMERCE DEPUTY SECRETARY HEARS OMANI FRUSTRATION OVER FTA IMPLEMENTATION REF: MUSCAT 191 Classified By: Ambassador Gary A. Grappo, reasons 1.5 b and d -------------- Summary -------------- ¶1. (C) Commerce Deputy Secretary David Sampson called for forging stronger commercial ties in anticipation of the implementation of the U.S.-Oman Free Trade Agreement (FTA) during February 6 meetings with Omani government and business leaders. Oman's business community expressed its eagerness to quickly reap the benefits of the FTA as the Deputy Secretary addressed the Chamber of Commerce, but the Commerce SIPDIS Minister expressed his frustration regarding the slow pace of the implementation process. End Summary. -------------- Ramping up for Implementation -------------- ¶2. (SBU) On February 6, Commerce Deputy Secretary David Sampson discussed the current status of the FTA with Maqbool bin Ali Sultan, Minister of Commerce and Industry. Maqbool noted the importance of the FTA to Oman, stating "at the end of the day, the FTA is good for us and good for you." He mentioned his optimism that all GCC countries would eventually conclude FTAs with the United States. Maqbool expressed appreciation for the benefits that the FTA would provide in terms of trade, technical assistance, and foreign direct investment. Given these benefits, he remarked that the Omani government decided to ease the implementation process through an extraordinary royal decree that established the Agreement's precedence over any contradictory regulations. Maqbool said that the Omani government would not do the same for other FTAs currently under negotiation, including that with the European Union. ¶3. (SBU) In preparing for the FTA's implementation, Maqbool stated that the Ministry was considering placing a trade official in Washington to facilitate commerce. He also commented that Oman was trumping the benefits of doing business in Oman on regional visits. Domestically, Maqbool noted that the government has been raising community awareness of the FTA in advance of implementation. In addition to a December 2006 FTA awareness conference, Maqbool has briefed members of the Majlis al-Shura (legislative body) and the Oman Press Club. He expressed his view that Oman would intensify its advertising efforts once the agreement was implemented. -------------- Implementation Fatigue -------------- ¶4. (C) While appreciative of the expected benefits of the FTA, Maqbool expressed significant frustration over the pace of the implementation process. He stated that he did not believe the agreement would be implemented in 2007. Maqbool commented that Oman was making a good faith effort to amend specific regulations to satisfy USTR's concerns, but that those concerns were "endless." On Oman's Omanization requirements, Maqbool deemed as "impossible" USTR's request for a royal decree specifically exempting managers and technical personnel from the applicable 80% Omanization requirement. On Oman's copyright law, Maqbool lamented that even with the submission of the "final" draft legislation in December 2006, the Ministry continues to receive questions from USTR. Maqbool did note that progress had been made on the labor and telecommunications fronts. Even with these advances, however, Maqbool concluded, "Some people don't want the FTA to happen. We have a real problem." Maqbool pledged not to discuss the FTA in public further until the agreement was implemented. -------------- Good Story to Tell -------------- ¶5. (SBU) Sayyid Fahad bin Mahmood al-Said, Deputy Prime Minister for the Council of Ministers, and Mohammed al-Khusaibi, Secretary General of the Ministry of National Economy, also expressed their optimism for the FTA in separate follow-on meetings with Sampson. Sayyid Fahad noted that the Agreement was representative of the strong bilateral relationship between the Sultanate and the United States. Khusaibi viewed awareness of the FTA as the most essential ingredient to spurring development and identified the importance of a trade delegation visiting the United States to promote Oman's favorable business climate. He stated that representatives from U.S. companies already operating in Oman, such as Dow Chemicals and AES, would be excellent spokespeople for Oman. ¶6. (SBU) Khusaibi called on both sides to find ways to promote small and medium-size enterprise (SME) growth under the FTA. He commented that the Omani government would encourage the private sector to take a leading role in exploring opportunities under the FTA, and that the establishment of joint ventures in Oman would facilitate growth in the SME sector. "We have a good story to tell," opined Khusaibi, "and we need to have business meet regularly to create awareness and opportunities under the FTA." -------------- Helping Small Business -------------- ¶7. (U) The theme of promoting small businesses carried through Sampson's meeting with Oman Chamber of Commerce and Industry Chairman Salem al-Ghattami, and with the Chamber's membership at large. In responding to a question from a Chamber member on SME promotion under the FTA, Sampson commented that the Commerce Department was encouraging U.S.-based SMEs to reach out to customers "close to the borders" first, then to other FTA partners. Sampson also highlighted Commerce efforts to assist SMEs through the strengthening of export assistance centers and links between large companies and SMEs. He urged Chamber members to contact the Embassy's Commercial Office to make connections with U.S. partners. -------------- Comment -------------- ¶8. (C) As reported reftel, Minister Maqbool once again took the occasion of a visit by a senior USG official to vent on the length of the implementation process. Maqbool has a great deal of personal credibility on the line with fellow ministers, and with the anticipation among the local business community building, the Minister is keen to have the Agreement implemented at the earliest moment. Embassy will await Washington feedback on engaging the Minister per reftel request. ¶9. (U) This message has been cleared by the Commerce Department. GRAPPO