UNCLAS RABAT 000597

SIPDIS

SIPDIS

EB/CBA FOR DWINSTEAD

E.O. 12958: N/A
TAGS: BEXP EAGR ECIN EFTA EIND ETRD MO
SUBJECT: BFIF SUPPORT FOR U.S.-MOROCCO FTA CLOSE OUT REPORT

REF: 06 STATE 127166


1. Summary. The FY-06 Business Facilitation Incentive Funds
(BFIF) program approved $11,000 for Embassy Rabat to support
the U.S.-Moroccan Free Trade Agreement (FTA) in its initial
year of implementation. Post proposed to use the funds to
bolster the American Chamber of Commerce's (AmCham) program
of workshops to highlight industrial sectors thought to be
particularly well suited to benefit from the FTA. While all
envisaged seminars were not realized, those that were held
contributed to the strong trade results that marked the FTA's
first year. End summary.


2. AmCham originally planned to cover the following
industries: automotive components, agribusiness, chemicals,
apparel and pharmaceuticals. In the end, three workshops
were completed concerning the handicrafts, agribusiness and
pharmaceutical sectors. However, AmCham experienced delays
in organizing certain other workshops and deobligated $4,653
of unused funds at the end of FY-06 with the intention of
using most of them in FY-07. Now, however, the AmCham has
decided to cancel the remainder of the program.


3. In February 2006, AmCham secured the services of an
expert in the handicraft sector who was visiting Morocco.
Although this sector was not originally covered in its plans,
the AmCham took advantage of this target of opportunity to
hold several workshops that did not require any BFIF funding
for travel. Later in 2006, AmCham decided not to pursue the
automotive part sector program, but instead assisted post
with its plans to hold an investment conference for the
sector (septel).


4. The AmCham conducted a successful series of workshops for
the agriculture sector in March, 2006. This program incurred
total costs of $3,448 consisting of $1,920 for air fare for
agribusiness expert Mathew Nussbaum and $1,528 for
translation services. Agriculture is one of the most
important sectors of the Moroccan economy, employing
approximately 40 percent of the population and accounting for
15 percent of GDP. The sensitive agriculture sector received
special attention during negotiations on the FTA and in 2006
total bilateral trade in the sector increased 63 percent to
$365 million. U.S. exports increased 70 percent to $295
million and Moroccan exports grew 40 percent to $70 million.
These results are a considerable success for the FTA in its
first full year of implementation.


5. Pharmaceutical workshops were delayed until September,
2006 due to difficulties in finding a trainer. Costs for the
program totaled $2,875: $1,300 for airfare and $1,575 for
translation services. Bilateral trade in this sector is
still quite small with zero exports from Morocco and only
$1.4 million of U.S. exports. Unfortunately, U.S.
pharmaceutical exports to Morocco dropped 31 percent in 2006,
but since the workshop did not take place until late in the
year any beneficial effects probably will not be felt until

2007.


6. Comment: In comparison with its larger MEPI and USAID
counterparts, which also aimed at supporting FTA
implementation, our BFIF funding was directed at specific
niche markets. As such, its impact was more limited.
Nevertheless, it helped post's efforts to get the FTA off to
a strong start and to underline the U.S. commitment to
helping Morocco draw maximum advantage from the agreement.
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RILEY