Identifier
Created
Classification
Origin
07SANAA1563
2007-08-11 10:46:00
CONFIDENTIAL
Embassy Sanaa
Cable title:  

YEMEN READY TO MOVE FORWARD ON WTO ACCESSION

Tags:  ECON EINV ETRD AID YM 
pdf how-to read a cable
VZCZCXYZ0002
RR RUEHWEB

DE RUEHYN #1563/01 2231046
ZNY CCCCC ZZH
R 111046Z AUG 07
FM AMEMBASSY SANAA
TO RUEHC/SECSTATE WASHDC 7809
INFO RHEHAAA/THE WHITE HOUSE
RUCPDOC/USDOC WASHDC
C O N F I D E N T I A L SANAA 001563 

SIPDIS

SIPDIS

THE WHITE HOUSE PLEASE PASS TO NSC
NSC PASS TO USTR JASON BUNTIN
DOC PASS TO TOM MORITZ

E.O. 12958: DECL: 08/01/2017
TAGS: ECON EINV ETRD AID YM
SUBJECT: YEMEN READY TO MOVE FORWARD ON WTO ACCESSION

REF: SANAA 01343

Classified By: CDA ANGIE BRYAN FOR REASONS 1.4 (B) AND (D)

C O N F I D E N T I A L SANAA 001563

SIPDIS

SIPDIS

THE WHITE HOUSE PLEASE PASS TO NSC
NSC PASS TO USTR JASON BUNTIN
DOC PASS TO TOM MORITZ

E.O. 12958: DECL: 08/01/2017
TAGS: ECON EINV ETRD AID YM
SUBJECT: YEMEN READY TO MOVE FORWARD ON WTO ACCESSION

REF: SANAA 01343

Classified By: CDA ANGIE BRYAN FOR REASONS 1.4 (B) AND (D)


1. (C) SUMMARY: The new ROYG Minister of Industry and Trade
requests increased USG political and technical support for
Yemen's accession to the World Trade Organization (WTO) and
renewed bilateral discussions under the US Yemen Trade and
Investment Framework Agreement (TIFA). CDA reiterated earlier
USG requests for a draft agenda and a list of proposed
technical assistance programs. If the Minister, an embassy
contact with known ties to ROYG reformers, follows his words
with action, Yemeni accession to the WTO could occur sooner
rather than later.END SUMMARY.



2. (U) On July 30, Dr. Yahia Yahia Al-Mutawakil, ROYG
Minister of Industry and Trade, requested a meeting with
Charg d'Affaires Angie Bryan. CommOff and Dr. Hamoud
Al-Najar, Director of Yemen's WTO Coordination Office, also
attended the meeting.


3. (C) Al-Mutawakil thanked CDA for the USG's continuing
support to Yemen in their WTO accession efforts, adding that
Yemen is keen to reconvene bilateral negotiations with the
USG in September. Al-Mutawakil stated that the ROYG is
committed to WTO accession and that they realize that
accession will require a great deal of effort and political
maneuvering by the Ministry of Industry and Trade (MOIT) and
the WTO Coordination Office. He stated that the ROYG is
committed to free-market principles and that by his count
there are 12-13 pieces of trade-related legislation that need
to be revised in order to bring Yemen in line with
international standards and attract foreign investors.


4. (C) Al-Mutawakil believes these laws should go forward as
a single package of trade legislation. He added that he
thinks that all necessary revisions can be completed by the
end of the year, ahead of their five-year transition plan. He
added that passing the revised legislation will be
technically possible, but politically difficult. He stated
that resistance is staunch among the elite businessmen with

vested interests in the status quo. He specifically
mentioned Parliamentary resistance in the Trade and Industry
Committee and private sector resistance from the Yemen
Federation of Chambers of Commerce.(COMMENT: The Yemen
Federation of Chambers is an umbrella organization which
claims to represent all Chambers of Commerce in Yemen. The
Embassy, however, has found the organization to be
obstructionist to both Yemeni and US business interests in
Yemen. The organization is controlled by members of the
largest trading families in Yemen and appears to represent
primarily their interests. END COMMENT). He stated that both
of these groups are populated by wealthy businessmen who may
feel that their interests would be threatened by changes in
Yemen's commercial law regime, specifically, the abolition of
sole agency/distributorships and the revision of Article 28
of the Commercial law which currently requires 51 percent
Yemeni ownership of any business operating in Yemen. Despite
this resistance, Al-Mutawakil believes that the recent price
hikes in Yemen have increased public support for legislation
that will foster competition in the market (reftel).


5. (C) Al-Mutawakil stated that the ROYG views WTO accession
as an interim step toward their parallel goal of GCC
integration. He expressed a desire that the various donor
groups in the trade sector harmonize their efforts to avoid
confusing, duplicative or contradictory messages. (NOTE:
Embassy has since approached the Donor Forum here in Yemen to
include in their next Donor Forum meeting a discussion of
customs valuation and WTO accession issues and assistance.
The Donor Forum agreed and the topics are now on the agenda
for the September 2007 meeting. END NOTE). Hamoud Al-Najar
asked the CDA for assistance in restarting TIFA negotiations
with the USTR and increased technical assistance in the areas
of intellectual property rights, customs valuation, sanitary
phyto-sanitary measures and technical barriers to trade.


6. (C) CDA told Al-Najar and Al-Mutawakil that the USTR is
open to further engagement and willing to provide technical
assistance, but reiterated that the USTR is still waiting for
a proposed agenda for their next meeting and a specific list
of technical assistance needs from the ROYG. (NOTE: In
November 2006 USTR and ROYG representatives conducted a DVC
on TIFA and WTO related issues during which the ROYG
representatives promised to forward to the USTR a list of
proposed technical assistance programs for consideration by
the USTR. To date, however, the ROYG has not provided such a
list. END NOTE) Al-Mutawakil stated that these would be
forthcoming. (NOTE: At the time of the meeting, Al-Mutawakil
had not yet seen USTR's July 17 letter to him, so CDA passed
him a copy. Post is awaiting his response. END NOTE).

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COMMENT
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7. (C) Post is cautiously optimistic that Minister
Al-Mutawakil may achieve forward movement on the TIFA and WTO
accession in spite of political and private sector business
resistance that has stalled both until now. Al-Mutawakil is
new to the Ministry. He received the position during the
April 2007 ROYG Cabinet reshuffle. His previous post was that
of Deputy Minister to reform-minded embassy friend Abdulkarim
Al-Arhabi, the Minister of Planning and International
Cooperation (MOPIC). Al-Arhabi has now also assumed duties
as Deputy Prime Minister in charge of Economic Affairs. His
portfolio includes the MCC Threshold program and GCC
integration. As a product of Al-Arhabi's tutelage,
Al-Mutawakil may have been placed in the MOIT as a
like-minded ally.


8. (C) ROYG reformers and President Saleh realize that Yemen
is heading into a perfect storm of opportunity, standing to
gain hundreds of millions of dollars from the MCC program and
billions of dollars from GCC integration, but only if the
country can achieve demonstrable reform. There will be no
greater beacon of successful reform than WTO accession and a
free trade agreement with the United States. Al-Mutawakil
seems charged with the responsibility of getting the trade
sector into compliance with international standards and
appears ready to take full advantage of USG technical
assistance and political support that has thus far been
received with lukewarm enthusiasm if not outright suspicion.


9. (C) Trade legislation is drafted under the auspices of the
MOIT. If Al-Mutawakil is ready to allow USG assistance in
that process it is likely that compliant legislation can move
forward aided by Al-Arhabi's guidance through Cabinet
approval and Parliamentary debate. Post credits Al-Arhabi,
almost single-handedly, with securing cabinet approval and
Parliamentary passage of the new ROYG Procurement law. That
law was drafted with USG expert assistance and passed without
revision. If the same can be done with trade-related
legislation, Yemen's accession to the WTO may come to pass,
sooner rather than later. END COMMENT.

BRYAN