MINISTER JOUINI: UNITED STATES AND TUNISIA NEED TO

C O N F I D E N T I A L SECTION 01 OF 02 TUNIS 000105

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STATE PASS USTR (BELL),
USPTO (ADLIN),USAID (METZGER)
USDOC FOR ITA/MAC/ONE (NATE MASON),ADVOCACY CTR (JAMES),
AND CLDP (TEJTEL)
CASABLANCA FOR FCS (ORTIZ)
PARIS AND LONDON FOR NEA WATCHERS

E.O. 12958: DECL: 01/17/2017
TAGS: ECON ETRD TS
SUBJECT: MINISTER JOUINI: UNITED STATES AND TUNISIA NEED TO
BUILD BRIDGES


Classified By: Ambassador Robert F. Godec for reasons 1.4 (b) and (d)


1. (C/NF) Summary: During Ambassador's January 16 courtesy
call on the Minister of Development and International
Cooperation (MDIC),Mohamed Nouri Jouini discussed the way
forward for the US-Tunisian economic relationship.
Ambassador asked Jouini what he wanted out of the
relationship over the next three years. Jouini wants a
policy dialogue and would like to hear about the US vision
for Tunisia as well as for the Maghreb region. While he
acknowledged that the American economic system is the one
that will create the most wealth, Jouini indicated that
Tunisia is not currently at a stage in its development where
it can automatically adopt all of the policy and regulatory
reforms required to mimic the US system. Nevertheless,
Tunisia wants to move forward with its structural reforms to
improve the business environment. As examples, Jouini
indicated that Tunisia is prepared to permit franchising and
to improve IPR protection. The Minister affirmed that the
GOT is committed to strengthening trade relations with the
United States. He emphasized that the way forward was to
start building bridges with ongoing exchanges of people and
dialogue. Ambassador raised the possibility of a visit by
senior Washington officials to discuss a US-Tunisian economic
agenda. Jouini welcomed the idea. End Summary.


2. (C/NF) Minister Jouini opened the meeting with a brief
economic overview. Jouini then highlighted some of the
concerns and issues that Tunisia must tackle in its 11th
development plan covering 2007-2016. The main challenge is
to generate enough economic growth to meet the rising job
demand. (Note: Tunisia faces a high unemployment rate
(official rate of 14.2%),particularly among university
graduates. End Note.) GOT objectives over the next ten years
are to generate a 6.5 percent annual GDP growth rate;
maintain the fiscal balance; keep the poverty rate under four
percent; drop the external debt ratio under 50 percent of
GDP; reduce unemployment to less than 10 percent; and to
achieve a per capita GDP of USD 3000. Although structural
and regulatory reforms will be necessary to achieve these
goals, Jouini stated that GOT needs to move carefully, using
a step-by-step development approach. The GOT cannot afford
to make any errors.


3. (C/NF) Ambassador asked Jouini how he envisioned the
US-Tunisian economic relationship developing over the next
three years and how we could strengthen the dialogue. Jouini
replied at length, lamenting that the relationship was not as
good as it used to be, but emphasizing that the GOT, at the
highest levels, is committed to improving it. Jouini said he
wants a policy dialogue with the United States, including the
opportunity to present Tunisia's reality (concerns, issues,
goals) to the USG. Pointing out that Tunisia is different
from others in the region, Jouini also stressed that he wants
to hear about the US vision for the region. He wants to
discuss specific policies or rules that need to be applied to
Tunisia. Jouini said the United States and Tunisia need to
start building bridges and mutual understanding via dialogue
and exchanges of "real people."


4. (C/NF) Jouini also mentioned that he would like more
predictability built into the US-Tunisia relationship. He
noted that with the EU there is a plan for the next three to
five years. Both parties know what issues will be discussed
and make advances and trade-offs as negotiations proceed. As
a result, Tunisia is now better-prepared for a free trade
zone with the EU and is moving on to dealing with services.
Over the next ten to twelve years, he continued, the GOT will
be implementing further economic and regulatory reforms in
the context of the EU Neighborhood Agreement. Jouini credits
this EU process for the economic progress which Tunisia has
made over the past 15 years.


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5. (C/NF) Contrasting EU-Tunisian trade talks with those
between the United States and Tunisia, Jouini opined that the
US process is unpredictable and asks too much from a small
country such as Tunisia. The "take it or leave it" approach
cannot work for Tunisia, whose current economic and political
structure would not be able to survive an immediate and
automatic adoption of all the US policies and regulatory
reforms. While admitting that the US system is the one that
will create the most wealth and prosperity in the long run,
Jouini expressed the belief that the GOT needs to continue
upgrading its economy and society on a step-by-step basis.
He added that he is prepared to be flexible and to move in
the direction the United States wants on many issues. He
noted, for example, that the GOT intends to permit
franchising and improve IPR protection. Jouini concluded the
meeting by stating that the GOT wants to learn from the US
environment and is open to having a dialogue with US
interlocutors. The end goal should be to improve life
politically and economically for all Tunisians. Ambassador
raised the possibility of a visit by senior Washington
officials to discuss a US-Tunisian economic agenda. Jouini
welcomed the idea.


6. (SBU) Comment: In light of the positive meeting with
Jouini, Post recommends a visit from an interagency team led
by a senior State Department or other USG representative.
The goal would be to discuss a broader "vision" (i.e., work
plan or agenda) for the long-term US-Tunisian economic
relationship. While the GOT is not prepared to commit to an
FTA negotiation at this time, we believe we can make
incremental progress in other important areas. For example,
possible practical outcomes for the United States might
include a commitment and time frame from the GOT on opening
up franchising and improving IPR protection. But beyond
these benefits, strengthening the economic relationship will
increase our leverage and create opportunities to advance the
Freedom Agenda. Across the board engagement with the
Tunisians is key to strengthening the relationship and
enhancing our ability to press Tunisia toward becoming a
model for the region. End Comment.
GODEC