ECONOMIC DELEGATION SPURS GOT ACTION

C O N F I D E N T I A L TUNIS 001249 SIPDIS SIPDIS STATE FOR EEB (DIBBLE),NEA/MAG (HOPKINS AND HARRIS) STATE PASS USTR (DONNELLY AND BURKHEAD) AND USAID (MCCLOUD) USDOC FOR (VINEYARD AND MASON),ADVOCACY CTR (JAMES),AND CLDP (TEJTEL AND MCMANUS) USDOC PASS USPTO (ADAMS, BROWN AND MARSHALL) CASABLANCA FOR FCS (ORTIZ) CAIRO FOR FINANCIAL ATTACHE (SEVERENS) LONDON AND PARIS FOR NEA WATCHER E.O. 12958: DECL: 09/12/2017 TAGS: ECON ETRD EAIR EINV BEXP TS SUBJECT: ECONOMIC DELEGATION SPURS GOT ACTION REF: A. TUNIS 959 ¶B. TUNIS 618 ¶C. TUNIS 271 ¶D. 06 TUNIS 2771 Classified By: Ambassador Robert F. Godec for Reasons 1.4 (b) and (d). -------------- Summary -------------- ¶1. (C) During a September 9-12 visit to Tunisia, the interagency economic delegation headed by EEB PDAS Elizabeth Dibble stressed the US commitment to strengthening the bilateral economic relationship and the need for concrete action. Meetings with Minister of Development and International Cooperation (MDIC) Mohamed Nouri Jouini, Minister of Foreign Affairs Abdelwahab Abdallah, and Prime Minister Mohamed Ghannouchi produced not only strong statements of GOT support for enhanced economic ties, but also agreement on specific next steps, including reinvigorating the TIFA Council. The visit of this unique delegation provided a strong signal of US interest in Tunisia, laying the groundwork for both short- and long-term economic engagement. End Summary. -------------- Jouini Optimistic -------------- ¶2. (C) In his meeting with the delegation, Minister Jouini outlined the GOT's long-term economic vision of reaching OECD-level development both in terms of revenue and human development. He told the delegation that the GOT will continue both micro- and macro-level reforms, including improvements in the investment climate and development of infrastructure. While he noted Tunisia's economy is oriented towards Europe, he stressed the need for Tunisia to diversify and build stronger relationships with other countries -- first and foremost the United States. Jouini bemoaned the low level of US trade and investment in spite of the great potential in Tunisia for US business. However, Jouini declared himself "more optimistic than two years ago" and eager to enhance economic relations with the United States. Signaling MDIC's renewed enthusiasm for advancing the bilateral economic relationship, MDIC assembled a large interagency contingent of their own, including representatives from the Ministry of Commerce, Ministry of Public Health, and Ministry of Transport. -------------- "Tunisia Must Be the Best" -------------- ¶3. (C) PDAS Dibble emphasized that due to its small size, Tunisia needs to "be the best" in order to attract US trade and investment. Jouini demurred at comparisons to Jordan and Morocco, stating that greater US investment in these countries is a result of greater US government attention and encouragement. Dibble stressed that while our governments can send signals to the business community, it is up to businesses to make their own decisions. Dibble stressed that elements of the business climate such as transparency, access to the internet, and the ease of getting permits all affect investors' decisions to enter a country. She cited direct air links, clear rules, less red tape, transparent tendering and foreign exchange convertibility as improvements that could positively impact trade and investment. Treasury Financial Attache Alex Severens commended Tunisia's solid macroeconomic performance and good rating on the World Bank's Doing Business survey. Severens cautioned that in order to maintain a high ranking on this survey Tunisia "needs to run to stay ahead" as other country's try to improve their own rankings. Quini laughed while stating that he knows that "Tunisia needs to run and needs to run fast." -------------- Reinvigorating the TIFA -------------- ¶4. (C) Both Minister Jouini and the delegation lamented the lack of action on the TIFA following the 2005 TIFA Council. USTR's Paul Burkhead emphasized that, although the TIFA is organized around the goal of an FTA, the TIFA can also be used to address specific concerns. Jouini agreed that the TIFA can lay the groundwork for an FTA and that a TIFA council would send a positive signal to the business community. Referring to his comments at the MEPI-sponsored FTA roundtable (Ref B),Jouini repeated that the GOT is committed to an FTA with the United States. Jouini told the delegation that he "understands and accepts" that the philosophy of an FTA is different than an Association Agreement with the EU, but emphasized that if there is real interest compromises must be made on both sides. Jouini continued that an agreement needs to consider a country's specificities, reflecting Jouini's desire for flexibility in implementation timelines. Jouini said he would be pleased to meet AUSTR Shaun Donnelly in October in order to set a date and location for the next TIFA council meeting. -------------- Open Skies: Agreement on an Agreement -------------- ¶5. (C) PDAS Dibble raised the Open Skies Agreement with all three ministers and reiterated US interest in beginning negotiations. Dibble stressed the important economic impact of direct air links both in facilitating trade and investment and specifically, in encouraging US tourism. At the MDIC meeting, Director General of Civil Aviation Hamadi Ben Khelifa, reading directly from his talking points, stated the Minister of Transport would like an agreement. Ben Khelifa presented the Ministry of Transport suggestion that American companies enter into discussions with state-owned Tunisair regarding codeshares. He also indicated that Northwest Airlines codeshare request would be approved if Northwest entered into a codeshare with Tunisair. Ambassador Godec reiterated US interest in receiving an official response. Minister Jouini, who could be seen writing, replied laughingly that he had taken note of this and stated "We'll respond." -------------- IPR: Progress and Lingering Concerns -------------- ¶6. (C) Commerce DAS Holly Vineyard commended the progress on intellectual property rights, noting that the removal of pirated products from Carrefour (Ref D) and the termination of "correlation" (Ref C). She cited continuing confusion over the appeals filed for pharmaceutical products correlated in late December 2006 and urged the GOT to make final rulings. Referring to pharmaceutical company concerns that the GOT does not provide data exclusivity, DAS Vineyard highlighted that pharmaceutical companies tend to invest in countries that offer five-year data exclusivity and the GOT should clear up misperceptions. Director General of the Pharmaceutical and Drug Administration Kamel Iddir responded that Tunisian laws respect TRIPs and the GOT respects its international obligations for medical products. Ambassador Godec added that this provided a good example of how more information and contact with companies could resolve misperceptions. In response to Vineyard's encouragement for a patent linkage system, Jouini stated that the GOT believes "WTO is sufficient." Jouini added that if the US demonstrates that the GOT is not TRIPs compliant, the GOT will address this. -------------- Advocacy -------------- ¶7. (SBU) In all three meetings, PDAS Dibble raised outstanding advocacy cases and pushed for favorable resolution. Advocacy included Cisco Systems, e-government proposal, Coca-Cola,s carbonated beverage tax solution, the pharmaceutical companies' correlated drugs, Northwest Airlines' codeshare request and Boeing's anticipated bid for Tunisair,s fleet renewal tender. Minister Jouini urged the delegation to forward all such issues to MDIC and undertook to respond to these concerns. -------------- FM Abdallah: "Political will exists" -------------- ¶8. (C) In his meeting with the delegation, Minister of Foreign Affairs Abdelwahab Abdallah, in a particularly jovial mood, emphasized his desire to reinforce and strengthen economic ties. Abdallah stated that the "political will exists" to strengthen the bilateral economic relationship. Referring to the spate of recent congressional visits, Abdallah told the group he was happy to receive delegations and hoped the increased rhythm of visits would continue. Abdallah acknowledged that Tunisia has more to do on freedom of the press and human rights, but stated that the GOT is working to improve daily life in all areas. Citing an oft-heard refrain, Abdallah stated that it is necessary to recognize each country's "specificities"; every country has a unique vision. PDAS Dibble affirmed that democracy is not "one-size fits all", but emphasized that the United States is looking for a positive trend on political reform, transparency, and accountability. Dibble highlighted the linkage between the close political relationships the US has with Morocco and Jordan and the strong economic relationships. Turning to Maghreb integration, Abdallah noted the negative impact of the Western Sahara impasse on economic exchange in the region and also in hampering Arab Maghreb Union progress. -------------- PM Ghannouchi: GOT Committed -------------- ¶9. (C) Prime Minister Mohamed Ghannouchi, who had to cut the meeting short after being summoned by President Ben Ali, reiterated GOT commitment to enhancing bilateral economic relations. In response to PDAS Dibble's assertion that negotiation of an open skies agreement could lead to direct air links and expanded commercial exchanges and tourism between the US and Tunisia, Ghannouchi told the delegation the GOT is committed to exporing the details of open skies and noted that there is a trend towards progressively liberalizing more Tunisian airports. Ghannouchi lamented the limited number of American companies, less than 70 out of 2800 foreign companies in Tunisia. Citing Tunisia's trade balance with the United States, Ghannouchi stated that more must be done to promote Tunisian exports and acknowledged the need to enhance the TIFA process. (NOTE: Tunisian National Institute of Statistics figures show a 2006 Tunisian trade deficit of approximately 377 million Tunisian dinars (roughly US $300 million),while USDOC figures show a US deficit of approximately US $141 million. END NOTE.) PDAS Dibble highlighted some of the concerns raised by US businesses during an Embassy-hosted roundtable (septel),including the need for predictability and a level playing field. Ambassador Godec emphasized the need for concrete action such as beginning Open Skies negotiations and holding a productive TIFA council meeting. Ultimately, Dibble stated "we both want results." -------------- Key Next Steps -------------- ¶10. (C) The delegation underscored the need for concrete action to advance the bilateral economic relationship and outlined several specific steps for the coming months. In side meetings with MDIC, Burkhead and MDIC agreed to name heads for the four TIFA working groups, who would begin discussions via DVC prior to the next TIFA Council. Minister Jouini agreed to meet with AUSTR Shaun Donnelly while he is in Washington in October to set a time and place for TIFA council. The October door knock mission to Washington by the Tunisian-American Chamber of Commerce and the November visit to Tunisia of a US business delegation present opportunities to generate private sector interest in the bilateral economic relationship. These events set the stage for a TIFA Council at the end of 2007 or beginning of 2008. -------------- Moving Forward -------------- ¶11. (C) The visit of this unique interagency delegation provided a strong signal of US interest in Tunisia that will lay the groundwork for both short- and long-term economic engagement. Although the delegation did not receive an official agreement to begin negotiations for an Open Skies Agreement, GOT officials sent strong signals that they are interested in proceeding. PDAS Dibble made it clear both in official meetings and in the press that the ball is now in the GOT's court. The Embassy will continue to follow up on the proposed Open Skies text. In the long-term, it will be important to maintain the momentum created by the delegation's visit by continuing to encourage systemic improvements in Tunisia's investment climate and stressing the linkage between close political cooperation and stronger economic ties. (U) This cable was cleared by PDAS Dibble. GODEC