COMMERCE MINISTER: LET'S TALK SPECIFICS

C O N F I D E N T I A L SECTION 01 OF 02 TUNIS 000329 SIPDIS SIPDIS NEA/MAG FOR HOPKINS AND HARRIS, EB/CBA (WINSTEAD) STATE PASS USTR (BELL),USPTO (ADLIN),USAID (MCCLOUD) USDOC FOR ITA/MAC/ONE (NATE MASON),ADVOCACY CTR (JAMES), AND CLDP (TEJTEL) CASABLANCA FOR (FCS ORTIZ) E.O. 12958: DECL: 03/09/2017 TAGS: ETRD ECON TS SUBJECT: COMMERCE MINISTER: LET'S TALK SPECIFICS REF: A. TUNIS 105 ¶B. TUNIS 192 Classified By: Ambassador Robert F. Godec for reasons 1.4 (b) and (d) ¶1. (SBU) Summary: On March 7 the Ambassador paid a courtesy call on Minister of Commerce and Handicrafts (MOC) Mondher Zenaidi. The Ambassador commended the Minister for the progress made in the campaign against counterfeit products and raised several specific issues that discourage greater US investment in Tunisia. Zenaidi was very receptive to the Ambassador's idea of sending a senior economic delegation to Tunisia. End summary. ¶2. (SBU) The Ambassador and Zenaidi engaged in a cordial, energetic discussion during the March 7 courtesy call. Zenaidi presented a rapid soliloquy on the state of commerce in Tunisia. He said that while imports and exports are increasing, Tunisia needs even more import and export growth over the next few years. Zenaidi noted that Tunisia has trade agreements with the Maghreb, Africa, the Agadir countries, and the European Union, but not with the United States. He would like to see more US investment in Tunisia, as well as a US-Tunisia free trade agreement. The Ambassador said that there are many possibilities for Tunisia and the United States to work together to promote commerce and cooperation. Ambassador raised the possibility of negotiating an Open Skies Agreement in the near future. He also broached the possibility of another Trade Investment Framework Agreement Council meeting at an appropriate time. The Ambassador said he would like to bring a US interagency economic delegation to Tunisia to discuss specific issues and strategies to enhance the US-Tunisian economic relationship. Zenaidi enthusiastically endorsed such a visit, stressing the need for an economic dialogue in order to generate the growth, modernization, and organization that Tunisia needs. ¶3. (C) The Ambassador congratulated the Minister on the progress his ministry has made in the fight against counterfeit products, stressing that a strong IPR regime is important if Tunisia wants to attract more investors. Zenaidi responded that the GOT was working hard to tackle the issue of counterfeit products and to reinforce its IPR regime. The Ambassador encouraged the Minister to liberalize the services sector and to open the way for foreign franchises to enter the Tunisian marketplace. The Minister said that the GOT wants liberalization in this sector but that the sector first needs to be more competitive. (Note: During a March 3 press interview Zenaidi had said that he was in the process of carrying out President Ben Ali's plans/directives relating to the retail sector. An objective of the retail sector plan was to change the law regarding the distribution of products and the modernization of small businesses. The Minister also said that he wanted to train small businesses how to be more competitive through the promotion of the franchising technique. End Note.) Zenaidi indicated that individual negotiations would be required before the services sector was further liberalized. He went on to say that Tunisia was currently in services negotiations both with the WTO and with the European Union. The Ambassador stressed that franchise and services liberalization is important for the United States and for the tourism sector. ¶4. (C) The Ambassador raised Coca Cola's concern over the discriminatory excise tax on carbonated beverages which together with the VAT and other taxes amounts to 47.5% tax on Coke products. (Note: Coca Cola representatives raised the tax concern during a March 5 meeting with the Ambassador, during which they said Coca Cola would like to increase its investment in Tunisia but that the heavy tax was discouraging them from proceeding. Coca Cola has submitted a tax-break proposal to the GOT with the offer to re-invest tax savings in the local market. End Note.) While the Minister did not think that there was such a high tax on carbonated beverages, he promised to look into the matter. (Note: the Ambassador is also following up with a detailed letter on the tax to the Minister and other GOT officials. End Note.) TUNIS 00000329 002 OF 002 ¶5. (C) The Ambassador and Zenaidi also discussed the broader US - Tunisian bilateral relationship. The Ambassador said that he would like to see a strategic dialogue with collaboration in all areas of mutual concern. Zenaidi agreed and said that the proposed economic delegation visit and other such missions between the two countries would allow discussions to be targeted more specifically towards the domain of commerce and customs. Zenaidi is in favor of anything that will help Tunisia better compete in the global economy. He would also like to increase knowledge about Tunisia and improve Tunisia's image in the United States. ¶6. (SBU) Comment: Zenaidi emphasized the need for dialogue between the United States and Tunisia, as has been the norm during the Ambassador's courtesy calls on other Ministers (reftels). As requested in reftel A, post strongly recommends a visit from an interagency economic team led by a senior State Department or other USG representative to discuss a broader "vision" (i.e., work plan or agenda) for the long-term US-Tunisian economic relationship. Possible practical outcomes of such a dialogue for the United States might include a commitment from the GOT on opening up franchising. But beyond these benefits, strengthening the economic relationship will increase our leverage, thus creating opportunities to advance the Freedom Agenda and to enhance our ability to press Tunisia toward becoming a model for the region. End Comment. GODEC