Identifier
Created
Classification
Origin
08ABUDHABI1265
2008-11-06 06:33:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Abu Dhabi
Cable title:  

USTR SCHWAB PROMOTES BILATERAL TRADE AND INVESTMENT IN

Tags:  ETRD ECON EFIN PGOV AE 
pdf how-to read a cable
VZCZCXRO4287
RR RUEHDE RUEHDIR
DE RUEHAD #1265/01 3110633
ZNR UUUUU ZZH
R 060633Z NOV 08
FM AMEMBASSY ABU DHABI
TO RUEHC/SECSTATE WASHDC 1708
INFO RUEHDE/AMCONSUL DUBAI 8016
RUEHZM/GULF COOPERATION COUNCIL COLLECTIVE
UNCLAS SECTION 01 OF 02 ABU DHABI 001265 

SENSITIVE
SIPDIS

STATE FOR NEA/ARP AND EEB
STATE PLEASE PASS USTR (MOWREY, BUNTIN)

E.O. 12958: N/A
TAGS: ETRD ECON EFIN PGOV AE
SUBJECT: USTR SCHWAB PROMOTES BILATERAL TRADE AND INVESTMENT IN
UAE

ABU DHABI 00001265 001.2 OF 002


UNCLAS SECTION 01 OF 02 ABU DHABI 001265

SENSITIVE
SIPDIS

STATE FOR NEA/ARP AND EEB
STATE PLEASE PASS USTR (MOWREY, BUNTIN)

E.O. 12958: N/A
TAGS: ETRD ECON EFIN PGOV AE
SUBJECT: USTR SCHWAB PROMOTES BILATERAL TRADE AND INVESTMENT IN
UAE

ABU DHABI 00001265 001.2 OF 002



1. (SBU) Summary: United States Trade Representative Susan Schwab
visited the UAE October 21-23 for a series of discussions with
government officials and representatives of Dubai's private sector.
She reiterated the United States' strong commitment to an open and
dynamic trade relationship with the UAE, particularly reinforcing
with the private sector that the U.S. remains "open for business,"
despite the current financial crisis. She acknowledged difficulties
(some of which were raised by various UAE private sector reps)
preventing the conclusion of a bilateral Free Trade Agreement (FTA),
including Emirati reluctance to take on commitments to liberalize
aspects of the UAE's investment regime (particularly with respect to
the energy sector). However, Amb. Schwab urged using the existing
"TIFA-Plus" channel to formalize agreements or other bilateral
arrangements in those areas which had progressed under the FTA
talks. UAEG officials agreed to revisit the possibilities for
bilateral action under TIFA-Plus. They also described remaining
political hurdles to an EU-GCC FTA, despite efforts by the French EU
Presidency to conclude the negotiations. End Summary.

U.S. Firms Upbeat
--------------


2. (SBU) USTR Schwab began her visit to the UAE in Dubai with a
series of discussions with U.S. companies with a significant
regional presence, including General Motors, General Electric, and a
roundtable with executives from a variety of U.S. firms. The
messages she heard were consistent: Dubai remains a dynamic and
profitable environment for U.S. companies, but there exist
significant challenges. Those cited repeatedly included the U.S.'s
Section 911 taxation laws (which have the effect of making Americans
non-competitive for overseas jobs),difficultly complying with the
GCC's unique standards requirements and the region's disadvantageous
Commercial Agency laws, which often impose strict penalties on
foreign firms for ending their relationships with local agents, even
when contracts have reached their expiration dates.


3. (SBU) The American representatives were eager to hear about the

prospects for conclusion of a U.S./UAE FTA. They described
widespread commercial successes in the UAE, in many cases confiding
that their local/regional divisions were more profitable at the
moment than their U.S.-based operations. Nonetheless, it was clear
that U.S. business is eager to see formalized an improved bilateral
trade relationship as a means of protection against the
deteriorating global financial outlook. USTR Schwab cautioned that,
while much progress had been made in the FTA talks, the "last ten
percent is always the most difficult" in FTA negotiations and it was
not clear the UAEG was prepared to make the concessions necessary to
finalize the agreement. She assured them, however, that the U.S.
was prepared to memorialize progress already made in the
negotiations through a series of individual agreements and
arrangements, where possible, that could be concluded within the
existing Trade and Investment Framework Agreement (TIFA) "TIFA-Plus"
consultative mechanism.

Dubai Private Sector More Circumspect
--------------


4. (SBU) USTR Schwab also met with board members from the Dubai
Chamber of Commerce and Industry (DCCI),Dubai's most important
private sector organization representing 108,000 members across all
sectors. The DCCI leaders were less enthusiastic than their
American counterparts about the benefits of a formal free trade
relationship with the U.S. It became evident in the discussion
that, in the eyes of DCCI, the private sector had not been
sufficiently consulted throughout the FTA negotiations and could not
be expected to implement what the UAEG had negotiated on its behalf.
Board members described their own narrow objectives vis-a-vis trade
with the U.S. as expanding the UAE's market share and its
investments in the U.S. (Note: Despite USTR Schwab's repeated
assurances that the U.S. is open for business with the UAE, there
remain obvious scars from the 2006 Dubai Ports World debacle and
lingering concern that politics could, again, jeopardize legitimate
investment decisions to the detriment of the overall bilateral
relationship. End Note)


5. (SBU) DCCI aired a number of frustrations associated with doing
business with the United States. Notably, they complained about
lengthy visa processing requirements (the Consul General explained
the USG is constantly seeking ways to expedite and improve services
for legitimate visitors); difficulties Arab travelers face at U.S.
ports of entry; the propensity of U.S. business to immediately take
disputes to court; and the mixing of political and economic issues
(one member gave the example of U.S. attempts to limit legitimate
trade in non-controlled items with Iran as damaging to DCCI members'
attempts to do business with U.S. firms).

Minister of Trade Committed

ABU DHABI 00001265 002.2 OF 002


to Improving Trade Relationship
--------------


6. (SBU) During their October 23 meeting, USTR Schwab and UAE
Minister of Foreign Trade Sheikha Lubna Al Qasimi discussed ways to
restore momentum to the stalled Trade and Investment Framework
Agreement (TIFA) "TIFA Plus" process. Sheikha Lubna said that the
UAE prides itself on being the largest export market for U.S. goods
in the region and that this trade relationship must continue. USTR
Schwab encouraged the UAE to consider a series of bilateral
agreements or other arrangements that would promote trade and
investment ties. Sheikha Lubna expressed interest in the
Anti-Counterfeiting Trade Agreement (ACTA) and said she would push
the Ministry of Economy to join the ACTA negotiations as an active
participant. She also said that the UAE remains interested in
concluding a Bilateral Investment Treaty (BIT) and a double taxation
treaty with the United States and requested a model e-commerce
agreement text for the UAEG to review. Sheikha Lubna promised to
follow up with others in the UAEG to encourage more active Emirati
engagement in these areas.


7. (SBU) Turning to the suspended US-UAE FTA negotiations, Sheikha
Lubna said that the new Ministry of Foreign Trade (established in
February 2008) still has difficulties convincing other UAE agencies,
which retain the lead on some key trade and investment issues, to
commit to formal FTA obligations with the United States. Sheikha
Lubna told USTR Schwab that "new thinking" and renewed U.S. trade
promotion authority will be needed before the UAEG is ready to
restart FTA negotiations. In addition, she opined that it would be
essential to convince stakeholders (such as banks and private sector
entities) of the benefits of the FTA. Sheikha Lubna and USTR Schwab
agreed that both sides should engage the US and UAE private sectors
to promote support for future efforts to liberalize bilateral trade
and investment.

EU-GCC FTA
--------------


8. (SBU) During USTR Schwab's meetings, UAE officials said the
proposed EU-GCC free trade agreement would likely need a political
push for conclusion. Sheikha Lubna told USTR Schwab that the
agreement had progressed rapidly of late thanks to a strong push
from France, in its role as EU President, and particularly from
French President Sarkozy. Sheikha Lubna said Sarkozy had also
written to GCC Secretary General Abdulrahman al-Attiyah, then sent
Minister of State for Foreign Trade Affairs Anne-Marie Idrac to
follow up with individual GCC member states. Sheikha Lubna said the
strong ties between France and the current GCC president, Qatar,
were also helpful.


9. (SBU) Minister of State for Foreign Affairs Anwar Gargash, in a
separate meeting on October 23, was skeptical such a political
decision would be forthcoming. He described the EU negotiations as
the "longest trade negotiations in history" and accused the EU of
inserting at the eleventh hour a "political clause" on human rights.
Echoing the DCCI's earlier complaints about inserting non-trade
issues into negotiations, Gargash said the GCC position wouldn't
allow the UAE to accept such an insertion. Given that human rights
have become an almost required component of EU trade negotiations,
Gargash was doubtful the agreement would be concluded.


10. (U) This cable has been cleared by USTR Schwab's party.
OLSON