AMBASSADOR AND COMMERCE MINISTER DISCUSS TRADE AND

UNCLAS SECTION 01 OF 02 ABUJA 001314

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TAGS: ETRD PREL EINV ECON PGOV KIPR EPET NI
SUBJECT: AMBASSADOR AND COMMERCE MINISTER DISCUSS TRADE AND
INVESTMENT ISSUES

SENSITIVE BUT UNCLASSIFIED -- NOT FOR INTERNET DISTRIBUTION.


1. (SBU) Summary: Ambassador and Commerce Minister Ugwuh
discussed Nigeria's tariff barriers and bilateral trade and
investment issues, the upcoming AGOA Forum, GON efforts to
expand value-added manufacturing and increase non-oil
exports, The bilateral investment treaty (BIT),prospects for
an intellectual property (IP) commission and the Doha Round
on June 10. The Minister admitted that Nigeria's excessively
high tariffs and large number of import bans were due to fear
of competition. He said he and the Finance Minister were
working to lower tariffs and eliminate bans but had had
resistance particularly from the Agriculture Minister (see
septel). He requested support in identifying potential
investors for specific sectors such as fertilizer production
to help develop productive capacity. Minister Ugwuh said a
draft proposal for a BIT was with President Yar'Adua and he
hoped a BIT could be signed by the next TIFA Council. He
sought assistance on the proposed IP Commission and noted the
GON and other African countries needed to focus more on the
Doha Round. The Ambassador and Minister agreed to establish
working groups on AGOA, TIFA/BIT, Investment and IPR and find
ways to encourage others in the GON to support elimination of
trade barriers. End summary.


2. (U) Ambassador met with Minister of Commerce and Industry
Charles Ugwuh at MCI on June 10. The Minister was
accompanied by senior ministry officials and representatives
of the Nigerian Export Promotion Council (NEPC). Acting AID
Mission Director and Econ Counselor accompanied Ambassador.
Subsequently the Ambassador and Ugwuh opened the U.S.-funded
Intellectual Property workshop on June 24.

Nigeria's Trade Regime
--------------

3. (SBU) The Ambassador reported to Minister Ugwuh that the
USG was working hard to change the paradigm in bilateral
economic relations, including by sponsoring a seminar on
project finance for electric power projects, a workshop to
familiarize Nigerian businesses with the products and
services of U.S. credit and technical assistance agencies,
and a range of efforts to support the growth of non-oil
exports under the African Growth and Opportunity Act (AGOA).
At the same time, the GON needed to reform its tariff and
trade regime, to enhance two-way trade and allow growth in
Nigeria's non-oil sectors. Ugwuh admitted the GON maintained
high tariffs and import bans "out of fear" of competition
from manufacturers in other countries. He said that he and
Finance Minister Usman were working together to lower tariffs
and eliminate bans. At the same time, he was looking to
establish industrial operations where Nigeria could gain a
competitive edge, e.g. plastics or other oil and gas
derivatives. He said Nigeria was "caught in a vicious
cycle," and inter alia not taking proper advantage of the
African Growth and Opportunity Act (AGOA) although he still
had his own reservations on AGOA's benefit. Ambassador
pushed back on this, noting the advantage to Nigeria's SME's.

Bilateral Trade and Investment
--------------

4. (SBU) The Minister welcomed the Ambassador's recent
initiatives to move forward bilateral economic relations and
said he looked forward to regular contact. He lamented the
lack of American investments outside of oil and gas, and said
he greatly valued the potential for U.S. technology to
contribute to Nigerian efforts to boost value-added
production. He admitted it was difficult to "arrange
everything perfectly" in terms of the investment climate that
U.S. companies wanted first, but recommended picking a few
areas, including the power sector and fertilizer production,
where he could talk specifics with U.S. firms, asking "What
do you need to do a deal?" so he could then go to the
President to get the right terms and conditions in place. In
the meantime, he was working with the Minister of State for
Gas to allocate gas supplies for industrial processing,
though there "was still untidiness" on gathering presently
flared gas. The Ambassador noted the importance of his
points, but said lack of transparency and sanctity of
contracts are a problem, noting that one of the frameworks
important for U.S. companies to see is a bilateral investment
treaty. "American investors put great stock in the existence
of BITs and a strong, working Trade and Investment Framework

ABUJA 00001314 002 OF 002


Agreement (TIFA)", she said. The Minister replied that a
draft proposal for a BIT was with President Yar'Adua and he
was hopeful that the U.S. and Nigeria could reach agreement
on a BIT before the next TIFA Council.

AGOA Forum
--------------

5. (SBU) The Ambassador emphasized that the July 14-16 AGOA
Forum in Washington, DC would be focused on private sector
investment and that the GON Delegation could also look for
areas to move forward with the TIFA, including on
intellectual property rights (IPR). Nigerian Export
Promotion Council (NEPC) representatives detailed their
recent efforts to boost AGOA exports, including through a
textiles training center in Lagos and proactive efforts to
enter into contracts with U.S. buyers. There were 140
machines at the center and over 200 entrepreneurs had been
trained recently, with three million dollars in contracts
signed. There remained a great need to develop human
capital. NEPC had set a goal of 25,000 textiles and related
jobs by the end of 2009. There was a need to source
equipment for emerging enterprises. Overall, NEPC was
looking for areas where Nigerians could create value-added
operations and then scale out. Fish, shea butter and nuts
were also promising areas. NEPC and business people had a
growing appreciation of the importance of packaging and
standards. Buyers from other countries including Japan had
asked whether products were "approved in the U.S." NEPC
appreciated USAID and USDA support for regional workshops on
packaging and standards. Acting AID Mission Director told
the Minister that AID would be happy to work with the
Ministry of Commerce and Industry to address specific issues,
including product tracing and identifying markets. The
Ministry was also trying to develop existing industrial
development centers, which had been slated for privatization,
as platforms to support the development of small and medium
enterprises (SMEs) in line with the GON's cluster strategy
for industrial development.

Intellectual Property (IP) Commission
--------------

6. (SBU) Minister Ugwuh said latest GON thinking was to set
up a broad-based IP Commission, along the lines of the
existing Corporate Affairs Commission. Though different
ministries and agencies had some IPR responsibility, e.g.
"trademarks belonged firmly in MCI," there was an emerging
consensus to set up an IPC. The GON welcomed any possible
U.S. assistance to that end, including on-site advisors and
technical assistance to answer basic questions such as "How
to conclude registration processes?" and "How to store
registrations?" Subsequently the Ambassador and Ugwuh opened
a USG funded IPR conference on June 24 where the ministers
made promissing remarks on IPR issues and redressing concerns
at the ports where he stated the goal is to clear goods
within 48 hours.

Doha Round
--------------

7. (SBU) The Minister stated that African countries had been
preoccupied with Economic Partnership Agreement discussions
with the EU, but needed to devote more attention to the Doha
Round. Nigeria would be working with other African countries
to harmonize South-South positions towards making progress in
the Doha Round.

Establishment of Bilateral Working Groups
--------------

8. (SBU) The Ambassador and Minister Ugwuh agreed to
establish a working group that would address these issues in
an effort to improve dialogue and move U.S. goals and
objectives forward:

-- AGOA (USAID - NEPC and MCI SME Department);

-- TIFA/BIT (Econ Counselor - MCI Trade Director);

-- IPR (Econ - MCI Perm Sec); and

-- Investment (Econ Counselor - Nigeria Investment Promotion
Commission).

SANDERS