ALGERIA GOES WTO SHOPPING

C O N F I D E N T I A L SECTION 01 OF 02 ALGIERS 000191

SIPDIS

SIPDIS

CAIRO FOR ASEVERENS; USTR FOR PBURKHEAD

E.O. 12958: DECL: 02/10/2018
TAGS: ETRD WTO ECON PREL AG
SUBJECT: ALGERIA GOES WTO SHOPPING

REF: 07 ALGIERS 1252

Classified By: Ambassador Robert Ford; reasons 1.4 (b) and (d).


1. (C) SUMMARY: Following the February 4 visit of European
Union Trade Commissioner Peter Mandelson to Algiers, EU
diplomats told us the Algerians were "forthcoming and eager"
on WTO accession, but the Europeans remain skeptical of rapid
progress. They felt the Algerians were shopping for the
easiest way into the WTO, one that would require a
minimum of structural change. The Algerians, they said,
became frustrated by the EU's unyielding position on WTO
standards, believing the Europeans were "not doing enough" to
help Algeria's WTO efforts. The EU presented standard WTO
positions on creating a uniform system of bilateral tariffs
and eliminating fuel subsidies. The Algerian response,
according to the diplomats, reflected a "completely different
and socialist mentality." The EU delegate in Algeria told
Ambassador February 13 that the time was "perfect" for the
U.S. to deliver a message on specific next steps on WTO to
the Algerian government, since the Austrian Commissioner for
Foreign Affairs planned to deliver a similar message in a
March visit to Algeria. He cautioned, however, against
insisting the Algerians present their WTO documents in
English, believing this was unnecessarily complicating
matters for Algeria. END SUMMARY.

ALGERIANS SHOPPING FOR EASY ENTRY
--------------


2. (C) German diplomat Benedikt Zanker who, like his UK and
French counterparts, received a detailed briefing on
Mandelson's visit, told us on February 7 that Mandelson came
to Algeria for a general assessment of trade relations
within the context of the EU-Algerian Association Agreement
(reftel. Mandelson was "not prepared" to get into the
details of WTO accession criteria with the Algerians. Zanker
said that the Germans did not question the Algerians'
enthusiasm for the WTO but said that Algeria was "misguided"
in thinking that if it searched and pushed hard enough, it
would somehow find an easier and less painful way into the
WTO. The Germans believed the Algerians were probing the EU,
individual EU member states, the U.S. and Canada to see if
anyone would help it "negotiate" on WTO accession criteria.
UK diplomat Simon Dennison voiced the same impression to us
on February 6, saying that the Algerians had accused the EU
of "not doing enough" to support them because the EU was not
negotiating on WTO accession criteria and not walking Algeria
through the necessary accession steps.

EUROPEANS SENSE WTO MOVEMENT
--------------


3. (C) EU Delegate Wolfgang Plotze told Ambassador on
February 12 that Mandelson concluded that "there was
movement" on the WTO, and that he found the Algerians to be
forthcoming. Plotze said the European trade relationship
with Algeria required patience, noting that the WTO process
with Algeria began 20 years ago while the first actual
meeting only happened 10 years ago. Plotze said that things
have changed inside Algeria since then -- enough that he
believed the Algerian officials could eventually secure
consensus within the government and broader population to
back WTO accession. Plotze told us that the Austrian
Commissioner for Foreign Affairs would visit Algeria in
March, and would present a more specific message to the
Algerians on the next steps for WTO accession. Because of
this, he said the time was "perfect" for the U.S. to demarche
the Algerian government with a similar message.

EU AMBASSADOR: "DON'T INSIST ON ENGLISH"
--------------


4. (C) Plotze, however, cautioned against insisting the
Algerians present their WTO documents in English. French
is an official WTO language, he said, and the Algerians have

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difficulty securing quality translations. Plotze, who worked
for seven years in Geneva, said that the Algerians could rely
on the existing translation service in Geneva and focus
instead on the technical elements of their submission.
Ambassador noted that many other countries worked in English
even if English is not their native language and most
countries negotiating with Algeria prefer to use English.
Plotze was unmoved.

A LINGERING SOCIALIST MENTALITY
--------------


5. (C) UK diplomat Dennison agreed that Algeria now is more
able than ever before to sell WTO internally, but noted
there was still a ways to go. He said that his embassy
believed there were some Algerian officials who understood
that WTO accession criteria were objective. The majority,
however, still believed that WTO was something to be
negotiated in a bilateral context rather than an
international standard. French diplomat Francois Penguilly
told us on February 7 that the French message to the
Algerians on WTO was clear: WTO standards are not open for
negotiation, and France remains ready to advise in taking
steps towards accession. Penguilly conceded that the French
did not have much traction with Algeria on WTO.


6. (C) Penguilly said that France had stressed to the
Algerians the need to harmonize a chaotic system of bilateral
tariffs and to eliminate domestic subsidies, particularly on
fuel. On this last point, Penguilly said, the French had run
into a real impasse. The Algerians, according to Penguilly,
see the incredibly low price of fuel inside Algeria (unleaded
gasoline, for example, costs approximately USD 1.25 per
gallon) as an incentive to foreign investors. He said the
Algerians insisted passionately that low domestic fuel costs
would be the deciding factor for businesses torn between
setting up in Algeria or in its more expensive Maghreb
neighbors. (NOTE: Peter Walters of U.S. company Guardian
Industries told us during a July 2007 visit that his firm was
considering building a glass production factory in Algeria
because of the low cost of natural gas. End note.)
Penguilly said the subsidy impulse was deeply buried in the
Algerian psyche, and it would take much effort to change it,
regardless of the pace of WTO accession.

COMMENT: NEW OPENINGS, HOWEVER SMALL
--------------


7. (C) Energy subsidies will indeed be sensitive. Already
Algerian Energy Minister Khellil is reported in the media
several times in the past two weeks as insisting that
domestic gas prices include all costs and a small profit
margin as well. In our own conversations with Algerian top
leaders, we have found very little understanding even of the
concept of international market prices for natural gas that
would be comparable to domestic pricing.


8. (C) The EU diplomats we spoke to agreed that the
Mandelson visit did not break new ground on the WTO with the
Algerians, nor did it delve into the details of specific
steps Algeria needed to take towards accession. However,
they did sense an opening both at the recent Geneva meetings
and during the Mandelson visit that they believed present a
moment of opportunity. All shared the sense that Algeria was
far more comfortable pursuing bilateral trade negotiations
even though it had realized that the WTO would be necessary
medicine for its economy, as Zanker put it. The EU's Plotze
supported a coordinated EU-U.S. approach, and noted that both
were already delivering the same basic message. Penguilly
took the long view, concluding that because the Algerians
were still emotional about any steps taken to bend their
economy to standards they perceive to be Western, progress
would still be slow and difficult to
predict.
FORD