Identifier
Created
Classification
Origin
08BEIRUT1248
2008-08-25 15:25:00
CONFIDENTIAL
Embassy Beirut
Cable title:  

LEBANON: PROGRESS TOWARDS WTO ACCESSION IS SLOW,

Tags:  PREL PGOV ECON ETRD LE 
pdf how-to read a cable
VZCZCXRO8025
PP RUEHAG RUEHBC RUEHDE RUEHKUK RUEHROV
DE RUEHLB #1248/01 2381525
ZNY CCCCC ZZH
P 251525Z AUG 08
FM AMEMBASSY BEIRUT
TO RUEHC/SECSTATE WASHDC PRIORITY 2844
INFO RUEHEE/ARAB LEAGUE COLLECTIVE
RUCNMEM/EU MEMBER STATES COLLECTIVE
RUCNDT/USMISSION USUN NEW YORK 2780
RUEHNO/USMISSION USNATO 3020
RHMFISS/CDR USCENTCOM MACDILL AFB FL
RHEHAAA/NSC WASHDC
C O N F I D E N T I A L SECTION 01 OF 02 BEIRUT 001248 

SIPDIS

DEPT FOR NEA/FO, NEA/ELA, EEB
ALSO FOR IO ACTING A/S HOOK AND PDAS WARLICK
USUN FOR KHALILZAD/WOLFF/SCHEDLBAUER
NSC FOR ABRAMS/SINGH/YERGER/MCDERMOTT

E.O. 12958: DECL: 08/22/2018
TAGS: PREL PGOV ECON ETRD LE
SUBJECT: LEBANON: PROGRESS TOWARDS WTO ACCESSION IS SLOW,
PROBLEMS REMAIN ON BILATERAL TRACK

Classified By: Charge William Grant for reasons 1.4 (b) and (d).

SUMMARY
-------

C O N F I D E N T I A L SECTION 01 OF 02 BEIRUT 001248

SIPDIS

DEPT FOR NEA/FO, NEA/ELA, EEB
ALSO FOR IO ACTING A/S HOOK AND PDAS WARLICK
USUN FOR KHALILZAD/WOLFF/SCHEDLBAUER
NSC FOR ABRAMS/SINGH/YERGER/MCDERMOTT

E.O. 12958: DECL: 08/22/2018
TAGS: PREL PGOV ECON ETRD LE
SUBJECT: LEBANON: PROGRESS TOWARDS WTO ACCESSION IS SLOW,
PROBLEMS REMAIN ON BILATERAL TRACK

Classified By: Charge William Grant for reasons 1.4 (b) and (d).

SUMMARY
--------------


1. (SBU) Almost nine years after its initial World Trade
Organization (WTO) membership application, Lebanon is moving
forward on the multilateral track of the accession process,
and only minor issues remained after the last Working Party
(WP) meeting in May 2007. However, problems remain on the
bilateral track with the United States, particularly in terms
of Lebanon,s lack of progress on liberalizing trade in
goods. The date of the next WP meeting has not yet been set;
sources at the Ministry of Economy and Trade (MOET) expect it
to take place before the end of 2008. Trade officials
expressed intention to join, but there does not appear to be
widespread political will to make this a priority issue
(reftel). Given the short mandate of the new Lebanese
government and focus on preparations for the 2009
parliamentary elections, we do not expect accession to take
place during the current government,s term. The current
MEPI grant to the contractor helping the GOL with WTO
acession, Booz Allen Hamilton, expires in December and
embassy view is that there should be no more extensions to
the contact based on the same workplan. End summary.

WTO MULTILATERAL NEGOTIATIONS
MOVING FORWARD...
--------------


2. (SBU) Despite the political stalemate in Lebanon over the
past two years, the MOET has been moving forward with the WTO
accession process. Lebanon applied for accession to the WTO
in early 1999, and had its first Working Party (WP) meeting
in Geneva in 2002. (At the Working Party, a group of WTO
members negotiate multilaterally with the applying country;
bilateral negotiations take place in parallel.) Though they
have moved forward very slowly, the Lebanese have made
significant progress on the multilateral track. In
particular, the Lebanes have made progress in their direct

negotiations with the WTO, with the help of USG-funded
assistance programs and consultants who have written and
filed the bulk of the documentation needed for accession over
the last eight years. In other words, Lebanon has answered
all questions from WP members and sent clarifications
regarding its trading regime and legislation as requested,
and has so far not received any additional requests for
clarification from the WTO.


3. (SBU) Since 2000, through USAID and more recently through
MEPI, the USG has been financing a WTO accession project at
the MOET, providing technical assistance and institutional
capacity building to the GOL as it moves down the
multilateral track toward WTO accession. A delegation from
Booz Allen Hamilton (BAH),which has been contracted with
running the project since 2003, met with Minister of Economy
and Trade Mohammad Safadi on July 22 to provide an overview
of upcoming projects, which include preparing a study on the
impact of WTO accession in Lebanon, as well as a
communication strategy to increase awareness and highlight
the benefits of accession. In a separate meeting, emboffs
from Pol/Econ, MEPI, and AID offices told BAH that the
program would be re-competed for public bids if the GOL could
demonstrate, concretely, a will and ability to move forward
on accession now that there is a functioning cabinet and
parliament.


4. (SBU) Advisor to Minister Safadi Lama Oueijan told us this
month that the MOET held a video conference with USTR in June
regarding WTO multilateral negotiations, which helped clarify
pending issues related to trading rights. After the last WP
meeting in May 2007 in Geneva, the head of the BAH WTO
accession project noted that all pending issues on the
multilateral track were &technical and solvable.8
Moreover, at the end of the meeting, WP members recommended
that the final draft WP report be circulated among all WTO
members for comments, a step that positions Lebanon to close
the multilateral track during the next WP meeting. Oueijan
recently noted that the next such meeting is expected before
the end of the year. We will watch carefully to see if these
targets are met.

BEIRUT 00001248 002 OF 002



...WHILE PROBLEMS REMAIN ON THE
BILATERAL TRACK WITH THE U.S.
--------------


5. (SBU) Meanwhile, obstacles to accession remain on the
bilateral track, through which each WTO member state set its
own conditions on Lebanon,s WTO accession. During the last
WP meeting, bilateral negotiations on goods and services took
place with the USG, EU, Australia, Japan, Cuba, Canada, and
Taiwan. Contacts present at the meeting told us that the
&toughest8 questions for Lebanon originated both from the
U.S. and EU delegations. According to Oueijan, bilateral
issues with the USG related to trade in goods and services
were last handled through an exchange of letters sent by the
GOL to USTR prior to May 2007. On the services offers,
Lebanon met 70 percent of the U.S. request, Oueijan claimed,
but noted that Lebanon has received additional requests from
USTR and is currently working to address them. She expects
Lebanon's response on services offers to be sent to USTR by
October 2008.


6. (SBU) As for the goods offers, 60 percent of the U.S.
requests have been met, she said. However, "the remaining 40
percent put a lot of pressure on industrialists and the
agriculture sector, as well as strain the Treasury at a time
when Lebanon is facing major debt restructuring problems,"
Oueijan said. Because of these budgetary problems, Lebanon
cannot drop its customs duties below the currently applied
tariff rates on the 40 percent remaining goods, she argued,
while USTR is requesting zero tariffs.

COMMENT
--------------


7. (C) Lebanon,s progress on WTO accession has been slow,
largely due to the political impasse and security situation
in recent years. However, with the current relative
political stability and the parliamnt now back in session,
the GOL has an opportuniy to pass needed legislation, much
of which has een waiting before a non-functioning parliament
for the last two years. The recently ratified ministerial
policy statement clearly specified Lebanon,s WTO accession
as one of its economic priorities, although many question how
much the cabinet will be able to achieve during its short
term and with higher priority issues (security, the economy)
demanding its attention. The current cabinet will be in
place until the 2009 elections, expected to occur in May of
next year.


8. (C) Embassy Beirut believes that the USG should tie future
USG assistance on this issue to concrete progress by the GOL.
When the current MEPI grant to BAH expires in December, it
will be time for the Embassy to re-examine the program and
submit any new assistance Requests for Proposal for public
competition. We believe that there should be no more
automatic "bridge" extensions to the current contractor to
continue the same workplan. End Comment.
GRANT