Identifier
Created
Classification
Origin
08MUSCAT265
2008-04-07 13:05:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Muscat
Cable title:  

OMAN TEXTILES INDUSTRY LOOKS TO FTA FOR REBOUND

Tags:  ETRD ECON KTEX MU 
pdf how-to read a cable
VZCZCXYZ0022
RR RUEHWEB

DE RUEHMS #0265 0981305
ZNR UUUUU ZZH
R 071305Z APR 08
FM AMEMBASSY MUSCAT
TO RUEHC/SECSTATE WASHDC 9460
INFO RUCPDOC/DEPT OF COMMERCE WASHDC
UNCLAS MUSCAT 000265 

SIPDIS

SENSITIVE
SIPDIS

STATE FOR NEA/ARP, EEB/TPP/ATT/TPA
STATE PASS USTR FOR CMILLER
COMMERCE FOR ITA THOFFMAN

E.O. 12958: N/A
TAGS: ETRD ECON KTEX MU
SUBJECT: OMAN TEXTILES INDUSTRY LOOKS TO FTA FOR REBOUND

-------
Summary
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UNCLAS MUSCAT 000265

SIPDIS

SENSITIVE
SIPDIS

STATE FOR NEA/ARP, EEB/TPP/ATT/TPA
STATE PASS USTR FOR CMILLER
COMMERCE FOR ITA THOFFMAN

E.O. 12958: N/A
TAGS: ETRD ECON KTEX MU
SUBJECT: OMAN TEXTILES INDUSTRY LOOKS TO FTA FOR REBOUND

--------------
Summary
--------------


1. (U) Oman's garment and textiles industry continues to
shrink in the post-quota era, but the pending implementation
of the U.S.-Oman Free Trade Agreement (FTA) holds out the
promise of a modest sector revival in the eyes of Omani
government officials and remaining private firms. End
Summary.

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Not Very Competitive at Present
--------------


2. (U) On April 1, USTR Deputy Textiles Negotiator Caroyl
Miller and Econoff met with Omani Center for Investment
Promotion and Export Development (OCIPED) Advisor K.
Venkatesan to discuss the promotion of Oman's textile
industry under the FTA. Venkatesan replied that the number
of players in Oman's textile industry had fallen from 30 to
three after the removal of the U.S. quota system. Without
the quotas, Oman did not enjoy a competitive advantage over
its rivals, since materials and most labor were imported.
That being said, Venkatesan noted that OCIPED was looking
closely at supporting a revival of Oman's apparel industry
once the FTA came into effect, given the organization's goal
of reaching $5 billion in non-oil Omani exports by 2010. He
took onboard Miller's suggestions for reaching out to the
U.S. market and committed to exploring OCIPED involvement in
promoting a trade delegation to the U.S.


3. (SBU) In subsequent meetings, both Sami al-Sahib, Director
of Industrial Development at the Ministry of Commerce and
Industry, and Jameel Sultan, Vice Chairman of the Oman
Chamber of Commerce and Industry, echoed Venkatesan's view
that the textile industry was in desperate need of incentives
under the FTA in order to remain in existence. Sahib stated
that once the FTA becomes operational, the Ministry would
look into licensing new garment and textile operations,
especially to promote the industry in the secondary cities of
Salalah, Sohar and Nizwa. He believed that training courses
would be necessary in order for company officials to unlock
the FTA's potential, and asked for clarification on how
towels and bed linens, two popular Omani exports, would be
treated under the FTA.


4. (SBU) Sultan questioned whether the industry was ready to
take advantage of the FTA, given the speed by which it
deteriorated in the post-quota era. He remarked, "After the
lifting of the quotas, Oman lost everything." Remembering
that the industry used to have a "large voice" at the
Chamber, Sultan said that garment firms had the potential of
employing a large number of Omanis. He cautioned, however,
that, "Time was short for the industry to expand, and it
would need time to find ways to benefit from the FTA."

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Waiting for the FTA
--------------


5. (U) On April 2, Miller and Econoff discussed how the
private sector could benefit from the FTA with Yousef Ahmed,
CEO of Oman Textile Mills, the only fabric producer in Oman.
Ahmed explained that the factory mainly exported its products
to the countries of the Gulf Cooperation Council and Sudan.
In light of the upcoming implementation of the FTA, Ahmed
said that he was looking very closely at entering the U.S
market. He found that buying houses were looking away from
China toward other suppliers, and that Oman Textile Mills,
with the benefit of the FTA, hoped to capitalize on this
trend by offering higher-end product lines.


6. (U) Miller and Econoff also visited the premises of Azaiba
Clothing Factory, one of three remaining apparel
manufacturers in Oman. Managing Director Suleiman al-Kharusi
noted that the company reduced its employment rolls from 450
employees to 180 following the removal of the quota. He
continued that his firm, owned by the Royal Oman Police
Pension Fund, remains in business by producing uniforms for
various GCC police and military units, as well as clothing
for oil and gas firms. The director expected Azaiba's
fortunes to improve dramatically once the FTA enters into
force. For this reason, the firm has kept in close contact
with its former buyers -- such as the Gap, Wal-Mart, Express,
and Tommy Hilfiger -- and retains floor space to accommodate
an up-tick in business.
GRAPPO