ALGERIAN INDUSTRY MINISTER REAFFIRMS INTEREST IN

C O N F I D E N T I A L ALGIERS 000887 SIPDIS STATE FOR NEA/MAG STATE PASS FOR USTR COMMERCE FOR NATE MASON E.O. 12958: DECL: 10/01/2019 TAGS: ETRD EINV EFIN ECON AG SUBJECT: ALGERIAN INDUSTRY MINISTER REAFFIRMS INTEREST IN WTO Classified By: David D. Pearce, Ambassador. Reason: E.O. 12958 1.4 (b ),(d) ¶1. Summary: Minister of Industry told USTR Director Burkhead that Algeria remains interested in acceding to the WTO and engaging with the U.S. in the framework of our bilateral Trade and Investment Framework Agreement. He nevertheless believed the government had to exert more control over imports and repatriations of profits by foreign companies. End summary. ¶2. USTR Director for Middle Eastern and European Trade Affairs Paul Burkhead, accompanied by the Ambassador and Pol-Econ Chief (notetaker),met with Minister of Industry and Investment Promotion Abdelhamid Temmar in his offices September 27. Temmar was accompanied by his chief of staff, and the ministry's Director General for Investment, Hamoud Benhamdine. The meeting was conducted in English. Burkhead led off by emphasizing that the U.S. wanted to expand trade and investment ties with Algeria. Terrar immediately volunteered that Algeria still wanted to accede to the WTO and join the world economy. The more open the Algerian economy was, the more Algeria would win. After discussions three years ago, Algeria thought all had been settled, but progress had then stalled. Algeria did not know how to proceed or how to ''improve our answers.'' ¶3. Burkhead underscored that the U.S. stood ready to partner with Algeria in its accession efforts. He proposed an informal meeting between USTR and Algerian representatives to discuss where we stood on WTO accession, and our bilateral trade and investment relationship -- the latter in the context of the U.S.-Algeria Trade and Investment Framework Agreement, which had not been used since 2004. Temmar agreed this would be desirable, although the Minister of Commerce would take the lead. ¶4. Temmar brought up the 2009 Complementary Finance Law, which he admitted included measures that business questioned, and that could be interpreted as the beginning of a restoration of state management of the economy. He noted as background that while the private sector was responsible for 75-80 percent of GDP, state owned industry produced 70 percent of Ageria's industrial product, a legacy of Algeria's socialist past. Algeria had to protect and build up this industry. Temmar explained that the Algerian state was rich, and had decided to emphasize joint ventures between Algerian and foreign partners as the preferred form of foreign investment. He claimed discussions were underway for approximately 15 such ventures, including in automobiles and aluminum. The government would give foreign partners full management rights for at least 10 years. ¶5. Burkhead interjected that the minimum 51 percent Algerian share requirement for all new foreign investments would be an obstacle for U.S. investors. Temmar replied that the Algerian government envisaged the government taking an average 15 percent share, leaving the rest of the Algerian component to domestic private investors, which would leave the U.S. investor a relative majority stakeholder. ¶6. Burkhead stated that the limitation on repatriation of profits would also discourage investors. Temmar argued that the government had reacted to the Egyptian wireless operator Jezzi's attempt to transfer USD 600 million in a single transaction. Officials had also discovered that Jezzy had not paid all its taxes. Temmar admitted that officials who were ''old socialists'' like himself had been shocked by the news of the $600 million transfer. Jezzy would have been better advised to alert the government ahead of time about such large transfers. The Minister of Industry would follow up on the case with the Ministry of Finance and Customs. Burkhead suggested to the minister that the government might have addressed the Jezzy case individually rather than implementing a response that affected all foreign companies. ¶7. Burkhead also commented that Algeria had high rates of piracy of intellectual property. Temmar admitted that IP was a new concept in Algeria, which was progressing slowly in protecting it. Algeria's IP protection office, the National Office of Copyright and Intellectual Property (ONDAPI),was under his ministry. He had just replaced its chairman. Algeria would welcome assistance from and brainstorming sessions with the U.S. Burkhead pointed out that Algeria has had a legal framework for IP protection for several years. It remained for Algeria to educate the people to create a culture of IP protection, and to enforce the law. PEARCE