TRADE DELEGATION AFFIRMS COMESA RELATIONSHIP, JUMPSTARTS

UNCLAS SECTION 01 OF 03 LUSAKA 000865 SIPDIS, SENSITIVE E.O. 12958: N/A TAGS: ECON ETRD ECIN EAGR TBIO XW ZA SUBJECT: TRADE DELEGATION AFFIRMS COMESA RELATIONSHIP, JUMPSTARTS ZAMBIA RELATIONSHIP LUSAKA 00000865 001.2 OF 003 SUMMARY -------------- ¶1. (SBU) An inter-agency trade delegation led by Assistant United States Trade Representative Florizelle Liser visited Lusaka November 1-5 to hold regional and bi-lateral trade talks. The delegation held a Trade and Investment Framework (TIFA) Council meeting with the Common Market for Eastern and Southern Africa (COMESA) Secretariat on November 2. At the TIFA meeting the two sides reaffirmed their strong partnership, discussed AGOA trade and options for enhancing U.S.-COMESA trade post-AGOA, , and pledged to work together on issues such as WTO/Doha Round and the trade aspects of the new Global Hunger and Food Security (GHFS) initiative, including a regional approach to biotech. In bilateral meetings with the Zambian government (GRZ) on November 3, the two sides agreed to start an informal working group dedicated to expanding and diversifying bilateral trade. The first working group meeting could take place, probably via digital video conference, in early 2010. The delegation also met with representatives of the Zambian private sector to discuss the challenges they face in exporting to the U.S. market. The visit resulted in significant positive press for the delegation and for U.S. trade and development policies in Zambia and the region. END SUMMARY. U.S.-COMESA TIFA MEETING -------------- ¶2. (SBU) The delegation -- which included representatives from USTR, State, Embassy Lusaka, USDA, USAID, and USAID's Regional Trade Hubs for Eastern and Southern Africa -- held a Trade and Investment Framework (TIFA) Council meeting at the COMESA Secretariat on November 2. It was the sixth meeting under the COMESA TIFA, and the first to be held at the COMESA Secretariat in Lusaka. ¶3. (SBU) At the opening of the meeting, COMESA Secretary General Sindiso Ngwenya noted that the African Growth and Opportunity Act (AGOA) provided an open door to African exporters, but that most African countries had not yet built the capacity to take full advantage of the program. He stressed that further regional integration, and intra-regional trade and investment, was the key to developing that capacity. AUSTR Liser affirmed that the U.S. partnership with COMESA was one of the strongest with an African regional organization, and that COMESA's progress in its free trade area, customs union, and agriculture and food security issues enhanced COMESA's global competitiveness. The Ambassador, who is the U.S. Representative to COMESA, surveyed the U.S.-COMESA partnership's successful history, and highlighted USG assistance to COMESA, including the new USAID USD 8 million Integrated Partnership Assistance Agreement. WTO and DOHA -------------- ¶4. (SBU) Ngwenya noted that some advanced developing countries, such as China and India, had opened their markets to African primary exports, but not to value-added products, thereby hampering the region's economic development prospects. He lamented that COMESA had not yet been granted WTO observer status, and asked for U.S. support. Liser stressed that while COMESA waited for observer status, its member countries had a large collective voice in the WTO right now. She added that the United States would welcome African members' leadership in discussing an ambitious outcome in Doha talks that would create new market access in larger developing countries' markets - especially for the value-added products of African nations. The Future of AGOA -------------- ¶5. (SBU) Liser noted that, while AGOA was at the center of the U.S.-COMESA relationship, the legislation is set to expire in 2015 and AGOA's third-country fabric provision would end in 2012. While stressing that AGOA's future would be decided by Congress, Liser challenged COMESA to think about what the future trade relationship should look like, and why the United States should extend AGOA (as COMESA has advocated) when many have argued that Africans have not taken advantage of it. Moreover, Africans are developing trade partnerships with the EU in which two-way trade benefits are being negotiated. Ngwenya argued that regional investment and trade to create manufacturing capacity in textiles and other sectors meant that Africa was "on the verge" of being able to take full advantage of the trade program. He also suggested that the post-AGOA U.S.-Africa trade relationship could be based on a "contractual arrangement" (like the EPAs with the EU) rather than a unilateral program (like AGOA). (Note: COMESA Assistant Secretary General Stephen Karangizi later testified at a November 17 U.S. Congressional hearing on the future of U.S. preference programs. Among other things, he called for "permanent" extension of AGOA.) FUTURE COLLABORATION LUSAKA 00000865 002.2 OF 003 -------------- ¶6. (SBU) The TIFA meeting concluded with a substantial list of action items for further cooperation and collaboration, including; - Possible collaboration on the WTO Doha Healthcare Sectoral, which would reduce tariffs on pharmaceutical and medical products; - Explore cooperation on trade facilitation, especially with regard to Doha; - Develop a regional AGOA strategy to ensure that an integrated COMESA can leverage comparative advantages among its member states to develop trade opportunities; - Collaborate on biotech outreach and capacity building to COMESA member countries. COMESA plans to have a biotech advisor in place in early 2010 to lead its efforts to secure acceptance of biotech by COMESA member states; - COMESA will provide its view on what the U.S.-COMESA trade environment could be post-2015 and whether/why AGOA should be extended; - Continued consultation on trade-related aspects in the COMESA region of the new Global Hunger and Food Security initiative; - Explore possible areas of cooperation on protection of intellectual property rights (IPR); and, - Review the potential marketability of products that have passed pest risk assessments, and assess prospective marketability of organic products from the region. U.S.-ZAMBIA BILATERAL TRADE -------------- ¶7. (SBU) On November 3 the delegation turned to bilateral trade, meeting with Felix Mutati, Zambia's Minister of Commerce, Trade & Industry, and a wider group of GRZ representatives to explore ways to expand and diversify bilateral trade. Repeating a common theme, Mutati lamented that while AGOA opened the door to Zambian exporters, Zambia had not yet developed the capacity to "reach the door." He stressed that the GRZ needed to address barriers to increased trade and investment, and to inform U.S. investors and importers about Zambia. To that end, he announced that the GRZ planned to launch a trade mission/road show to the United States in early 2010 to help forge private sector links between the two countries. Liser noted that an amenable business climate is the key to attracting U.S. investment. ¶8. (SBU) Liser said that the United States shared Zambia's concern over its very low volume of AGOA exports, but stressed the need for Zambian products to be marketable and competitive on the U.S. market to succeed. She told Mutati that many USG agencies were ready to work with the GRZ on trade issues, and reiterated an earlier proposal to start an informal working group on bilateral trade and AGOA that would be a first step in creating a stronger collaborative relationship. Mutati supported such a working group, noting that if the U.S. was seen to be engaged with Zambia it would give others confidence to follow. Liser cautioned Mutati that it was not enough to be engaged with the U.S. - Zambia needs to ensure that it deals with negative perceptions of its commitment to rule of law and corruption to attract significant investment and bolster trade. ¶9. (SBU) In subsequent working-level discussions between USTR and GRZ trade ministry officials, the GRZ indicated that it would be sending a letter to USTR formally supporting the working group concept and indicating that the ministry's permanent secretary would be the GRZ's point of contact. It was agreed that the two sides would aim to hold the first working group meeting, via DVC, in early ¶2010. The concept paper for the working group, which USTR originally forwarded to the GRZ in the spring of 2009, proposed to establish an interagency U.S.-Zambia working group which would seek to develop an action plan for increasing and diversifying U.S.-Zambian trade and investment, with special attention to sectors that have export potential under AGOA. ZAMBIAN PRIVATE SECTOR WEIGHS IN -------------- ¶10. (SBU) As a follow-on to the bilateral meetings, the delegation met with representatives of the Zambian private sector to discuss their successes and challenges in accessing U.S. markets, including barriers that may be unique to Zambia. Attendees noted that the U.S. market could be intimidating for small Zambian producers because it is so large, and local producers do not have the capacity to meet order sizes. Delegation members, including a representative from USAID's Regional Trade Competitiveness Hub in Botswana, stressed that marketability and cost competitiveness were keys to the U.S. market, and that Zambian exporters could find success filling a niche market rather than competing in mass markets with lower cost producers. Two local business associations pledged to become information clearinghouses for Zambian exporters wishing to access the U.S. market, and to work closely with the Trade Hub to increase Zambian exporters' understanding of AGOA, the U.S. market, LUSAKA 00000865 003.2 OF 003 and their capacity to access it. POSITIVE PRESS -------------- ¶11. (SBU) The trade delegation's visit to Lusaka garnered strong press coverage in print and on radio and television. The opening statements at the COMESA TIFA meeting received wide coverage on November 3 in all media. The bilateral meetings and AUSTR Liser's interviews on November 3 resulted in significant positive press, with stories in all media almost daily until November 10. ¶12. (U) AUSTR Liser has cleared this message. BOOTH