Identifier
Created
Classification
Origin
09RABAT271
2009-04-02 14:55:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Rabat
Cable title:  

AUSTR WILSON SETS STAGE FOR FTA JOINT COMMITTEE

Tags:  ETRD ECON ECIN EAGR MO 
pdf how-to read a cable
VZCZCXYZ0000
PP RUEHWEB

DE RUEHRB #0271/01 0921455
ZNR UUUUU ZZH
P 021455Z APR 09
FM AMEMBASSY RABAT
TO RUEHC/SECSTATE WASHDC PRIORITY 9887
INFO RUCNMGH/MAGHREB COLLECTIVE
RUEHRC/DEPT OF AGRICULTURE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEHC/DEPT OF LABOR WASHDC
RUEHGV/USMISSION GENEVA 1134
UNCLAS RABAT 000271 

SENSITIVE
SIPDIS

STATE FOR EEB/TPP AND NEA/MAG
STATE PLEASE PASS USTR FOR AUSTR CHRIS WILSON AND PAUL
BURKHEAD

E.O. 12958: N/A
TAGS: ETRD ECON ECIN EAGR MO
SUBJECT: AUSTR WILSON SETS STAGE FOR FTA JOINT COMMITTEE

REF: A. RABAT 1190

B. RABAT 0190

UNCLAS RABAT 000271

SENSITIVE
SIPDIS

STATE FOR EEB/TPP AND NEA/MAG
STATE PLEASE PASS USTR FOR AUSTR CHRIS WILSON AND PAUL
BURKHEAD

E.O. 12958: N/A
TAGS: ETRD ECON ECIN EAGR MO
SUBJECT: AUSTR WILSON SETS STAGE FOR FTA JOINT COMMITTEE

REF: A. RABAT 1190

B. RABAT 0190


1. (SBU) Summary: In preparation for the May 2009 Joint
Committee Meeting (JCM) Assistant United States Trade
Representative for Europe and the Middle East Christopher
Wilson met with Government of Morocco (GOM) officials and
business representatives on March 19 and 20 to discuss
outstanding issues related to the U.S.-Morocco Free Trade
Agreement (FTA). Wilson highlighted the bilateral trade
growth, including the entry of new Moroccan products, since
the entry into force of the FTA, and emphasized the need to
address technical issues before the JCM through an exchange
among experts. Wilson's visit coincided with the release of
a business sector-commissioned evaluation of the free trade
agreements that Morocco has signed in recent years. GOM
officials and the private sector observed that Moroccan
exports had failed to meet expectations but attributed this
to a failure of Moroccan businesses to "enter the ring," as
well as the lack of a comprehensive export strategy. In
press interviews, Wilson noted the positive achievements of
the agreement to date, and described its potential as a
"tool" businesses can utilize to expand their trade with the
U.S. End Summary.

--------------
IT'S ALL ABOUT THE TOMATOES
--------------


2. (SBU) Foreign Trade Minister Abdellatif Maazouz, Wilson's
official counterpart, reviewed outstanding issues with Wilson
and the Charge d'Affaires before Wilson's more in-depth
discussion with technical experts from Maazouz's team.
Maazouz praised the existing healthy working relationship
between USG and GOM officials dealing with FTA discussions.
He assessed that the GOM, like the King, "believes in" the
FTA and defends it, but said that Morocco, like Doubting
Thomas, needs to see concrete results in improved trade
opportunities and figures. Acknowledging Wilson's statistics
pointing to healthy growth in bilateral trade, Maazouz argued
that public perception of the trade relationship is focused
on key sectors with "high visibility," particularly
agriculture. Although trade volume in electronics or
aerospace products may be ten times that of agriculture,

Maazouz said, when the public hears that tomatoes from
Morocco have been banned from the U.S., the result is a
negative assessment of the entire relationship. We need to
ensure that the "clouds do not block the sunshine" of the
"good work" we are doing on trade, he concluded. Wilson
noted Morocco's frustration with the perceived slow pace of
approval for products such as tomatoes, but stressed that
Morocco's FTA had in fact given the case file a higher
profile relative to other pending applications. Concerning
technical responses such as the recent restrictions on
Mediterranean tomatoes for disease and pest concerns, Wilson
and Maazouz agreed that increased transparency and exchange
of information on actions and reasons would assist in
assuring both sides of the other's commitment to the
agreement.

-------------- --
NEED PROGRESS ON WHEAT QUOTAS AND TRANSSHIPMENT
-------------- --


3. (SBU) Wilson expressed hope that discussions on
transshipment and wheat quotas could lead to agreement before
the May JCM. The disagreement on transshipment is important
to us, he noted, and we are constrained in our ability to
alter our interpretation because the same language is
incorporated in FTAs with multiple countries. Morocco is the
only partner who differs in the interpretation, Wilson
pointed out. He invited the GOM to send a delegation of
customs experts to Washington to discuss a path forward on a
common interpretation that would avoid a restrictive
interpretation of the rules of origin. This visit would also
allow discussion of a Customs Mutual Assistance Agreement as
envisioned in the FTA, he added.


4. (SBU) On the issue of administration of tariff rate
quotas (TRQs) for wheat, Wilson said the U.S. is ready to
enter into an open, transparent discussion, but it must be
done with urgency. Maazouz agreed that personnel changes in
the Moroccan team addressing the issue may have delayed
engagement, but assured Wilson that the overall team is ready
to engage. He agreed that both governments want the May JCM
to be a "signature meeting," where these issues have been
resolved.


5. (SBU) Maazouz asserted that Morocco has been awaiting a
written transshipment proposal from the U.S. for some time.
The GOM is committed to removing anything that inhibits
trade, Maazouz averred, but the U.S. interpretation of
transshipment poses "risks" to Morocco, as it could allow
falsification of origin, given the agreement does not require
a certificate of origin. "We don't have this problem with
other countries," he continued, because certificates of
origin guarantee the true provenance of goods being
transshipped. Regarding imports to Morocco, Maazouz
continued, the GOM also worries that American exporters to
Europe could use Morocco as a dumping ground for products
that do not sell in Europe, including possibly spoiled goods.
The GOM believes that a time limit on transshipped goods, as
well as a certificate of origin, could address their concerns
while keeping the transshipment provision of the FTA, he
concluded. In the technical meeting following the session
with Maazouz, GOM officials agreed to send a delegation to
the U.S. for a technical exchange between customs officials
after Wilson undertook to transmit a paper setting forth
avenues for overcoming transshipment concerns. The paper,
Wilson specified, will not propose a different U.S.
interpretation but would try to present practical options for
moving forward.

--------------
AGRICULTURE, FISHERIES, AND SERVICES
--------------


6. (SBU) Ministry of Agriculture representative Samia Moulay
Benaissa expanded on Maazouz's agriculture concerns,
highlighting the lack of a final rule permitting entry of
tomatoes from the Souss-Massa region into the U.S., the
timing of USDA's Animal and Plant Health Inspection Service's
(APHIS,s) risk assessment for the export of blueberries and
raspberries, accelerating the tariff reduction for one olive
line item and artichokes, changing the basis for the TRQs to
a marketing year, and the differing agricultural trade
figures (Ref A details pending agricultural issues).
Benaissa also requested technical assistance for the
promotion of Moroccan agricultural products in the U.S.
Wilson acknowledged all the work left to be done on
agricultural issues, recommended that U.S. and Moroccan
agricultural experts hold a Digital Video Conference (DVC) to
address these issues before the FTA JCM in May, and requested
the GOM to identify the new lead negotiator on agriculture
issues since the retirement of the previous negotiator. GOM
officials undertook to provide us with a point of contact for
future communications. (Note: Ministry of Agriculture
contacts informed AgCouns that there are imminent changes in
the leadership positions of several agencies within the
Ministry. End note.)


7. (SBU) GOM officials told Wilson that they have reviewed
the language in the separate letters that will be exchanged
to revise Morocco's schedule of non-conforming measures in
services and the fisheries line item, and hope to have the
letters ready for signature during the JCM. The letters are
in good shape to be finalized in May, Wilson noted, but the
accelerated tariff reduction request for canned sardines will
require consultations with Congress, which may take time.

--------------
CONTINUED TECHNICAL ASSISTANCE
--------------


8. (SBU) Ministry of Foreign Trade Secretary General El Aid
Mahsoussi commended the high level of FTA-related technical
assistance support the USG has provided to Morocco and
expressed Morocco's hope for its continuation. He added that
the GOM is in the process of formalizing a coordinated
support request by sector. Wilson regarded the technical
assistance to Morocco as a "very impressive" exhibit of
collaboration to reinforce the FTA. "We remain interested in
continuing to be responsive," said Wilson, "but our resources
are limited and we need as much precision as you can provide
in terms of priorities." Moroccan Customs officials
requested engagement with U.S. Customs regarding new and
different products, to which Wilson proposed a meeting
between experts.


9. (SBU) Wilson closed the technical meeting by reiterating
the fact that both sides need to work together to make sure
the FTA provides the expected benefits, and noted that expert
meetings should be the top priority for both governments to
address issues before the JCM. He thanked Morocco for its
active participation in the Anti-Counterfeiting Trade
Agreement (ACTA) negotiations. Wilson also added that
President Obama and the new leadership at USTR have expressed
interest in exploring the relations between trade agreements,
environmental policies and labor rights. The U.S. will
present initial ideas on how these policies are developing
within the U.S. system at the JCM, he added. Mahsoussi
underscored the importance the GOM attaches to the
environment and labor rights and welcomed U.S. proposals at
the JCM.

-------------- --------------
INDUSTRY AND FINANCE MINISTRIES REVIEW CHALLENGES
-------------- --------------


10. (SBU) Ministry of Industry Ahmed Reda Chami told Wilson
and the Charge that the FTA was "good," but Moroccan
exporters had not yet "cracked the code" to take advantage of
its opportunities. The FTA was not meeting expectations, but
the responsibility for that "is more on our side." Barriers
to Moroccan export success included lack of knowledge of and
connections within the U.S. market, the scale of the U.S.
businesses (such that many Moroccan exporters could not
fulfill U.S. orders),and a weak dollar making Moroccan
exports uncompetitive. Chami,s cabinet is conducting a
study to identify sectors in which Morocco has potential to
be internationally competitive, and also hopes to entice
multinational firms with experience selling in the U.S. to
locate production in Morocco to take advantage of the FTA.
U.S. firms will also be welcome, Chami clarified, arguing
that U.S. firms could locate production here to open new
European and North African markets, so as not to be taking
jobs from the U.S. Chami said that he intends to lead an
industrial delegation to the U.S. in the near future, but has
delayed the visit to avoid arriving at a time when U.S.
counterparts are preoccupied with other economic concerns.


11. (SBU) Wilson and the Charge reviewed Morocco,s economic
growth and export goals with Minister of Economy and Finance
Salaheddine Mezouar and Director of the Treasury Zohair
Chorfi. Mezouar, who served as an industry representative on
Morocco,s FTA negotiation team, assessed that the FTA had
given positive results, although the dollar weakness had made
Europe a more attractive market to Moroccan exporters.
However, he stated, Morocco has "gained an important partner"
with whom exporters will have time to build relationships.
Mezouar outlined Morocco,s macroeconomic context, and noted
that price changes and the global economic slowdown appear to
have reduced overseas remittances, tourism receipts, and
phosphate export sales in January and February by 15 to 20
percent from last year. However, the GOM has implemented
sector-specific support measures to help firms in difficulty,
particularly in export sectors. Although the GOM does not
have the financial resources of developed countries, Mezouar
asserted, "we,re managing well" in maintaining public
confidence and keeping the credit markets healthy. The GOM
agrees, he stated, that countries must not retreat to
protectionism in the current crisis, but must "preserve the
model of trade" that has been built. He expressed concern
that each country is responding to its own problems, but that
global trade and economic growth requires a coordinated
response.


12. (SBU) Mezouar predicted that the opening of the
Tangier-Med port and its prospects for direct shipping links
to the U.S. east coast would assist in "orienting" Moroccan
exporters to the U.S. Particularly in an economic crisis, he
mused, "there are opportunities" for a country like Morocco.
Morocco, as a relatively small exporter to a market the size
of the U.S., cannot be a mass market supplier, he observed,
and must find its success in such niches. The GOM plans to
offer technical assistance to help exporters understand the
U.S. market. Overall, Mezouar stated he is not dissatisfied
with the FTA. Trade growth has not been as high as desired,
but it is growing. Chorfi agreed that U.S. foreign direct
investment has also grown as a result of the FTA, although
that too at a slower rate than hoped. At the end of the day,
Mezouar observed, the state is not the exporter, and it is up
to the private sector to take advantage of the opportunities
created under the FTA.

--------------
EXPORT PROMOTION IS THE KEY
--------------

13. (SBU) Director General Saad Benabdallah of the revamped
Maroc Export (formerly Center for the Promotion of Moroccan
Exports) and his newly recruited team gave Wilson an overview
of the structure, priorities and focus of Maroc Export (Ref
B). They emphasized their interest in reaching out to the
U.S. market and establishing trade tours,
business-to-business initiatives, and other marketing
strategies targeting U.S. companies and investors. Maroc
Export's U.S. strategy will prioritize promoting agricultural
products, textiles, clothing and leather, and niche products
such as emerging technologies, they outlined. "The U.S. is
our top priority market," Benabdallah asserted, "we are
looking for USTR and Embassy assistance in creating
partnerships to reach out to that market."

--------------
BUSINESS COMMUNITY COMMENDS FTA
--------------


14. (SBU) Business leaders from CGEM (Morocco's largest
federation of enterprises) and the American Chamber of
Commerce (AMCHAM) met Wilson in Casablanca March 20. CGEM
U.S.-Morocco FTA Committee President Abdelmalek Kettani noted
that CGEM is committed to making sure Moroccan businesses
take full advantage of the agreement. To that end, CGEM is
looking to establish a permanent Moroccan council in
Washington to promote business links and to serve as an entry
point for American investors interested in Morocco. "If we
want the FTA to work," Wilson responded, "these are the types
of business links we need to establish." Kettani also
reviewed the conclusions of the study CGEM commissioned on
the country's various FTAs (subject of septel).


15. (SBU) A representative from Sun Trading Company, a U.S.
agricultural importer/exporter, expressed his concerns on the
long period of time required to attain APHIS certification to
export blueberries and raspberries to the U.S. He added that
his company is very interested in importing Moroccan
blueberries, but hesitates to invest until the APHIS
certification is complete. Wilson acknowledged the lengthy
certification process and agreed to take the request for
accelerated certification back to USDA in Washington.
Overall, however, business representatives at this meeting
and a separate lunch with Wilson commended the FTA for
"bolstering" business and opening new opportunities, a theme
Wilson emphasized in several impromptu national radio and
television appearances during his visit, and a sit-down
interview with L'Economiste, Morocco's premier
business-oriented French language daily newspaper.


16. (SBU) Post has continued to broadcast the positive
message on the achievement of the FTA Wilson generated. On
March 27, the Charge, alongside Minister Chami, briefed at a
roundtable discussion hosted by AMCHAM entitled "American
Investment in Morocco." He highlighted that since FTA
implementation two-way trade has expanded (not just as a
result of phosphates and wheat); Moroccan agricultural
exports to the U.S. have risen steadily; U.S. investments
have increased; and the U.S. continues to provide targeted
technical assistance. "The FTA offers Morocco a great
opportunity," Minister Chami concluded, "we are trying to
figure out exactly what needs to be done to take advantage of
it."

--------------
NOT MUCH TIME TILL THE JCM
--------------


17. (SBU) Comment: As Minister Maazouz outlined for Wilson,
the Moroccan perception of trade relations with the U.S.
continues to be skewed based on news reports that portray FTA
benefits as being one sided. Wilson's visit provided a
timely opportunity to highlight the bilateral benefit of
FTA-derived growth to GOM officials, business leaders and the
public at large. To reinforce this positive focus and ensure
a constructive outcome at the second JCM of the FTA in May,
the Mission urges priority engagement by Washington agencies
to address outstanding technical issues in advance of the
JCM, including undertaking without delay the technical
exchanges among experts proposed by Wilson. End Comment.


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