THE CURIOUS CONTINUING CASE OF CATERPILLAR

C O N F I D E N T I A L SECTION 01 OF 02 TRIPOLI 000619



NOFORN

SIPDIS



STATE FOR NEA/MAG; STATE PLEASE PASS TO USTR PAUL BURKHEAD; COMMERCE FOR ITA NATE MASON; COMMERCE FOR THE ADVOCACY CENTER; ENERG



E.O. 12958: DECL: 8/3/2019

TAGS: ECON, EAGR, EPET, EFIN, PGOV, ETRD, LY

SUBJECT: THE CURIOUS CONTINUING CASE OF CATERPILLAR



REF: A) TRIPOLI 618; B) TRIPOLI 258



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CLASSIFIED BY: Gene Cretz, Ambassador, U.S. Embassy Tripoli,

Department of State.

REASON: 1.4 (b),(d)

1. (C) Summary. The Ambassador met with Minister-equivalent of

Economy, Mohammed Ali al-Hweij, August 2, to address stalled CAT

negotiations; to set a date for a TIFA signing; to solicit

support for a U.S. Executive Trade Mission in November; to

encourage forward movement on the Commercial Law Development

Program; and to seek the Minister's help in securing visas for

U.S. business travelers. Al-Hweij told the Ambassador that a

resolution to stalled Caterpillar (CAT) negotiations was on the

horizon and was also positive on the possibility of concluding a

Trade and Investment Framework Agreement (TIFA) before the UN

General Assembly. He agreed in principle to support a U.S.

Trade Mission visit in November, as well as to moving forward

with the Commercial Law Development Program. Regarding visa

support for U.S. business travelers, the Minister referred the

Ambassador to the Prime Minister-equivalent's office for

resolution. End Summary.



CAT NEGOTIATIONS COMPLICATED BY FIVE-YEAR-OLD LAW



2. (C/NF) Minister-equivalent of Economy, Mohammed Ali al-Hweij,

told the Ambassador, Pol/Econ Chief, and FCS August 2 that an

end was in sight for stalled CAT negotiations (Ref A). Backing

down from prior demands that the local, quasi-governmental

Economic and Social Development Fund (ESDF) take full ownership

of a would-be CAT distributorship in Tripoli, al-Hweij reported

that he had personally instructed the ESDF to offer CAT a

60-percent/40-percent split deal, with the ESDF holding the

controlling share. Qualifying his statement, al-Hweij noted

that this would be the agreed-upon arrangement "at least for the

first five years." Al-Hweij emphasized that CAT must comply

with a 2004 law governing foreign distributors that the

government had recently decided to enforce (septel) , whereby

all such companies would have to work with Libyan-owned and

operated trade agents in order to sell their products within the

country. Al-Hweij emphasized that this law would be applied to

all foreign companies across the board in an attempt to regulate

the market and prevent terrorist finance networks from

exploiting the heretofore unregulated environment.



3. (C/NF) Al-Hweij informed the Ambassador that the ESDF had

already sent CAT's Regional Director, Andrew Sheridan, the new

proposal. [Note: Sheridan later told FCS that he received the

proposal by email only hours before the Ambassador's meeting

with al-Hweij. End Note.] Al-Hweij went out of his way to

prove the veracity of his statement, personally calling the head

of ESDF, Hamed Hoderi, by phone in order for the Ambassador to

hear firsthand that the proposal had been extended. The

Ambassador pressed al-Hweij on the Ministry's previous implicit

threats to reimpose a ban on CAT imports, stating that

discriminatory market barriers would not be viewed favorably.

Al-Hweij reassured the Ambassador that a ban on CAT imports

would not be reimposed, stating that he hoped his Ministry and

our Embassy would cooperate effectively to resolve any future

issues in order to avoid such drastic measures. He designated

his deputy for international cooperation, Dia Hammouda, as the

point person for addressing bilateral, trade-related issues of

concern. Al-Hweij expressed an interest in meeting more often

with the Ambassador to review the status of bilateral trade

relations - an idea that the Ambassador welcomed.



POSITIVE SIGNALS ON BILATERAL TRADE COOPERATION



4. (C) Al-Hweij was also positive on TIFA, saying that the text

was approved and only a date needed to be set. The Ambassador

noted that we want the agreement signed before UNGA and stated

that setting a date for the signing was more important than the

location. In response, the Minister promised to have the

agreement finalized before UNGA.



5. (C) Al-Hweij agreed in principle to support a Department of

Commerce Executive Trade Mission visit in November, requesting a

formal program proposal via diplomatic channels. He also asked

us to resubmit information on the Commercial Law Development

Program to improve the commercial legal environment for

businesses.



6. (C) Regarding visa support for U.S. business travelers,

al-Hweij requested additional information regarding the

difficulties that U.S. businesses face in attempting to obtain

visas for travel to Libya. Making sure not to tread outside of

his boundaries, he also advised the Ambassador to raise the visa



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issue with the Prime Minister's office. [Note: During the

Ambassador's first meeting with al-Hweij in March, the latter

pledged to help business travelers to secure visas - a pledge he

has not been able to uphold. (Ref B) End Note.]



7. (C/NF) Comment: The fact that the CAT negotiation process was

taking place at the same time that the Ministry was trying to

impose a five-year-old law involving distributorships

undoubtedly complicated the negotiations. Al-Hweij's apparent

actions to press the ESDF to compromise on the CAT deal are

positive and demonstrate that he has at least some authority to

be able to make decisions within the business sector. His

pledge not to reimpose the ban on CAT equipment and to see that

a compromise is achieved is also a positive signal. Al-Hweij

seemed genuinely interested in improving the environment for

foreign investment and in regulating local markets for goods and

services. Post will follow-up on al-Hweij's requests for

additional information regarding an Executive Trade Mission

visit and the Commercial Law Development Program. End Comment.

CRETZ