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

TRIPOLI 00000619 001.2 OF 002


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

TRIPOLI 00000619 002.2 OF 002


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