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Cablegate: Us-Tunisia Tifa Council Meeting

VZCZCXRO1324
PP RUEHTRO
DE RUEHTU #0293/01 0811143
ZNR UUUUU ZZH
P 211143Z MAR 08
FM AMEMBASSY TUNIS
TO RUCPDOC/USDOC WASHDC PRIORITY
RUEHC/SECSTATE WASHDC PRIORITY 4689
INFO RUEHAS/AMEMBASSY ALGIERS PRIORITY 7655
RUEHEG/AMEMBASSY CAIRO PRIORITY 1587
RUEHLO/AMEMBASSY LONDON PRIORITY 1447
RUEHNK/AMEMBASSY NOUAKCHOTT PRIORITY 0981
RUEHFR/AMEMBASSY PARIS PRIORITY 1914
RUEHRB/AMEMBASSY RABAT PRIORITY 8533
RUEHTRO/AMEMBASSY TRIPOLI PRIORITY 0220
RUEHCL/AMCONSUL CASABLANCA PRIORITY 4211

UNCLAS SECTION 01 OF 05 TUNIS 000293

SIPDIS

SENSITIVE
SIPDIS

NEA/MAG (HOPKINS AND HARRIS), EB/CBA (WINSTEAD/GILMAN),
EB/TRA/AN(FINSTON),
STATE PASS USTR (BURKHEAD),
STATE PASS USPTO (ADAMS, BROWN, MARSHALL)
USDOC FOR ITA/MAC/ONE (NATE MASON), ADVOCACY CTR (REITZE),
CASABLANCA FOR (FCS ORTIZ),
CAIRO (SEVERENS AND MOEZIE)
LONDON AND PARIS FOR NEA WATCHER

E.O. 12958: N/A
TAGS: ETRD EINV ECPS EFIN ECON KIPR TS
SUBJECT: US-TUNISIA TIFA COUNCIL MEETING

REF: A. TUNIS 287
B. TUNIS 211
C. 07 TUNIS 1521

-------
Summary
-------

1. (SBU) The March 10-11 US-Tunisia Trade and Investment
Framework Agreement (TIFA) Council provided a productive
exchange of information on areas where progress has been
made, and areas where more progress is needed, in
intellectual property rights (IPR), market access, services
and investment. Both parties committed to work in
partnership to strengthen our economic relationship.
Specifically, the two sides will develop a three- to
five-year program to set concrete objectives and cooperative
efforts to move forward, with ongoing contact between
Tunisian technical experts and the Mission. In addition to
the formal TIFA meetings, AUSTR Donnelly and Ambassador Godec
had excellent meetings (Ref A) with the Prime Minister,
Commerce Minister, and Minister of Development and
International Cooperation (MDIC). End Summary

2. (U) The March 10-11 TIFA Council Meetings in Tunis were
hosted by the Ministry of Development and International
Cooperation (MDIC) and included a number of other GOT
participants. The US delegation, led by Assistant United
States Trade Representative (AUSTR) Shaun Donnelly, included
the following officials:

Ambassador Robert F. Godec
Paul Burkhead, Director, USTR
Clarence Severens, Regional Financial Attache, Department of
Treasury
Nathaniel Mason, Desk Officer, Department of Commerce
Mayra Caldera, Desk Officer, Department of Agriculture
Michael Fay, Regional Agricultural Attache, Department of
Agriculture
Dorothy Shea, Political/Economic Counselor, Embassy Tunis
Beth Mitchell, Economic/Commercial Officer, Embassy Tunis
Victoria Taylor, Economic Officer, Embassy Tunis

--------
Overview
--------

3. (SBU) During the opening plenary of the TIFA Council MDIC
Minister Jouini said that Tunisia is committed to achieve
concrete progress, in the interest of both countries, to
expand and enhance our trade and development relationship and
is ready to learn from the US experience. He stressed that
diversification of the Tunisian economy is a top priority.
AUSTR Donnelly said that he saw the TIFA as a way for both
parties to develop a common vision and long-term objectives,
such as creating investment and jobs in Tunisia, increasing
Tunisian investment in the United States, and establishing
building blocks to strengthen our economic relationship.
AUSTR Donnelly suggested that the TIFA dialogue be continued
through more regular meetings between Tunisian experts and
EmbOffs, including developing a mechanism with MDIC to
coordinate USG technical assistance and cooperative programs.


4. (SBU) During the working group sessions the US delegation
raised specific US company concerns, IPR, investment climate
issues, the need for liberalization of the services sector,
and market access challenges (e.g., franchises). In
addition, the delegation advocated for several US companies
with pending project/export proposals before the GOT. It
also offered technical assistance to Tunisia. The GOT was
able to point to recent reforms and new legislation in IPR
protection and investment since the last TIFA Council in
2005. The Tunisian delegation also stated their readiness to

TUNIS 00000293 002 OF 005


further improve their legal framework and the business
climate through the TIFA process.

---
IPR
---

5. (SBU) During this working group session it was agreed
that Tunisia has a good legislative framework in place but
enforcement is lacking. The US delegation suggested that the
GOT conduct high profile raids and seizures to publicly
demonstrate its commitment to IPR enforcement. The US
delegation also raised concerns over data exclusivity
protection; asked for a final ruling on appeals filed by US
pharmaceutical companies' correlated products; and encouraged
the GOT to adopt a patent linkage system. The GOT delegation
noted existing Tunisian IPR laws, and said that it has
adopted the WTO TRIPS agreement and is open to joining other
international agreements. They then listed several IPR laws
including a December 27, 2007, law No. 2007-68 on geographic
indicators for handicrafts. The Tunisian side noted the
importance of geographic indicators for Tunisian agricultural
products and handicrafts and suggested that the United States
become a party to the Lisbon Agreement.

6. (SBU) Regarding data exclusivity, the GOT insisted that
they have reinforced patent protection and respect data
exclusivity. The Tunisians offered to study whether circular
no. 40 (covering data exclusivity) needs to be turned into an
administrative decree or law. The Ministry of Health
representative said that he has never received any data
exclusivity dispute cases related to either patents or data
exclusivity, but that he is willing to review any such cases
raised by US companies. He also said that although
correlation was terminated in January 2007, it was not
retroactive and that they were still studying the US
pharmaceutical companies' appeals.

7. (SBU) During the plenary session, AUSTR Donnelly said
that Tunisia's future is to develop high-value-added
products, so IPR protection is important. While taking note
of the progress that Tunisia has made in its IPR regime,
AUSTR Donnelly opined that customs officials and countries
need to cooperate to improve IPR enforcement efforts. AUSTR
Donnelly explained that the United States has a different
approach to geographic indicators, but does believe some
protection is appropriate. Jouini said that Tunisia is
trying to get to a higher stage in the value chain and that
its destiny is not to compete with China but to produce high
value-added products. He added that Tunisia has made
progress in IPR enforcement and that it is important to
protect geographic indicators.

-------------
Market Access
-------------

8. (SBU) The market access working group discussed tariff
systems, standards, rules of origin, phytosanitary
regulations, and sectorial issues. Tunisia said that its
average tariff rate in 2007 was 24.6 percent and intends to
reduce this to 21 percent by the end of 2008. The US
delegation said that US customs tariff rates are already
quite low and that it does not envision any specific
decreases in the short term other than those that may be
negotiated to in the WTO Doha Round negotiations. The US
delegation asked for and received an overview of tariff
coverage under the EU-Tunisian Association Agreement.
Tunisian representatives asked about technical issues related
to the US rules of orgin, agricultural products standards,
phytosanitary certificates, and for a list of GSP eligible
products. As there was no US expert in these areas present,
the US delegation offered to follow-up with the FDA and the
National Institute of Standards and Technology (NIST). Both

TUNIS 00000293 003 OF 005


sides agreed that the GSP program needs higher visibility in
Tunisia and post has offered to conduct additional outreach,
including a possible workshop with a GSP expert.

9. (SBU) In the plenary, AUSTR Donnelly said that the US
approach to FTAs is a global approach where we negotiate
services, agriculture, investment, and market access at the
same time. Jouini replied that Tunisia wants to diversify
partners, and recognizes that the United States' and the EU's
approaches are not the same but that Tunisia is ready for
this. Tunisia's association agreement with the EU is a
comprehensive and all-inclusive accord but that it contains a
gradual implementation schedule. He noted that as a result
of the EU agreement, exports increased ten percent with the
EU and that total investment from Europe increased ten times
from 1996 to 2006. Jouini added that market access is an
important step for preparing for an eventual free trade
agreement (FTA) and said that he had learned that Tunisian
exporters have a US market access mechanism available to them
via the GSP program.

----------
Investment
----------

10. (SBU) The investment working group session covered the
new GOT economic initiative law, each parties' concerns over
the investment climate in the respective countries, and plans
to better promote and attract increased foreign direct
investment (FDI) over the long term. Tunisia's new economic
initiative law No. 2007-69 (passed on December 27, 2007)
establishes a negative list approach to facilitate economic
investment. The GOT indicated that the negative list is
under development but will be published in a few months. The
Tunisian side also explained the ease with which a company
can be established in Tunisia and how VAT refund time has
been reduced from 70 days to just seven days. The GOT asked
for clarification on US Mode 4 provisions (GATS - Movement of
Natural Persons), noting the need to find ways to facilitate
the movement of people. The Tunisian delegation commented
that Tunisians may not invest in the United States because
they do not have market share or they run into visa regime
and freedom of movement issues.

11. (SBU) USTR responded that the implementation of Mode 4
of GATS has proven to be a complicated issue for all WTO
members, but that we have not received any complaints about
Tunisian business people being unable to get a visa. The
Treasury representative explained that the United States is
open for business and that the Committee on Foreign
Investment in the United States (CFIUS) process applies only
to a minority of foreign investments which could potentially
harm US national security interests. The US side broached
several specific investment issues that US companies wanting
to invest in Tunisia have encountered and pushed for
liberalization of the services sector.

12. (SBU) In the plenary, AUSTR Donnelly stated that
potential investors look for and talk to other successful
investors before investing in a country. Attracting FDI is
about creating confidence in the business environment. He
used Singapore as a model, for setting the right investment
climate to attract investors, that Tunisia might follow.
Jouini said that he is committed to improve the investment
climate and that he would like to work directly with the
principals of several high profile US companies on targeted
investment projects in Tunisia.

--------
Services
--------

13. (SBU) The services working group session discussed the
growing and important role of the services sector in

TUNIS 00000293 004 OF 005


Tunisia's economy and initiatives taken to prepare the way
for opening up this sector to competition. Stating that
telecommunications services represents a strategic pillar for
the development of a knowledge economy, the Tunisian side
said that the GOT intends to grant additional licenses for
fixed telephone operators in 2008 and plans to launch a call
for interest for third generation modes of telecommunications
in 2009. The US delegation pushed for further services
liberalization, highlighting that if one opened the telecom
and financial services sectors to competition, it would
attract increased investment across the board since these two
areas play such a pivotal role in all sectors and have a
multiplier effect on the economy. The US delegation also
asked to be informed about future legislation and/or future
liberalization of this sector. GATS Mode 4 was also
discussed during this session with the Tunisian side asking
for clarification on the US Mode 4 provisions. The US
delegation refered the Tunisians to the US GATS schedule
which lays out some of our restrictions and to the text of
our FTAs. Both sides agreed to continue consultations on
non-conforming measures.

14. (SBU) During the plenary, AUSTR Donnelly suggested that
the text of US free trade agreements be looked at and
considered while Tunisia is discussing services
liberalization with the EU. Jouini said Tunisia is working
to liberalize the services sector with the EU, but it needs
to proceed gradually and must consider the social and
economic impact. He noted that Tunisia is working with the
World Bank on a program to liberalize the financial services
sector. There is a new profile for the Tunisian job market
with services playing a major role in the economy and being
the major employer for young university graduates. He said
Tunisia is currently adopting a positive list approach in its
negotiations under the EU Association Agreement but is
interested in learning about the legal provisions of positive
lists versus negative lists.

----------
Next Steps
----------

15. (U) Jouini asked for technical assistance in the areas
of support for small and medium enterprises, innovation, and
technology transfer. He said that both parties need to work
together to create planned actions to put people together and
to raise the visibility of US/Tunisian cooperation and to
take our bilateral economic relationship to a higher level.
Both sides agreed to work in partnership, between MDIC and
the Embassy, on a 3-5 year program to engage in an ongoing
dialogue and to set concrete objectives for a way forward.
The program also includes developing US technical assistance
programs under the umbrella of the TIFA and in coordination
with the MDIC.

-------
Comment
-------

16. (SBU) A very congenial atmosphere surrounded this TIFA
Council meeting. Discussions were open and frank but not
contentious. The Tunisian side genuinely seemed interested
in and willing to explore ways to build bridges and advance
our economic relationship. The Tunisians are looking to
diversify away from dependence on the EU market and the US
market is becoming more attractive to them. Several
officials asked detailed technical questions about US FTAs,
that indicated a more serious level of interest than we had
heard before. If we succeed in establishing a developing a
sound program of regular engagement with MDIC and cooperative
technical assistance programs under the TIFA umbrella,
perhaps the bureaucratic obstacles that such programs have
encountered in the recent past will be resolved. End Comment.


TUNIS 00000293 005 OF 005


17. (U) AUSTR Donnelly has cleared this cable.

Please visit Embassy Tunis' Classified Website at:
http://www.state.sgov.gov/p/nea/tunis/index.c fm
GODEC

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