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Cablegate: Nigeria: Proctor and Gamble Detergent Could Be

This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS ABUJA 001396

SIPDIS


DEPT FOR E:ANNE PENCE AND AF/W DON BOOTH


E.O. 12958: N/A
TAGS: ETRD ECON NI
SUBJECT: NIGERIA: PROCTOR AND GAMBLE DETERGENT COULD BE
'GRANDFATHERED' UNDER OLD TARIFF RATE


REF: A. A) LAGOS 908
B. B) ABUJA 1163
C. C) LAGOS 725


1. In a April 12 meeting with the President's Principal
Secretary Stephen Oronsaye and the President's Special

SIPDIS
Assistant for Budget Oby Ezekwisili, Ambassador Jeter raised
Proctor and Gamble's concerns over the recent hike in tariffs
on detergent from 40 percent to 100 percent. The Ambassador
said that the U.S. company would not be able to sustain its
domestic manufacturing capability in Nigeria without lower
tariffs on its detergent, Ariel. P&G's proposed $30 million
investment in a greenfield factory in Ibadan would be halted
if the tariff increase were not rescinded.


2. Oronsaye and Ezekwisili unambiguously responded that,
under no circumstances, would the tariff hike be reversed;
because the increase was designed specifically to protect
domestic manufacturers of detergent. Proctor and Gamble is
not manufacturing detergent in Nigeria, but importing it in
bulk for local packaging, Oronsaye noted. At the
Ambassador's insistence, Oronsaye conceded that perhaps P&G
could be 'grandfathered' to enable them to import Ariel
detergent under the old 40 percent rate for a specified time
and at an agreed upon volume. Oronsaye thought this might be
possible with a commitment from P&G to begin detergent
manufacturing in Nigeria no later than 2.5 years following
the grant of the grandfathered concession by the GON.

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3. Comment. The GON position on P&G's request for lower
tariffs is unequivocal. Oronsaye and Ezekwisili are two of
President Obasanjo's closest advisors on economic and
budgetary issues and both influence and reflect his thinking.
Post has recommended to Proctor and Gamble that it consider
making a formal request to the GON to 'grandfather' Ariel
detergent. Oronsaye's proposal would obviously be subject to
negotiation. Two and a half years at the status quo ante
rate might allow P&G to begin the manufacture of Ariel in
Nigeria. The company could then benefit from the high tariff
on detergent. End Comment.
JETER

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