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Cablegate: Nigeria: Agoa Eligibility Review

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

UNCLAS SECTION 01 OF 03 LAGOS 002023

SIPDIS


STATE FOR AF/EPS - DKRZYWDA
STATE PASS TO USTR - CHAMILTON
COMMERCE FOR ITA - HVINEYARD
TREASURY FOR OWHYCHE-SHAW


E.O. 12958: N/A
TAGS: ETRD ECON ELAB PREL PGOV NI AGOA
SUBJECT: NIGERIA: AGOA ELIGIBILITY REVIEW

REF: (A) STATE 263702 (B) 02 ABUJA 02803


1. (U) In response to Ref A, U.S. Mission Nigeria is
pleased to provide the following update to the 2002
AGOA eligibility review (Ref B). Nigeria's progress
toward fulfilling AGOA eligibility requirements has
been slow and fitful, but progress continues. Post
recommends that Nigeria remain eligible for AGOA
benefits.


--------------------------------------
PROGRESS TOWARD A MARKET-BASED ECONOMY
--------------------------------------


2. (U) Nigeria continues to make progress toward
establishing a market-based economy that protects
private property rights and minimizes government
interference. Since its 1999 launch of a three-stage
privatization program, the GON has privatized 25
enterprises (among them hotels, banks and cement
manufacturing firms) and moved toward the privatization
of several others, including the National Electric
Power Authority (NEPA) and Nigeria Telecommunications
Limited (NITEL). The GON plans to split NEPA into
autonomous generating, transmission, distribution and
billing firms and expects to divest 51 percent of its
shares in NITEL at the expiration of the firm's three-
year management contract with Pentascope International,
a Dutch communications consortium. The GON also raised
fuel prices and has hinted at plans for an additional
increase, thereby reaffirming its commitment to
reducing government interference in the economy.


3. (U) Progress toward establishing a rules-based open
trading system has been slower; the GON still tends to
change policies suddenly and arbitrarily. In March
2003, the GON once again cut duties on many items
(mostly raw materials and capital equipment) and raised
them on others (primarily finished goods and
agricultural products). A protectionist bent is
increasingly evident in Nigerian trade policy, as many
items - frozen poultry, certain printed fabrics,
cassava, ice cream, fruit juice in retail packs,
toothpicks, beer and pasta - are simply banned,
ostensibly to foster domestic production, even though
domestic industries cannot meet demand.


---------------------------------------
THE RULE OF LAW AND POLITICAL PLURALISM
---------------------------------------


4. (U) Ethnic and religious tensions pose significant
challenges to GON efforts to establish the rule of law
and political pluralism. Communal clashes have
resulted in numerous injuries and deaths, and Nigeria's
under-funded, under-trained and under-equipped police
force is often hard-pressed to stop or prevent
violence. The Nigerian military has managed to calm
some particularly violent areas, but looting and
indiscriminate killing have marred its efforts.


5. (U) Civil and criminal cases move through Nigeria's
courts slowly, and the country's judicial system
generally lacks the resources and administrative
capability to function effectively. The adoption of
Sharia law in 12 of Nigeria's northern states remains a
contentious issue, and few people in government or the
courts are willing to address the problem. Still, the
Supreme Court and appellate courts command wide
respect, and the former continues to assert its role as
the final arbiter of disputes in Nigeria's ongoing
efforts to adopt political and economic reforms.


6. (U) Nigeria's record of political pluralism is
slightly better. Thirty political parties contested
the spring 2003 federal and state elections, and
various parties' elected officials share power at all
levels. Despite reports of widespread electoral fraud,
President Obasanjo's administration enjoys broad
support, and the vast majority of Nigerians continue to
support democratic practices.


--------------------------------------------- -------
ELIMINATION OF BARRIERS TO U.S. TRADE AND INVESTMENT
--------------------------------------------- -------


7. (U) Nigeria continues to make progress toward
creating an environment conducive to domestic and
freign investment. The GON allows for the free
movement of foreign exchange across Nigeria's borders
and generally does not discriminate against U.S. goods
or services. Foreign firms are allowed to invest in
all sectors of the Nigerian economy, and investors who
abide by regulations governing the establishment of
businesses are assured national treatment.


8. (U) Nigeria's record of intellectual property rights
protection has improved. The country is party to
numerous conventions and agreements regarding patent,
trademark and copyright protection, and laws generally
favor intellectual property owners and impose criminal
penalties on violations of owners' rights. The GON has
introduced legislation to create a quasi-independent
intellectual property rights commission and bring
Nigeria into full compliance with the WTO TRIPS
agreement. Licensed software and visual materials are
better protected now than they once were. Still,
scarce resources and a lack of expertise make
enforcement of intellectual property rights difficult.


--------------------------------------------- --------
POVERTY REDUCTION AND PROMOTION OF PRIVATE ENTERPRISE
--------------------------------------------- --------


9. (U) The GON recently unveiled a new economic plan,
the National Economic Empowerment and Development
Strategy, that outlines strategies for attaining macro-
economic stability (with emphasis on low inflation and
stable interest and exchange rates), achieving annual
GDP growth of 5-7 percent, and reducing poverty. The
plan reflects the GON's commitment to fiscal discipline
and public sector reforms and emphasizes health,
education and agriculture. If the plan is implemented
effectively (a far from certain prospect), the GON may
begin to make progress in improving the living
standards of the two-thirds of Nigerians who live in
poverty.


10. (U) The GON continues to promote the development of
private enterprise through its Small and Medium
Industries Equity Investment Scheme, under which banks
are required to set aside 10 percent of before-tax
profits for equity investments in industrial
enterprises. 80 banks had set aside $103 million but
had invested only ten percent of the available funds in
36 different projects as of December 2002.


----------------------------
EFFORTS TO COMBAT CORRUPTION
----------------------------


11. (U) Nigeria continues to make progress toward
reducing corruption. A federal anti-corruption
commission is in place, and public enterprises are
regularly audited. The GON awards government contracts
under an increasingly transparent open tender system
and now subjects federally funded capital projects over
USD 10,000 to due diligence tests. In general, the GON
has succeeded in reducing the most blatant forms of
corruption; it has been less successful, however, in
preventing back-room maneuvers that bias decisions.


--------------------------------------------- ---------
PROTECTION OF INTERNATIONALLY RECOGNIZED WORKER RIGHTS
--------------------------------------------- ---------


12. (U) The Nigerian Constitution protects the right of
association and the right to organize and bargain
collectively, but several statutory restrictions remain
in place. Only one labor federation, the Nigeria Labor
Congress, is recognized, but the GON has indicated that
it may amend existing legislation to allow multiple
trade federations.


13. (U) Nigerian law outlaws forced or bonded labor,
prohibits the employment of children younger than age
15 in commerce and industry, and restricts other child
labor to home-based agricultural or domestic work for a
maximum of 8 hours per day. Minimum wages, hours of
work, and general health and safety provisions are
statutorily mandated, but enforcement remains weak.
The private sector's reliance on casual or part-time
labor is a problem, particularly as casual workers are
denied benefits and prohibited from joining labor
unions. The GON has been slow to address the issue,
but increasingly loud protests from Nigerian workers
may prompt progress.
--------------------------------------------- ------
U.S. NATIONAL SECURITY AND FOREIGN POLICY INTERESTS
--------------------------------------------- ------


14. (U) Nigeria does not engage in activities that
undermine U.S. national security or foreign policy
interests.
--------------------------------------------- --------
PROTECTION OF INTERNATIONALLY RECOGNIZED HUMAN RIGHTS
--------------------------------------------- --------
15. (U) The GON's human rights performance has been
mixed. There have been improvements in several areas,
but serious problems remain. Nigeria does not support
international terrorism; on the contrary, it has been a
staunch ally in the U.S.-led war on terror.


HINSON-JONES

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