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Cablegate: Mozambique - Request for Tariff Rate Quota for Tobacco

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 MAPUTO 001502

SIPDIS
STATE FOR AF/S - HTREGER
STATE PLEASE PASS USTR FOR PATRICK COLEMAN
USDOC FOR RTELCHIN
PRETORIA FOR USDA/FAS
E.O. 12958: N/A
TAGS: ETRD EAGR ECON MZ
SUBJECT: MOZAMBIQUE - REQUEST FOR TARIFF RATE QUOTA FOR TOBACCO


1. This is an action request for USTR. See para 3.

2. Below is the text of correspondence received October 14 from
the International Relations Directorate of the Ministry of
Industry and Trade, in which the GRM requests that it be allowed
to export tobacco to the United States under the tariff rate
quota system.
Begin Text:
Dear Ambassador,
Mozambique has an interest in exporting processed tobacco
products to the United States. However, the United States
currently has a tariff rate quota (TRQ) on those processed
tobacco products that Mozambique will be producing. We are
kindly requesting your assistance in helping us enter into
bilateral discussions with the United States to see if there is
any possibility of obtaining TRQ for tobacco processed in
Mozambique.
As you are well aware, exports are of critical importance for
Mozambique. They will assist in creating jobs, improving our
economic growth and reducing poverty in our country. One area
that we feel there is substantial possibility to export is in
tobacco.
Tobacco production started in Mozambique in the early 1990s and
is bringing far-reaching change to parts of the central-northern
provinces by dramatically improving household incomes and
introducing modern production techniques that are then
transferred to other crops. Approximately 128,000 farms depend
on tobacco production (see table 1).
TABLE 1
Distribution of Tobacco Production by Province and Company
Province Company Number of Farmers
Niassa JFS 27,303
STANCOM 7,510
Cabo Delgado JFS, CANAM 2,050
Nampula JFS 12,000
SONIL 8,000
Zambezia JFS 10,156
STANCOM 8,500
Tete MLT 39,000
DIMON 4,464
Manica MLT, STANCOM,
DIMON, TABACO, 9,000
DE MOCAMBIQUE
Sofala DIMON 791
Gaza JFS 22
Source: Ministry of Agriculture and Rural Development
?
Mozambique currently does not have the capacity to process
tobacco beyond the burley and flue-cured stages; thus, tobacco is
exported raw to Malawi and Zimbabwe for processing before being
re-exported for final manufacture. There are a few companies
that are investing millions of dollars to create tobacco-
processing plants in Northern and Central Mozambique. On such
factory will begin operations in June 2005 and will have an
initial capacity of 37,000 tons, expandable up to 52,000 tons by
2007. This 50 million dollar investment is expected to create
approximately 1,500 jobs, bring significant value-adding
advantages and eliminate dependence on the uncertain trade flows
with Malawi that currently beset the industry.
In order to ensure the viability of investors that are creating
tobacco-processing plants in Mozambique, bringing much needed
capital and jobs to the country, we feel that tobacco TRQ into
the United States is necessary.
Our analysis shows that in 2001, over 57,000 Metric Tons of US
tobacco TRQ was left unfilled. In 2002, approximately 34,000
Metric Tons of TRQ was left unfilled. And in 2003, there was
approximately 16,000 Metric Tons of tobacco TRQ left unfilled
(see Table 2). A significant portion of this is unused TRQ from
Zimbabwe. In 2001, Zimbabwe did not use 6,704 Metric Tons of
their quota. Zimbabwe's unused quota has continued to increase
since 2001, reaching 7,067 Metric Tons in 2002 and 7,331 Metric
Tons in 2003. Given the political and economic hardships in
Zimbabwe, we feel the unused TRQ in Zimbabwe will continue to
rise over the years.
TABLE 2
Unused TRQ (Metric Tons) 2001 2002 2003
Total Unused TRQs 57,044 28,136 8,911
Of Which is Unused EC TRQ 4,763 5,449 6,492
Other Unused TRQ -4,246 470 574
Total Unused TRQs 57,044 34,055 15,977
(Comment: Post cannot reconcile the numbers in this table. End
comment.)
?
REQUESTS FROM MOZAMBIQUE TO THE UNITED STATES
Given this background, Mozambique kindly requests the following:
-- To enter into bilateral discussions with the United States on
Tobacco (specifically those products listed in Table 3).
-- To understand in greater detail how to obtain part of the
3,000 Metric Tons of TRQ that falls in the "Other" category, and
if necessary, to receive assistance to export tobacco under this
"Other" TRQ category.
-- To explore the opportunities of redistributing unused Tobacco
TRQ to eligible least-developed countries (LDCs) like Mozambique,
perhaps through new rules that require unused quota to be
redistributed.
-- To explore the opportunities of increasing the present TRQ of
150,000 metric tons by about 20 percent and setting aside this
increase to new LDC-tobacco producers, like Mozambique.
-- To explore the opportunities of eliminating the TRQ altogether
for certain LDCs that meet certain eligibility (perhaps similar
to that of the Millennium Challenge Corporation, of which
Mozambique is a potential beneficiary).
TABLE 3
Harmonized System (HS) Tobacco Products in which Mozambique
Request TRQ
HS NUMBER HS DESCRIPTION
2401.10.63 Tobacco, not stemmed or stripped, not or not over 35
percent wrapper tobacco, flue-cured burley, etc., described in
additional US note 5 to chap 24
2401.20.33 Tobacco, partly or wholly stemmed/stripped,
n/threshed or similarly n/threshed or similarly proc, not or
n/over 35 percent wrapper, des. in addl US note 5 to ch. 24
2401.20.85 Tobacco, partly or wholly stemmed/stripped,
n/threshed or similarly processed, not from cigar leaf, described
in addl US note 5 to chap 24 (eligible under AGOA)
2401.30.33 Tobacco refuse, from other tobacco, for cigarettes,
described in addl US note 5 to chap 24, tobacco stems, not cut,
ground or pulverized
2401.30.35 Tobacco refuse, from other tobacco, for cigarettes,
described in addl US note 5 to chap 24, tobacco stems, cut,
ground or pulverized
2401.30.37 Tobacco refuse, from other tobacco, for cigarettes,
described in addl US note 5 to chap 24, not tobacco stems
2403.10.60 Smoking tobacco, whether or not containing tobacco
substitutes, other, to be used in cigarettes, described in addl
US note 5 to chap 24
2403.91.45 "Homogenized" or "reconstituted" tobacco, not
suitable for use as wrapper tobacco, to be used in cigarettes,
des. in addl US note 5 to chap
2403.99.60 Other manufactured tobacco, tobacco substitutes,
tobacco extracts or Essences, to be used in cigarettes, described
in addl US note 5 to chap
Your assistance would be greatly appreciated.
Sincerely,
Luis Eduardo Sitoe
National Director
End Text.

3. Action Request: Post requests guidance from USTR on how to
respond to this request from the Mozambican government.
LA LIME

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