Cablegate: Ustr Reinvigorates Tifa with Mozambique

VZCZCXRO2948
RR RUEHBZ RUEHDU RUEHJO RUEHMR RUEHRN
DE RUEHTO #0969/01 2840937
ZNR UUUUU ZZH
R 100937Z OCT 08
FM AMEMBASSY MAPUTO
TO RUEHC/SECSTATE WASHDC 9441
INFO RUCNSAD/SOUTHERN AFRICAN DEVELOPMENT COMMUNITY
RUEHLO/AMEMBASSY LONDON 0257
RHEHNSC/NSC WASHDC
RUEAIIA/CIA WASHDC

UNCLAS SECTION 01 OF 02 MAPUTO 000969

SENSITIVE
SIPDIS

DEPT PLEASE PASS TO USTR BILL JACKSON

E.O. 12958: N/A
TAGS: ETRD ECON EINV EFIN EAGR ENRG EPET SENV MZ
SUBJECT: USTR REINVIGORATES TIFA WITH MOZAMBIQUE

1. (SBU) SUMMARY: In a September 28 to October 1 visit,
USTR Director for African Affairs Bill Jackson met with a
variety of government and private sector stakeholders in
Maputo to reinvigorate the bilateral Trade and Investment
Framework Agreement (TIFA). The second high-level Trade and
Investment Council meeting under the TIFA is now tentatively
scheduled to take place in Washington in the first quarter of
2009. Jackson heard private sector concerns about Mozambican
exporters' inability to meet the product standards and
volumes required to export to the U.S. He also heard
frustration from the private sector over the slow progress of
reforms to the business climate. U.S.-based NGO TechnoServ
provided a more positive perspective on export potential for
wood and wood products as well as tropical fruits.
Continuing bilateral dialogue through the TIFA process could
streamline the Government of Mozambique's (GRM's) economic
development strategy in relation to trade and strengthen
AGOA-related trade and investment in the future. END SUMMARY.

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USTR TALKS TIFA
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2. (SBU) In his late-September visit to Maputo, Bill
Jackson explained that USTR interest in Mozambique and the
USG assistance program there derives from its general
objective of helping developing countries, especially LDCs,
to use trade to boost economic growth and development as well
as the country-specific objective of strengthening
U.S.-Mozambique trade and investment relations under the
TIFA. The U.S. has just 10 TIFAs with sub-Saharan African
countries and regional organizations, agreements that Jackson
explained we typically undertake only with significant
trading partners and those, such as Mozambique, in which the
U.S. sees particular potential for trade-driven economic
growth.

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MINISTER AGREES TO NEXT TIFA MEETING
------------------------------------

3. (SBU) In a September 30 meeting with Minister of
Industry and Commerce Antonio Fernando, the Charge and
Jackson pushed for a reinvigoration of the TIFA process as a
means to help Mozambique generate greater economic growth and
development through trade. Minister Fernando agreed to
commit new energy to the TIFA process and agreed in principle
to lead a high-level GRM delegation to Washington for a Trade
and Investment Council meeting in the first quarter of 2009.
Jackson in turn agreed to work with Washington agencies to
develop a draft agenda by the end of November at which point
a specific date for the 2009 Trade and Investment Council
meeting will be finalized.

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MCC/MCA TO SUPPORT EXPORTABLE PRODUCTS
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4. (SBU) Millennium Challenge Account (MCA) Mozambique
Deputy Director Emilio Muchanga, told Jackson that the 5-year
$507 million Millennium Challenge compact focuses in part on
supporting exportable products, as well as expanding
trade-enabling infrastructure in northern Mozambique.
Muchanga voiced concerns that Mozambican products cannot meet
high U.S. market standards and volume requirements, calling
for technical assistance, particularly in SPS and standards
certification, for Mozambican products. Jackson suggested
that Mozambique look to capture niche markets in the U.S. and
noted that AGOA provides incentives for Mozambique to move up
the product value chain.

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BUSINESS COMMUNITY DOWN ON AGOA TRADE
-------------------------------------

5. (SBU) Jackson met with members of the
Mozambican-American Chamber of Commerce who voiced similar
concerns about standards and volumes of exports required to
compete in the U.S. market. The business community indicated
that Mozambique would need significant trade capacity
building assistance (TCB) in order to take advantage of AGOA.
Kekobad Patel of the business association umbrella group CTA
told Jackson that Mozambique exported very few value-added
products due to weak internal capacity, a restrictive
business environment, and high transportation costs. Patel
warned that even tariff integration into SADC will be
challenging, as Mozambique has little political space to

MAPUTO 00000969 002 OF 002

diverge from the South African trade agenda. Patel also
expressed frustration at the GRM's inability to accelerate
reform of the business environment.

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TECHNOSERV ON AREAS OF EXPORT POTENTIAL
---------------------------------------

6. (SBU) Jake Walter, country director for the nonprofit
organization TechnoServ, provided a more optimistic
perspective on the potential for export-driven economic
growth in Mozambique. Waller cited a recent FAO study which
indicates that, with its vast tracts of arable land (89
million acres of arable land of which only 10 percent is
currently being used), Mozambique has the potential to plant
seven million acres of eucalyptus and pine plantations,
potentially generating $10 billion in revenues and creating
300,000 jobs. This would make Mozambique the second largest
wood and wood product producer in Africa. Waller also
believes that northern Mozambique shows great potential for
tropical fruit exports, with U.S. company Chiquita planning
to begin planting 7,400 acres in Nampula province next year,
with an eye on duty-free importation of bananas to the EU
market via the Everything But Arms (EBA) initiative by 2010.
This consistent export of bananas should provide sufficient
shipping infrastructure from the Port of Nacala to allow
tropical fruit exports to the Middle Eastern and Indian
markets. According to Waller, there is also great potential
for export of mangoes to India to meet off-season demand
there.

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COMMENT: TIFA - OPPORTUNITY TO PUSH REFORMS
-------------------------------------------

7. (SBU) Post is focused on using the TIFA as an organizing
mechanism to streamline both the Mission's and the GRM's
economic development strategies with respect to trade, and we
are pressing the the GRM to involve the private sector more
fully in its strategic planning. It seems clear that
Mozambique can use trade more effectively to boost economic
development, eradicate poverty, and meet Millennium
Development goals. The Mission will support USTR's goals of
using the TIFA process to cultivate some AGOA success
stories for Mozambique and support GRM efforts to push
through reforms to improve the business and investment
climate.
Amani

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