Cablegate: Morocco's Pending Fta Issues

VZCZCXYZ0000
PP RUEHWEB

DE RUEHRB #1190/01 3581714
ZNR UUUUU ZZH
P 231714Z DEC 08
FM AMEMBASSY RABAT
TO RUEHC/SECSTATE WASHDC PRIORITY 9481
INFO RUCNMGH/MAGHREB COLLECTIVE
RUEHCL/AMCONSUL CASABLANCA 4429
RUEHRC/DEPT OF AGRICULTURE WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC

UNCLAS RABAT 001190

SENSITIVE
SIPDIS

DEPT FOR NEA/MAG, EEB/IFD/OIA AND EEB/TPP/BTA
STATE PLEASE PASS TO USTR - PAUL BURKHEAD AND MARY LATIMER
USDOC FOR ITA/MAC/ONE ROTH
USDA/FAS ONA FOR CHUCK BERTSCH AND BARBARA CHATTIN
USDA/FAS OCRA FOR CATHY MCKINNELL
USDA/APHIS FOR CRAIG FEDCHOCK AND FAN-LI CHOU

E.O. 12958: N/A
TAGS: ETRD EFIN EAGR EINV MO
SUBJECT: MOROCCO'S PENDING FTA ISSUES

1. (SBU) Summary: Minister of Foreign Trade Abdellatif
Maazouz convoked the Ambassador (accompanied by AgCouns and
EconOff) on December 16 to discuss the evolving post-Free
Trade Agreement (FTA) bilateral trade relationship and next
steps to advance outstanding implementation issues. Minister
Maazouz raised Moroccan concerns about U.S. market access for
Moroccan tomatoes and berries, areas of disagreement on
administration of transshipment rules and wheat tariff
quotas, non-conforming measures in services, and technical
assistance. Minister Maazouz expressed the Government of
Morocco,s (GOM's) overall satisfaction with the FTA, but
noted &small technical issues8 that need to be resolved as
soon as possible. The Ambassador highlighted the expected
2009 visit of Assistant United States Trade Representative
(USTR) Chris Wilson and the Second Joint Committee meeting as
possible forums to address these issues. End Summary.

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Proposed Meetings
-----------------

2. (U) The Ambassador opened the discussion by presenting
USTR,s proposal that new Assistant USTR Chris Wilson make an
introductory trip to Morocco in early 2009. The Minister
stated his preference that the visit take place in early
January, ideally before the Ambassador,s departure from Post
on January 20. He also noted USTR,s proposal to hold the
Second Joint Committee Meeting in the spring or early summer
2009. Maazouz preferred a spring timeframe, stressing the
importance of addressing unresolved FTA issues as soon as
possible.

--------------------------
Agriculture and SPS Issues
--------------------------

3. (U) Tomatoes: Maazouz stated that the accreditation
process to allow tomato exports to the U.S. from the
Souss-Massa Region is almost complete after five years. He
observed that USDA's Animal and Plant Health Inspection
Service (APHIS) has finished its technical review, but
inquired about when the new final rules will be published in
the Code of Federal Regulations. The GOM is eager to know
when producers from the Agadir region can begin to ship their
tomatoes to the U.S. market, he concluded. AgCouns told the
Minister that the change of U.S. Administration might delay
the publishing process of the rules until next spring. The
new regulations will require that APHIS visit and approve the
tomato greenhouses eligible to export to the U.S. AgCouns
suggested that the GOM should very soon start identifying
potential producers/exporters to expedite the APHIS
inspections as soon as possible following publication of the
regulations.

4. (U) Blueberries/Raspberries: Maazouz acknowledged
USAID,s technical assistance to Morocco regarding blueberry
and raspberry exports to the U.S. In September 2008, Maazouz
recalled, the GOM submitted a technical proposal requesting
APHIS to add these berries to the list of products eligible
for entry to the U.S. The GOM strongly desires that APHIS
process the berry request more quickly than the ongoing
tomatoes case, Maazouz said, and Morocco is ready to receive
an APHIS risk assessment team as soon as possible to expedite
the review process. AgCouns informed the Minister that the
Foreign Agricultural Services (FAS) stands ready to work
closely with APHIS to facilitate the inspection process, and
undertook to explore with APHIS the feasibility of the
Ambassador,s suggestion to combine the APHIS visits to
approve the tomato greenhouses and conduct the risk
assessment for the berries.

5. (SBU) Olives and Wheat: The GOM is still waiting for a
USG response to its request to accelerate the tariff
reduction to the one olive line item, Maazouz stated.
Recalling USTR,s March 2008 letter regarding wheat Tariff
Rate Quotas (TRQs), Maazouz reminded the Ambassador that the
GOM sent an official response to USTR last week. AgCouns
acknowledged that the response has been received and told the
Minister that the USG is reviewing the letter. Maazouz
emphasized the GOM,s desire to change the common wheat TRQs
year from a calendar year basis, as stipulated in the FTA
text, to a marketing year basis to facilitate the use of the
quotas.

---------------
Customs Matters
---------------

6. (SBU) Transshipment: Maazouz and the Ambassador reviewed
the different U.S. and Moroccan interpretations of points of
origin for goods that undergo transshipment. Maazouz
reiterated that the GOM believes only shipments that depart
the U.S. following an order from a Moroccan customer (as
reflected in an invoice or bill of lading) may benefit from
the FTA provisions if they transit a third country.
Bilateral Trade Director Souad Benanni stated that the text
of the accord is clear on transshipment matters, and asserted
that the U.S. was responsible for including provisions
regarding direct shipment in the FTA. Nevertheless, Minister
Maazouz agreed that the U.S. position on transshipment is
logical, but said the GOM is concerned that products entering
Morocco from a third country would carry greater risks of
disease or spoilage. He urged the USG and GOM to find a
&mutually agreeable solution8 to the disagreement. The
Ambassador noted that U.S. trade officials accord direct
shipment treatment to Moroccan goods that are first exported
to Europe before distribution to U.S. retailers and the USG
does not expect or observe greater risks from these products.

------------
Other Issues
------------

7. (U) Non-Conforming Measures in Services: The GOM awaits
a response to the revision in Morocco,s schedule of
non-conforming measures in services, Maazouz observed. He
pointed to the April 2008 letter of former Assistant USTR
Shaun Donnelly undertaking to finalize the issue through an
exchange of letters within weeks. Morocco hopes this issue
could be resolved before Wilson,s visit to Morocco.

8. (SBU) Technical Assistance: Maazouz expressed concern
that MEPI funds for FTA technical assistance may not be
available in 2009. EconOff informed the Moroccans, as
indicated by prior communications through USTR, that MEPI
plans to fund the FY 2009 technical assistance work plan
developed by the Commercial Law Development Program (CLDP) in
consultation with the GOM and USTR. However, she continued,
the USG and GOM need to consider other possibilities of
securing funding for FY 2010 and beyond. The Ambassador,
AgCouns and Econoff also reviewed other ongoing and potential
USG-funded technical assistance programs, such as customs
controls training, USAID programs, and technical assistance
and capacity building programs through FAS.

---------------------------------------
Hoping to Resolve Issues through Visits
---------------------------------------

9. (SBU) Despite specific implementation concerns, Minister
Maazouz judged the overall results of the FTA in
strengthening trade, market access, and investment as
positive. Total bilateral trade has more than doubled since
the FTA entered into force and 2008 has been the best year
yet for Moroccan exports to the U.S. Moroccan exports for
the first ten months of 2008 were 50 percent higher than
total 2005 exports (USD 520 million in 2005 versus USD 749
million in the first 10 months of 2008). The outstanding
issues are &small8 in comparison to the overall success of
the FTA, Maazouz said. Unfortunately, he opined, the USG and
GOM have taken a stance on the remaining issues as if the
discussion were a boxing match where each party must defend
its stance and not back down. Maazouz asserted that we must
consider each other,s viewpoints in order to come up with an
agreeable solution to the pending issues. The Ambassador
closed the meeting by promising to present to USTR the GOM
concerns, in particular getting an update on the
non-conforming measures in services and the exact dates of
Assistant USTR Wilson,s trip to Morocco.

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Riley

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