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Cablegate: Eizenstat Promotes Bilateral Fta, Maghreb

VZCZCXYZ3039
RR RUEHWEB

DE RUEHRB #0826/01 2791653
ZNR UUUUU ZZH
R 061653Z OCT 09
FM AMEMBASSY RABAT
TO RUEHC/SECSTATE WASHDC 0712
INFO RUCNMGH/MAGHREB COLLECTIVE

UNCLAS RABAT 000826

SIPDIS

STATE FOR NEA/MAG, NEA/PI, EB/TPP/BTA

E.O. 12958: N/A
TAGS: ETRD EINV ECON PREL MO
SUBJECT: Eizenstat promotes bilateral FTA, Maghreb
regional integration

1. Summary: During an October 1 conference in
Casablanca on the U.S.-Morocco Free Trade Agreement
(FTA), former senior USG official Stuart Eizenstat
discussed opportunities for increasing bilateral
trade between Morocco and the U.S., and for
bolstering U.S. FDI in Morocco. He also proposed
reinvigorating his late-nineties initiative to
promote Maghreb regional integration and deepen the
relationship between the U.S. and the Maghreb, noting
that this initiative had renewed importance given the
rise of extremism in the region. Eizenstat also
presented his ideas at a dinner with six Moroccan
ministers (interior, agriculture, energy, industry,
trade, finance), as well as Moroccan notables ranging
from Royal Adviser Andre Azoulay to intelligence
chief Yassine Mansouri. End summary.

2. On October 1, A/DCM Ranz attended a conference in
Casablanca on the U.S.-Morocco FTA, co-hosted by the
Office Cherifien des Phosphates (OCP, the government-
owned phosphate monopoly) and the Confederation
Generale des Entreprises du Maroc (CGEM, the most
important private sector organization in Morocco).
Moroccan conference attendees included recently-
elected CGEM head Mohamed Horani, OCP Director
Mostafa Terrab, and former Finance Minister and
current Rabat mayor Fathallah Oualalou.

3. In his keynote address, Eizenstat was blunt that
the FTA could not function independently of the
broader business environment, citing Morocco?s low
ranking on the World Bank?s Doing Business index, and
Transparency International?s corruption index. He
also underscored the importance of improving
Morocco?s poor education system. He suggested (and
Moroccan business leaders in attendance agreed) that
Morocco should reconsider its currency mechanism,
which resulted in a too-strong dirham and thus
reduced the competitiveness of Moroccan exports. On
the positive side, he noted that Morocco was one of
only two countries (Jordan being the other) enjoying
essentially free-trade status with both the U.S. and
Europe, making it a perfect export platform for
investors interested in trade with both markets.

4. Eizenstat acknowledged that full regional
integration in the Maghreb was impossible absent a
solution on Western Sahara, but argued that the
business communities did not need to wait for
?nirvana.? He proposed regional cumulation of origin
(for which no legislation was needed, he said) and
Economic Integration Zones (similar to the Israel-
Jordan and Israeli-Egypt Qualifying Industrial Zones,
which would require legislation in both countries) as
potential first steps. Several Moroccan business
leaders in attendance responded that they had tried
to establish business partnerships with eager and
willing Algerian counterparts, but that the Algerian
Government had intervened and prevented culmination
of their deals.

5. Eizenstat argued that there was an even greater
sense of urgency now for regional integration than
when he first launched his initiative in the late
1990s. The population bulge throughout North Africa,
and the high rate of urban unemployment, were a
recipe for an explosion in crime and extremism. He
returned several times to this core theme: regional
integration was the key to avoiding the growth of
extremism. He listed several sectors that were ripe
for regional cooperation, including: sustainable
water supply, unified transportation networks,
regional energy policy, agribusiness, and financial
services.

6. Researchers from the Petersen Institute for
International Economics presented the findings of
their recent, OCP-funded study, "Capitalizing on the
Morocco-US Free Trade Agreement: A Road Map for
Success," which focuses on trade and investment
opportunities in agriculture, textiles, services and
aviation, and uses Chile and Jordan as models for
successful FTA implementation. CGEM also presented
some of its recent findings on obstacles to full
utilization of the FTA, which were published earlier
this year in a report prepared by the French firm
Roland Berger.

7. In his conclusion, Eizenstat reiterated that
countries that had done well with FTA implementation

had paired it with improvements in their business
climates through serious reform efforts and
institution building. He pushed for the USG to be
more proactive in promoting regional integration, and
specifically to press publicly for opening borders
and regularizing trade between Morocco and Algeria.
The regional players needed the "catalyst" of USG
intervention, he averred.

8. For its part, the GOM needed an office and
individual responsible for FTA implementation,
Eizenstat said, noting that this model had been the
key to success elsewhere. This office should invite
a team of Petersen Institute and CGEM researchers
involved in studying FTA implementation to present
their findings in greater detail, "drill down" into
their recommendations, and come up with an
implementation plan.

9. Eizenstat thought the Moroccan private sector
needed to do more to promote itself by teaming up
with American business organizations like the U.S.
Chambers of Commerce and National Association of
Manufacturers to sensitize American companies to the
benefits of the FTA. Eizenstat also pushed the
private sector to "establish a presence" in the U.S.,
by opening up trade missions in selected key American
cities. Finally, he suggested that the private
sector establish a single location in Casablanca
where Moroccan enterprises could find everything they
needed to know about doing business with the U.S.

Kaplan

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