US embassy cable - 04ABUJA290

UNCLAS SECTION 01 OF 02 ABUJA 000290 
 
SIPDIS 
 
STATE PLEASE PASS TO USTR BILL JACKSON 
 
E.O. 12958: N/A 
TAGS: ETRD, EINV, ELAB, ECON, PREL, NI, AGOA, USTR 
SUBJECT: NIGERIA: SUBMISSION FOR 2004 PRESIDENT'S REPORT ON 
AGOA 
 
REF: (A) STATE 23970, (B) 03 Abuja 2184 
 
1. (U) Per ref A, Post provides the following update to the 
2003 President's Report on AGOA. 
 
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AGOA Trade and Investment 
------------------------- 
 
2. (U) Nigeria has not capitalized on African Growth and 
Opportunity Act (AGOA) benefits to a discernible degree. 
Nigeria's duty-free exports to the United States under AGOA 
consist almost exclusively of petroleum products, which 
would be the same even without AGOA.  Mission personnel have 
organized seminars and press briefings and provided support 
for the West Africa Trade Hub's opening of an AGOA resource 
center in Lagos, but despite these efforts and public 
interest in AGOA, the Act has generated very little new 
trade or investment.  The Mission has received no answer to 
date on its proposal for a program to improve the climate 
for U.S. private investment in Nigerian industries that 
might export to the U.S. under AGOA (ref B). 
 
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Market Economy/Economic Reform/ 
Elimination of Barriers to U.S. Trade 
------------------------------------- 
 
3. (U) Nigeria has made incremental progress toward 
establishing a market-based economy.  The GON announced it 
would deregulate fuel prices in late 2003, but stiff public 
resistance has all but stopped the initiative.  GON 
officials announced their intention of privatizing the 
Petroleum Product Marketing Company, which buys and sells 
both domestic and imported fuel and petroleum products, and 
said plans to privatize Nigeria's four state-owned oil 
refineries would continue.  The GON has repeated its 
commitment to privatizing the National Electric Power 
Authority and Nigeria Telecommunications Limited, but the 
process has suffered frequent setbacks. 
 
4. (U) Progress toward eliminating barriers to U.S. trade 
has slowed considerably.  Trade policies and tariff rates 
tend to change suddenly and arbitrarily, and violations of 
WTO prohibitions against certain non-tariff trade barriers 
continue.  The GON maintains a long list of banned imports 
and in January 2004 added more than forty items, including 
plastics, textiles, detergents, and meat products, to the 
list.  The GON drew up the list without the required studies 
to justify the bans.  Notoriously congested ports and long 
delays in clearance procedures present additional barriers 
to U.S. trade. 
 
5. (U) Improvements in intellectual property rights (IPR) 
protection have also been sluggish.  Nigeria is party to 
numerous IPR conventions and agreements, and laws favor 
intellectual property owners and impose criminal penalties 
on IPR violators.  The GON has introduced legislation to 
create a quasi-independent IPR commission and bring Nigeria 
into full compliance with the WTO TRIPS agreement.  Patents, 
trademarks, and copyrights are better protected now than 
they once were, but software and DVD piracy remains rampant 
even though the market for legitimate products is very 
small.  Scarce resources and a lack of expertise continue to 
make IPR enforcement difficult. 
 
--------------------------------------------- -- 
Rule of Law/Political Pluralism/Anti-Corruption 
--------------------------------------------- -- 
 
6. (U) Nigeria continues to be one of the world's most 
corrupt countries, second only to Bangladesh in Transparency 
International's 2003 Corruption Perceptions Index.  Some 
officials see government service as a path to personal 
enrichment, and companies continue to report that doing 
business without paying bribes puts them at a distinct 
disadvantage.  The GON is putting together an ambitious 
program for combating corruption and has established a 
federal anti-corruption commission and other institutions to 
tackle the issue.  Thus far, their results have been meager, 
but progress is evident in the reversal of some procurement 
contract decisions.  Future work with the GON under Evian, 
including the Extractive Industries Transparency Initiative, 
may help reduce the most blatant forms of corruption, but 
for now corruption remains endemic. 
 
7. (U) Civil and criminal cases move through Nigeria's 
courts at a snail's pace.  The country's judicial system is 
not always independent, and it generally lacks the resources 
and administrative capability to function effectively.  Low 
levels of public confidence have contributed to the adoption 
of criminal codes based on Shari'a (Islamic law) in 12 of 
Nigeria's northern states.  Surprisingly, the Supreme Court 
and appellate courts command respect, and the former 
continues to assert its role as the final arbiter of 
disputes. 
 
8. (U) Nigeria's politics are becoming increasingly 
competitive, but problems remain.  Thirty parties, up from 
three in 1999, presented candidates in Nigeria's April 2003 
state and national elections (the second elections since the 
country's 1999 return to democracy), but the contests were 
marred by what domestic and international observers 
perceived as widespread fraud.  The leading opposition 
party, the All Nigeria People's Party, filed a lawsuit to 
have President Obasanjo's victory overturned, but the Court 
of Appeals has yet to deliver a ruling.  Expected local 
elections, meanwhile, have not been held. 
 
9. (U) Ethnic and religious tensions pose additional 
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. 
 
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Poverty Reduction 
----------------- 
 
10. (U) The GON promised far-reaching reforms in its mid- 
2003 economic plan, the National Economic Empowerment and 
Development Strategy, but details have yet to be released. 
The plan 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.  Skeptics point out that 
the plan is the third in a series of poverty reduction 
programs introduced over the last four years and note that 
none have had noticeable effects on the two-thirds of 
Nigerians living in poverty.  Key indicators show that 
poverty is actually increasing. 
 
11. (U) The GON promotes 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, but the program has 
been only moderately successful.  Of the $150 million set 
aside by December 2003, only thirty-five percent had been 
invested. 
 
------------------------------ 
Labor/Child Labor/Human Rights 
------------------------------ 
 
12. (U) Nigerian law outlaws forced or bonded labor and 
restricts the employment of children younger than age 15 to 
home-based agricultural or domestic work for no more than 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 since 
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. 
 
13. (U) The GON's human rights record has improved, but 
serious problems remain.  Security services all too often 
fail to protect the rule of law, particularly in rural 
areas, and human rights violators are rarely held 
accountable for their actions. 
 
ROBERTS