US embassy cable - 04ACCRA1203

UNCLAS SECTION 01 OF 02 ACCRA 001203 
 
SIPDIS 
 
SENSITIVE 
 
STATE PASS USTR -- PATRICK COLEMAN 
 
E.O. 12958: N/A 
TAGS: EAID, ETRD, GH 
SUBJECT: TREASURY UNDER SECRETARY TAYLOR AND GHANA TRADE 
MINISTER DISCUSS KIGALI MEETING OF AFRICAN TRADE MINISTERS 
 
REF: ACCRA 1200 
 
Summary 
------- 
1. (SBU) Treasury Under Secretary John Taylor met May 31 with 
Trade Minister Alan Kyerematen, who had just returned from 
the African Union trade ministers' meeting in Kigali. 
Responding to recent U.S. and EU WTO proposals, the ministers 
drafted an African strategy for WTO negotiations.  It calls 
for special/differential treatment, greater market access, 
and a timeline for cuts in agricultural subsidies. 
Kyerematen complained that the trade component in Poverty 
Reduction Strategy Papers (PRSP) is weak and applauded the 
MCA's emphasis on growth.  Ghana plans to urge faster trade 
liberalization at the ECOWAS heads of state level.  End 
Summary. 
 
Kigali Consensus 
---------------- 
2. (SBU) Kyerematen said African trade ministers developed a 
proposal for a post-Cancun strategy ) the "Kigali consensus" 
) that calls for enhanced market access for African products 
and for specific timelines for reducing and eliminating trade 
distorting supports for agriculture.  The ministers wanted to 
capitalize on recent U.S. and EU indications of flexibility, 
and the idea was to come up with a useful proposal that could 
move the process forward. 
 
3. (SBU) African countries are unable to take advantage of 
market opportunities, Kyerematen said, because of non-tariff 
barriers ) sanitary and phytosanitary (SPS) and technical 
barriers to trade (TBT).  He asked the U.S. to provide more 
technical assistance to improve African businesses ability to 
meet these difficult developed world requirements.  Taylor 
responded that the U.S. has emphasized trade capacity 
building. 
 
4. (SBU) Kyerematen said the Kigali consensus calls for 
definite timelines for eliminating agricultural export 
subsidies, which the African ministers realize the U.S. 
supports, and also for reducing domestic supports and 
subsidies.  Taylor responded that the U.S. proposal includes 
increasing market access, eliminating export subsidies and 
reducing domestic supports, but accepted Kyerematen's point 
that the African ministers were looking for set timelines. 
Kyerematen commented that the EU is prepared to eliminate 
trade distorting supports on products important to developing 
countries, postponing broader reductions.  However, he agreed 
with Taylor that the point is for developing countries to 
eventually become developed, so the African countries do not 
want the EU to develop a fixed list of products that cannot 
be expanded. 
 
5. (SBU) On tariff escalation, Kyerematen said the ministers 
understand the U.S. and EU want developing countries to bind 
tariffs at present levels.  The Kigali proposal reiterates 
calls for special and differential treatment, to allow 
developing countries to build industrial capacity.  He added 
that the ministers expected the EU and U.S. would not 
pressure African countries for immediate or rapid tariff 
reductions. 
 
6. (SBU) Kyerematen was less clear on the Kigali ministers' 
position on cotton.  They apparently agreed to consolidate it 
into the overall agricultural talks.  However, they proposed 
including it on the priority list and setting a set time 
period for elimination of developed country supports to the 
sector ) three years for subsidies and four years for 
domestic supports.  (Note:  Kyerematen told econoff June 7 
that he understands the U.S. has agreed to the principle of 
time limits, but was not sure if the U.S. had accepted a set 
timeframe.  End Note)  His only comment regarding Singapore 
issues was that the general consensus was to negotiate on 
trade facilitation and postpone the other three issues. 
 
ECOWAS Trade Liberalization 
--------------------------- 
7. (SBU) Ghana is concerned that Nigerian trade barriers and 
export expansion grants are interfering with ECOWAS trade 
liberalization efforts.  Kyerematen asserted that the GoG is 
committed to the ECOWAS common market and will raise this at 
the next heads of state meeting. 
 
Pro-Growth Strategies, Trade, and the MCA 
----------------------------------------- 
8. (SBU) Kyerematen complained that pro-growth strategies, 
especially the trade component of economic development, are 
under-represented in PRSPs, which stress poverty reduction 
and social programs.  Taylor agreed, adding that growth and 
trade were also not main features of the UN's Millennium 
Development Goals.  Kyerematen was pleased to hear U/S Taylor 
state that growth is at the heart of the MCA.  (Note:  U/S 
Taylor's MCA discussions reported reftel.  End Note) 
 
9. (SBU) Kyerematen pointed to the Kufuor administration's 
Presidential Special Initiatives as an example of the GoG's 
policies to promote growth.  He disputed criticism that the 
initiative is government intervention in the economy, or 
"picking winners," as is commonly alleged.  Rather, he called 
it government &engagement8 in strategic sectors to foment 
export-driven growth and employment generation.  The GoG is 
focusing on industrial starch, using cassava, oil palm 
products, and industrial salt.  He hopes the salt industry 
will serve as the basis for developing a chemicals industry 
in Ghana.  Kyerematen called it "government engineering" of 
the economy:  the GoG is helping to identify bottlenecks, 
organize farmers into cooperatives, and assisting SMEs to 
access technology, financing and professional management. 
 
10. (SBU) Despite the GoG's efforts, private sector 
investment, especially foreign direct investment, is growing 
slowly.  Kyerematen blamed this on collateral damage from 
regional instability, which makes it especially difficult to 
attract small and medium sized investment from the U.S. and 
Europe.  He asked the U.S. to help Ghana improve its image by 
promoting success stories.  Ambassador Yates reiterated a 
comment she has delivered before to Kyerematen that Ghana has 
a perception problem:  many investors believe it does not 
have a welcoming investment climate. (Comment: As usual, 
Kyerematen misunderstood the Ambassador's criticism of the 
investment environment.  Rather than accept this as an area 
the GoG should work on, he blamed the problem on investors' 
lack of information on Ghana.  End Comment) 
 
11. (SBU) Kyerematen criticized donors for not really 
understanding or supporting the private sector, and mentioned 
that he has requested assistance from the U.S. Small Business 
Administration (SBA).  He said the SBA has agreed to visit 
Ghana to explore ways to provide assistance.  Taylor agreed 
that many donors are more focused on poverty alleviation, but 
pointed out that in addition to the MCA focus on growth, IDA 
funding can now be used to support the private sector, since 
SME lending was negotiated into IDA 13 (for the first time). 
 
Yates