US embassy cable - 01ABUJA1543

UNCLAS SECTION 01 OF 03 ABUJA 001543 
 
SIPDIS 
 
 
E.O. 12958: N/A 
TAGS: ECON, ETRD, EAID, BEXP, NI 
SUBJECT: NIGERIA: AMBASSADOR'S CALL ON MINISTER OF 
COMMERCE: WORK REMAINS ON AGOA AND PROCTER & GAMBLE 
 
 
 --------------- 
SUMMARY 
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1.  (SBU) Ambassador Jeter met June 26 with Minister of 
Commerce Bello for a discussion of U.S.-Nigeria trade 
relations.  He stressed the need for Nigeria to take 
advantage of AGOA's benefits quickly.  Minister Bello 
concurred and thanked the U.S. for its capacity-building and 
technical assistance efforts on AGOA.  He noted that the GON 
will promote the sale of inputs, mainly textiles to countries 
already AGOA-certified while developing Nigeria's own 
finished-product export capacity.  Minister Bello was unclear 
on AGOA statutory requirements regarding plant inspections 
and records keeping.  Econ Chief noted those points and will 
work closely with Ministry staff to ensure they are properly 
reflected in the final Custom Code revisions presented to 
USTR for certification.  Ambassador Jeter also raised Procter 
& Gamble's interest in a differentiated tariff structure 
designed to provide tariff relief for P&G while 
simultaneously protecting Nigeria's domestic detergent 
producers.  Although the proposal was not accepted 
immediately, we will continue to push this idea at all levels 
of the Ministry.  End Summary. 
 
 
2.  (U) Ambassador Jeter, USAID Abuja Chief Economist Aulakh 
and Embassy Economic Section Chief Carrig met June 25 with 
Minister of Commerce Mustafa Bello, Permanent Secretary Amuna 
Lawal Ali and six of the Ministry's Directors at the 
Minister's Federal Secretariat office for a discussion of 
U.S.-Nigerian trade relations.  Members of the press covered 
the Ambassador's initial courtesy call. 
 
 
3.  (U) Ambassador Jeter opened by noting the importance of 
commerce to our developing bilateral relationship, citing the 
critical necessity to move "from aid to trade" as the basis 
for our cooperative efforts.  He congratulated Bello on the 
Commerce Ministry's progress in preparing Nigeria for full 
participation in the export opportunities offered by the 
Africa Growth and Opportunity Act (AGOA). 
 
 
------------------------------- 
AGOA Preparations 
------------------------------ 
 
 
4. (U) Noting that the "Asian Tigers" owe much of their 
current prosperity to the preferential tariff structure 
programs now available to Nigeria, Ambassador Jeter stressed 
the importance of bringing Nigeria "on line" as quickly as 
possible, given the time limit on Generalized System of 
Preferences status for eligible AGOA countries. 
 
 
5. (U) He continued that the current terms of trade are 
overwhelmingly in Nigeria's favor and that the USG wants to 
address that imbalance in a positive manner designed to 
provide increased wealth and an improved standard of living 
for all Nigerians.  That, the Ambassador noted, is the only 
sure route to a meaningful "democracy dividend."  Ambassador 
Jeter's remark that "We, the United States, want for 
Nigerians what Nigerians want for themselves: prosperity and 
a rightful place in global trade," drew spontaneous applause 
from the Minister, his staff, and the press as well. 
 
 
6.  (U) Minister Bello thanked Ambassador Jeter for his 
observations on the signal importance of our trade relations 
and praised the efforts of USAID and Embassy staff to 
increase Nigeria's capacity to trade in world markets.  With 
respect to AGOA, Bello outlined the GON's preparatory steps 
that have included a November 2000 day-long joint 
Embassy/Ministry of Commerce "AGOA Sensitization Seminar" for 
the 36 State Commissioners of Commerce meeting at Jos, 
Plateau State; combined GON/Embassy AGOA road shows; and the 
GON's creation of AGOA committees at the State, Ministerial 
and Presidential levels. 
 
 
7.  (U) Bello was particularly supportive of the 
participation of USAID and Embassy officers as non-voting 
members of key Presidential level committees, assisting in 
developing products lines for export to the United States. 
Ambassador Jeter reiterated the importance of moving quickly 
to take advantage of Nigeria,s duty-free status for 
thousands of products and commended Minister Bello,s 
strategy to provide inputs to nations already AGOA compliant 
on textiles (e.g. Mauritius, South Africa, and Lesotho) while 
simultaneously ramping up Nigeria,s own export 
infrastructure. 
 
 
8.  (U) Bello also praised the Embassy's efforts to assist 
GON officials in bringing Nigeria's Customs regulations and 
criminal penalties for textile visa circumvention into line 
with AGOA requirements.  He said he appreciated the Embassy's 
offer of support for a Ministry-organized AGOA Sensitization 
Seminar for key members of the National Assembly to acquaint 
them with the changes needed in Nigeria's criminal code. 
 
 
9.  (U) Ambassador Jeter commented that the Embassy was ready 
to assist the Ministry in the U.S. as well.  He noted that 
Mr. Carrig, the Embassy,s AGOA coordinator, would be in 
Washington during the month of July and was prepared to (a) 
discuss the GON,s textile visa proposals with USTR and (b) 
initiate coordination with prospective investors and buyers 
of priority products lines identified by the Ministry. 
 
 
10. (U) Bello made a miss step, however, when he described 
two key provisions of the AGOA statute ensuring Nigeria is in 
compliance with the textile visa requirements as optional. 
Speaking of the need to keep the Customs Code clutter-free so 
as not to complicate trade relations with other countries (he 
mentioned Japan), Bello suggested that Nigeria could ignore 
-- in rewriting its regulations -- the AGOA requirement that 
textile plants are subject to inspection by U.S. Customs.  He 
also opined that Nigerian firms need not keep all the 
"voluminous records" mandated by AGOA. 
 
 
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Assistance to Procter & Gamble 
--------------------------------------------- ------ 
 
 
11. (U) Ambassador Jeter reviewed for Minister Bello our 
continuing efforts in support of Procter & Gamble's request 
for tariff reductions on its Ariel soap powder in exchange 
for a substantial increase in P&G's already sizeable 
investment in Nigeria.  Nigerian producers fear competition 
from cheap imports should the tariff barrier be lowered 
across the board. 
 
 
12. (U) Ambassador and Econ Chief outlined the latest P&G 
proposal, which calls for a differentiated tariff structure 
based on the quality of the detergent product, in this case 
its enzyme load.  In its elementary form, the P&G proposal 
would have duties inversely proportional to quality - the 
higher the quality, the lower the tariff.  This approach 
could give P&G a break on tariffs for its high quality 
product without necessarily endangering the lower end of the 
market that domestic detergent producers fear they would lose 
were the tariff barrier removed for all qualities of 
detergent. 
 
 
13.  (U) Minister Bello was not immediately supportive of the 
idea.  He noted that P&G could relocate its Ariel production 
facilities to Nigeria and benefit from Nigeria's export 
promotion regime, perhaps saving the firm more money than a 
cut in tariffs could provide.  The Minister's staffers in 
early conversations with EconChief had also suggested that 
P&G would be unlikely to get the tariff concessions it seeks 
without: (a) agreeing to a price undertaking that would limit 
competition with domestic products; and (b) a sunset 
provision providing a date-certain by which the special 
differentiated tariff structure would expire. 
 
 
14. (SBU) Minister Bello, however, did not assert that any of 
these suggestions were absolute or non-negotiable.  He 
offered to convene a roundtable of the appropriate 
decision-makers to listen directly to proposals by P&G 
representatives and to have that group then make appropriate 
recommendations to the Presidency.  (Comment.  Three times we 
have scheduled just such a roundtable discussion.  Each time 
one or another of the proposed participants, i.e., Commerce, 
Finance, Office of the Vice President, Office of the Chief 
Economic Advisor, Nigerian Export Promotion Council, and 
Nigerian Investment Promotion Commission, has had to withdraw 
at the last minute, scuttling the session.  We will continue 
our efforts, however.  End Comment.) 
 
 
15. (SBU) Comment.  Minister Bello,s remarks about 
Nigeria,s presumed capacity to negotiate the terms of AGOA 
regarding record-keeping and U.S Customs access to Nigerian 
textile factories surprised us.  We have been in close 
contact with the Minister and his staff for months regarding 
the provisions of AGOA.  Perhaps, his comment may have been 
more directed to the press present in the room than to us. 
 
 
16. (SBU) Comment Continued: In a pull aside following the 
meeting, EconChief mentioned to Bello that the provisions for 
AGOA textile certification are not opening bids for bilateral 
negotiations; rather, they are integral components of the 
AGOA legislation, non-negotiable and applied equally to all 
nations asking for AGOA benefits.  In subsequent 
conversations with Bello,s staff, EconChief was assured that 
the GON,s textile visa submission would be virtually 
identical to that of South Africa,s already approved Customs 
Code.  End Comment. 
Jeter