US embassy cable - 04MUSCAT2190

C O N F I D E N T I A L SECTION 01 OF 02 MUSCAT 002190 
 
SIPDIS 
 
STATE FOR EB/TPP/BTA, NEA/RA, NEA/PI, AND NEA/ARPI 
STATE PLEASE PASS USTR/JBUNTIN 
USDOC FOR 4520/ITA/MAC/AMESA/OME/MTALAAT 
 
E.O. 12958: DECL: 12/17/2014 
TAGS: ETRD, PREL, BEXP, MU, International Relations, Economic Affairs 
SUBJECT: COMMERCE MINISTER ON FTA, SAUDI CRITICISM 
(C-NE4-01168) 
 
 
Classified By: Ambassador Richard L. Baltimore, III. 
Reasons: 1.4 (b) and (d). 
 
1. (C) Summary: Omani Minister of Commerce and Industry 
Maqbool bin Ali bin Sultan reassured visiting NEA DAS Philo 
Dibble that Oman remains firmly committed to signing a 
bilateral FTA with the U.S.  Bluster from the Saudis 
notwithstanding, Maqbool reiterated that the Omani cabinet 
has already approved the decision to move forward with an FTA 
along the lines of the U.S.-Bahrain agreement.  While 
backdoor negotiations between the Bahrainis and Saudis 
concerning alleged incompatibility between bilateral trade 
pacts and the GCC charter have failed to yield a definitive 
resolution, Maqbool is confident that Sultan Qaboos will 
maintain his unwavering support for a bilateral agreement 
during the upcoming GCC Summit in Bahrain December 20-21. 
DAS Dibble emphasized USG support for GCC integration and 
pledged that we would be willing to work with Oman and other 
nations to address Customs Union and other concerns during 
the negotiations.  End Summary. 
 
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Getting Down to Business 
------------------------ 
 
2. (C) On December 12, during a half-hour morning meeting 
with visiting NEA DAS Philo Dibble and the Ambassador, Omani 
Minister of Commerce and Industry Maqbool bin Ali bin Sultan 
pointedly and repeatedly emphasized Oman's desire to move 
forward on a bilateral free trade agreement (FTA) with the 
United States.  DAS Dibble stressed the USG belief that 
regional integration would be strengthened through the FTA 
process, and that the U.S. is willing to work with the GCC on 
addressing its concerns that bilateral FTAs would undermine 
the GCC Customs Union. 
 
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All Fingers Point to Riyadh 
--------------------------- 
 
3. (C) Maqbool asserted that the Saudis were caught off guard 
by the speed with which the U.S. concluded its FTA with 
Bahrain.  In his view, Riyadh believed that it could achieve 
WTO accession prior to any deal being struck between 
Washington and Manama.  When the Bahrain discussions ended in 
four months and Oman and the UAE were recently announced as 
upcoming FTA partners, the Saudis felt their only option was 
to make a public statement cajoling the other GCC states into 
honoring the GCC Charter and renouncing bilateral agreements. 
 (Note: As an aside, Maqbool stated that Saudi Arabia will 
encounter many bumps along the path to WTO accession, 
particularly with the EU over its gas sector (NFI).) 
 
4. (C) In spite of such bluster, Maqbool said that Sultan 
Qaboos and the Omani Cabinet of Ministers agree with the U.S. 
position that Oman should negotiate a bilateral FTA.  He also 
indicated that progress was being made behind the scenes in 
the GCC on the issue of FTAs, and that Oman has made its 
position very clear to the other members.  Maqbool predicts 
that the December 20-21 GCC Summit in Bahrain will yield an 
accord on moving forward with bilateral agreements, 
especially in light of Bahrain already having signed its FTA. 
 In the end, the Saudis' biggest concern is the integrity of 
the GCC Customs Union and its industrial protection policies. 
 Maqbool suggested that a public statement of support for the 
GCC from the USG would be extremely helpful in resolving the 
current impasse.  DAS Dibble noted this request and reassured 
the Omani minister that the USG's intent is not to undercut 
the GCC in any way. 
 
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Taking the Necessary Steps 
-------------------------- 
 
5. (C) Maqbool stressed the need to conclude FTA negotiations 
by July, and mentioned that the Omani government is taking 
numerous steps to prepare for this aggressive timetable. 
Economic expert Dr. Said al-Riyami will be posted to the 
Omani Embassy in Washington, the Ministry expects to hire 
other consultants and/or legal advisors to assist in the 
negotiations and implementation of an FTA, and the Minister 
acknowledged the need to cultivate contacts on Capitol Hill. 
DAS Dibble noted that lawyers helped greatly in the Bahrain 
negotiations.  In comparison with the relatively 
straightforward ratification system in Oman, Maqbool 
expressed a newfound appreciation for the complexity of 
getting FTA ratification in the U.S.  Nevertheless, he 
insisted that an FTA is still Oman's primary goal: "I'm sure 
it's worth it; we're committed and we're moving forward. 
We'll get it done." 
 
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Comment 
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6. (C) Maqbool demonstrated a keen grasp of the intricacies 
and accelerated timetable necessary to achieve an FTA, and 
his Ministry has been reacting noticeably more quickly in 
their interactions with the Embassy.  While he was reluctant 
to completely dismiss Saudi recalcitrance on the bilateral 
FTA dilemma within the GCC, Maqbool appeared confident that 
the Saudis would have no choice in the end but to accept the 
reality that the U.S. is moving forward with willing partners 
in the region. 
BALTIMORE