US embassy cable - 05DARESSALAAM432

UNCLAS SECTION 01 OF 02 DAR ES SALAAM 000432 
 
SIPDIS 
 
STATE FOR AF/E AND AF/EPS 
PASS TO USTR BILL JACKSON 
PASS TO COMMERCE ROBERT TELCHIN 
PASS TO DEPT OF LABOR/ILAB ROBERT YOUNG 
 
SENSITIVE 
 
E.O. 12958:N/A 
TAGS: ETRD, PHUM, PGOV, ELAB, EINV, TZ 
SUBJECT: INPUT FOR 2005 PRESIDENT'S REPORT ON AGOA: TANZANIA 
 
REF: SECSTATE 24616 
 
Sensitive but Unclassified (SBU).  Protect accordingly. 
 
1. (SBU) Post submits input for the President's Report on 
AGOA, as requested reftel.  Also, see additional comments in 
paragraph 6.  Point of contact at post is Pol/Econ Officer 
Jefferson Smith, smithjd@state.gov. 
 
2. Market Economy/Economic Reform/Elimination of Barriers to 
U.S. Trade: Since early 1986, the government has launched a 
comprehensive economic reform and stabilization program. In 
pursuit of this, agricultural marketing has been 
liberalized, foreign exchange controls have been lifted, 
prices deregulated, and a new investment code has attracted 
increased foreign investment. These reforms have resulted in 
improved competitiveness, lower tariffs, increasing levels 
of foreign investment and trade, improved key economic 
indictors, and integration into world markets. The 
government has privatized nearly all of its parastatal 
enterprises. Market forces determine interest and exchange 
rates. Still, the nascent private sector is weak and poverty 
persists throughout the country.  U.S. investment in 
Tanzania is slowly increasing but is hindered by corruption, 
poor infrastructure, and bureaucratic inefficiencies. The 
latter has significantly prolonged debt repayment and 
intellectual property protection cases involving major 
American corporations. The inability to own land or offer it 
as collateral remains a major impediment to new investment. 
 
3. Rule of Law/Political Pluralism/Anti-Corruption: Tanzania 
became a multiparty state in 1992 and held its second 
multiparty election in October 2000.  National elections 
will be held in October 2005 and the current president will 
step down due to constitutional term limits.  The ruling 
party is expected to win easily on the mainland, but the 
contest in Zanzibar is likely to be closer and more 
contentious.  There were no reports of overt political 
harassment in 2004, nor were any opposition rallies banned 
during the same year.  The judiciary is formally independent 
but suffers from corruption, inefficiency, and executive 
influence, particularly in the lower courts. Criminal trials 
are open to the public and the press. The government 
participates in the World Bank Institute's anti-corruption 
and good governance program, has established an Anti- 
Corruption Commission, and has indicted senior officials and 
mid-level members of the judiciary for corruption. The 
government has established a Ministry of Good Governance and 
a Human Rights Commission as recommended by a 1997 report on 
corruption, but most other recommendations remain 
unimplemented. 
 
4. Poverty Reduction: Macroeconomic stability and steady 
growth has not led to a significant reduction of poverty. 
The government of Tanzania is working to address poverty by 
implementing its PRSP for the HIPC Initiative. According to 
an IMF-World Bank assessment team, the government has made 
"significant progress" in PRSP implementation.  Priority 
sectors of the plan include primary education, roads, water, 
health care services, and agriculture/food security. 
Tanzania remains dependent on donor-funded projects in each 
of these areas. 
 
5. Labor/Child Labor/Human Rights: The government passed new 
Labor Laws in 2004 strengthening workers rights and 
prohibitions against child labor; however they are not 
currently in effect.  There was little respect for trade 
union rights in the privatized industries. The Trade Unions 
Act allows workers to form trade unions, but dissolved the 
Tanzania Federation of Free Trade Unions, which though not 
legally registered was recognized by workers, employers, and 
international organizations. Labor law on the mainland 
covers public and private employees, but restricts the right 
of workers to form unions and to strike. The labor law does 
not cover government employees on Zanzibar. The Registrar of 
Trade Unions has broad authority to monitor and discipline 
the internal conduct of unions. The right to strike is 
weakened due to the prolonged mandatory dispute settlement 
procedures. Tanzania has ratified all eight ILO core 
conventions and has been a member of the ILO's International 
Program on the Elimination of Child Labor since 1994. 
Tanzania is currently participating in the ILO's "Timebound 
Program to Eliminate the Worst Forms of Child Labor," which 
seeks to eliminate child labor in the commercial 
agriculture, commercial sex, domestic service and mining 
sectors. As of December 2004, approximately 9,000 children 
have been withdrawn from child labor as a result of the Time- 
bound Program. Following the January 2001 incidents on Pemba 
Island in Zanzibar, the ruling party and an opposition party 
signed an accord that has led to increased political freedom 
in the country. In May 2003, Tanzania held a free and fair 
by-election in Pemba for previously contested parliamentary 
seats as specified under the accord. In the lead-up to the 
2005 general elections respect for political rights of 
opposition parties has decreased. Arbitrary arrest and 
prolonged detention remained problems. The judicial system 
often did not provide expeditious and fair trials. Pervasive 
corruption continued. The government limited privacy and 
freedom of speech, the press, assembly, and association. 
 
6. Comment: Tanzania has not benefited significantly under 
AGOA.  A few individual companies have been able to export 
under AGOA, particularly in handicrafts and textiles. 
However, the U.S. market remains a distant dream for most 
Tanzanian exporters.  There was no new AGOA-related foreign 
investment in Tanzania in 2004.  The most significant 
barriers to developing an export sector include weak power 
and transport infrastructure, a largely unskilled work 
force, and an inability to produce the quantities required 
by U.S. buyers.  End comment. 
 
OWEN