US embassy cable - 05ABUDHABI1005

C O N F I D E N T I A L SECTION 01 OF 03 ABU DHABI 001005 
 
SIPDIS 
 
STATE FOR EB/TPP/BTA AND EB/IFD/OIA 
STATE FOR NEA, NEA/ARP, NEA/PI 
STATE PASS USTR FOR DOUG BELL 
 
E.O. 12958: DECL: 03/02/2015 
TAGS: ETRD, ECON, ELAB, EFIN, PHUM, TC 
SUBJECT: UAE PREPARING ACTIVELY FOR FTA FIRST ROUND 
 
REF: ABU DHABI 992 
 
Classified By: Classified by Ambassador Michele J. Sison for reasons 1. 
4 (b and d) 
 
1. (C) Summary: The UAEG continues its preparations for 
negotiating an FTA with the USG.  UAE negotiators have 
reached out to the private sector, including banks, textile 
manufactures, and insurance companies to solicit input in 
advance of the March 6 launch of the first round of FTA 
negotiations.  The Emirati banking sector, which had 
apparently been a source of concern for the UAEG, supports 
liberalization in the context of an FTA.  The UAEG is also 
conducting a carefully tailored media campaign emphasizing 
the consultative process and the benefits of an FTA for the 
UAE.  The Dubai Chamber of Commerce and Industry continues to 
voice FTA concerns, however.  Ambassador and Econchief have 
stressed our concerns about the need to address weaknesses in 
the UAE's labor law and move forward on eliminating the use 
of children as camel jockeys in a series of meetings with 
senior UAE officials this week.  End Summary. 
 
UAEG Preparations 
----------------- 
 
2. (C) On March 1, Ambassador discussed ongoing preparations 
for the March 8-10 FTA negotiations with MinState for Finance 
Dr. Mohammed Khalfan bin Khirbash.  Dr. Khirbash emphasized 
that he wanted to be able to focus on the key issues and move 
as quickly as possible through the "smaller stuff."  The 
negotiators would hopefully be able to move quickly to the 
issues that would need further attention "from capitals." 
 
3. (C) Ambassador noted recent press reporting on UAE 
outreach efforts to the private sector and asked about 
private sector feedback.  MinState Khirbash replied that the 
various subcommittees had been meeting with industry groups, 
including the chambers of commerce and representatives from 
financial services, insurance and textile sectors to solicit 
input.  He said that he had been pleasantly surprised that 
local banks had come out publicly favoring liberalizing the 
country's banking sector in context of FTA negotiations with 
the U.S.  The Central Bank had sent out a questionnaire to 
local banks in early February.  At that time, the Central 
Bank Governor told Ambassador that he was anticipating "a big 
row" with local banks.  MinState Khirbash expressed some 
frustration about the Dubai Chamber of Commerce and Industry 
(DCCI), describing them as "taking a narrow (minded) 
approach" and being "anti-FTA."  (Note: DCCI has been one of 
the more pointed critics of the FTA negotiations and has 
expressed concerns about the impact of the FTA on Emirati 
agency relationships. End note) 
 
4. (C) For this reason, Khirbash explained, the UAEG was 
organizing AUSTR Novelli's meetings with the UAE business 
community under a "federal umbrella" rather than having 
individual chambers of commerce organize their own events. 
He added that he understood that representatives from the 
different chambers of commerce were trying to insert 
themselves directly into the negotiations, which he said 
would undercut government to government nature of these 
negotiations.  (Note: In a March 2 meeting, Minister of 
Information Sheikh Abdullah bin Zayed Al-Nahyan told the 
Ambassador that the head of DCCI, Obeid al-Tayer had 
telephoned him the day before and was "pissed" that the DCCI 
had been "cut out" by Khirbash of organizing Novelli's 
meeting with the UAE business community.  Sheikh Abdullah 
said that al-Tayer sees it as a Khirbash versus al-Tayer 
family issue.  End note) 
 
5. (C) The UAE has also been conducting a carefully managed 
public outreach program in recent weeks.  MinFin A/US Khalid 
Al-Bustani told Econchief that the negotiating committee had 
instructed individual negotiators to avoid talking to the 
press about the FTA, but the UAEG has been actively 
publicizing its meetings with industry groups and both 
MinState Khirbash and Minister of Economy and Planning 
Sheikha Lubna Al-Qasimi have been making statements stressing 
that "the FTA with the US will enable the UAE to compete in 
international markets and benefit from the transfer of modern 
technology and expertise that support the improvement of our 
services and products."  At a meeting of the Dubai Economic 
Council last week, MBR emphasized that all sectors should be 
ready for trade agreements in order to "benefit from the 
gains." 
 
 
Labor 
----- 
6. (C) Ambassador raised USG concerns about labor issues to 
Minstate Khirbash and in a separate meeting to Minister of 
Information Sheikh Abdullah.  She also explained that the 
political reality was that our trading partners must have 
good labor laws.  Dr. Khirbash said that labor reform and 
eliminating the use of children as camel jockeys were issues 
that the UAE would need to deal with.  He added that he 
viewed resolving these issues as "a challenge rather than a 
problem."  Sheikh Abdullah said that the federal government 
has drafted a law requiring that camel jockeys be at least 16 
years old and weigh at least 45 kgs.  He said that regardless 
of whether the law is approved by Dubai (a requirement in 
order for it to become federal legislation), Abu Dhabi will 
implement these requirements.  He said that Abu Dhabi (the 
wealthiest of the seven emirates) funds most of the prizes 
for races in the other emirates, and that if the races do not 
comply with the law, they will not receive prize money from 
Abu Dhabi.  Since violators will not receive prize money, he 
believes that there will be fewer races that use underage 
children as jockeys.  (Note: Sheikh Abdullah also told the 
Ambassador that the real stumbling block against addressing 
the camel jockey problem in Dubai is not Crown Prince 
Mohammed Bin Rashid -- it is Minister of Finance Sheikh 
Hamdan bin Rashid.  Sheikh Abdullah said that Sheikh Hamdan 
enjoys going to camel races with the young camels, and that 
he is dead-set against implementing the weight requirement. 
End note) 
 
7. (C) On March 1, Econchief met with Ministry of Labor U/S 
Dr. Khalid Al-Khazraji to make similar points and to 
coordinate labor consultations following the negotiation 
round.  Al-Khazraji said that the labor union law was almost 
through the interagency working group process with "two or 
three points" left to resolve.  The Minister of Labor had 
pulled back the revised labor law for review.  Al-Khazraji 
said that he and the Minister of Labor had met, in Algeria, 
with Taleb Rifai, the head of the International Labor 
Organization's (ILO) Regional Office in Beruit and solicited 
his assistance in ensuring that the labor law and the labor 
union law would meet ILO standards.  According to 
Al-Khazraji, they offered to share their draft texts with the 
ILO after resolving their interagency issues, but 
before/before sending the texts to the cabinet for approval. 
(Note:  Generally, the UAEG has been very reluctant to share 
draft texts internationally before the cabinet has had a 
chance to approve them.  After cabinet approval, the draft 
laws must be approved by the (appointed) Federal National 
Council and sent to the rulers of the seven emirates before 
being signed into law. 
 
8. (C) Al-Khazraji emphasized that it was his goal that the 
UAE laws meet ILO standards.  He said that, currently, the 
only major issues that the UAEG had with the ILO were rights 
of association (and collective bargaining) and child labor 
(i.e., camel jockeys).  Al-Khazraji stressed that the 
Ministry of Labor strictly enforced child labor laws in the 
work place, but that it had not been able to regulate the 
camel races.  He said that the UAEG would be moving on 
eliminating the use of children as camel jockeys.  (Note: 
Post understands that Minister of Labor Dr. Ali Al-Ka'abi 
will visit Abu Dhabi's camel jockey rehabilitation center 
shortly.  He has already made a point of visiting labor camps 
and working to improve services for workers.)  Al-Khazraji 
also stressed that the UAEG was "moving to a different stage" 
in its labor regulations (i.e., modernizing and improving 
them) and that such steps required extensive consultations 
and were not simple.  He also explained that the UAE faced an 
unusual demographic situation, with nationals making up "at 
most" 20 percent of the population.  This meant that the UAEG 
needed to balance security and economic concerns in its 
decision about setting up trade unions, he said. 
 
Intellectual Property Rights 
---------------------------- 
 
9. (U) Ambassador also discussed the issue of Intellectual 
Property Rights (as it relates to pirated music CDs) with 
Fawzi al-Jaberi, a Ministry of Information officer involved 
IPR enforcement.  (Note: Representatives from the Recording 
Industry Association of America met with Ambassador and 
econchief earlier that morning.  After their meeting at the 
Embassy, the representatives met with officials at the 
Ministry of Information, including Al-Jaberi. End note) 
Al-Jaberi said that the Ministry of Information wants to do a 
better job of enforcing IPR laws, but he noted that the 
Ministry's IPR department is constrained.  MoI officials can 
conduct raids of retail shops, but they are not allowed to 
raid homes or vehicles without involving law enforcement.  He 
explained that the MoI inspectors are working with a new 
Economic Crimes department within the Abu Dhabi police and 
that cooperation is increasing.  He also said that the 
Ministry wants to hire more inspectors to conduct raids, but 
no one has applied for the job since it requires work on 
weekends and the evenings conducting raids.  One of the 
problems in enforcing IPR violations, according to Al-Jaberi, 
is that some judges do not understand the legal definition of 
intellectual property.  To address this issue, the MoI has 
consulted with the Ministry of Justice to try to establish a 
set of judges who specialize in IPR cases, but no definitive 
progress has been made. 
SISON