US embassy cable - 02ABUJA1811

C O N F I D E N T I A L SECTION 01 OF 03 ABUJA 001811 
 
SIPDIS 
 
 
DEPT PASS TO USTR FOR WHITAKER AND COLEMAN 
 
 
E.O. 12958: DECL: 06/17/2012 
TAGS: ETRD, EINV, ECON, NI 
SUBJECT: NIGERIA: POST PERSPECTIVE ON JUNE 24 TIFA COUNCIL 
 
 
REF: ABUJA 1606 
 
 
1. Classified by CDA Andrews for reasons 1.5 (B) and (D). 
 
 
2. (C) The Nigerian delegation to the June 24 Trade and 
Investment Framework Agreement Council in Washington will be 
headed by Minister of Commerce Engineer Mustafa Bello.  The 
annual Council meeting provides an opportunity for senior 
level policy discussion and for both sides to take stock of 
major issues on the bilateral trade and investment agenda. 
However, GON preparedness may not be what we would hope. 
They may not yet have in mind specific goals or a plan of 
action they would like to see come from the meeting.  To make 
the meeting as productive as possible, we should develop an 
agenda that includes general policy discussion as well as 
concrete steps that can be taken by both sides to advance 
bilateral trade and investment.  We should maintain a careful 
balance between the issues we push on and what we can do to 
help them. 
 
 
3.  (C) We suggest that the U.S. delegation take this 
opportunity to encourage GON economic reform, especially 
tariff reduction and rationalization and exchange rate and 
monetary policies.  We should thank the GON for their support 
of U.S. positions at multilateral fora including the Doha WTO 
meeting, and enlist their continued assistance on these and 
other issues such as those which may arise at the World 
Summit on Sustainable Development coming up in August in 
South Africa.  We should push for movement on a number of 
outstanding issues including ratification of the OPIC and 
Open Skies agreements. 
 
 
4.  (C) Nigeria will not enact appropriate legislation for 
AGOA eligibility prior to this TIFA Council.  We should use 
this meeting to reach final agreement on regulatory language 
for the AGOA visa regime, and encourage the GON to resolve 
the legislative roadblock on transshipment penalties that has 
kept Nigeria from enjoying full AGOA benefits.  We should 
discuss agricultural and textile opportunities.  While giving 
the GON recognition for progress made in instituting due 
process for capital projects, we should encourage the GON to 
exercise fiscal restraint and enter in a program with the IMF 
at the earliest opportunity.  We also should encourage 
greater transparency in government contracting, including the 
petroleum sector. 
 
 
5. (U) Below is the text of the Objectives of the Second TIFA 
Council meeting submitted by the Nigerian Ministry of 
Commerce.  This is the only documentation we have received 
from the GON regarding the TIFA meeting. 
 
 
BEGIN TEXT: 
 
 
It is pertinent to recall that the overall objective of the 
TIFA is to develop further for both countries the 
international trade and economic interrelationship.  This 
objective is to be achieved through: 
(1)   Fostering an open and predictable environment for 
international trade and investment; 
(2)   Mutual resolution of trade and investment problem 
between the two countries; 
(3)   Removal of trade and investment barriers between our 
two countries; 
(4)   Increased participation of both countries private 
economic operators in foreign direct investment; 
(5)   Elimination of non-tariff barriers in order to 
facilitate great access to markets of both countries; 
(6)   Providing adequate and effective protection and 
enforcement of intellectual property rights etc; 
 
 
The TIFA Council is essentially put in place to ensure full 
implementation of these objectives and the inaugural Session 
at Abuja addressed some of these issues.  The focus of 
Washington meeting therefore, should be to: 
(1)   Review the issues discussed at the inaugural Council 
and perhaps assess the extent of implementation; 
(2)   Discuss issues still constituting impediments to 
unfettered and fair trade between our two countries and 
proffer solutions to them; 
(3)   Discuss new strategies to increase US-Nigeria trade and 
investment flows; 
(4)   Apprise the Council of Nigerian efforts at implementing 
AGOA; 
(5)   Explore new areas of technical assistance in developing 
agriculture and empowerment of Nigerian women; 
(6)   Cooperate in areas such as agriculture and 
Biotechnology and irrigation projects; 
(7)   Seek further grant assistance from the US Trade 
Development Agency (TDA) and increased involvement of 
Overseas Private Sector Investment Corporation (OPIC) in 
Nigeria; 
(8)   Further identify the funds which OPIC is making 
available to Africa, so as to enable Nigeria to take 
advantage of it 
(9)   Create a forum for bilateral trade and investment 
discussions between the two countries business entrepreneurs 
that will be on the delegation; 
(10)  Match potential Nigerian business partners with 
American investors through the US "Strategic Alliance 
programme"; 
(11)  Seek Technical assistance in Bilateral and Multilateral 
Trade Negotiations 
(12)  Apprise the Council of Nigerian Government of efforts 
at facilitating Trade etc. 
 
 
It is hoped the above will meet the request of the U.S. 
Government in firming up arrangements for the 2nd TIFA 
meeting. 
 
 
END TEXT. 
6. (U)  The Nigerian Delegation is: 
 
 
(1)   Engr. Mustafa Bello, Honorable Minister of the Federal 
Ministry of Commerce and Leader of the Delegation; 
(2)    Mr. E.I. Ogbile, Director of External Trade Department 
of the Federal Ministry of Commerce; 
(3)    Alhaji Dogara Shehu, Special Assistant to the 
Honorable Minister of Commerce; 
(4)   Mr. Y.F. Agah, Federal Ministry of Commerce; 
(5)   Mr. Y.S. Labaran, Federal Ministry of Commerce; 
(6)   Mr. David I. Adulugba, Nigerian Export Promotion 
Council; 
(7)   Dr. Julius Bala, Nigerian Investment Promotion 
Commission; 
(8)   Mr. A.I. Sole, Federal Ministry of Industries; 
(9)   Mr. V.O.E. Adeoba, Federal Ministry of Finance 
 
 
7. The Ministry of Commerce still wants private sector 
participation but they have not yet communicated to the 
Mission the members of this group. 
 
 
--------------------------------------------- 
Post-suggested Specific Action Items 
--------------------------------------------- 
 
 
8. (C) General Policy Reform 
 
 
-     The Importance of Fiscal Discipline 
 
 
The USG should stress the negative effect of excessive 
government spending on interest rates, inflation, private 
investment, and long-term growth. 
 
 
-     Importance of Re-establishing a Program with the IMF 
 
 
The USG should emphasize the benefits to Nigeria of resuming 
a formal program with the IMF.  Particularly useful is to 
describe the difficulties in debt rescheduling or reduction 
while Nigeria is not part of a program. 
 
 
-     Exchange Rate Unification 
 
 
Again, we should stress the costs to their economy of 
maintaining the parallel exchange rate system.  If numbers 
can be generated to represent the cost to the Nigerian 
economy of "round tripping," it would focus political 
attention on an issue that is usually ignored, or considered 
a perquisite for those officials Nigerians traveling with 
dollars purchased at the IFEM rate. 
 
 
-     Transparency in Granting of Government Contracts 
 
 
The USG can use the information from Reftel on due process in 
capital projects to emphasize the positive benefit of 
reducing corruption.  However, U.S. firms are getting the 
cold shoulder on a number of projects in a less than 
transparent process with NNPC contracts. 
 
 
9. (C) AGOA 
 
 
-     Regulation for Apparel and Textile Visas 
 
 
We should be ready to reach agreement on a final draft from 
the GON at the meeting. 
 
 
-     Legislation for Transshipment Penalties 
 
 
We should ask that the Nigerian government put pressure on 
the National Assembly to pass legislation increasing 
penalties for transshipment immediately.  This may require 
separating the current language from the Customs Excise 
Management Act (CEMA) where it has been attached. 
-     Identification and Promotion of Niche Market 
 Products 
 
 
The Council should review progress on identified products 
(gum arabic, ginger, prawns) and efforts to identify new 
ones. 
 
 
-     Export Shipment Alternatives Pending Reform of Ports 
- 
The GON should look at the window of opportunity for direct 
foreign investment in AGOA apparel and textiles. Can the 
industry wait for port reform and rehabilitation?  Discuss 
alternatives such as special Export Processing Zones (EPZ) or 
shipment through neighboring ports. 
 
 
-     Leather and Footwear 
 
 
What is the potential for this industry and how should the 
GON attract investment? 
 
 
10. (SBU) Follow Up on US-Nigerian Agreements 
 
 
-     Open Skies 
-     OPIC 
 
 
11. (C) USG Assistance for Capacity Building in Trade and 
Investment 
 
 
-     USAID-sponsored Capacity Building Programs 
-     Other Initiatives 
 
 
12. (SBU) Cash Calls and Any Other Outstanding Oil-sector 
Issues 
 
 
13. (SBU) Recognition of Nigerian Economic Accomplishments 
 
 
-     Successful privatization process 
 
 
Though the NITEL bidders were unable to complete their 
purchase when the world telecom market crumbled, the GON has 
maintained its commitment to privatization.  Each 
privatization has faced political opposition, and the GON 
should be commended for keeping with the program despite 
considerable pressure to keep many items off the auction 
block. 
 
 
-     Restructuring of Telecom Sector and GSM Success 
 
 
GSM telephones more than doubled Nigeria's telephone capacity 
in less than six months.  The work of the NCC has made 
possible the near-term renovation of the sector and created 
the largest market for direct investment outside the oil 
sector. 
 
 
-     Partial Deregulation of the Downstream Oil Sector 
 
 
Note the success of the partial deregulation of the 
downstream oil sector in increasing supplies of gasoline 
throughout the country and how that availability is an 
important democracy dividend. 
 
 
ANDREWS