US embassy cable - 05MAPUTO1332

UNCLAS SECTION 01 OF 02 MAPUTO 001332 
 
SIPDIS 
SENSITIVE 
STATE FOR AF/S - TREGER 
USDOC FOR KBOYD 
USTR FOR PCOLEMAN AND FLISER 
E.O. 12958: N/A 
TAGS: ECON, EINV, ETRD, EAID, MZ, TIFA 
SUBJECT: U.S. - MOZAMBIQUE TIFA TALKS 
 
1. (U) Summary: Assistant United States Trade Representative 
Florizelle Liser led an interagency visit to Mozambique 
October 1 to October 5. During the visit, the delegation met 
with government officials to conduct bilateral consultative 
talks under the Trade and Investment Framework Agreement 
(TIFA), discussed opportunities under AGOA with 
representatives from the business community, held a joint 
press conference with the Minister of Industry and Commerce, 
and heard from the private sector on intellectual property 
rights protection in Mozambique. The delegation included 
USTR Director for African Affairs Patrick Coleman, Department 
of Commerce Director for Africa Kevin Boyd, and U.S. Trade 
and Development Agency Manager for Sub-Sahara Africa Doug 
Shuster. AUSTR Liser discussed the opportunities for an 
expanded trading relationship between the U.S. and Mozambique 
and encouraged Mozambique to continue work on improving the 
business environment. A draft work plan for the TIFA was 
agreed upon. A senior Ministry official asked the USG to 
consider Mozambique as an FTA partner and expressed a strong 
interest in pursuing an FTA in 2006. End Summary. 
 
2. (U) On October 3 AUSTR Liser and Mozambique,s Minister of 
Industry and Commerce Antonio Fernando led bilateral 
discussions on strengthening cooperation between the United 
States and Mozambique on trade and investment issues. Talks 
focused on identifying priority areas to be addressed under 
the TIFA signed between the United States and Mozambique in 
June 2005. AUSTR Liser also took the opportunity to 
encourage the GRM to take a more active role in Doha, 
stressing the need for Sub-Saharan Africa to make its voice 
heard in the WTO. Minister Fernando was appreciative of the 
support that the USG has provided in trade capacity building 
to date, and stated he looked forward to working with the 
U.S. to help improve the business environment in Mozambique - 
one of six goals he has set out for his ministry. The goal 
of improving Mozambique,s business climate was echoed during 
discussions later in the day with the Integrated Framework 
Committee, a cross-functional group made up of ministry 
officials, civil society, donors and the private sector to 
look at key trade issues. During an afternoon press 
conference, both Liser and Fernando underscored Mozambique,s 
significant bilateral trade potential with the United States 
(Note: Trade between the two countries reached only USD 87.2 
million in 2004, and Mozambican exports to the U.S. accounted 
for only one percent of Mozambique,s total exports. End 
note). Fernando also stressed the need for Mozambique to 
improve its trade stance by increasing the competitiveness of 
its products. 
 
3. (U) During a roundtable discussion on AGOA, AUSTR Liser 
heard from Mozambican entrepreneurs in the seafood, 
handicrafts, and garment sectors on the challenges businesses 
face in exporting products to the United States under AGOA, 
which include poor infrastructure, limited access to credit, 
and high labor costs. Garment manufacturer Alibhai Dassat 
described how he was forced to close his factory due to high 
labor and transportation costs in the face of increased 
competition from low-priced Asian producers. Others 
explained that limited access to credit severely constrained 
their ability to expand and export more under AGOA. On 
October 5 members of the delegation also heard from 
representatives of Unilever, Colgate-Palmolive, British 
American Tobacco, and Nestle on GRM efforts to improve 
intellectual property rights protection (IPR) in Mozambique. 
The group stated that the GRM had recently established the 
Intellectual Property Institute (IPI) and was working with 
the private sector to create a cross-functional taskforce to 
deal with IPR issues. The taskforce is composed of 
representatives from the Ministry of Industry and Commerce, 
Ministry of Finance, Ministry of Interior, Ministry of 
Justice, Trade Marks Office, a private law firm, and the 
private sector. 
 
4. (SBU) On October 5 Coleman and Boyd met with a 
multi-sectoral GRM team, which included a private sector 
representative, to discuss in detail the TIFA draft work 
plan. The draft work plan was jointly developed and will now 
be taken to the respective government officials for final 
approval. Priority areas agreed upon under the draft plan 
included improving customs procedures, trade and investment 
facilitation, AGOA implementation, agricultural trade support 
infrastructure, technical regulations, and commercial law 
legislation. In addition, strengthening of the financial 
sector and improving access to trade finance, including 
promotion, protection and regulation of investment were 
agreed upon priorities. At the GRM,s request, transport was 
added to the list of areas to be covered in TIFA discussions. 
 
5. (SBU) Coleman also briefed the GRM on requirements for a 
future Free Trade Agreement (FTA) between the U.S. and 
Mozambique. Coleman noted that FTAs with the U.S. were 
extremely comprehensive, warning that they can be time 
consuming and difficult to negotiate. Ministry of Industry 
and Commerce National Director Luis Sitoe expressed a strong 
interest in pursuing an FTA with the United States in 2006. 
Although he acknowledged that the MIC had no mandate to 
negotiate an agreement at this time, he asked the United 
States to consider Mozambique as an FTA partner, and he 
wanted to learn more about the process. (Note: Coleman 
cautioned that many countries were currently "in line" for 
FTAs, and that it was not likely one could be negotiated 
between the U.S. and Mozambique until after the U.S. FTA with 
the Southern African Customs Union was completed. End note.) 
Sitoe also asked USTR to consider providing technical 
assistance to the GRM in trade negotiation, admitting that 
the GRM did not have experience negotiating in key areas such 
as services and government procurement. 
 
6. (U) Comment: This USTR-led interagency visit reinforced 
the positive and supportive USG stance towards Mozambique. 
In her meetings AUSTR Liser repeatedly expressed her 
satisfaction with recent progress on strengthening the 
U.S.-Mozambique trade and investment relationship, as 
evidenced by Mozambique,s ratification of the Bilateral 
Investment Treaty (BIT) and signing of the TIFA. The visit 
also provided a valuable opportunity for Liser to stress 
first-hand to senior GRM officials and the private sector the 
important work that is still to be done in making Mozambique 
a more competitive business environment and a higher profile 
destination for foreign investment. End Comment. 
 
7. (U) This message was cleared by USTR. 
DUDLEY