US embassy cable - 03ABUDHABI2455

C O N F I D E N T I A L SECTION 01 OF 02 ABU DHABI 002455 
 
SIPDIS 
 
STATE FOR NEA/ARP, NEA/PPR AND EB/TPP/MTA/IPC 
STATE PASS USTR -- DOUG BELL 
USDOC FOR USPTO 
USDOC FOR 4250/DOC/MAC/ONE/CLOUSTAUNAU 
GENEVA PASS USTR 
 
E.O. 12958: DECL: 05/25/2008 
TAGS: PREL, KIPR, ETRD, TC 
SUBJECT: UAE: POST RESPONSE ON MIDDLE EAST TRADE INITIATIVE 
 
REF:  STATE 135263 
 
1.  (U) Classified by Charge d'Affaires Richard A. Albright 
for reasons 1.5 (b) and (d). 
 
2.  (C) Summary and comment: The UAEG will welcome the 
Middle East Trade Initiative (METI) and its comprehensive 
efforts to encourage economic reform and enhance economic 
growth in the region -- particularly if METI is defined in 
unambiguously non-political terms.  The UAE sees itself as 
a model of economic prosperity and diversity for other Arab 
countries, and will likely view the Initiative more as a 
mechanism to enhance economic reform elsewhere in the 
region.  Post recommends that any approach to the UAE 
regarding the Middle East Trade Initiative focus on areas 
where we can reinforce the already strong bilateral 
economic relationship, and refrain from suggesting that our 
goal is to reform the UAE economy.  The GCC -- the only 
existing free trade area in the Middle East -- is a ready 
vehicle through which the USG could approach the Gulf 
countries on the Middle East Trade Initiative.  The 
countries of the GCC face similar economic problems -- 
which vary significantly from the economic challenges of 
other countries in the Middle East -- and the GCC offers 
the perfect venue for addressing such issues collectively. 
End summary and comment. 
 
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The UAE Can Benefit From The Initiative 
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3.  (C) Although the UAE is well ahead of the rest of the 
region in terms of economic diversity and private sector 
participation, the Middle East Trade Initiative could 
encourage the UAE's compliance with international workers' 
rights and protection, support workforce skills 
development, and the revamping/updating of the local 
commercial and agency laws and courts -- all of which 
hinder foreign investment in the UAE. 
 
4.  (C) UAE officials have also welcomed targeted WTO 
training -- especially in Trade in Services and TRIPs -- 
and raised the issue at the U.S.-UAE Strategic Dialogue in 
Washington in November.  Post believes that the UAE could 
also benefit from training in Government Procurement and 
Intellectual Property Rights, specifically.  A better 
understanding of agreements related to Customs Valuation 
Methods, Rules of Origin, and Standards as Non-Tariff 
Barriers to Trade are also critical to the UAE. 
 
5.  (C) The long-term presence in the Gulf of an American 
trade expert, who could educate the UAEG on its specific 
WTO obligations and explain U.S. positions in multilateral 
negotiations, would be a welcomed sign that we are serious 
about strengthening our economic ties to the UAE and the 
region.  Given the UAE's reputation as the regional trading 
hub, the UAEG may offer to cover the costs of trade 
experts, host training sessions, and even propose a 
permanent regional training facility in the UAE for trade- 
related programs. 
 
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Approach The UAE Through The GCC 
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6.  (C) The GCC is an existing free trade zone that -- 
although is experiencing problems with the logistics of its 
customs union -- is politically committed to economic 
integration.  The USG has secured a number of agreements 
with the GCC in the past, including most recently the 
Multilateral Open Skies Agreement.  This agreement began as 
several concurrent bilateral initiatives with individual 
GCC members, and morphed into a regional Open Skies 
Agreement with the GCC. 
 
7.  (C) The GCC is the best forum to discuss trade- 
institution building in the Gulf and the UAE's specific 
trade-related concerns, as well.  Such an approach might 
also usefully address issues arising from the 
implementation of the GCC Customs Union in terms of WTO 
obligations, and standards issues.  Such discussions could 
take place during the regular (but currently overdue) 
meetings of the U.S.-GCC Economic Dialogue. 
 
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Israel Will Be A Problem 
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8. (C) The GCC forum would also provide political cover for 
sensitive political decisions regarding trade with Israel. 
Although the UAE no longer enforces the secondary and 
tertiary aspects of the Arab League boycott of Israel, some 
government contracts continue to contain pro forma 
provisions requiring companies to observe the regulations 
of the Arab League regarding the boycott.  A political 
decision at the highest level of the UAEG will be necessary 
to initiate trade ties with Israel.  The UAE is unlikely to 
make such a decision unilaterally, and without consent of 
its GCC neighbors. 
 
Albright