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Diana T Fritz  02/06/2007 05:21:21 PM  From  DB/Inbox:  Search Results

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Text:                                                                      
                                                                           
      
UNCLASSIFIED

SIPDIS
TELEGRAM                                            July 13, 2004


To:       No Action Addressee                                    

Action:   Unknown                                                

From:     AMEMBASSY ABU DHABI (ABU DHABI 2343 - PRIORITY)        

TAGS:     EINV, ECON, KSPR, KPRP                                 

Captions: None                                                   

Subject:  UAE: JULY 2004 APPENDIX TO 2003 INVESTMENT CLIMATE     
          STATEMENT                                              

Ref:      None                                                   
_________________________________________________________________
UNCLAS        ABU DHABI 02343

SIPDIS
CXABU:
    ACTION: ECON 
    INFO:   POL P/M AMB DCM 
Laser1:
    INFO:   FCS 

DISSEMINATION: ECON
CHARGE: PROG

APPROVED: CDA: RALBRIGHT
DRAFTED: ECON: NALLOO
CLEARED: C/ECON: CRUMPLER; FCS: OBRIEN; CBD: CARVER; POL: MAYBURRY

VZCZCADI240
PP RUEHC RUEHZM RUCPDOC RUEATRS RUCPCIM
DE RUEHAD #2343/01 1951136
ZNR UUUUU ZZH
P 131136Z JUL 04
FM AMEMBASSY ABU DHABI
TO RUEHC/SECSTATE WASHDC PRIORITY 5097
INFO RUEHZM/GULF COOPERATION COUNCIL COLLECTIVE
RUCPDOC/USDOC WASHDC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUCPCIM/CIMS NTDB WASHINGTON DC

UNCLAS SECTION 01 OF 03 ABU DHABI 002343 
 
SIPDIS 
 
SENSITIVE 
 
STATE FOR EB/IFD/OIA 
STATE PASS TO USTR AND OPIC 
USDOC FOR 4520/ITA/MAC/ONE/GUGLIELMI 
 
E.O. 12958: N/A 
TAGS: EINV ECON KSPR KTBD KPRP OPIC TC
SUBJECT:  UAE: JULY 2004 APPENDIX TO 2003 INVESTMENT CLIMATE 
STATEMENT 
 
REF:  ABU DHABI 03164 
 
¶1.  (U) This appendix serves as an update to the 2003 
Investment Climate Statement for the United Arab Emirates 
(UAE). It has been provided to assist investors in the 
interim period resulting from the U.S. Government's decision 
to begin publishing the Country Commercial Guide (of which 
the Investment Climate Statement is a chapter) on a calendar 
year basis, in January instead of August. 
 
¶2.  (U) The United States Government has reviewed the 2003 
Investment Climate Statement for the UAE, and has noted the 
following changes that have occurred since its publication. 
In most circumstances, if a portion of the 2003 Investment 
Climate Statement has not been modified in this appendix, it 
is because the U.S. Government is satisfied that it 
continues to accurately reflect the state of affairs in the 
UAE as of July 2004. 
 
13.a.1.  Openness To Foreign Investment 
---------------------------------------- 
 
¶3.  (U) Up until recently, only Emiratis and other GCC 
nationals were permitted to own land in the UAE, while 
foreigners, who comprise 80-85% of the population, had been 
restricted to renting. In May 2002, the Emirate of Dubai 
announced that it would permit so-called "freehold" real 
estate ownership for non-GCC nationals by giving permission 
to three companies to develop and sell freehold properties 
on government-designated pieces of land. However, because 
specific laws regarding freehold ownership remain to be 
codified and procedures for title documentation and 
conveyance remain to be established, potential buyers are 
unsure whether they will have an absolute freehold title 
that means the same as it does in Europe or the U.S. 
 
¶4.  (U) Perhaps the most important impediment to freeholds 
is that owners cannot register titles with the Dubai Lands 
Department, a step that allows owners access to the full 
range of legal protections and transactions that property 
ownership requires. If a national and foreigner try to 
register a change of land title, the Land Department 
normally turns them away. Inheritance laws present another 
area of concern to freehold buyers, and current legislation 
appears ambiguous. Freeholds are so new that there are no 
court precedents yet. Some people are reportedly avoiding 
this legal ambiguity by purchasing homes through an offshore 
shell company. Nevertheless, the Dubai Government has 
promised to resolve these problems and ambiguities in a new 
land law. So far Dubai is the only emirate attempting large- 
scale property sales to foreigners, though Ajman and Ras As 
Khaimah reportedly are considering similar schemes. 
 
¶5.  (U) The UAE has opened the telecommunications market to 
foreign investment by enacting legislation to end the 
monopoly of Etisalat (the official UAE telecommunications 
company) and open the market to the private sector and 
foreign investment. However, it is unlikely that licenses 
will be granted to 100% foreign owned companies to operate 
telecommunications services in the UAE through LAN or GSM 
services. 
 
13.a.2.  Conversion And Transfer Policies 
----------------------------------------- 
 
¶6.  (U) No significant changes since 2003. 
 
 
13.a.3.  Expropriation And Compensation 
--------------------------------------- 
 
¶7.  (U) No significant changes since 2003. 
 
 
13.a.4.  Dispute Settlement 
--------------------------- 
¶8.  (U) No significant changes since 2003. 
 
 
13.a.5.  Performance Requirements/Incentives 
-------------------------------------------- 
¶9.  (U) No significant changes since 2003. 
 
 
13.a.6.  Right To Private Ownership And Establishment 
--------------------------------------------- -------- 
¶10.  (U) No significant changes since 2003. 
 
 
13.a.7.  Protection Of Property Rights 
-------------------------------------- 
 
¶11.  (U) Foreign and national banks have increased their 
activity in the mortgage market, expanding their services to 
foreigners as well as nationals due to the recent boom in 
freehold property. Foreign banks have entered the market on 
a smaller scale; the local MashreqBank and Dubai Islamic 
Bank are most heavily involved in new mortgage business, 
with banks such as Standard Chartered and HSBC providing 
mortgages on a case-by-case basis to established customers. 
 
¶12.  (U) The UAE Government continues to lead the region in 
protecting intellectual property rights (IPR). Anecdotal and 
statistical evidence confirms that the UAEG is enforcing 
copyright, trademark, and patent laws passed in 2002 to 
protect U.S. intellectual property, and continues to 
demonstrate its commitment to the 2002 agreement providing 
TRIPs-plus levels of protection to U.S. pharmaceuticals. 
 
¶13.  (U) In 2003, the UAEG sought to amend and expand the 
scope of landmark copyright, trademark and patent laws 
issued in 2002. Most notably, in 2004, the UAE Ministry of 
Information issued regulations under the 2002 Copyright Law 
allowing for specialized collecting societies. These 
societies are a practical way for sound recording companies 
to collect royalties on the broadcast and performance of 
copyrighted material. The UAEG also is considering 
legislation for data protection, privacy, and other IP- 
related issues. 
 
13.a.8.  Transparency Of The Regulatory System 
--------------------------------------------- -- 
 
¶14.  (U) No significant changes since 2003. 
 
13.a.9.  Efficient Capital Markets And Portfolio Investment 
--------------------------------------------- -------------- 
 
¶15.  (U) No significant changes since 2003. 
 
13.a.10.  Political Violence 
---------------------------- 
 
¶16.  (U) No significant changes since 2003. 
 
13.a.11.  Corruption 
-------------------- 
 
¶17.  (U) No significant changes since 2003. 
 
13.a.11.b. Bilateral Investment Agreements 
------------------------------------------ 
 
¶18.  (SBU) On March 15th, the United States signed a Trade 
and Investment Framework Agreement (TIFA) with the United 
Arab Emirates to provide a formal framework for dialogue on 
economic reform and trade liberalization. TIFAs promote the 
establishment of legal protections for investors, 
improvements in intellectual property right protection, more 
transparent and efficient customs procedures, and greater 
transparency in government and commercial regulations. 
Through this process, the United States Government (USG) can 
identify potential partners for further trade cooperation, 
such as free trade agreements (FTA). In consultation with 
Congress, the USG is pursuing a series of FTAs with Middle 
Eastern countries to build on those already concluded with 
Israel, Jordan, Morocco, and Bahrain, collectively referred 
to as President Bush's Middle East Free Trade Initiative 
(MEFTA). The FTAs are designed to expand bilateral trade 
through commitments to high standards and comprehensive 
trade liberalization. With the TIFA signing, the UAE joins a 
long list of Middle Eastern trading partners that are in 
close and active consultations with the USG, and have a 
strong interest in concluding a FTA with the United States. 
 
¶19.  (SBU) A key element of the TIFA agreement is the 
establishment of a U.S.-UAE TIFA Council, which will meet on 
a regular basis and provide an opportunity for the U.S. and 
the UAE to learn more about each other's trade and economic 
policies. It also provides a forum for discussions of ways 
to increase bilateral trade and bolster the UAE's current 
economic reform efforts. The first U.S.-UAE TIFA Council met 
April 26, 2004 in Washington, during which both sides asked 
detailed questions about each other's IPR levels of 
protection, standards, market access, customs valuation, 
government procurement, services and investment, labor, and 
environment. 
 
13.a.11.c.  OPIC And Other Investment Insurance Programs 
--------------------------------------------- -------------- 
 
¶20.  (U) No significant changes since 2003. 
 
13.a.11.d.  Labor 
----------------- 
 
¶21.  (U) The UAE Government has committed itself to strictly 
regulating and enforcing labor laws, as witnessed by a 
recent series of legislation and proposals. In June 2004, 
the UAE's Cabinet of Ministers approved a memo calling for 
the establishment of labor unions and associations in the 
UAE. The UAEG instructed a ministerial committee to draft a 
federal law creating unions; the committee will then have 
six months to submit the draft law for approval. This new 
Labor Law will allow for the creation of labor unions to 
ensure laborers' rights to organize and bargain 
collectively. Unlike the current Labor Law, which only 
covers private sector employees, the new federal law 
covering unions will include employees from both the public 
and private sectors. The exact role unions will play and 
membership conditions remain unclear. Under the new law, 
trade unions would be limited to UAE citizens, while 
expatriate workers would be represented through special 
committees. 
 
¶22.  (U) Starting October 1, 2004, the UAE Ministry of Labor 
will also require employers to submit job offers stating the 
salary and job title of their prospective employees at the 
same time employers submit visa applications. The current 
practice is for employers to provide employment details on 
the visa applications only. This mandate is intended to make 
employers more accountable when applying for work visas on 
behalf of their employees and aims to protect the rights of 
workers, who are sometimes misled by their employers. 
 
13.a.11.e.  Foreign Trade Zones/Free Ports 
------------------------------------------ 
 
¶23.  (U) No significant changes since 2003. 
 
13.a.11.f.  Foreign Direct Investment Statistics: 
------------------------------------------ 
 
¶24.  (U) Statistics will be updated in the next full 
revision of the Investment Climate Statement, which will be 
published in January 2005. 
 
ALBRIGHT