VZCZCXYZ0005
RR RUEHWEB

DE RUEHRB #0506/01 0801722
ZNR UUUUU ZZH
R 211722Z MAR 06
FM AMEMBASSY RABAT
TO RUEHC/SECSTATE WASHDC 3142
INFO RUEHCL/AMCONSUL CASABLANCA 1418
RUCPDOC/USDOC WASHDC
RUEHRC/USDA FAS WASHDC 0869

UNCLAS RABAT 000506 
 
SIPDIS 
 
SIPDIS 
 
USTR FOR DOUG BELL 
STATE ALSO FOR NEA/MAG AND NEA/OFI 
STATE ALSO FOR EB/TPP 
USDOC FOR ITA/MAC/ANESA - DAVID ROTH 
USDA FOR ITP - BOB MACKE 
 
E.O. 12958: N/A 
TAGS: ETRD EAGR BEXP KIPR KTIA MO
SUBJECT: Initial FTA Success Stories - The First 90 Days 
 
 
------- 
SUMMARY 
------- 
 
¶1.  Summary:  As expected, increased foreign direct 
investment has led FTA successes in the early days.  Yet 
anecdotal evidence shows U.S. and Moroccan exporters are 
making use of the FTA's market access provisions to explore 
new market opportunities.  U.S. FTA-related technical 
assistance has borne fruit:  MEPI and USAID programs are 
helping Moroccan businesses recognize and seize the FTA's 
benefits.  End Summary. 
 
¶2.  The success of the FTA in attracting foreign direct 
investment and in "marketing Morocco" had become apparent 
even before ratification and implementation of the accord. 
Now, 90 days into implementation, we are beginning to see 
signs of expanded bilateral trade.  U.S. FTA-related 
technical assistance, especially MEPI-funded FTA assistance 
has produced concrete gains for Moroccan exporters, 
particularly for SMEs. 
 
------------------------- 
Foreign Direct Investment 
------------------------- 
 
¶3.  As expected, the first, and most impressive successes 
linked to the FTA are increased foreign direct investment in 
Morocco.  The FTA's investment provisions plus generous 
market access (particularly for textiles and garments) make 
Morocco an attractive platform for export to the United 
States and to the European Union.  Even before the 
conclusion of negotiations in 2004, citing the FTA's textile 
market access, Group Legler, an Italian concern, announced a 
$66 million investment.  It consummated the deal in March 
¶2006.  Fruit of the Loom decided to move its Northern 
Ireland operations to Morocco, expanding its operations in 
the kingdom with a $150 million investment.  Settavex, the 
Moroccan subsidiary of a Spanish garment producer has 
committed an additional $7.2 million to expand its 
vertically integrated denim garment production facility in 
Settat, southeast of Casablanca.  Hong Kong-based SML and 
Arrow Shirts have also indicated they will invest in Morocco 
soon. 
 
¶4.  There have been significant new foreign investments 
outside the textiles and garment sector as well. 
International Paper purchased a local packaging firm for 
$120 million in 2005.  Electronic component maker Minco will 
invest one to four million dollars over the next few years 
for their facility that makes sensors and flexible circuits 
for export.  Dell opened a telephonic service center in 
¶2003.  Its 1000 employees (over half women) service the 
francophone European market.  In addition, citing FTA IPR 
protections and a positive business climate bolstered by the 
FTA, IT companies such as UAE's Tech Access and Antelop 
Computer have established a Moroccan presence.  In 2004, a 
group of Moroccan expatriates returned to Casablanca to open 
an Apple Computer showroom (called Univers Digital), noting 
the FTA drew them back to Morocco. 
 
------------ 
U.S. Exports 
------------ 
 
¶5.  In the first weeks following entry into force of the 
FTA, post's commercial and agricultural sections have noted 
an increase in potential U.S. export deals.  While many 
remain anecdotal and lack specific amounts to date, we are 
encouraged by the success of U.S. apple exporters during 
their February 2006 visit to Casablanca.  FCS has fielded 
inquiries from Moroccan producers seeking U.S. inputs, such 
as an artisanal iron products firm searching for U.S. iron 
suppliers.  The FTA enabled U.S. sorghum exporters to send 
25 thousand metric tons, worth four million dollars, to 
Morocco, the first shipment in six years. 
 
--------------------------------------------- - 
U.S. Technical Assistance and Moroccan Exports 
--------------------------------------------- - 
 
¶6.  Moroccan textile and garment exporters have begun 
negotiating deals with U.S. design houses, distributors and 
retailers.  The largest deal to date by a Moroccan firm is 
SOMITEX's $61 thousand January 2006 contract to provide baby 
and children's clothing to the U.S. market.  Petit Poussin 
has two firm orders ($25 thousand and $15 thousand) for 
children's wear.  Modatric will export 3000 units of 
knitwear worth $25 thousand.  Benitex has signed a $ 15 
thousand deal for thermal underwear.  All these firms have 
befitted from the four-year MEPI-funded and USAID- 
Administered IESC Morocco Fast Track Trade program that 
assists Moroccan firms trying to take advantage of the 
benefits of the FTA. 
 
¶7.  IESC Morocco Fast Track Trade Program has also helped 
companies outside the textile and garment sector.  IESC's 
earliest major success story was in March 2004.  Nouvelle 
Manufacture de Cuir signed an $88.5 thousand contract to 
provide luxury leather display cases to well-known U.S. 
jewelry stores.  IESC's greatest success that exploited new 
market access was frozen fruit and vegetable exporter Noble 
Delice's $2.6 million contract (negotiated at the Fancy 
Foods Show) for 100-120 containers of its products.  Other 
IESC clients include small artisanal exporters:  Manar 
Marbre that exported eight thousand dollars worth of marble 
sinks; Arte Palma that negotiated a contract for $15 
thousand in palm leaf baskets; and Louizida, a producer of 
high quality argan oil-based cosmetics that secured a $14 
thousand export contract. 
 
¶8.  Other MEPI implementers have contributed to the 
increased interest and ability of Moroccan exports to enter 
the U.S. market.  The Commerce Department's Commercial Law 
Development Program (CLDP) has provided MEPI-funded 
standards training in five separate sectors, helping 
Moroccan businesses understand U.S. rules and regulations. 
A $500 thousand MEPI-funded Aid to Artisans program has also 
begun preparing Moroccan artisans to penetrate the U.S. 
market.  These exports, particularly in the SME sector, will 
help fuel vital job creation and promote entrepreneurialism 
in Morocco.  USAID has recently launched its five year New 
Business Opportunities Program, a strategy that will support 
and compliment these other technical assistance efforts to 
help Moroccans realize the promise of the FTA. 
 
-------- 
Comment: 
-------- 
 
¶9.  Comment:  Over the next several months and years, we 
expect to see increased levels of interest by both Moroccan 
and U.S. exporters.  Foreign direct investment will remain 
an important fuel for economic growth and employment 
creation.  The FTA forms a key piece of the investment 
puzzle by providing investor assurances, market access for 
goods and services, liberalization in the financial sector 
and telecommunications, requiring new transparency and 
enforcement of property rights, including intellectual 
property rights.  These combine to improve the business 
climate and set Morocco apart from its neighbors.  By 
adhering to its FTA obligations Morocco will go a long way 
to furthering its status as a member of the global trading 
community.  Our FTA outreach and the new possibilities the 
agreement provides will help the Moroccan private sector 
diversify away from its traditional bias toward and 
dependence on the European market for investment, exports 
and inputs.  Mission Morocco's FTA-related outreach will 
continue apace, leveraging practical private sector 
experiences and expertise with diplomatic tools to drive 
home the message that the FTA is already a success. 
 
 
RILEY