VZCZCXRO4338
OO RUEHMA RUEHPA
DE RUEHAR #1899/01 2301204
ZNR UUUUU ZZH
O 181204Z AUG 06
FM AMEMBASSY ACCRA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 2154
INFO RUEHZK/ECOWAS COLLECTIVE
RUCPDOC/USDOC WASHDC 0604
RHEHNSC/NSC WASHDC

UNCLAS SECTION 01 OF 04 ACCRA 001899 
 
SIPDIS 
 
SIPDIS 
 
DEPARTMENT PLEASE PASS TO USTR FOR AGAMA 
COMMERCE FOR VINEYARD 
NSC FOR COURVILLE 
 
E.O. 12958: N/A 
TAGS: EAID EINV ETRD KMCA PGOV PREL GH
SUBJECT: GHANA: TRADE AND INVESTMENT FRAMEWORK AGREEMENT 
COUNCIL MEETING 
 
SUMMARY 
------- 
 
¶1. During a July 19-23 visit to Ghana, Assistant U.S. Trade 
Representative Florie Liser, Commerce Deputy Assistant 
Secretary for Market Access and Compliance Holly Vineyard and 
 
SIPDIS 
accompanying USG officials engaged with GOG officials and 
members of Ghana's private sector to discuss strategies for 
increasing bilateral trade and investment.  Ghanaian private 
sector exporters shared their concerns regarding poor 
infrastructure, low financing, high shipping costs, and lack 
of market research that prevent them from taking maximum 
advantage of the African Growth and Opportunity Act (AGOA). 
During the fourth council meeting of the U.S.-Ghana Trade and 
Investment Framework Agreement (TIFA), discussions with GOG 
officials focused on obstacles to maximizing exports under 
AGOA, such as the need for energy sector reform.  Both sides 
agreed on the need to increase horticulture processing and to 
find ways to develop vertically integrated textiles and 
garment industries.  They also agreed on the importance of 
finding ways to better support small and medium enterprises. 
GOG officials described their plans for using Millennium 
Challenge Account money to support their national trade 
strategy, and the two sides exchanged views on the current 
impasse in the Doha Round of WTO negotiations.  The GOG 
proposed mid-July for the 2007 AGOA Forum and shared its 
ideas about the event.  End Summary. 
 
¶2. Assistant U.S. Trade Representative Florie Liser and her 
GOG counterpart, Minister of Trade, Industry, and Private 
Sector and Presidential Special Initiatives Alan Kyerematen, 
chaired the fourth council meeting of the U.S.-Ghana Trade 
and Investment Framework Agreement (TIFA) July 20-21, 2006, 
in Accra.  Deputy Assistant Secretary of Commerce for Market 
Access and Compliance Holly Vineyard, USTR Director of 
African Affairs Laurie-Ann Agama, and Department of Energy 
International Program Specialist Tom Sperl accompanied A/USTR 
Liser. 
 
EXPORTERS NEED INFRASTRUCTURE, FINANCING, RESEARCH 
--------------------------------------------- ----- 
 
¶3. In July 20 sessions with Ghanaian apparel and non-apparel 
exporters, A/USTR Liser emphasized that Ghanaian exporters 
must take advantage of the African Growth and Opportunity Act 
(AGOA) to increase exports to the United States.  Ghanaian 
exporters generally lauded USAID's West Africa Trade Hub for 
helping them connect with U.S. buyers through trade shows. 
They expressed concerns, however, about infrastructure, 
financing, shipping costs, and market research that prevent 
them from taking full advantage of AGOA.  In the apparel 
session, exporters questioned how Ghana could achieve 
vertically integrated textile and garment industries when 
much of the fabric used in Ghanaian garment production is 
currently sourced from outside the sub-region, and the AGOA 
third country fabric provision is scheduled to expire in 2007. 
 
¶4. In both sessions, exporters generally complained of 
inadequate GOG efforts to improve infrastructure, including 
roads, energy, and reliable cold storage.  The banking sector 
was criticized for offering only short-term, high interest 
financing that fails to meet the needs of businesses 
attempting to expand in order to produce the volumes required 
by U.S. buyers.  Companies seeking to maximize exports under 
AGOA also face freight challenges.  Surface shipping to the 
United States is over four times the cost of that to Europe, 
the journey often takes three weeks or more, and containers 
in some cases face long delays at U.S. ports for quarantine 
and security purposes, they said.  Finally, exporters noted 
that Ghana lacks institutional capacity to conduct market 
research. 
 
U.S.-GHANA TRADE AND INVESTMENT FRAMEWORK AGREEMENT 
--------------------------------------------- ------ 
 
¶5. Opening the fourth session of the U.S.-Ghana Trade and 
Investment Framework Agreement (TIFA) council meeting on July 
21, Kyerematen called attention to Ghana's constructive 
engagement with the USG and with the U.S. private sector over 
the years, which would culminate, he said, in the landmark 
signing of Ghana's USD 547 million Millennium Challenge 
Compact.  The United States' role as a close friend and 
strategic ally of Ghana, however, is not reflected in the 
volume of bilateral trade, he said.  Saying that these 
numbers will not change unless Ghana takes full advantage of 
AGOA, which lies at the heart of U.S.-Ghana trade relations, 
 
ACCRA 00001899  002 OF 004 
 
 
Kyerematen expressed his hope that the talks would include a 
serious look at how the United States can help Ghana take 
advantage of AGOA. 
 
¶6. Ghana is a special country with huge potential, A/USTR 
Liser said.  Agreeing that current trade relations do not 
accurately reflect Ghana's important bilateral relations with 
the United States, Liser noted that if Ghana and other 
African countries were to capture only one percent more of 
global trade, it would generate billions more each year in 
revenue and create thousands of jobs. 
 
¶7. In her opening remarks, the Ambassador stressed that Ghana 
was the first West African country to obtain certification 
for AGOA eligibility and that the United States is the fifth 
largest investor in Ghana.  The country must do more, 
however, if it is to reach its goal of Middle Income status 
by 2015, she said.  In particular, Ghana must address 
widespread corruption, a slow court system and high rates of 
fraud, all of which dissuade tourists and investors from 
spending their money in Ghana, she stated. 
 
TRADE CAPACITY BUILDING: GHANA'S ENERGY PROBLEMS 
--------------------------------------------- --- 
 
¶8. The lack of an adequate or stable energy supply, coupled 
with high energy costs, makes Ghanaian producers less 
competitive, A/USTR Liser said.  Though tackling the entire 
problem would likely cost billions of dollars, targeting the 
energy needs of specific export-oriented factories could have 
a dramatic impact.  Conducting a survey of top exporters' 
energy needs, in addition to improving donor coordination 
with the World Bank and others, could help the GOG obtain 
appropriate support.  The GOG must also address Ghana's 
energy regulatory regime, Department of Energy International 
Program Specialist Tom Sperl added.  With the opening in 2007 
of the West Africa Gas Pipeline, running from the Niger Delta 
to Togo, Benin and Ghana, the market for gas services in 
Ghana will be extremely lucrative, Sperl continued.  However, 
to cash in on this opportunity Ghana must create 
state-of-the-art legal and financial regulatory regimes and 
minimize barriers to entry for service providers. 
USAID/Ghana Advisor on Economic Growth Trade and Investment 
Ron Stryker noted that some progress is already being made in 
this area, with USAID supporting GOG efforts to develop a 
regulatory framework for a secondary market for gas coming 
from the pipeline. 
 
¶9. Minister Kyerematen agreed that Ghana must target the 
energy needs of export-oriented industries.  The GOG is also 
attempting to address the problem of regulatory transparency 
in the energy sector, he said, exploring whether Ghana has 
any specific policy barriers or is doing enough to provide 
incentives to independent power producers. 
 
FROM AGRICULTURE TO AGRO-PROCESSING 
----------------------------------- 
 
¶10. USAID/Ghana Advisor on Economic Growth Trade and 
Investment Ron Stryker explained that USAID's Trade and 
Investment Program for a Competitive Export Economy (TIPCEE) 
is focused on helping Ghana's horticulture sector to become 
self-sustaining, though the program also works with various 
ministries to improve Ghana's investment climate.  Making the 
point that Ghana must strive to export agricultural products 
not only to Europe, but also to the United States, A/USTR 
Liser noted that while raw agricultural products can enter 
Europe duty free, processed foods face tariff escalation. 
AGOA, however, does the opposite, allowing processed foods 
from Africa to enter the United States duty free.  Third 
countries that invested in agricultural processing in Ghana 
could save an average of 20 percent in tariffs by exporting 
to the United States under AGOA, Liser said. 
 
¶11. Minister Kyerematen responded that high trans-Atlantic 
freight costs prevent Ghana from competing with Latin 
American countries on raw agricultural exports to the United 
States.  He said the focus for both TIPCEE and the Millennium 
Challenge Compact must be to put a heavier emphasis on 
processing.  To address the high cost of trans-Atlantic sea 
freight and the dearth of air cargo options from Ghana to the 
United States, A/USTR Liser suggested that Kyerematen and 
other ministers organize a meeting with shipping companies 
and air carriers to seek ways to improve transport options 
for Ghana and other West African nations. 
 
 
ACCRA 00001899  003 OF 004 
 
 
SMALL AND MEDIUM ENTERPRISES NEED HELP, TOO 
------------------------------------------- 
 
¶12. Minister Kyerematen told A/USTR Liser that Ghana also 
needs help in developing its small and medium enterprises 
(SMEs) and would benefit from the assistance of the U.S. 
Small Business Administration (SBA) in this respect, as well 
as in re-engineering Ghana's own SBA-type institution. 
Noting that his Ministry has already established a framework 
for cooperation with SBA, Kyerematen lamented that SBA does 
not appear to have funding for conducting work outside the 
United States.  USAID support for SBA assistance is 
preferable, he added, because while other donors like the 
World Bank do provide support to the SME sector, it is not in 
the form of direct subsidy payments. A/USTR Liser suggested 
that relevant USG agencies work to improve coordination on 
assistance to Ghana and see if existing funds could be 
leveraged for providing help on SMEs.  Some work is already 
happening in this area, Liser said, noting that the Trade 
Development Agency (TDA) has provided grants to Ghana to 
train SMEs to become localized electricity distribution 
companies. 
 
ENHANCING GHANA'S PARTICIPATION UNDER AGOA 
------------------------------------------ 
 
¶13. AGOA is at the heart of the U.S.-Ghana trade 
relationship, Kyerematen said.  Ghana is developing a country 
strategy for taking advantage of AGOA, as called for by the 
African Ministerial Consultative Group, that consists of a 
national trade policy as well as direct support interventions 
to the private sector.  Ghana's national trade policy, being 
developed with input from the private sector, includes the 
areas of trade facilitation, production capacity, trade 
support services, domestic trade, competition policy, an IPR 
regime, standards, and consumer protection.  The 
sector-specific, enterprise-level interventions would take 
place in select areas: garments and textiles, wood 
processing, agro-processing, and fish products and processing. 
 
¶14. Describing Ghana's sector-specific strategy for textiles, 
Kyerematen said the plan has three components.  First, Ghana 
will set up a "garment village" in the free trade zone to 
provide infrastructure and support for entrepreneurs. 
Second, the GOG will train young workers to develop a talent 
pool from which investors can easily draw.  Third, the GOG 
will support market development to attract foreign investors 
by addressing problems with infrastructure and the regulatory 
environment.  Ghana must support its own entrepreneurs, 
Kyerematen said, as foreign garment manufacturers still have 
little interest in exporting to the U.S. market from 
Africa--despite AGOA--due to the phase-out of the Multi-Fibre 
Agreement (MFA) and the fact that setting up a textile mill 
in Ghana would require a USD 100 million or more investment. 
 
¶15. Echoing points she made the previous day, A/USTR Liser 
stressed the difference between the garment and textile 
industries and noted that roughly 94 percent of the apparel 
entering the United States under AGOA makes use of 
third-country fabric.  Ghana, therefore, must invest in 
fabric production and develop vertically integrated textile 
and garment industries if it is to compete effectively. 
Addressing Kyerematen's concerns about the cost of developing 
the textile industry in Ghana, Liser argued that simply 
extending the allowance on third-country fabric will not in 
itself lead to vertical integration, but rather that any 
further extension must be structured to include incentives 
for AGOA-eligible exporters to use more African-made fabrics. 
 Congress already extended third-country fabric in 2004, 
Liser continued, and would certainly need to know why a 
further extension is needed and how it could be structured to 
meet immediate and longer-term goals for Africa's apparel 
industry. 
 
2007 AGOA FORUM PLANNING 
------------------------ 
 
¶16. Turning to plans for Ghana's hosting of the 2007 AGOA 
Forum, Kyerematen suggested that either June or July would be 
the most suitable timeframe in order to avoid Ghana's 50th 
anniversary celebrations in March, while also taking 
advantage of Ghana's most pleasant season.  Kyerematen 
proposed that in the months leading up to the Forum, 
sub-regional consultative groups such as ECOWAS and SADC 
could meet twice to chart their progress toward developing an 
AGOA strategic framework.  Just prior to the actual Forum 
 
ACCRA 00001899  004 OF 004 
 
 
there would be a technical experts meeting.  The day before 
the Forum there would be a Ministerial, and finally the AGOA 
Forum itself.  Kyerematen proposed that civil society and 
private sector participants be integrated into the main Forum 
event. 
 
¶17. Thanking Ghana for offering to host the 2007 AGOA Forum, 
Liser said a USG planning team would need to visit Ghana to 
meet with the host point of contact at least twice prior to 
the event.  Liser suggested that planners on both sides try 
to find opportunities to meet that piggyback on other 
scheduled events, such as an ECOWAS meeting, to bring 
together AGOA members from a number of countries. 
 
MILLENNIUM CHALLENGE ACCOUNT, DOHA ROUND 
---------------------------------------- 
 
¶18. The GOG side offered a detailed presentation to A/USTR 
Liser on how Ghana intends to use its USD 547 million 
Millennium Challenge Compact, particularly how the MCC will 
support Ghana's overall trade strategy.  Examples include 
helping with farmers' transition from subsistence farming to 
cash crops, improving infrastructure such as feeder roads to 
facilitate bringing goods to market, creating an unbroken 
cooling chain to allow Ghanaian producers to move into higher 
value fruits and vegetables, and targeting education and 
financial reforms to assist producers.  Liser commended Ghana 
for its compact, saying that the country has truly put the 
concept of "aid for trade" into practice. 
 
¶19. A/USTR Liser and Kyerematen discussed the future of the 
Doha Round of WTO talks at some length, particularly the 
issue of U.S. and EU disagreements over the depth of 
necessary tariff cuts.  Both sides agreed that the EU must 
show more flexibility if any progress is to be made. 
 
¶20. A/USTR Liser cleared this cable. 
 
BRIDGEWATER