VZCZCXYZ0002
PP RUEHWEB

DE RUEHTU #2798/01 3280741
ZNR UUUUU ZZH
P 240741Z NOV 06
FM AMEMBASSY TUNIS
TO RUEHC/SECSTATE WASHDC PRIORITY 2252
INFO RUEHCL/AMCONSUL CASABLANCA PRIORITY 4021
RUEATRS/DEPT OF TREASURY WASHINGTON DC PRIORITY
RUCPDOC/USDOC WASHDC PRIORITY

UNCLAS TUNIS 002798 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR NEA/MAG - HARRIS 
STATE PASS USTR - BELL, USPTO -ADLIN AND ADAMS, USAID - 
MCCLOUD 
USDOC FOR ITA/MAC/ONE - NATE MASON, ADVOCACY CTR - JAMES, 
AND CLDP - TEJTEL 
CASABLANCA FOR FCS - ORTIZ 
 
E.O. 12958: N/A 
TAGS: ECON EINV PGOV ETRD TS
SUBJECT: BEN ALI ANNOUNCES NEW POLICIES TO FACILITATE 
BUSINESS 
 
¶1. (SBU) SUMMARY. On November 21, President Zine El Abidine 
Ben Ali spoke on the occasion of the opening of the 14th 
Congress of the Tunisian Employers' Association for Industry, 
Trade and Handicrafts (UTICA) and delivered a speech 
announcing some new economic and commercial policies. 
Designed to spur foreign investment and increase the 
competitiveness of Tunisian firms, the policies seem to do 
little to reduce the state's strong influence over private 
business.  END SUMMARY. 
 
¶2. (U) BACKGROUND: The Tunisian Employers, Association for 
Industry, Trade and Handicrafts (Union Tunisienne de 
l,Industrie du Commerce et de l,Artisanat, UTICA) is the 
sole employers, union in Tunisia and represents companies in 
almost every Tunisian business sector.  A traditional 
counterbalance to the once powerful General Union of Tunisian 
Workers (UGTT), UTICA negotiates on behalf of the private 
sector in the triennial national labor negotiations, lobbies 
for business and engages in trade promotion.  Like many 
Tunisian entities, UTICA holds a national congress once every 
five years.  The 14th UTICA Congress (November 21-22) will 
evaluate the past five years, performance, outline the 
challenges facing business and make recommendations for the 
coming years, in addition to holding elections for the 
Executive Bureau. 
 
¶3. (U)President  Ben Ali attended the opening session of 14th 
UTICA Congress on November 21 and was introduced by current 
UTICA Chairman Hedi Djilani, who has been head of the 
organization since 1988, in addition to being a member of the 
Chamber of Deputies (lower parliamentary body) and the ruling 
Democratic Constitutional Rally (RCD) party Central 
Committee.  Djilani's introduction was predictably laudatory, 
stressing that UTICA's members had responded to all of Ben 
Ali's directives (more investment, more exports, etc.).  The 
only thing UTICA wanted in return, said Djilani, was for Ben 
Ali to remain in power.  Known for their generally pro-Ben 
Ali stance, UTICA delegates in attendance rose on several 
occasions to chant "Tunis! Ben Ali!" and "Long live Ben Ali!" 
during Djilani's introduction and Ben Ali's subsequent speech. 
 
¶4. (U) In his speech, Ben Ali highlighted Tunisia's economic 
achievements and challenges in the five years since the last 
UTICA Congress.  He also announced some new policies designed 
to spur business, including: 
 
-- IPR PROTECTION:  Drafting a law to improve the protection 
of trademarks, empowering economic inspection agents to seize 
counterfeit trademarked products, regardless of whether or 
not the trademark owner has taken civil action. IMPACT: This 
is a major development that will improve IPR protection for 
non-resident firms that have not initiated legal action.  Now 
the GOT can seize counterfeit products, even if the trademark 
owner is not aware of the violation.  At present, trademark 
owners have to initiate the complaint for the GOT to take 
action. 
 
Also, preparing a law for the protection and registration of 
controlled origin appellation, and to develop a public 
awareness campaign for producers, to facilitate their raw 
materials supply and market their products. IMPACT: This law 
appears designed to assist local producers (like of wine, 
olive oil and harissa) to in establishing controlled origin 
appellation for their products, particularly those intended 
for export. 
 
-- CUSTOMS:  Establishing a "master plan" for customs 
clearances, which will aim to shorten clearance periods to 
less than 24 hours from the submission of required documents 
and increase electronic processing of customs declarations 
from 40 percent to 80 percent by 2007.  Ben Ali also called 
on involved parties to do their part to improve the quality 
and speed of freight, handling, transport and inspection 
operations and reduce the amount of time goods remain in 
port.  IMPACT:  Customs clearances are notoriously 
time-consuming and some report bribery is widespread.  It is 
not clear if this "master plan" will have any impact on the 
realities of this business issue. 
 
-- PRODUCTS:  Launching a pilot program for the establishment 
of logistical centers across Tunisia for collection, 
distribution, packaging, canning and quality control 
 
facilities, as well as lower the cost and facilitate the 
marketing of high-value export products.  IMPACT:  This 
program appears to be directly associated with a recent 
tender for the establishment of a port logistical center in 
Tunis and may also assist agricultural producers in exporting 
a branded retail product as opposed to bulk exports. 
 
-- PROFITS:  Developing a program to liberate profit margins 
in goods and services where there is sufficient competition. 
IMPACT: In some industries, there is a limit on the profit 
margin for products, therefore the program would increase the 
profitability of related firms. 
 
-- EXCHANGE CONTROLS:  Eliminating foreign exchange 
authorizations for advance payments for the import of 
production-related goods and services, transport and 
communication expenses; IMPACT:  In the past, Tunisia firms 
had to present customs documentation to prove the imports had 
arrived before they would be able to obtain hard currency to 
pay for the goods.  This decision may be a response to IMF 
calls for increased liberalization, as it allows importing 
firms to obtain hard currency without authorization to make 
advance payments for imports. 
 
-- Extending the payment facilities offered by Tunisian firms 
from six months to one year.  IMPACT:  Perhaps designed to 
assist the banking sector in reducing the number of 
non-performing loans, this will allow Tunisian wholesalers to 
extend repayment periods for smaller firms.  While a benefit 
for the end-user, this will place an increased burden on 
wholesalers, whose payments may not be received for an entire 
year. 
 
-- FOREIGN DIRECT INVESTMENT:  Canceling exchange 
authorization for subscription to the increase of the capital 
of Tunisian companies beyond the preferential rights of 
subscription in sectors covered by the Investment Code. 
 
-- Allowing non-residents who invest more than 50 percent of 
the total capital of a Tunisian company the right to manage 
the firms accounts, and increasing short-term dinar or 
foreign currency borrowing limits for these individuals, in 
order to finance local product purchases. IMPACT:  Both of 
these initiatives will make it easier for foreign investors 
to control their hard currency and their broader investments, 
whose control of which has limited investment in the past. 
Previously, foreign firms had limits on the amount of foreign 
capital that could be added to an existing investment, and 
additional rights were limited to those who controlled more 
than 66 percent of the total capital. 
 
-- Encouraging new investors to re-open closed exporting 
companies through the elimination of outstanding customs fees 
on these facilities. IMPACT: Some smaller exporting firms, 
such as textile companies, have closed due to lack of 
competitiveness and left fees for customs-related services 
unpaid.  This policy will remove the burden on the new 
investor to pay these overdue fees. 
 
-- TUNISIAN INVESTMENT: Increasing the export profit accounts 
rate from 10 percent to 15 percent (2007) to 20 percent 
(2009);  IMPACT: This grants exporters greater control over 
their convertible accounts, which are historically limited. 
 
Increasing the annual ceiling for external Tunisian 
investment from 300,000 TD (approx. USD 227,000) to 1,000,000 
TD (approx. USD 758,000) and to 3,000,000 TD (approx. USD 
2,272,000) for exporters that finance their investments 
through export revenues, and increasing the annual ceilings 
for non-exporting enterprises from 100,000 TD (approx. USD 
75,800) to 500,000 TD (approx. USD 379,000), with the aim of 
eventually eliminating these ceilings on a case-by-case 
basis.  IMPACT:  This change appears to be reflective of the 
recent depreciation of the dinar against the Euro, which has 
reduced the hard currency value of Tunisian investments. 
 
¶5. (SBU) COMMENT. While the speech contained a number of new 
initiatives, none of them significantly decrease the state's 
role in the economy.  However, the speech did give Ben Ali 
and opportunity to engage a key audience on one of his major 
administration initiatives, economic growth.  As he makes few 
public appearances or speeches, this event indicates the 
 
importance of economic development to Ben Ali's regime 
strength. END COMMENT. 
GODEC