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C O N F I D E N T I A L SECTION 01 OF 02 BEIRUT 000777 
 
SIPDIS 
 
SIPDIS 
 
NSC FOR ABRAMS/SINGH/MARCHESE/HARDING; STATE PASS TO USTR 
 
E.O. 12958: DECL: 05/30/2017 
TAGS: ECON ETRD PGOV PREL LE
SUBJECT: LEBANON:  ECONOMY MINISTER REVIEWS WTO MEETINGS 
 
 
Classified By: Ambassador Jeffrey D. Feltman for reasons 1.4 (b) and (d 
). 
 
SUMMARY 
------- 
 
¶1. (C) Minister of Economy and Trade (MOET) Sami Haddad 
expressed frustration that, in his view, U.S. trade 
negotiators asked more of Lebanon than they have asked of 
other recent WTO members.  He argued that any message of 
strong American political support to the besieged GOL is not 
trickling down to working level negotiators.  Haddad said he 
has met most USG requests, including the drafting of required 
laws, but is pushing back against requests to additional 
lowering of goods tariffs.  Lebanese officials request that 
we show political support to Lebanon by wrapping up bilateral 
negotiations while we still have a pro-trade cabinet to work 
with; we can continue to discuss any outstanding issues in 
alternate fora, Haddad suggested.  Finally, Haddad explained 
some of the urgency of his request by highlighting that some 
resigned cabinet ministers appeared interested in returning 
as 'caretaker' ministers in a new cabinet.  End Summary. 
 
FRUSTRATED WITH STRICT DEMANDS, 
LACK OF POLITICAL SUPPORT AT WTO 
-------------------------------- 
 
¶2. (C) Explaining his emotional late night call to the 
Ambassador on the first night of the early-May world Trade 
Organization (WTO) working party meeting in Geneva to the 
Ambassador and Poloff, Minister of Economy and Trade (MOET) 
Sami Haddad expressed frustration that, in his view, the U.S. 
is asking more of Lebanon than it has asked of other recent 
WTO members, such as Vietnam.  Our negotiations are already 
advanced, Haddad's WTO advisor Lama Ouejean told us, and 
Lebanon has done the technical work to prepare.  The 
government faces no political resistance to passing all the 
draft laws to make it WTO compliant, if only the Speaker 
would open Parliament.  The GOL did its internal homework for 
this round, engaging in various bilateral dialogues with the 
U.S., EU, Japan, and others. 
 
¶3. (C) Any message of strong American political support to 
Lebanon is not trickling down to the working level, Haddad 
argued, particularly on agricultural issues.  The GOL made 
what Haddad claimed to be a very generous informal offer in 
the summer of 2005 -- prepared by MOET official Fadi Maki, 
who was later fired -- but U.S. negotiators used this as a 
floor and have asked for significant additional concessions. 
In contrast to the allegedly tough time the U.S. is giving 
Lebanon, Ouejean noted, Vietnam and other recent WTO members 
have less liberalized economies than Lebanon.  Finally, U.S. 
agricultural demands are unreasonable, as Lebanon provides 
less of a subsidy to its farmers than the U.S. does, Haddad 
declared. 
 
MUCH OF THE WORK IS DONE 
------------------------ 
 
¶4. (C) Much of the work the U.S. wanted from Lebanon is done, 
in the form of draft laws ready to be voted on when 
Parliament re-opens.  Lebanon expects to conclude bilateral 
negotiations with Taiwan, Australia, and Japan by the end of 
June.  Lebanon has met all requirements from the Secretary 
General of the WTO.  More than 20 countries have acceded to 
the WTO in the last 12 years, and most have less liberal 
economies than Lebanon has, Haddad argued, so there is little 
reason for the United States to require further concessions 
from Lebanon.  However, unless the U.S. and EU now wrap up 
bilateral discussions, Lebanon will be plagued with new 
bilateral agreement requests from relatively insignificant 
trading partners such as Brazil and Cuba. 
 
¶5. (C) While Lebanon's other bilateral partners have focused 
on services, U.S. negotiators have focused on asking Lebanon 
to lower already low agricultural and industrial goods 
tariffs.  Haddad's senior advisor on WTO issues, Lama 
Ouejean, told us that Lebanon has already matched at least 60 
percent of the U.S. demands on agriculture and at least 70 
percent of the demands on other goods.  Lebanon cannot 
further eliminate tarrifs without affecting politically 
sensitive interest groups and undermining already fragile 
government finances.  The level Lebanon is binding at is 
already too low for a developing county.  In addition, 
Lebanon feels caught, like many other countries, between 
 
BEIRUT 00000777  002 OF 002 
 
 
conflicting U.S. and EU demands on audiovisual material 
distribution, which require that the U.S. and EU to work out 
a solution between themselves.  On services, U.S. requests 
are in line with those of other bilateral partners, but on 
goods the U.S. has been especially demanding. 
 
TIME TO WRAP UP BILATERAL NEGOTIATIONS 
LEST WE LOSE THE CABINET 
-------------------------------------- 
 
¶6. (C) Haddad, feeling some pressure to conclude negotiations 
before a possible change of government, asked that we 
consider wrapping up bilateral negotiations now by either 
formally signing a bilateral accession agreement based on the 
draft laws, or by signing an MOU that lays out the pledges 
Lebanon must deliver on to reach a bilateral accession 
agreement.  The U.S. can avoid giving Parliament Speaker 
Nabih Berri and Syria a veto on Lebanon's WTO membership by 
not waiting for the draft laws to be passed, and instead 
accepting cabinet approval of all required draft laws as a 
basis to conclude negotiations.  If we signed an agreement 
based on draft laws and the cabinet resigned, all laws 
referred to parliament would remain in parliament, Haddad 
assured us.  Alternatively, the United States could sign an 
MOU saying it agreed to close negotiations now with the 
expectation that Lebanon would adopt specific actions. 
 
¶7. (C) Haddad went on to argue that supporting Lebanon's WTO 
accession now would have a large political payoff, 
strengthening the international community's perception of 
Lebanon in the same way that signing an agreement with the 
IMF has.  Lebanon's first-ever IMF agreement and continued 
pro-reform efforts are evidence that Lebanon wants to join 
the rest of the world as a "good citizen."  In addition, 
Lebanese officials would like to reinforce perceptions that 
Lebanon conforms to international rules.  Previously at the 
forefront of the Arab world, Lebanese officials are now 
ashamed to be seen as lagging.  Lebanon was a founding member 
of WTO predecessor, the GATT, but withdrew in 1951 and only 
started its effort to rejoin in 2002. 
 
¶8. (C) Discussion on issues of ongoing concern could continue 
in alternate fora, Haddad explained.  For example, IPR issues 
remain an area of bilateral attention, but are at this point 
an enforcement rather than a legislative issue.  They can be 
better addressed through the Special 301 process than through 
the WTO forum, which requires only that laws are on the 
books, rather than implemented.  Lebanese officials should 
shift their limited resources to focusing on passage of laws 
and law enforcement, Haddad argued. 
 
BRING THE MINISTERS BACK 
------------------------ 
 
¶9. (C) Some of Haddad's eagerness to conclude bilateral WTO 
accession negotiations apparently stems from his realization 
that the cabinet will constitutionally dissolve with the next 
presidential election this fall and could be dissolved before 
that as part of a political package.  Haddad implied that the 
opposition, and in particular the six resigned ministers, 
were looking for a way out of the political impasse, and were 
considering coming back as caretaker ministers.  Haddad noted 
that some of the ministers, such as Health Minister Khalifeh, 
never stopped working from home, while others, such as the 
resigned Minister of Foreign Affairs, recently resumed 
signing papers.  Haddad believes that reform measures and WTO 
accession concessions will become harder, not easier, to 
achieve if those ministers resume work. 
 
¶10. (C)  Comment:  We are sure that none of Haddad's 
arguments are new to the Washington trade policy officials 
who have worked with Lebanon -- or any numbemr of other 
countries, for that matter -- on WTO accession.  The urgency 
in Haddad's tone stems from his fear that, if the Siniora 
government is changed either by force or with agreement of 
March 14 leaders, the cabinet environment will be less 
friendly to reform in general and WTO in particular.  Thus, 
he is eager to wrap up WTO accession as soon as possible. 
FELTMAN