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RR RUEHBI RUEHLH RUEHPW
DE RUEHIL #4422/01 2851400
ZNR UUUUU ZZH
R 121400Z OCT 07
FM AMEMBASSY ISLAMABAD
TO RUEHC/SECSTATE WASHDC 2474
INFO RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/USDOC WASHDC
RUEHRC/USDA FAS WASHDC 4121
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RUEHKP/AMCONSUL KARACHI 7663
RUEHLH/AMCONSUL LAHORE 3704
RUEHPW/AMCONSUL PESHAWAR 2194
RUEHBI/AMCONSUL MUMBAI 3718
RUEHDO/AMEMBASSY DOHA 1458

UNCLAS SECTION 01 OF 03 ISLAMABAD 004422 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
E.O.  12958:  N/A 
TAGS: EFIN ECON EINV PREL PK
SUBJECT: MOORE MEETINGS FOCUS ON ROZS, IPR, TRANSIT TRADE 
 
 
Summary 
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¶1.  (SBU)  On the margins of the October 12-13 Strategic Dialogue in 
Islamabad, Bureau of Economic and Energy Affairs Deputy Assistant 
Secretary Chris Moore met with senior Ministry of Commerce, Finance 
 
SIPDIS 
and Industries to share details of the Reconstruction Opportunity 
Zone (ROZ) legislation and to encourage the GOP to start development 
of incentive and other programs to attract investment to the ROZs. 
Our GOP interlocutors took this advice on board and mentioned that 
they were planning a road show with potential investors to 
Washington in the near future.  The Minister of Commerce pushed for 
inclusion of all of Balochistan in the ROZ legislation, as well as 
inclusion of categories 347 and 348.  On intellectual property 
rights protection, Moore met with the Chairman of the Intellectual 
Property Office, highlighting the need for the GOP to fulfill its 
promises on enacting data protection legislation and complimenting 
the GOP on its progress on enforcement.  End summary. 
 
¶2.  (SBU)   Bureau of Economic and Energy Affairs Deputy Assistant 
Secretary Chris Moore met with State Finance Minister Omer Ayub; 
 
SIPDIS 
Secretary Ministry of Industries Shahab Khwaja; Minister of Commerce 
 
SIPDIS 
Humayum Akhtar Khan; Ashraf Hayat, Additional Secretary Ministry of 
Commerce, and Chairman, Intellectual Property Office (IPO) Yasin 
Tahir.  The majority of  meetings focused on briefing the GOP 
interlocutors on the status and details of the ROZ legislation and 
asking our GOP interlocutors on their plans for implementation and 
incentives.  Pakistan's recently issued anti-money laundering 
ordinance was discussed at the Finance Ministry. At IPO, Moore urged 
prompt passage of TRIPS-compliant data protection legislation and 
complimented the GOP on its enforcement activities. 
 
Ministry of Finance:  Competitiveness and AML 
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¶3.  (SBU)  At the Ministry of Finance, State Finance Minister Omer 
Ayub highlighted the GOP's push on increasing the competitiveness of 
Pakistani firms in the international marketplace, noting USAID's 
assistance.  He also noted GOP efforts opening trade routes to 
Central Asia.  Regarding incentives, Ayub commented that they need 
to make sense economically and highlighted GOP efforts for the 
motorcycle and gems and jewelry sectors.  Moore emphasized that the 
GOP needs to start looking now at possible ROZ locations, 
infrastructure, and put together a package of incentives to attract 
investors. 
 
¶4.  (SBU)  Moore asked Ayub about the September 8 Anti-Money 
Laundering (AML) ordinance signed by President Musharraf.  Ayub 
commented that the ordinance is identical to the bill before the 
National Assembly and that legislative process is still in train. 
He added that "reputational issues" prompted Musharraf to sign the 
ordinance.  He also argued that the Financial Intelligence Unit 
meets the Financial Action Task Force criteria for independence. 
Ayub was confident that the ordinance would be systematically 
renewed every four months. 
 
Ministry of Industries:  Looking beyond textiles; need to find 
skilled labor 
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- - - - - - - - - - - - - - - - - 
 
¶5.  (SBU)  Moore briefed Shahab Khwaja, Secretary, Ministry of 
Industries, on the provisions of the ROZ legislation and asked 
Khwaja on his Ministry's implementation and industry recruitment 
efforts.  Khwaja was particularly interested in attracting 
non-textile sectors (marble and granite, gems and jewelry and 
surgical instruments) to the ROZs.  He added that the Federally 
Administered Tribal Areas (FATA) Secretariat had already established 
a marble zone.  The major problem, however, is the lack of skilled 
manpower as people will not relocate to this region for jobs.  Moore 
commented that training is an important part of the U.S. FATA 
program.  He agreed that looking beyond textiles is important, but 
highlighted that a good incentive structure is essential to attract 
investors.  Comment:  It was clear that the GOP has not given much 
thought on what types of incentives are likely to attract investors 
to the ROZs.  End comment. 
 
 
ISLAMABAD 00004422  002 OF 003 
 
 
¶6.  (SBU)  Ihsan Ullah Khan, ??? of the Pakistan Stone Development 
Company also attended the meeting.  (Note:  Assistant Secretary 
Sullivan met with Khan in xxx during his trip to the FATA. End 
note.)  Khan described his successful visit to the U.S. to sell his 
marble and granite; informed us that the establishment of "marble 
cities" in the FATA is well underway; and outlined his efforts on 
training women for mosaics and handicrafts. 
 
Commerce Minister Khan:  another push to add 347, 348 and 
Balochistan 
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- - - - - - - - - - - - - - - - - 
 
¶7. (SBU)  Khan was pleased to hear that the ROZ legislation would be 
submitted to Congress very soon, and asked about the timeframe for 
passage.  He also made a push for inclusion of categories 347 and 
348 (cotton trousers) and the entire province of Balochistan.  Moore 
responded that formulation of the legislation required close 
consultations and a balance between broad coverage and what Congress 
will actually pass.  He highlighted the single transformation, 
generous coverage and long duration.  Khan asked if he could pursue 
this issue on the Hill; Moore commented that it will be challenging 
but the GOP and Levis can try.  Khan commented that he did not want 
to jeopardize quick passage but inclusion of 347 and 348 would help 
Pakistan a lot.  On Balochistan, the GOP wants to give the province 
the same treatment as North West Frontier Province, given the 
similar levels of development.  Khan closed by expressing the GOP's 
full support for the ROZ legislation. 
 
Incentives key to ROZ development 
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¶8.  (SBU)  Moore and Economic Counselor discussed ROZ implementation 
with Javed Saifullah Khan, Chairman of the SAIF Group, one of 
Pakistan's biggest conglomerates.  SAIF Group has successfully 
invested in the Egyptian QIZs and Khan was very helpful in 
organizing appointments for the ROZ study group in xxxx.  His family 
is from the North West Frontier Province and has textile mills 
there.  Khan highlighted that a long-term, attractive incentive 
structure and access to finance will be key to attracting industry 
to the ROZs.  He emphasized that duty-free treatment was not 
sufficient for the textile sector since transportation and energy 
costs in the ROZ-designated areas will not necessarily be 
competitive with the Egyptian and Jordanian QIZs. 
 
Transit Trade:  Pakistan sees no problems 
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¶9.  (SBU)  Junaid Iqbal Ch., Additional Secretary, Ministry of 
Economic Affairs, gave Moore and Economic Counselor an update on 
transit trade and GOP FATA developments plans.  Iqbal chairs the 
Pakistan-Afghanistan Joint Working Group which handles transit trade 
issues.  He highlighted the need for safe transit through 
Afghanistan to implement the National Trade Corridor Strategy 
linking Pakistan to Central Asia.  In response to our question, 
Iqbal did not see any problems with the status quo with Afghan 
transit trade through Pakistan beyond the smuggling issues.  The GOP 
had removed cooking oil from the list of prohibited transit trade 
items; the GOP is considering the Afghan request to remove 
cigarettes and automotive spare parts.  (Comment:  Cigarettes and 
spare parts, along with electronics, are among the items with the 
highest incidence of smuggling back to Pakistan.  End comment) 
Moore highlighted the importance of smooth transit trade for the 
success of ROZs on both sides of the Afghan-Pakistan border and to 
the revival of the Afghan private sector since the ROZs will be 
export-oriented. 
 
¶11.  (SBU)  On renegotiation of the Pakistan-Afghan transit trade 
treaty, Iqbal told us that Special Advisor to the Prime Minister 
(and de facto Finance Minister) Salman Shah would chair a meeting 
this year to review the status of the treaty.  In response to our 
question, he explained that bilateral trade had decreased because of 
a decrease in fuel oil imports and a slowdown in the Afghan 
construction sector.  He expressed concern, however, that 
development of Iranian ports may make that option more attractive 
for Afghanistan.  Pakistan provides 300 million dollars in 
development assistance to Afghanistan, focused on roads, medical 
 
ISLAMABAD 00004422  003 OF 003 
 
 
facilities and scholarship for 1000 Afghan students to Pakistani 
universities. 
 
¶10.  (SBU)   Iqbal also reviewed Pakistan's plans for FATA 
development.  He stressed the importance of developing 
infrastructure quickly and noted the 250 million funding deficit. 
Moore commented that he is following up with G8 members on their 
commitments made at the June German G8 summit on development of the 
Pakistan-Afghan border areas. 
 
Intellectual Property Organization:  push for data protection 
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- - - - - - - 
 
¶11. (SBU)  Pakistan's Intellectual Property Organization (IPO) 
Secretary Yasin Tahir made a long presentation detailing his 
 
SIPDIS 
organization's achievement since its 2005 creation.  In a discussion 
of Pakistan's Special 301 out-of-cycle review, Moore emphasized the 
need for Pakistan to enact TRIPS-compliant data protection 
legislation as quickly as possible.  Keying off Yelsin's point that 
IPR protection is important for innovation, Moore highlighted the 
importance of data protection for development of Pakistan life 
sciences sector.  In a reversal of his position at previous 
meetings, Tahir recognized his organization's responsibility for 
assisting in this effort.  While recognizing the TRIPS obligation 
and appreciating the decision to remove Pakistan from the priority 
watch list, Tahir accused the U.S. of making additional demands for 
IPR protection.  He commented that while data protection is a TRIPS 
commitment, data exclusivity must be negotiated bilaterally.  Tahir 
also made a push for more training and asked that international 
training participation requests for all areas touching on IPR be 
made through his office. 
 
¶12.  (U)  DAS Moore did not have an opportunity to clear this 
cable.