VZCZCXRO9014
PP RUEHTRO
DE RUEHTU #0286/01 0791040
ZNR UUUUU ZZH
P 191040Z MAR 08
FM AMEMBASSY TUNIS
TO RUCPDOC/USDOC WASHDC PRIORITY
RUEHC/SECSTATE WASHDC PRIORITY 4676
INFO RUEHAS/AMEMBASSY ALGIERS PRIORITY 7647
RUEHLO/AMEMBASSY LONDON PRIORITY 1439
RUEHNK/AMEMBASSY NOUAKCHOTT PRIORITY 0973
RUEHFR/AMEMBASSY PARIS PRIORITY 1906
RUEHRB/AMEMBASSY RABAT PRIORITY 8525
RUEHTRO/AMEMBASSY TRIPOLI PRIORITY 0212
RUEHCL/AMCONSUL CASABLANCA PRIORITY 4203

UNCLAS SECTION 01 OF 04 TUNIS 000286 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
NEA/MAG FOR HOPKINS AND HARRIS, EB/CBA (WINSTEAD/GILMAN), 
EB/TRA/AN(FINSTON), 
STATE PASS USTR (BURKHEAD), 
USDOC FOR ITA/MAC/ONE (NATE MASON), ADVOCACY CTR (REITZE), 
CASABLANCA FOR (FCS ORTIZ), 
LONDON AND PARIS FOR NEA WATCHER 
 
E.O. 12958: N/A 
TAGS: ETRD EAIR ECIN ECON ECPS EFIN EIND EINV TS
SUBJECT: TIFA COUNCIL - AUSTR DONNELLY'S MINISTERIAL 
MEETINGS 
 
REF: A. TUNIS 211 
 
     ¶B. 07 TUNIS 1521 
 
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Summary 
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¶1. (SBU)  On the margins of the March 10-11 US-Tunisia Trade 
and Investment Framework Agreement (TIFA) Council meeting, 
Assistant US Trade Representative for Europe and the Middle 
East (AUSTR) Shaun Donnelly met with Prime Minister Mohamed 
Ghannouchi, Minister of Development and International 
Cooperation Mohamed Nouri Jouini, and Minister of Commerce 
Ridha Touiti.  AUSTR Donnelly advocated for several US 
companies with pending project/export proposals before the 
GOT.  He also raised the proposed Open Skies agreement, as 
well as, pharmaceutical issues, such as patent linkage, data 
exclusivity, and correlated pharmaceutical product appeals. 
The TIFA delegation also discussed the Generalized System of 
Preference Program (GSP) with the business community and the 
Center for the Promotion of Exports (CEPEX). 
 
¶2. (SBU)  In all of his meetings, AUSTR Donnelly explained 
President Bush's interest in the region and ultimate goal of 
establishing a Middle East Free Trade Area (MEFTA) by 2013. 
While emphasizing that this TIFA Council meeting was not an 
FTA negotiation, AUSTR Donnelly expressed his hope that both 
sides would use the meeting to explore and develop concrete 
near-term steps to increase bilateral trade and investment 
and to remove existing barriers.  AUSTR Donnelly argued that 
by liberalizing the services sector, particularly in the 
areas of ICT, Tunisia would attract much more foreign and 
domestic investment. 
 
¶3. (SBU)  Themes from Tunisian officials included: the 
historical ties between the United States and Tunisia; that 
Tunisia will continue its reform strategy, but that the 
reforms need to be implemented gradually so that Tunisians 
and Tunisia's economy can build the capacity to absorb the 
changes; that the USAID scholarship program be re-instated; 
the economic and social progress that Tunisia has achieved; 
the GOT's desire to diversify its economic partners beyond 
the EU; requests for more cooperative technical assistance 
programs to build capacity and to promote Tunisian exports to 
the US; and the desire for partnerships for Tunisian 
companies with US businesses in GOT targeted high value-added 
sectors.  End Summary. 
 
------------------------- 
Prime Minister Ghannouchi 
------------------------- 
 
¶4. (SBU)  Ghannouchi began with a short soliloquy on the 
long-standing US-Tunisian friendship and how grateful Tunisia 
is for our pre- and post-independence support.  AUSTR 
Donnelly explained the general framework of the TIFA Council 
proceedings and complimented the Minister on the economic 
progress that he has observed since he last was in Tunisia 16 
years ago.  Ghannouchi expressed his pride and satisfaction 
with Tunisia's reform program.  He said that the GOT would 
continue with its fundamental reforms to integrate Tunisia 
into the global economy and to upgrade the living standards 
of all Tunisians.  Tunisia wants to reinforce its economic 
and commercial ties with the United States but in a way that 
benefits both countries.  Ghannouchi identified three major 
pillars for US-Tunisian economic cooperation: 
 
A) Re-instatement of the USAID funded student post-graduate 
program that was suspended in 1992. Ghannouchi opined that 
this program is a great investment that will reap benefits 
for both countries by producing "American products" who may 
later play a major role in disseminating the US business 
culture in Tunisia; 
 
B) Provide greater predictability under the GSP program by 
guaranteeing that Tunisian products would benefit from 
 
TUNIS 00000286  002 OF 004 
 
 
duty-free treatment for a five to ten year period. 
Ghannouchi indicated that longer eligibility would raise the 
visibility of the US market and would stimulate Tunisian 
exporters to consider targeting this market. 
 
C) Encourage US companies to invest in Tunisia, mainly those 
with added value.  Ghannouchi specifically said that the GOT 
was looking for investment projects that would generate jobs, 
innovation, and new technology transfer, such as in the ICT 
and telecommunications fields. 
 
¶5. (SBU)  Ambassador Godec offered to discuss with Washington 
the prospect of instituting an education program similar to 
the former USAID program.  On GSP, Donnelly explained that 
Tunisia already benefits from preferential treatment of 
several thousand products under the GSP program, but 
exporters were not taking full advantage of it.  Ambassador 
Godec offered to work with the GOT to promote and raise the 
visibility of the GSP program throughout Tunisia. 
 
-------------------- 
MDIC Minister Jouini 
-------------------- 
 
¶6. (SBU)  Jouini stated that the main objectives for this 
TIFA Council were for both sides to share information and 
acquire a clearer understanding of the legal framework and 
provisions under which each party operates, to find areas of 
convergence, and to explore areas where we can advance the 
trade and investment relationship.  He used the EU-Tunisia 
Association Agreement negotiations as a good example of a 
negotiation process that works for Tunisia.  He said that 
Tunisia has signed an action plan for the "Neighborhood 
Policy" with the aim of harmonizing Tunisian legislation with 
that of the EU and the ultimate goal of full integration into 
the global economy, with the long term goal of Tunisian goods 
receiving the same treatment as EU goods (under the rules of 
origin). 
 
¶7. (SBU)  AUSTR Donnelly emphasized that the US approach to 
Free Trade Agreements (FTA) is fundamentally different from 
that of the EU.  US FTAs are comprehensive agreements and 
normally require substantial legislative and regulatory 
reform before an FTA can be reached.  He suggested that the 
GOT review the text of the Morocco-US FTA while they continue 
their trade negotiations with the EU and as they consider 
changes to Tunisia's legislative and regulatory regime. 
Jouini responded that the GOT would prefer that trade and 
investment discussions between the United States and Tunisia 
should proceed gradually.  AUSTR Donnelly told Jouini that he 
views our TIFA discussions as a way in which the United 
States and Tunisia can meet, talk, and establish building 
blocks to advance our bilateral economic relationship. 
 
------------------------ 
Commerce Minister Touiti 
------------------------ 
 
¶8. (SBU)  Minister Touiti said that he is proud of the 
quality of Tunisian products and of Tunisia's efforts to 
improve its investment and regulatory environment, including 
Intellectual Property Rights (IPR) enforcement.  He said that 
Tunisia is working hard to fully comply with European and 
hence international standards.  He said that Tunisia hopes to 
see increased trade between the United States and Tunisia 
through well-targeted product marketing.  Touiti would like 
to see greater support and cooperation between the United 
States and Tunisia in the areas of technical assistance, 
exchange of information about trade opportunities, and the 
exchange of experts for short and long term assignments 
(i.e., something akin to the Japanese International 
Cooperation Agency (JICA)). 
 
¶9. (SBU)  AUSTR Donnelly used this meeting to seek GOT 
cooperation in reaching a successful conclusion to the WTO 
Doha Round negotiations.  He indicated that while senior 
 
TUNIS 00000286  003 OF 004 
 
 
officials in Geneva are working hard toward achieving a 
breakthrough on a "modalities" package, they need to narrow 
gaps and issues over the short term so that ministers can 
make decisions.  The United States is looking for a 
"modalities" package that sets the formula and frameworks for 
agriculture, non-agricultural market access, and services 
that will move these negotiations into the final phase.  He 
added that the choreography has changed for the Doha Round 
with countries negotiating as groups.  He argued that 
emerging markets such as India, Brazil, China, Argentina, 
need to make a contribution and should not continue to claim 
the same special exceptions that are claimed by 
less-developed countries.  He encouraged Tunisia to work 
actively to promote constructive solutions and to pursue its 
own interests in the Doha Development Agenda, and not blindly 
follow the Advanced Developing Countries group or other 
groups whose agenda is not really in line with Tunisia's 
interests. 
 
-------- 
Advocacy 
-------- 
 
¶10. (SBU)  AUSTR Donnelly and Ambassador Godec raised several 
outstanding advocacy issues with all GOT officials: 
 
Open Skies - Both Minister Jouini and Prime Minister 
Ghannouchi said that the GOT was looking into the possibility 
of a bilateral Open Skies agreement with the United States 
and raised the possibility that an agreement could be 
concluded next year. 
 
Franchises - During the meeting with Minister Jouini, AUSTR 
Donnelly asked where Tunisia stood with regards to opening up 
the Tunisian market to franchises, noting that liberalization 
of the services sector would attract greater US investment to 
Tunisia.  Jouini responded that franchises are not totally 
banned, but that authorizations for franchises have to be put 
into a larger framework agreement and have to take social 
factors into consideration.  He said that some of Tunisia's 
recent agreements with the Middle Eastern investors permit 
franchises.  He also said that the tourism sector is open, 
and that franchises for hotels and touristic restaurants 
would be welcome.  The retail sector is not yet open to 
franchises, because Tunisia is currently embarked on a plan 
to upgrade this sector.  He added that Tunisia is cooperating 
with the EU to integrate the retail sector into the global 
economy.  Jouini stated that Tunisia is studying franchise 
legislation and intends to send a proposal to the Parliament 
in a few months. (Note: see septel for working group 
discussion.  End Note.) 
 
 
Boeing - The GOT officials responded that Boeing's bid for 
the Tunis Air fleet replenishment will be given due 
consideration and gave their assurances that the process will 
be open and transparent. 
 
Cisco - Officials said the GOT is aware of and considering 
Cisco's E-Government public private partnership (PPP) 
proposal.  The GOT is happy with Cisco's current investment 
in Tunisia and favorably disposed toward Cisco.  (Note: 
Econ/Commercial Officer has relayed this information to Cisco 
representatives in Tunisia and encouraged them to approach 
the MDIC and the Ministry of Communications to follow-up on 
their proposal.  End Note.) 
 
SemGroup - GOT officials said that they are aware of the 
SemEuro (SemGroup subsidiary) storage terminal proposal. 
Prime Minister Ghannouchi's response to this issue was that 
the Skhira region (proposed site for SemEuro storage 
terminal) was "very interesting for the GOT, and that there 
were already several projects planned in that area."  He went 
on to say that the GOT was studying SemEuro's proposal.  He 
said, however, that a decision is unlikely in 2008.  Jouini 
said that he believed that the hold-up on this project was a 
 
TUNIS 00000286  004 OF 004 
 
 
fiscal issue - that SemEuro did not want to pay taxes. 
(Note:  Before this project stalled, SemEuro had reached an 
agreement with the GOT to sign a special convention which 
would require them to pay taxes in accordance with the 
US-Tunisia Bilateral Investment Treaty.  Jouini seemed to be 
unaware of this agreement.  During the TIFA investment 
working group session, the GOT lead for this group asked 
whether SemEuro would consider locating their storage 
terminal project elsewhere in Tunisia.  Econ/CommercialOff 
responded that Post would contact SemEuro and pose this 
question to them, but that Post did not believe that SemEuro 
was tied to the Skhira location.  End Note.) 
 
Coca-Cola - The GOT gave what has become a standard reply to 
expressed concerns about the carbonated beverage tax: The 
excise tax on carbonated beverages is not discriminatory, as 
it applies to all such products and not just to Coca-Cola. 
Officials also pointed out that the consumer pays this tax. 
They argued that the tax in no way prevents Coca-Cola from 
upgrading their bottling and distribution facilities. 
 
Crown Can -  In response to concerns about the GOT's limit on 
the number of expatriate employees, officials made clear that 
Tunisia has an abundance of highly educated, capable citizens 
that are looking for employment.  They went on to explain 
that the GOT has always worked with individual companies such 
as Crown Can to meet their specific expatriate requirements. 
 
------- 
Comment 
------- 
 
¶11. (SBU)  Throughout all of AUSTR Donnelly's meetings with 
GOT interlocutors, there was a general excitement about the 
TIFA Council meeting and genuine interest in advancing trade 
and investment between Tunisia and the United States.  It has 
also become clear to us and to our interlocutors that the 
fact that Tunisia is a GSP beneficiary country, eligible for 
duty free treatment on many of its products, is not widely 
known.  Post will conduct additional outreach to local 
business entities to raise the visibility of the GSP program, 
including possibly arranging a workshop with a GSP expert. 
These meetings also confirmed the reports that recent 
investment agreements reached with several Gulf countries 
permit retail franchises in new projects in Tunisia.  End 
Comment. 
 
¶12. (U)  AUSTR Donnelly has cleared this cable. 
 
Please visit Embassy Tunis' Classified Website at: 
http://www.state.sgov.gov/p/nea/tunis/index.c fm 
GODEC