VZCZCXYZ0000
PP RUEHWEB

DE RUEHTU #0790/01 1991520
ZNR UUUUU ZZH
P 171520Z JUL 08
FM AMEMBASSY TUNIS
TO RUCPDOC/USDOC WASHDC PRIORITY
RUEHC/SECSTATE WASHDC PRIORITY 5341
INFO RUCNMGH/MAGHREB COLLECTIVE

UNCLAS TUNIS 000790 
 
SENSITIVE 
SIPDIS 
 
NEA/MAG (STEWART), 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: ECIN ECON ETRD KIPR TS
SUBJECT: MINISTRY OF DEVELOPMENT AND INTERNATIONAL 
COOPERATION HOSTS TOWNHALL FOR US BUSINESS 
 
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Summary 
------- 
 
 ¶1. (U)  A July 10 meeting for US, UK, and Canadian 
Ambassadors, respective Chambers of Commerce and businesses 
hosted by the Ministry of Development and International 
Cooperation (MDIC) allowed for a healthy exchange about the 
Tunisian investment climate: 
 
-- All three ambassadors noted that the overall investment 
climate in Tunisia is positive. 
 
-- The Ambassadors stressed the diplomatic community's lack 
of easy access to GOT counterparts, requirement for reliable 
internet, telephone, and power service throughout Tunisia, 
expatriate employment limitations, lack of a franchise law, 
high tariffs on products exported to Tunisia, and the need to 
create greater transparency and a level playing field in the 
tender process. 
 
-- The Chambers of Commerce and individual companies raised 
their specific issues centered on IPR protection and 
bureaucratic obstacles to doing business in Tunisia. 
 
-- Representatives from various GOT ministries provided 
initial responses to particular issues. 
 
MDIC Secretary of State Abdelhamid Triki closed the meeting 
promising to look into the issues raised and expressing the 
hope that they will be resolved before next year's meeting. 
Triki also indicated that he can serve as the central point 
of contact for any company experiencing problems with the 
bureaucracy.   End Summary. 
 
--------------------- 
GOT Economic Overview 
--------------------- 
 
¶2. (U)  The purpose of the July 10 meeting was to exchange 
information on the business climate in Tunisia (i.e., what 
works and what does not work for foreign investors).  Triki 
chaired the meeting, which he opened with a brief overview of 
Tunisia's latest economic indicators: GDP growth rate for 
2007 was 6.3 percent, up from 5.5 percent for 2006; total 
foreign investment was $ 8.6 billion representing 24.4 
percent of GDP (a one percent increase over 2006 figures); 
the private sector's share of total foreign direct investment 
(FDI) in 2007 was 59.8 percent; imports and exports of goods 
and services increased 22 percent over 2006 figures; 80,000 
new jobs were created in 2007 and GDP per capita increased 
from $ 3,581 in 2006 to $ 3806 in 2007.  Tunisia's budget 
deficit and its current account deficit were limited 
respectively to 3 percent and 2.6 percent of GDP.  Triki 
ended his introduction by stating that there are currently a 
combined total of 162 companies from the United States, Great 
Britain, and Canada operating in Tunisia and that their total 
FDI, excluding the energy sector, was around $ 521.7 million. 
 (Note:  The majority of the FDI from our three countries is 
in the energy sector - totaling around $ 1.6 billion for 
2007). 
 
--------------------------- 
Open the Door and Let Us In 
--------------------------- 
 
¶3. (SBU)  Ambassador Godec, along with his UK and Canadian 
counterparts, stressed that one of the Embassy's primary 
missions is to develop, promote, and strengthen the bilateral 
economic relationship.  In order to accomplish this mission, 
diplomatic staff require quick and easy access to their GOT 
counterparts.  He added that the cumbersome and difficult 
process in place today is not conducive to accomplishing this 
objective.  The requirement to submit a diplomatic note and 
receive MFA permission for working-level meetings creates a 
bottleneck and prevents the necessary government to 
government interaction necessary to foster a solid 
relationship.  The Ambassador emphasized that Tunisia is 
losing out on investment and technical assistance 
opportunities because of long delays in receiving responses 
to diplomatic notes. 
 
¶4. (SBU)  The Ambassador noted that while the investment 
 
 
climate in Tunisia is generally good, opening up the market 
to foreign franchises and passing legislation covering them 
would offer greater investment opportunities in Tunisia.  He 
added that the United States is ready and willing to conclude 
an Open Skies Agreement with Tunisia and would open up the 
possibilities for direct air routes between our two 
countries.  But a lack of response from the GOT to our 
queries on this issue are holding up progress in this area. 
The Ambassador and his UK and Canadian counterparts 
highlighted that the limitation on the number of expatriate 
employees, poor telecommunications (particularly internet) 
connections, high tariffs on incoming goods, the lack of 
transparency in the tender process, and complex banking 
regulations which serve as disincentives to investment. 
 
---------------------------------------- 
Infrastructure and Capacity Requirements 
---------------------------------------- 
 
¶5. (SBU)  The overall capacity and poor quality of internet, 
electricity, and telephone services were the main 
infrastructure concerns voiced by the companies represented 
at the meeting.   Several companies complained of weekly 
cut-offs of electrical power and the non-responsiveness of 
the state-owned utility, Societe Tunisienne de l'Electricite 
et du Gaz (STEG).  Current Internet services is also 
unreliable with frequent interruptions and inadequate 
bandwidth to support the demands of private enterprises.  The 
chief complaint regarding telephone service was the lack of 
coverage in Tunisia's southern regions.  The Ambassador 
offered that more competition (i.e., more private telephone 
and internet service providers) in this sector could resolve 
many of these issues. 
 
----------------------- 
Company-Specific Issues 
----------------------- 
 
¶6. (SBU)  Several US companies took advantage of the meeting 
to continue pressing for progress on issues they (and we) 
have previously raised with the GOT including: 
 
-- Coca-Cola pushed for reduction of the high tax on 
carbonated beverages; eliciting a lukewarm response from GOT 
officials.  Coca-Cola mentioned that their Tunisian bottled 
products exported tax-free to Libya are now illegally brought 
back into Tunisia and sold at lower prices.  Coca-Cola called 
for Customs to enforce better border control between Libya 
and Tunisia to help alleviate the huge problem this was 
creating for its local bottler. 
 
-- Crown Can raised the customs-related problems they have 
been experiencing when attempting to re-export the aluminum 
waste so that it can be recycled.  Customs has been blocking 
the re-export of this material. 
 
-- Pfizer argued for converting the current administrative 
decree on data exclusivity into a law to better protect 
pharmaceutical products.  The company also called for better 
enforcement against counterfeit products. 
 
-- Columbus Industries called on the MDIC to intervene on its 
behalf to expedite the administrative procedure to authorize 
the company expansion on its property.  Columbus Industries 
was in the midst of expanding its manufacturing facilities in 
Sidi Bou Ali (in the Sousse area) when GOT authorities issued 
a decree freezing all sales and development on land located 
between the new Endifha Airport project and the Kantoui port 
in Sousse.  Columbus Industries' expansion and installation 
of new lines to meet client orders has been frozen due to 
this decree.  Post has engaged in advocacy to help Columbus 
Industries resolve this matter.  (Note: At the conclusion of 
the meeting, Columbus Industries informed EconOff that 
shortly after Embassy representatives' visit to his factory, 
the Sousse Governor called and gave his approval for the 
factory expansion but that it still needs to be cleared by 
the governmental agency in charge of the management of public 
lands, Agence Fonciere de l'Habitat in both the Sousse and 
the Tunis offices.  Columbus Industries also mentioned that 
STEG installed a new transformer to resolve its frequent 
power outage problems within one day of the Embassy 
Representatives' visit.  End Note.) 
 
 
------------------ 
Promises, Promises 
------------------ 
 
¶7. (SBU)  Triki thanked everyone for coming.  He said that he 
fully understood that the diplomatic community needs easy 
access to their GOT counterparts and undertook to relay the 
ambassadors' concerns to the Ministry of Foreign Affairs.  He 
also offered to be the central point of contact for any 
company experiencing administrative problems.  Triki 
concluded the townhall by giving the floor to relevant 
working-level representatives from the specialized GOT 
agencies.  These officials gave brief responses to the issues 
raised: 
 
-- The Ministry of Commerce representative said that the GOT 
is doing its best to enforce intellectual property rights and 
to eliminate counterfeit products from the market.  He opined 
that it is becoming extremely hard to distinguish the 
counterfeit product from the authentic product. 
 
-- Regarding franchises the Commerce official said that the 
draft law on franchising (copy of which Post sent to 
Department of Commerce) is still being studied within the 
ministry and has not yet been transmitted to Parliament for 
final approval. 
 
-- The representative from Tunisie Telecom said that current 
plans call for fiber optic cables for Internet service to be 
installed in the five major governorates (Tunis, Ben Arous, 
Ariana, Sousse, and Sfax) by the end of 2008 and the same 
coverage is scheduled for other governorates for 2009.  He 
said this will significantly improve Internet coverage and 
service in Tunisia. 
 
-- The representative from the Agence Tunisienne d'Internet 
(ATI) peaked the interest of the audience by announcing that 
ATI has created a "One Stop Shop" to receive all complaints 
about Internet connections and service.  He provided the 
contact information for this "One Stop Shop". 
 
-- The representative from the Ministry of Social Affairs 
said that any company having expatriate employment 
requirements should bring their request directly his ministry 
and once they prove that the requested qualifications do not 
exist on the local market, any appropriate request for 
expatriates can be quickly approved. 
 
-- The Customs representatives said that a new customs code 
to be implemented in January 2009 will authorize customs 
officials to immediately stop the import of counterfeit 
products as soon as they are brought to their attention. 
 
-- The Tunisair representative said that the airline is 
currently in discussions with Air Canada and American 
Airlines about instituting direct air travel between Tunisia 
and their respective countries.  He also pointed out that the 
main problem is that Tunisair does not currently have the 
long distance aircraft to handle such direct flights. 
 
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Comment 
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¶8. (SBU)  This town hall-style meeting was much longer and 
more animated than in previous years.  Private companies from 
all three countries were much more vocal and open about 
issues and problems they encounter while doing business in 
Tunisia.  The forum allowed each ambassador the opportunity 
to forcefully lodge a unified complaint about the GOT's 
reticence to allowing GOT representatives to meet freely and 
regularly with their respective counterparts within the 
diplomatic community.  Whether matters will change remains to 
be seen.  End Comment. 
GODEC