VZCZCXRO2948
RR RUEHBZ RUEHDU RUEHJO RUEHMR RUEHRN
DE RUEHTO #0969/01 2840937
ZNR UUUUU ZZH
R 100937Z OCT 08
FM AMEMBASSY MAPUTO
TO RUEHC/SECSTATE WASHDC 9441
INFO RUCNSAD/SOUTHERN AFRICAN DEVELOPMENT COMMUNITY
RUEHLO/AMEMBASSY LONDON 0257
RHEHNSC/NSC WASHDC
RUEAIIA/CIA WASHDC

UNCLAS SECTION 01 OF 02 MAPUTO 000969 
 
SENSITIVE 
SIPDIS 
 
DEPT PLEASE PASS TO USTR BILL JACKSON 
 
E.O. 12958: N/A 
TAGS: ETRD ECON EINV EFIN EAGR ENRG EPET SENV MZ
SUBJECT: USTR REINVIGORATES TIFA WITH MOZAMBIQUE 
 
¶1.  (SBU)  SUMMARY:  In a September 28 to October 1 visit, 
USTR Director for African Affairs Bill Jackson met with a 
variety of government and private sector stakeholders in 
Maputo to reinvigorate the bilateral Trade and Investment 
Framework Agreement (TIFA).  The second high-level Trade and 
Investment Council meeting under the TIFA is now tentatively 
scheduled to take place in Washington in the first quarter of 
¶2009.  Jackson heard private sector concerns about Mozambican 
exporters' inability to meet the product standards and 
volumes required to export to the U.S.  He also heard 
frustration from the private sector over the slow progress of 
reforms to the business climate.  U.S.-based NGO TechnoServ 
provided a more positive perspective on export potential for 
wood and wood products as well as tropical fruits. 
Continuing bilateral dialogue through the TIFA process could 
streamline the Government of Mozambique's (GRM's) economic 
development strategy in relation to trade and strengthen 
AGOA-related trade and investment in the future.  END SUMMARY. 
 
--------------- 
USTR TALKS TIFA 
--------------- 
 
¶2.  (SBU)  In his late-September visit to Maputo, Bill 
Jackson explained that USTR interest in Mozambique and the 
USG assistance program there derives from its general 
objective of helping developing countries, especially LDCs, 
to use trade to boost economic growth and development as well 
as the country-specific objective of strengthening 
U.S.-Mozambique trade and investment relations under the 
TIFA.  The U.S. has just 10 TIFAs with sub-Saharan African 
countries and regional organizations, agreements that Jackson 
explained we typically undertake only with significant 
trading partners and those, such as Mozambique, in which the 
U.S. sees particular potential for trade-driven economic 
growth. 
 
------------------------------------ 
MINISTER AGREES TO NEXT TIFA MEETING 
------------------------------------ 
 
¶3.  (SBU)  In a September 30 meeting with Minister of 
Industry and Commerce Antonio Fernando, the Charge and 
Jackson pushed for a reinvigoration of the TIFA process as a 
means to help Mozambique generate greater economic growth and 
development through trade.  Minister Fernando agreed to 
commit new energy to the TIFA process and agreed in principle 
to lead a high-level GRM delegation to Washington for a Trade 
and Investment Council meeting in the first quarter of 2009. 
Jackson in turn agreed to work with Washington agencies to 
develop a draft agenda by the end of November at which point 
a specific date for the 2009 Trade and Investment Council 
meeting will be finalized. 
 
-------------------------------------- 
MCC/MCA TO SUPPORT EXPORTABLE PRODUCTS 
-------------------------------------- 
 
¶4.  (SBU)  Millennium Challenge Account (MCA) Mozambique 
Deputy Director Emilio Muchanga, told Jackson that the 5-year 
$507 million Millennium Challenge compact focuses in part on 
supporting exportable products, as well as expanding 
trade-enabling infrastructure in northern Mozambique. 
Muchanga voiced concerns that Mozambican products cannot meet 
high U.S. market standards and volume requirements, calling 
for technical assistance, particularly in SPS and standards 
certification, for Mozambican products.  Jackson suggested 
that Mozambique look to capture niche markets in the U.S. and 
noted that AGOA provides incentives for Mozambique to move up 
the product value chain. 
 
------------------------------------- 
BUSINESS COMMUNITY DOWN ON AGOA TRADE 
------------------------------------- 
 
¶5.  (SBU)  Jackson met with members of the 
Mozambican-American Chamber of Commerce who voiced similar 
concerns about standards and volumes of exports required to 
compete in the U.S. market.  The business community indicated 
that Mozambique would need significant trade capacity 
building assistance (TCB) in order to take advantage of AGOA. 
 Kekobad Patel of the business association umbrella group CTA 
told Jackson that Mozambique exported very few value-added 
products due to weak internal capacity, a restrictive 
business environment, and high transportation costs.  Patel 
warned that even tariff integration into SADC will be 
challenging, as Mozambique has little political space to 
 
MAPUTO 00000969  002 OF 002 
 
 
diverge from the South African trade agenda.  Patel also 
expressed frustration at the GRM's inability to accelerate 
reform of the business environment. 
 
--------------------------------------- 
TECHNOSERV ON AREAS OF EXPORT POTENTIAL 
--------------------------------------- 
 
¶6.  (SBU)  Jake Walter, country director for the nonprofit 
organization TechnoServ, provided a more optimistic 
perspective on the potential for export-driven economic 
growth in Mozambique. Waller cited a recent FAO study which 
indicates that, with its vast tracts of arable land (89 
million acres of arable land of which only 10 percent is 
currently being used), Mozambique has the potential to plant 
seven million acres of eucalyptus and pine plantations, 
potentially generating $10 billion in revenues and creating 
300,000 jobs.  This would make Mozambique the second largest 
wood and wood product producer in Africa.  Waller also 
believes that northern Mozambique shows great potential for 
tropical fruit exports, with U.S. company Chiquita planning 
to begin planting 7,400 acres in Nampula province next year, 
with an eye on duty-free importation of bananas to the EU 
market via the Everything But Arms (EBA) initiative by 2010. 
This consistent export of bananas should provide sufficient 
shipping infrastructure from the Port of Nacala to allow 
tropical fruit exports to the Middle Eastern and Indian 
markets.  According to Waller, there is also great potential 
for export of mangoes to India to meet off-season demand 
there. 
 
------------------------------------------- 
COMMENT: TIFA - OPPORTUNITY TO PUSH REFORMS 
------------------------------------------- 
 
¶7.  (SBU)  Post is focused on using the TIFA as an organizing 
mechanism to streamline both the Mission's and the GRM's 
economic development strategies with respect to trade, and we 
are pressing the the GRM to involve the private sector more 
fully in its strategic planning.  It seems clear that 
Mozambique can use trade more effectively to boost economic 
development, eradicate poverty, and meet Millennium 
Development goals.  The Mission will support USTR's goals of 
using the TIFA process to cultivate some  AGOA success 
stories for Mozambique and support GRM efforts to push 
through reforms to improve the business and investment 
climate. 
Amani