VZCZCXRO0210
RR RUEHDE
DE RUEHMS #0084/01 0321242
ZNR UUUUU ZZH
R 011243Z FEB 09
FM AMEMBASSY MUSCAT
TO RUEHC/SECSTATE WASHDC 0091
INFO GULF COOPERATION COUNCIL COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEHMS/AMEMBASSY MUSCAT
RUEHRC/DEPT OF AGRICULTURE WASHINGTON DC

UNCLAS SECTION 01 OF 03 MUSCAT 000084 
 
SIPDIS 
SENSITIVE 
SBU DELIBERATIVE PROCESS 
STATE PASS TO USTR JBUNTIN AND USDOC FOR THOFFMAN 
 
E.O. 12958: N/A 
TAGS: PREL ECON EFIN EINV ETRD KMPI MU
SUBJECT: FTA HIGH ON OMANI AGENDA, BUT MORE U.S. ASSISTANCE NEEDED 
 
REF: a) MUSCAT 38 
 
SUMMARY 
 
 
 
¶1.  (SBU) Since its January 1 implementation, the U.S.-Oman Free 
Trade Agreement (FTA) continues to capture the attention of the 
regional business community as well as the Omani government.  Post 
has experienced a significant increase in outside inquiries and 
comments regarding both the FTA and new Omani regulations adopted 
for its entry into force.  Although Oman's governmental agencies 
are attempting to implement FTA requirements, they struggle with 
enforcing the finer points of the agreement and lack the 
institutional knowledge and resources to effectively address 
FTA-related issues.  The government remains eager to assist Omani 
businesses to take advantage of the FTA, however, and has 
accordingly requested U.S. technical assistance in a number of 
subject areas, particularly customs.  Oman also hopes to partner 
with the U.S. to develop FTA promotional materials.  End Summary. 
 
 
 
ENTHUSIASM BUT SOME BUMPS ON INITIAL FTA IMPLEMENTATION 
 
 
 
¶2.   (SBU)  Among the copious questions and feedback post has 
received on trade-related matters since the FTA's entry into force 
are complaints from several prominent Omani companies that  Royal 
Oman Police (ROP) Customs officers have continued to charge tariffs 
on certain U.S. imports.  The Ministry of Commerce and Industry 
(MOCI) has taken responsibility for these mistakes, claiming that 
it did not appropriately inform Customs of FTA implementation 
because it was waiting for the U.S. Trade Representative's Office 
to directly confirm that former President Bush had signed the FTA 
proclamation.  MOCI has publicly stated, and assured econoff 
privately, that it will refund any tariffs erroneously charged and 
has affirmed that all government ministries are aware that they 
have a responsibility to uphold all aspects of the FTA. 
 
 
 
¶3.  (SBU)  Minister of Commerce and Industry Maqbool bin Ali Sultan 
kicked off the FTA's entry into force by holding an information 
session in Muscat on January 8 for local businesspeople.  The event 
was held at the Oman Chamber of Commerce and Industry (OCCI) by 
invitation only and included a few local press representatives. 
[Note:  Econoff received a verbal invitation to attend the event 
which was subsequently withdrawn.  End Note.]  According to Khalid 
al-Shuaibi, MOCI's Director General of Organizations and Commercial 
Relations, the government plans to sponsor additional FTA 
information sessions in both Arabic and English.  One private 
business contact reported that MOCI handed out the same 
informational booklet on the FTA used since 2006 and that the 
session did not directly address how Omani businesses could take 
advantage of the agreement.  On January 27, Minister Maqbool was 
called before the Majlis al-Shura (the directly elected lower house 
of Oman's bicameral advisory body) to address questions and 
concerns on how the FTA and WTO membership will impact small and 
medium sized enterprises (SMEs) in Oman.  While some of the session 
aired on television, most of the Minister's meeting with the Majlis 
was not made publicly available. 
 
 
 
MOVING FORWARD 
 
 
 
¶4. (SBU)  Econoff met with al-Shuaibi on January 20 to discuss 
plans to market and educate local and regional businesses on the 
FTA.  Al-Shuaibi said Oman was very interested in teaming with U.S. 
counterparts to develop promotional packets that contain both 
written materials and a DVD with information on how to do business 
in the U.S., how to capitalize on the opportunities afforded by the 
FTA, and other FTA-related subjects including relevant laws and 
regulations.  Econoff told al-Shuaibi and Khalfan al-Rahbi, MOCI 
Director of Organizations and Conferences, that the Embassy had 
endorsed a similar idea to USG agencies in Washington and would 
accordingly look into ways that the U.S. could work with MOCI and 
OCCI on a joint FTA promotion project.  Al-Shuaibi responded 
enthusiastically and noted that it would be "impossible" for Oman 
to put something together without input from the U.S. and the 
private sector.  [Note:  Post forwarded a Business Facilitation 
Incentive Fund proposal to Washington on January 14 via reftel 
 
MUSCAT 00000084  002 OF 003 
 
 
 
requesting funds for an FTA virtual tool kit with hard copy 
informational materials.  End Note.] 
 
 
 
¶5.  (SBU)  According to al-Shuaibi, Oman would like to focus FTA 
promotion efforts on specific business sectors identified in a 
study conducted by Booz Allen Hamilton (and funded by the Middle 
East Partnership Initiative) that addressed how Oman could take 
maximum advantage of the FTA.  He also mentioned that Oman is 
planning a trade "road show" in the U.S., but agreed that it would 
most likely be postponed until 2010 due to the current global 
financial crisis.  Al-Shuaibi is planning to travel to Bahrain and 
Jordan in March 2009 with MOCI Economic Expert and Trade Negotiator 
Dr. Saeed al-Riyami to seek advice from Bahraini and Jordanian 
counterparts on how Oman can better promote the FTA internally and 
externally. 
 
 
 
REQUESTS FOR U.S. ASSISTANCE 
 
 
 
¶6.  (SBU)  Noting the need for FTA implementation assistance, 
al-Shuaibi stated that Oman would like to send 14 ROP Customs 
officers to the U.S. for FTA-related customs training, possibly in 
conjunction with the Department of Commerce's Commercial Law and 
Development Program (CLDP).  Al-Shuaibi explained that Omani 
Customs required further training on import/export documentation 
procedures and inquired whether the U.S. could help Oman migrate 
its present hand-written customs system to an automated one.  "Oman 
lost points in the most recent analysis by the World Economic 
Forum's Global Competitiveness Report because its system is not 
automated," he remarked. 
 
 
 
¶7.  (SBU)  In addition to customs training, MOCI officials 
previously indicated that Oman may require USG assistance in the 
area of intellectual property rights due to a lack of resources and 
technical expertise to implement specific sections of the FTA. 
Al-Shuaibi pointed out that there will likely be further discussion 
on these technical weaknesses at the first U.S.-Oman Joint FTA 
Committee meeting, which he hopes will be held sometime in the 
second quarter of 2009.  He reported that the government is 
currently deciding who will sit on the committee for Oman and 
promised to forward the chosen names to the Embassy when available. 
 
 
 
 
BUSINESS COMMUNITY REACTION 
 
 
 
¶8.  (SBU) Since its entry into force, the FTA has received positive 
press and generally has been welcomed by Oman's business community. 
However, in addition to voicing complaints on delays in abolishing 
tariffs on some U.S. goods, local businesspeople are concerned that 
they may encounter other procedural problems, particularly in the 
area of intellectual property rights, as they conduct business 
under new FTA rules.  The CEO of Reem Batteries and Power 
Appliances Company, part of the OMZEST Group owned by the Sultan's 
personal advisor Dr. Omar Zawawi, told econoff that some 
businesspeople still harbor reservations on whether the FTA is good 
for Oman because the country has little to export apart from oil 
and gas.  They also fear that the Sultanate may become too reliant 
on the U.S. for goods and services.  The CEO further noted that 
concerns that only large Omani companies would benefit from the FTA 
were mollified by the continued granting of a ten percent rate 
preference to SMEs by Oman's Tender Board when awarding government 
contracts.  [Note:  Comments from post contacts suggest that Oman's 
Tender Board may apply too widely permitted preferences for Omani 
SMEs in the government procurement process.  End Note.] 
 
 
 
NUSACC TRIES TO GET ON BOARD 
 
 
 
¶9.  (SBU)  Econoff met with David Hamoud, President and CEO of the 
National U.S.-Arab Chamber of Commerce (NUSACC) on January 21. 
Hamoud was in Muscat on a brief visit to discuss how NUSACC could 
provide assistance to Oman's business community and government on 
 
MUSCAT 00000084  003 OF 003 
 
 
 
FTA implementation and enforcement.  According to Hamoud, Oman 
specifically requested NUSACC's assistance with training on customs 
and SME development related to the FTA, while NUSACC offered help 
with training on standards and conformity assessment.  Hamoud also 
expressed interest in sponsoring an Omani trade delegation to the 
U.S. to conduct a "road show" during the year.  Econoff informed 
Hamoud that the USG is already providing FTA-related assistance to 
Oman, including on customs and SMEs, and asked him to keep her 
informed of any further NUSACC outreach to Oman. 
 
 
 
COMMENT 
 
 
 
¶10.  (SBU)  Although MOCI and other government offices are 
energized for next steps on FTA promotion, Oman has limited 
resources and technical knowledge to enforce the FTA quickly and to 
guide relevant agencies through the new procedures and regulations 
accompanying the FTA's implementation.  With only two designated 
MOCI officials knowledgeable enough to lead promotional and 
enforcement efforts, in addition to having responsibility for 
responding to FTA-related inquiries, businesspeople may wait a long 
time to get answers on their FTA questions from the Omani 
government.  Moreover, according to al-Riyami, negotiations with 
other countries on potential new trade agreements with Oman may 
siphon off expertise and attention needed to solidify and resolve 
problems in the enforcement of the U.S.-Oman FTA.  Post accordingly 
recommends that the Department favorably consider Oman's requests 
for assistance on both FTA promotion and implementation.  End 
Comment. 
GRAPPO 
 
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