VZCZCXYZ0000
PP RUEHWEB

DE RUEHRB #0271/01 0921455
ZNR UUUUU ZZH
P 021455Z APR 09
FM AMEMBASSY RABAT
TO RUEHC/SECSTATE WASHDC PRIORITY 9887
INFO RUCNMGH/MAGHREB COLLECTIVE
RUEHRC/DEPT OF AGRICULTURE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEHC/DEPT OF LABOR WASHDC
RUEHGV/USMISSION GENEVA 1134

UNCLAS RABAT 000271 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EEB/TPP AND NEA/MAG 
STATE PLEASE PASS USTR FOR AUSTR CHRIS WILSON AND PAUL 
BURKHEAD 
 
E.O. 12958: N/A 
TAGS: ETRD ECON ECIN EAGR MO
SUBJECT: AUSTR WILSON SETS STAGE FOR FTA JOINT COMMITTEE 
 
REF: A. RABAT 1190 
     ¶B. RABAT 0190 
 
¶1.  (SBU) Summary:  In preparation for the May 2009 Joint 
Committee Meeting (JCM) Assistant United States Trade 
Representative for Europe and the Middle East Christopher 
Wilson met with Government of Morocco (GOM) officials and 
business representatives on March 19 and 20 to discuss 
outstanding issues related to the U.S.-Morocco Free Trade 
Agreement (FTA).  Wilson highlighted the bilateral trade 
growth, including the entry of new Moroccan products, since 
the entry into force of the FTA, and emphasized the need to 
address technical issues before the JCM through an exchange 
among experts.  Wilson's visit coincided with the release of 
a business sector-commissioned evaluation of the free trade 
agreements that Morocco has signed in recent years.  GOM 
officials and the private sector observed that Moroccan 
exports had failed to meet expectations but attributed this 
to a failure of Moroccan businesses to "enter the ring," as 
well as the lack of a comprehensive export strategy.  In 
press interviews, Wilson noted the positive achievements of 
the agreement to date, and described its potential as a 
"tool" businesses can utilize to expand their trade with the 
U.S.  End Summary. 
 
--------------------------- 
IT'S ALL ABOUT THE TOMATOES 
--------------------------- 
 
¶2.  (SBU) Foreign Trade Minister Abdellatif Maazouz, Wilson's 
official counterpart, reviewed outstanding issues with Wilson 
and the Charge d'Affaires before Wilson's more in-depth 
discussion with technical experts from Maazouz's team. 
Maazouz praised the existing healthy working relationship 
between USG and GOM officials dealing with FTA discussions. 
He assessed that the GOM, like the King, "believes in" the 
FTA and defends it, but said that Morocco, like Doubting 
Thomas, needs to see concrete results in improved trade 
opportunities and figures.  Acknowledging Wilson's statistics 
pointing to healthy growth in bilateral trade, Maazouz argued 
that public perception of the trade relationship is focused 
on key sectors with "high visibility," particularly 
agriculture.  Although trade volume in electronics or 
aerospace products may be ten times that of agriculture, 
Maazouz said, when the public hears that tomatoes from 
Morocco have been banned from the U.S., the result is a 
negative assessment of the entire relationship.  We need to 
ensure that the "clouds do not block the sunshine" of the 
"good work" we are doing on trade, he concluded.  Wilson 
noted Morocco's frustration with the perceived slow pace of 
approval for products such as tomatoes, but stressed that 
Morocco's FTA had in fact given the case file a higher 
profile relative to other pending applications.  Concerning 
technical responses such as the recent restrictions on 
Mediterranean tomatoes for disease and pest concerns, Wilson 
and Maazouz agreed that increased transparency and exchange 
of information on actions and reasons would assist in 
assuring both sides of the other's commitment to the 
agreement. 
 
--------------------------------------------- -- 
NEED PROGRESS ON WHEAT QUOTAS AND TRANSSHIPMENT 
--------------------------------------------- -- 
 
¶3.  (SBU) Wilson expressed hope that discussions on 
transshipment and wheat quotas could lead to agreement before 
the May JCM.  The disagreement on transshipment is important 
to us, he noted, and we are constrained in our ability to 
alter our interpretation because the same language is 
incorporated in FTAs with multiple countries.  Morocco is the 
only partner who differs in the interpretation, Wilson 
pointed out.  He invited the GOM to send a delegation of 
customs experts to Washington to discuss a path forward on a 
common interpretation that would avoid a restrictive 
interpretation of the rules of origin.  This visit would also 
allow discussion of a Customs Mutual Assistance Agreement as 
envisioned in the FTA, he added. 
 
¶4.  (SBU) On the issue of administration of tariff rate 
quotas (TRQs) for wheat, Wilson said the U.S. is ready to 
enter into an open, transparent discussion, but it must be 
done with urgency.  Maazouz agreed that personnel changes in 
the Moroccan team addressing the issue may have delayed 
engagement, but assured Wilson that the overall team is ready 
to engage.  He agreed that both governments want the May JCM 
to be a "signature meeting," where these issues have been 
resolved. 
 
¶5.  (SBU) Maazouz asserted that Morocco has been awaiting a 
written transshipment proposal from the U.S. for some time. 
The GOM is committed to removing anything that inhibits 
trade, Maazouz averred, but the U.S. interpretation of 
transshipment poses "risks" to Morocco, as it could allow 
falsification of origin, given the agreement does not require 
a certificate of origin.  "We don't have this problem with 
other countries," he continued, because certificates of 
origin guarantee the true provenance of goods being 
transshipped.  Regarding imports to Morocco, Maazouz 
continued, the GOM also worries that American exporters to 
Europe could use Morocco as a dumping ground for products 
that do not sell in Europe, including possibly spoiled goods. 
 The GOM believes that a time limit on transshipped goods, as 
well as a certificate of origin, could address their concerns 
while keeping the transshipment provision of the FTA, he 
concluded.  In the technical meeting following the session 
with Maazouz, GOM officials agreed to send a delegation to 
the U.S. for a technical exchange between customs officials 
after Wilson undertook to transmit a paper setting forth 
avenues for overcoming transshipment concerns.  The paper, 
Wilson specified, will not propose a different U.S. 
interpretation but would try to present practical options for 
moving forward. 
 
------------------------------------ 
AGRICULTURE, FISHERIES, AND SERVICES 
------------------------------------ 
 
¶6.  (SBU) Ministry of Agriculture representative Samia Moulay 
Benaissa expanded on Maazouz's agriculture concerns, 
highlighting the lack of a final rule permitting entry of 
tomatoes from the Souss-Massa region into the U.S., the 
timing of USDA's Animal and Plant Health Inspection Service's 
(APHIS,s) risk assessment for the export of blueberries and 
raspberries, accelerating the tariff reduction for one olive 
line item and artichokes, changing the basis for the TRQs to 
a marketing year, and the differing agricultural trade 
figures (Ref A details pending agricultural issues). 
Benaissa also requested technical assistance for the 
promotion of Moroccan agricultural products in the U.S. 
Wilson acknowledged all the work left to be done on 
agricultural issues, recommended that U.S. and Moroccan 
agricultural experts hold a Digital Video Conference (DVC) to 
address these issues before the FTA JCM in May, and requested 
the GOM to identify the new lead negotiator on agriculture 
issues since the retirement of the previous negotiator.  GOM 
officials undertook to provide us with a point of contact for 
future communications.  (Note: Ministry of Agriculture 
contacts informed AgCouns that there are imminent changes in 
the leadership positions of several agencies within the 
Ministry.  End note.) 
 
¶7.  (SBU) GOM officials told Wilson that they have reviewed 
the language in the separate letters that will be exchanged 
to revise Morocco's schedule of non-conforming measures in 
services and the fisheries line item, and hope to have the 
letters ready for signature during the JCM.  The letters are 
in good shape to be finalized in May, Wilson noted, but the 
accelerated tariff reduction request for canned sardines will 
require consultations with Congress, which may take time. 
 
------------------------------ 
CONTINUED TECHNICAL ASSISTANCE 
------------------------------ 
 
¶8.  (SBU) Ministry of Foreign Trade Secretary General El Aid 
Mahsoussi commended the high level of FTA-related technical 
assistance support the USG has provided to Morocco and 
expressed Morocco's hope for its continuation.  He added that 
the GOM is in the process of formalizing a coordinated 
support request by sector.  Wilson regarded the technical 
assistance to Morocco as a "very impressive" exhibit of 
collaboration to reinforce the FTA.  "We remain interested in 
continuing to be responsive," said Wilson, "but our resources 
are limited and we need as much precision as you can provide 
in terms of priorities."  Moroccan Customs officials 
requested engagement with U.S. Customs regarding new and 
different products, to which Wilson proposed a meeting 
between experts. 
 
¶9.  (SBU) Wilson closed the technical meeting by reiterating 
the fact that both sides need to work together to make sure 
the FTA provides the expected benefits, and noted that expert 
meetings should be the top priority for both governments to 
address issues before the JCM.  He thanked Morocco for its 
active participation in the Anti-Counterfeiting Trade 
Agreement (ACTA) negotiations.  Wilson also added that 
President Obama and the new leadership at USTR have expressed 
interest in exploring the relations between trade agreements, 
environmental policies and labor rights.  The U.S. will 
present initial ideas on how these policies are developing 
within the U.S. system at the JCM, he added.  Mahsoussi 
underscored the importance the GOM attaches to the 
environment and labor rights and welcomed U.S. proposals at 
the JCM. 
 
--------------------------------------------- ---- 
INDUSTRY AND FINANCE MINISTRIES REVIEW CHALLENGES 
--------------------------------------------- ---- 
 
¶10.  (SBU) Ministry of Industry Ahmed Reda Chami told Wilson 
and the Charge that the FTA was "good," but Moroccan 
exporters had not yet "cracked the code" to take advantage of 
its opportunities.  The FTA was not meeting expectations, but 
the responsibility for that "is more on our side."  Barriers 
to Moroccan export success included lack of knowledge of and 
connections within the U.S. market, the scale of the U.S. 
businesses (such that many Moroccan exporters could not 
fulfill U.S. orders), and a weak dollar making Moroccan 
exports uncompetitive.  Chami,s cabinet is conducting a 
study to identify sectors in which Morocco has potential to 
be internationally competitive, and also hopes to entice 
multinational firms with experience selling in the U.S. to 
locate production in Morocco to take advantage of the FTA. 
U.S. firms will also be welcome, Chami clarified, arguing 
that U.S. firms could locate production here to open new 
European and North African markets, so as not to be taking 
jobs from the U.S.  Chami said that he intends to lead an 
industrial delegation to the U.S. in the near future, but has 
delayed the visit to avoid arriving at a time when U.S. 
counterparts are preoccupied with other economic concerns. 
 
¶11.  (SBU) Wilson and the Charge reviewed Morocco,s economic 
growth and export goals with Minister of Economy and Finance 
Salaheddine Mezouar and Director of the Treasury Zohair 
Chorfi.  Mezouar, who served as an industry representative on 
Morocco,s FTA negotiation team, assessed that the FTA had 
given positive results, although the dollar weakness had made 
Europe a more attractive market to Moroccan exporters. 
However, he stated, Morocco has "gained an important partner" 
with whom exporters will have time to build relationships. 
Mezouar outlined Morocco,s macroeconomic context, and noted 
that price changes and the global economic slowdown appear to 
have reduced overseas remittances, tourism receipts, and 
phosphate export sales in January and February by 15 to 20 
percent from last year.  However, the GOM has implemented 
sector-specific support measures to help firms in difficulty, 
particularly in export sectors.  Although the GOM does not 
have the financial resources of developed countries, Mezouar 
asserted, "we,re managing well" in maintaining public 
confidence and keeping the credit markets healthy.  The GOM 
agrees, he stated, that countries must not retreat to 
protectionism in the current crisis, but must "preserve the 
model of trade" that has been built.  He expressed concern 
that each country is responding to its own problems, but that 
global trade and economic growth requires a coordinated 
response. 
 
¶12.  (SBU) Mezouar predicted that the opening of the 
Tangier-Med port and its prospects for direct shipping links 
to the U.S. east coast would assist in "orienting" Moroccan 
exporters to the U.S.  Particularly in an economic crisis, he 
mused, "there are opportunities" for a country like Morocco. 
Morocco, as a relatively small exporter to a market the size 
of the U.S., cannot be a mass market supplier, he observed, 
and must find its success in such niches.  The GOM plans to 
offer technical assistance to help exporters understand the 
U.S. market.  Overall, Mezouar stated he is not dissatisfied 
with the FTA.  Trade growth has not been as high as desired, 
but it is growing.  Chorfi agreed that U.S. foreign direct 
investment has also grown as a result of the FTA, although 
that too at a slower rate than hoped.  At the end of the day, 
Mezouar observed, the state is not the exporter, and it is up 
to the private sector to take advantage of the opportunities 
created under the FTA. 
 
--------------------------- 
EXPORT PROMOTION IS THE KEY 
--------------------------- 
¶13.  (SBU) Director General Saad Benabdallah of the revamped 
Maroc Export (formerly Center for the Promotion of Moroccan 
Exports) and his newly recruited team gave Wilson an overview 
of the structure, priorities and focus of Maroc Export (Ref 
B).  They emphasized their interest in reaching out to the 
U.S. market and establishing trade tours, 
business-to-business initiatives, and other marketing 
strategies targeting U.S. companies and investors.  Maroc 
Export's U.S. strategy will prioritize promoting agricultural 
products, textiles, clothing and leather, and niche products 
such as emerging technologies, they outlined.  "The U.S. is 
our top priority market," Benabdallah asserted, "we are 
looking for USTR and Embassy assistance in creating 
partnerships to reach out to that market." 
 
------------------------------- 
BUSINESS COMMUNITY COMMENDS FTA 
------------------------------- 
 
¶14.  (SBU) Business leaders from CGEM (Morocco's largest 
federation of enterprises) and the American Chamber of 
Commerce (AMCHAM) met Wilson in Casablanca March 20.  CGEM 
U.S.-Morocco FTA Committee President Abdelmalek Kettani noted 
that CGEM is committed to making sure Moroccan businesses 
take full advantage of the agreement.  To that end, CGEM is 
looking to establish a permanent Moroccan council in 
Washington to promote business links and to serve as an entry 
point for American investors interested in Morocco.  "If we 
want the FTA to work," Wilson responded, "these are the types 
of business links we need to establish."  Kettani also 
reviewed the conclusions of the study CGEM commissioned on 
the country's various FTAs (subject of septel). 
 
¶15.  (SBU) A representative from Sun Trading Company, a U.S. 
agricultural importer/exporter, expressed his concerns on the 
long period of time required to attain APHIS certification to 
export blueberries and raspberries to the U.S.  He added that 
his company is very interested in importing Moroccan 
blueberries, but hesitates to invest until the APHIS 
certification is complete.  Wilson acknowledged the lengthy 
certification process and agreed to take the request for 
accelerated certification back to USDA in Washington. 
Overall, however, business representatives at this meeting 
and a separate lunch with Wilson commended the FTA for 
"bolstering" business and opening new opportunities, a theme 
Wilson emphasized in several impromptu national radio and 
television appearances during his visit, and a sit-down 
interview with L'Economiste, Morocco's premier 
business-oriented French language daily newspaper. 
 
¶16.  (SBU) Post has continued to broadcast the positive 
message on the achievement of the FTA Wilson generated.  On 
March 27, the Charge, alongside Minister Chami, briefed at a 
roundtable discussion hosted by AMCHAM entitled "American 
Investment in Morocco."  He highlighted that since FTA 
implementation two-way trade has expanded (not just as a 
result of phosphates and wheat); Moroccan agricultural 
exports to the U.S. have risen steadily; U.S. investments 
have increased; and the U.S. continues to provide targeted 
technical assistance.  "The FTA offers Morocco a great 
opportunity," Minister Chami concluded, "we are trying to 
figure out exactly what needs to be done to take advantage of 
it." 
 
-------------------------- 
NOT MUCH TIME TILL THE JCM 
-------------------------- 
 
¶17.  (SBU) Comment:  As Minister Maazouz outlined for Wilson, 
the Moroccan perception of trade relations with the U.S. 
continues to be skewed based on news reports that portray FTA 
benefits as being one sided.  Wilson's visit provided a 
timely opportunity to highlight the bilateral benefit of 
FTA-derived growth to GOM officials, business leaders and the 
public at large.  To reinforce this positive focus and ensure 
a constructive outcome at the second JCM of the FTA in May, 
the Mission urges priority engagement by Washington agencies 
to address outstanding technical issues in advance of the 
JCM, including undertaking without delay the technical 
exchanges among experts proposed by Wilson.  End Comment. 
 
 
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