VZCZCXRO4835
OO RUEHBZ RUEHDU RUEHJO RUEHMR RUEHRN
DE RUEHTO #0606/01 1481305
ZNR UUUUU ZZH
O 281305Z MAY 09
FM AMEMBASSY MAPUTO
TO RUEHC/SECSTATE WASHDC IMMEDIATE 0326
INFO RUCNSAD/SOUTHERN AFRICAN DEVELOPMENT COMMUNITY
RUEHLO/AMEMBASSY LONDON 0390
RHEHNSC/NSC WASHDC
RUEHC/DEPT OF LABOR WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEAIIA/CIA WASHDC
RHEFDIA/DIA WASHDC

UNCLAS SECTION 01 OF 03 MAPUTO 000606 
 
SIPDIS 
 
STATE FOR EEB, L, AND AF 
STATE PLEASE PASS TO USTR 
 
E.O. 12958: N/A 
TAGS: ETRD EINV ELAB ECON EAID PGOV PREL AMGT APER
ASCH, MZ 
SUBJECT: LABOR LAW THREATENS U.S. INTERESTS 
 
REF: A. MAPUTO 493 
     ¶B. MAPUTO 381 
     ¶C. JACKSON-ROTH EMAIL 4/22/09 
     ¶D. ROTH-JACKSON EMAIL 5/12/09 
 
¶1.  SUMMARY/ACTION REQUEST:  Mozambique's new labor law sets 
complicated requirements for quotas and credential validation 
for foreigners.  U.S. companies and nonprofits along with the 
American school have requested USG advocacy as the law is 
significantly hindering their ability to invest and implement 
programs in areas where local employees with the needed 
skills are scarce.  Mission family members are no longer able 
to work on the local economy.  The GRM has so far been 
unresponsive to efforts to negotiate bilateral agreements in 
these areas.  The labor law appears to conflict with the 
U.S.-Mozambique Bilateral Investment Treaty's (BIT) articles 
on foreign worker quotas and credential validation, possibly 
abrogating the treaty.  The Embassy has aggressively pressed 
the GRM for resolution to the visas issue, noting that USG 
assistance programs cannot be implemented without foreign 
specialized labor.  We request Washington guidance soonest on 
whether the BIT has been violated and whether the BIT can be 
used to resolve the growing number of labor-related concerns. 
 END SUMMARY/ACTION REQUEST. 
 
¶2.  Mozambique's  labor code (enacted on December 30, 2008) 
requires that, depending on the size of the organization, no 
more than five to ten percent of workers can be foreigners 
(ref A).  Any requests for additional foreign workers above 
the quota must be reviewed on a case-by-case basis.  All 
foreign employees must have their education and professional 
credentials validated by the Ministry of Labor before being 
approved for work visas.  The Ministry of Labor's 
bureaucratic process to validate and approve cases has been 
so slow that it can often take up to 12 months before 
finalization.  In many instances, the applicant ultimately 
withdraws the application and seeks employment elsewhere. 
Furthermore, in cases where no local educational/professional 
equivalencies exist, applications have been denied outright. 
 
----------------------------------- 
U.S. Companies Request USG Advocacy 
----------------------------------- 
 
¶3.  The AmCit CEO of Opportunity Bank, a U.S.-owned and 
supported financial institution, recently had his work visa 
denied because the application put the company's number of 
foreign workers above quota.  The AmCit CEO of Houston-based 
Anadarko Petroleum's Mozambique subsidiary initially had his 
work visa denied because no local equivalent to his 
professional credentials as a petroleum engineer exists. 
While his application may be eventually approved upon 
appeal--Anadarko has not yet hit its quota limitation--the 
CEO expressed concern that when exploratory drilling 
commences later this year, the necessary American workers 
(petroleum technicians and geophysicists) will not be 
approved, even though there are no Mozambicans who are 
qualified in these areas.  Both companies have now formally 
requested USG guidance and advocacy.  Other U.S. companies 
have informally requested guidance as well. 
 
--------------------------------------------- - 
U.S. Nonprofits and School Ask for USG Support 
--------------------------------------------- - 
 
¶4.  U.S.-based nonprofits are also affected.  As a group, 
more than ten U.S. NGOs have asked for USG support, and some 
have begun moving operations across the border into South 
Africa or are considering complete withdrawal.  For example, 
John Snow International (a key USAID implementing partner) 
has lost four expat staff in the past month, and is expected 
to lose one more soon.  These staff include a PhD biochemist 
and the software engineer who wrote the logistics program 
used by the Ministry of Health to coordinate and deliver 
anti-retroviral drugs throughout the country--skill sets not 
available in-country.  Another implementer of USG assistance, 
Vanderbilt University, has had nine foreign medical doctors, 
nurses, and other allied health experts suspended or denied 
work permits in recent weeks.  Other nonprofits also indicate 
that foreign medical doctors have been denied 
visas--especially worrisome in a nation with one of the 
lowest ratios of doctors per capita in the world.  In all, 
 
MAPUTO 00000606  002 OF 003 
 
 
more than 80 expatriate professionals have been denied work 
visas for U.S. nonprofits in Mozambique, thus significantly 
hindering U.S. investment in the country's social and health 
systems. 
 
¶5.  The Director of the American school informed the Charge 
in early May that by the end of the school semester, 90 
percent of the expatriate teachers there will no longer have 
valid work visas.  Of all the applications pending before the 
Ministry of Labor for validation of academic credentials, 
only three have been approved, in spite of a significant 
dearth of English-speaking teachers in the country.  The 
director indicated that teachers would be effectively 
relegated to working illegally at the beginning of the new 
school year, a factor negatively impacting teacher morale and 
recruitment efforts.  While the school has not contemplated 
closure, any impairment in the school's operations  would 
reduce Mozambique's attractiveness to U.S. (and other) 
investors (and U.S. Embassy personnel) with families.  The 
GRM has not responded to repeated Embassy efforts to engage 
on a bilateral agreement to clarify the school's status. 
 
----------------------------------- 
Dependents of Diplomats Cannot Work 
----------------------------------- 
 
¶6.  The labor code also states that dependents of diplomats 
who enter the country on diplomatic visas are expressly 
prohibited from working in Mozambique, and a literal reading 
of the text indicates that the prohibition applies even to 
work in diplomatic missions.  While the latter point is 
likely unenforceable, at this time no/no USG dependents have 
been able to find employment on the local economy since 
implementation of the law.  The GRM and the USG do not have a 
Bilateral Work Agreement (BWA) in place, and it would appear 
that a de facto BWA is also no longer practicable.  We have 
updated post's FAMER to reflect this situation.  Repeated 
Embassy efforts to engage the GRM on a new BWA have been 
ignored, even though we have emphasized that there could be 
negative consequences for the Mozambican missions in the 
United States. 
 
------------------------------------------ 
Conflict with Bilateral Investment Treaty? 
------------------------------------------ 
 
¶7.  The U.S.-Mozambique Bilateral Investment Treaty (BIT) 
entered into force on March 3, 2005 after ratification by the 
United States Senate and the Mozambican Council of Ministers. 
 Article 1 gives a broad definition of the types of entities 
that are protected by the treaty, which would appear to 
include for-profit companies as well as non-profit 
organizations and schools.  Article 7 also states that U.S. 
entities are exempt from quotas on the number of U.S. workers 
and from validation requirements of education and 
professional credentials.  This would suggest a conflict 
between the labor law and the BIT (ref C).  Local lawyers 
informally suggest to Emboffs that in Mozambique, 
international treaties do not pre-empt national law, and that 
in this case it is possible that the labor code may abrogate 
the BIT. 
 
--------------------------------- 
Embassy Aggressively Pressing GRM 
--------------------------------- 
 
¶8.  The Charge and other officers in the mission have raised 
these concerns at all levels of the GRM, including with 
Ministers of the Presidency, Foreign Affairs, Commerce, 
Education and Labor, calling for prompt resolution of visa 
issues for foreign workers.  The Charge has specifically 
noted in these meetings that the labor law is having the 
unintended effect of hindering foreign investment and also 
complicating the delivery of international donor assistance 
(refs A & B).  We have also shared copies of the BIT with 
ministries, and have urged that it be used as a mechanism to 
quickly solve these difficulties.  To date, we have received 
no substantive response on whether there is GRM willingness 
to use the BIT in this way. 
 
--------------------------------------------- ----- 
COMMENT/ACTION: U.S. Assistance, Investment Harmed 
 
MAPUTO 00000606  003 OF 003 
 
 
--------------------------------------------- ----- 
 
¶9.  Clearly the intent of the labor law is to protect 
Mozambican workers and create new employment opportunities 
for them.  However, U.S companies and entities are unable to 
hire locally for specialized skill sets in health, 
engineering, finance and education.  GRM refusal of work 
visas for American professionals in these areas is a 
significant obstacle to investment.  Furthermore, USG donor 
assistance--clearly an investment in Mozambique's development 
and its economy--is also at risk, as U.S. and local entities 
that administer USG funds cannot hire the needed 
professionals to implement key programs, especially in 
health.  We ask that State and USTR review the text of 
Mozambique's labor law (sent ref D) and advise whether the 
BIT has been abrogated, and if not, whether it can be used to 
resolve this issue.  We believe the BIT represents the most 
promising short-term solution for U.S. companies, non-profits 
implementing USG assistance and the American school.  The BIT 
is an agreement that has already entered into force, and one 
that the GRM has reiterated its commitment to 
respecting--most recently on March 24 in Washington during 
Trade and Investment Framework Agreement discussions with the 
U.S. Trade Representative. 
 
Chapman 
Chapman