VZCZCXRO4063
RR RUEHROV
DE RUEHDS #1977/01 2291013
ZNR UUUUU ZZH
R 171013Z AUG 09
FM AMEMBASSY ADDIS ABABA
TO RUEHC/SECSTATE WASHDC 5873
INFO RUCNIAD/IGAD COLLECTIVE
RUEPADJ/CJTF HOA
RUEAIIA/CIA WASHINGTON DC
RUEKDIA/DIA WASHINGTON DC
RUEWMFD/HQ USAFRICOM STUTTGART GE
RUEKJCS/JOINT STAFF WASHINGTON DC
RUEHLMC/MILLENNIUM CHALLENGE CORP
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC

UNCLAS SECTION 01 OF 03 ADDIS ABABA 001977 
 
SIPDIS 
SENSITIVE 
 
DEPARTMENT FOR EEB/IFD/OMA - JWINKLER AND EEB/CBA - DWINSTEAD 
DEPT PASS TO USTR FOR PATRICK COLEMAN, CECILIA KLEIN, AND BARBARA 
GRYNIEWWICZ 
DEPT OF COMMERCE WASHDC FOR ITA MARIA RIVERO 
DEPT OF TREASURY WASHDC FOR REBECCA KLEIN 
 
E.O. 12958: N/A 
TAGS: BEXP ETRD ECON EFIN EINV PREL OVIP ET
SUBJECT: USTR KIRK VISIT HIGHLIGHTS TRADE OPPORTUNITIES 
 
ADDIS ABAB 00001977  001.2 OF 003 
 
 
SENSITIVE BUT UNCLASSIFIED; BUSINESS PROPREITARY INFORMATION; NOT 
FOR INTERNET DISTRIBUTION 
 
SUMMARY 
------- 
 
¶1. (SBU) U.S. Trade Representative (USTR) Ambassador Ron Kirk and 
his delegation visited Ethiopia from August 6-9 to highlight trade 
opportunities with the United States.  During his meeting with Prime 
Minister Meles Zenawi, Ambassador Kirk praised Ethiopia's success 
under the U.S. African Growth and Opportunity Act (AGOA), but stated 
that there is significant potential for additional growth. 
Ambassador Kirk urged Meles to continue moving forward with 
Ethiopia's World Trade Organization (WTO) accession process and 
liberalize the telecommunications and financial services sectors in 
order to reduce the cost of doing business in Ethiopia and increase 
global competitiveness.  Meles admitted that Ethiopia was working to 
improve the weak telecommunications infrastructure and acknowledged 
there would be some room for liberalization within five years. 
Regarding the financial sector, Meles said some openings have 
occurred already, but that further liberalization "will be an 
issue."  Meles echoed Ambassador Kirk's desire to move to the next 
stage of WTO accession negotiations and said he hoped to start 
bilateral talks soon.  Ambassador Kirk visited USAID-supported 
factories--Almeda Textile and Peacock Shoe--both of which are AGOA 
beneficiaries.  He also delivered the keynote address to over 80 
attendees at a business luncheon and led a press roundtable with 20 
local and international journalists.  His visit received extensive 
positive local media coverage, including print and television.  END 
SUMMARY. 
 
PM MELES ON TRADE, TELECOM, AND FINANCIAL SERVICES 
--------------------------------------------- ----- 
 
¶2. (SBU) USTR Ambassador Ron Kirk and his delegation met with Prime 
Minister Meles Zenawi to discuss trade and investment issues. 
Ambassador Kirk opened the meeting stating that Ethiopia has 
experienced success under AGOA, but that there is room for 
additional growth.  He also urged Meles to liberalize the 
telecommunications and financial services sectors while detailing 
the challenges businesses face with poor phone and internet 
connectivity.  Meles responded by stating that Ethiopia values the 
AGOA program and hopes this program will continue.  Meles admitted 
Ethiopia's telecommunications infrastructure is weak and said that 
five years down the line there will be "some room for 
telecommunications liberalization."  Ethiopia is currently working 
on improving the infrastructure and offering value-added 
telecommunications services from the private sector.  Regarding the 
financial services sector, Meles stated there has been some 
liberalization, but indicated that further liberalization "will be 
an issue" as Ethiopia moves forward with WTO accession negotiations. 
 Meles cited World Bank Chief Economist Justin Lin's comments 
included in a recent Economist magazine article as support for his 
argument that "early liberalization is not necessarily the way to 
go" with financial services. 
 
¶3. (SBU) In terms of Ethiopia's WTO accession, Ambassador Kirk 
expressed the need to move the process forward to the bilateral 
negotiations phase.  Meles stated that Ethiopia is now moving to 
that stage and he hoped to start the talks soon.  He added that 
there is no future for Ethiopia without being a part of global 
integration, but cautioned that others would need to be 
understanding regarding the pace of this integration. 
 
¶4. (SBU) Other topics of discussion included Ethiopia's foreign 
exchange crisis and recent problems in the coffee industry.  Meles 
explained the origins of Ethiopia's foreign exchange crisis starting 
with high world oil and fertilizer prices in 2008, which drove up 
inflation rates.  Meles said Ethiopia has been devaluing the 
Ethiopian Birr over time in coordination with the International 
Monetary Fund (IMF) and should be receiving an influx of foreign 
currency from the IMF within two months.  Meles disassociated the 
decline in coffee exports from the foreign exchange crisis, saying 
the coffee sector issues were a "different problem."  (Note: In 
early 2009, the Ethiopian Government seized coffee stocks from major 
exporters and revoked their export licenses claiming they were 
"hoarding" coffee since the global price of coffee was historically 
 
ADDIS ABAB 00001977  002.2 OF 003 
 
 
low. End note.)  Meles blamed the coffee sector problems on 
companies having to operate with more transparency and trading 
through the newly-established Ethiopian Commodity Exchange (ECX). 
He affirmed that Ethiopia has now "sorted out the problem" and that 
coffee exports are back on track. 
 
¶5. (U) Ambassador Kirk closed the meeting by urging Ethiopia to 
diversify its commercial interests by not only focusing on export 
sectors, but producing for the domestic market as well.  He went on 
to state that the African continent has the potential to be seen by 
the global business community like the Chinese and Indian markets 
and that East Africa will not be dynamic without Ethiopia's leading 
role.  Meles said he was "very pleased" with the Ethiopian diaspora 
and other Americans who are investing and providing assistance in 
Ethiopia right now, but welcomed additional assistance to build 
Ethiopia's capacity to manufacture goods at competitive prices. 
Ambassador Kirk told Meles that the United States would be happy to 
play a role in this type of assistance. 
 
AGOA IN ACTION: TEXTILE AND SHOE FACTORY VISITS 
--------------------------------------------- -- 
 
¶6. (SBU) Ambassador Kirk visited two AGOA beneficiaries during his 
visit: Almeda Textile Factory outside of Axum in northern Ethiopia 
and Peacock Shoe Factory in Addis Ababa.  USAID provides support to 
the Almeda Factory under their AGOA+ program as they export garments 
to the U.S. market.  Almeda is one of the few vertically-integrated 
textile to garment factories in Ethiopia, employing over 3,000 
employees.  The factory exported over USD 150,000 in sports attire 
and uniform aprons to the United States in the past year, but 
current orders from new U.S. buyers should significantly increase 
these figures.  USAID assists the Peacock Shoe Factory under their 
Fintrac partner program and the factory just shipped its first 
sample lot of men's dress shoes worth USD 110,000 to the U.S. 
market.  Peacock Shoe Factory maintains nearly 400 employees. 
 
EXTENSIVE PUBLIC OUTREACH 
------------------------- 
 
¶7. (U) The U.S. Chamber of Commerce and the newly-formed American 
Chamber of Commerce (AmCham) Ethiopia hosted a business luncheon in 
honor of Ambassador Kirk.  He delivered the keynote address to over 
80 attendees from both the public and private sectors.  Ambassador 
Kirk echoed themes from President Obama's recent speech in Ghana 
stating that change must come from within Africa.  He encouraged 
Ethiopia to take full advantage of the U.S. trade preference 
programs noting that Africa currently only exports about 60 products 
of the over 6,500 products eligible for duty-free access into the 
United States under AGOA.  Ambassador Kirk informed the crowd that 
the U.S. can assist with trade capacity issues and that it welcomed 
Ethiopia's continued progress towards WTO accession.  He closed his 
remarks stating that Ethiopia's economic reforms--especially in 
terms of the telecommunications and financial sectors--were key to 
increased trade and economic prosperity. 
 
¶8. (U) Ambassador Kirk also led a press roundtable of 20 
international and local press members and gave brief television 
interviews with state-owned ETV at the Prime Minister's Office and 
at the Peacock Shoe Factory.  His visit received extensive positive 
coverage in local English and Amharic language newspapers as a 
result of these press events.  Most local coverage focused on his 
message of Ethiopia's status as key U.S. trading partner in Africa; 
Ethiopia's success, challenges, and potential under AGOA; and the 
U.S. interest in moving the WTO accession process forward.  The 
Ambassador's clear public message of the need to liberalize the 
telecommunications and financial service sectors in order to 
increase U.S. investment in Ethiopia received particular attention 
and provides helpful top-cover for other stakeholders to press on 
these issues. 
 
DELEGATION DETAILS 
------------------ 
 
¶9. (SBU) Ambassador Kirk's delegation of ten people arrived in Addis 
Ababa for its August 6-9 visit straight from the annual AGOA Forum 
in Nairobi, Kenya.  The delegation included the Deputy USTR 
Ambassador Demetrios Marantis, Assistant USTR for Africa Florizelle 
 
ADDIS ABAB 00001977  003.2 OF 003 
 
 
Liser, Assistant USTR for Public and Media Affairs Carol Guthrie, 
USTR Director for African Affairs Patrick Coleman, U.S. House Ways 
and Means Committee Majority and Minority Trade Counsels Alexander 
Perkins and Angela Ellard, and U.S. Chamber of Commerce Africa 
Business Initiative Executive Director and Associate Director Scott 
Eisner and Danielle Walker.  The delegation also received briefings 
from the USAID-funded WTO Accession and AGOA+ teams and held a 
dinner discussion with key private sector representatives during 
their visit. 
 
¶10. (U) USTR cleared this cable. 
 
MEECE