VZCZCXRO1039
RR RUEHBZ RUEHDU RUEHGI RUEHJO RUEHMA RUEHMR RUEHPA RUEHRN RUEHROV
RUEHTRO
DE RUEHDS #2878/01 3430540
ZNR UUUUU ZZH
R 090540Z DEC 09
FM AMEMBASSY ADDIS ABABA
TO RUEHC/SECSTATE WASHDC 7070
INFO RUEHZO/AFRICAN UNION COLLECTIVE
RUCNIAD/IGAD COLLECTIVE
RUEPADJ/CJTF HOA
RUEAIIA/CIA WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUEKDIA/DIA WASHINGTON DC
RUEWMFD/HQ USAFRICOM STUTTGART GE
RUEKJCS/JOINT STAFF WASHINGTON DC
RUEHLMC/MILLENNIUM CHALLENGE CORP
RHEHAAA/NSC WASHDC

UNCLAS SECTION 01 OF 02 ADDIS ABABA 002878 
 
SENSITIVE 
SIPDIS 
 
DEPARTMENT FOR EEB/IFD/OMA - JWINKLER AND EEB/CBA - 
DWINSTEAD 
USAID FOR AFR/EA HELLYER AND DALTON 
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: EINV ETRD ECON ET
SUBJECT: DAS WYCOFF DISCUSSES TRADE AND INVESTMENT WITH 
ETHIOPIAN OFFICIALS 
 
REF: A. ADDIS ABABA 2741 
     ¶B. ADDIS 2817 
     ¶C. ADDIS 2877 
 
ADDIS ABAB 00002878  001.2 OF 002 
 
 
¶1. (SBU) Summary:  Visiting DAS Karl Wycoff and CDA Meece 
hosted a luncheon on November 19 to discuss trade and 
investment issues with Government of Ethiopia (GoE) 
officials from the trade and finance ministries.  All 
parties expressed an interest in moving forward with 
scheduling the second working party World Trade 
Organization (WTO) accession meetings.  State Minister for 
Trade and Industry Ahmed Tusa agreed to clarify the source 
of legal advice to Trade Minister Girma to wait to schedule 
the next round of talks until a permanent working party 
chair for Ethiopia has been selected.  When DAS Wycoff 
inquired about any additional liberalization plans, Finance 
Minister Sufian replied that most sectors are liberalized 
apart from telecom and mentioned that the GoE has issued a 
public tender for an international firm to overhaul the 
management operations of the state-owned telecom company. 
Further discussions involved the effects of the foreign 
exchange crunch on slowed construction progress and 
investment success stories in the flower and textile 
industries.  End Summary. 
 
LUNCH ATTENDEES 
--------------- 
 
¶2. (U) Lunch attendees included: 
 
DAS Karl Wycoff 
CDA Roger Meece 
A/DCM Kirk McBride 
Minister of Finance and Economic Development Sufian Ahmed 
State Minister of Trade and Industry Tadesse Haile 
State Minister of Trade and Industry Ahmed Tusa 
Econ/Comm Officer Kary Hintz-Tate (notetaker) 
 
MOVING WTO ACCESSION FORWARD 
---------------------------- 
 
¶3. (SBU) CDA Meece led an extensive discussion on how to 
move forward with Ethiopia's second working party meetings 
without a designated chairperson.  All expressed a desire 
to schedule the next meetings as soon as possible.  CDA 
Meece reported that the U.S. Trade Representative (USTR) 
believes we can legally move forward with a temporary 
chairperson from the WTO Secretariat and schedule the next 
meeting.  Trade Minister Girma informed USTR during his 
visit to Washington in early November that he was advised 
Ethiopia should not move forward until a permanent 
chairperson can be selected.  State Minister Ahmed agreed 
to follow up with Minister Girma to determine if this 
advice came from within the Ministry of Trade and Industry 
or the WTO Secretariat.  Once the source of the advice was 
identified, all parties agreed that we should put USTR in 
direct contact with the source to see if they can come to a 
mutual conclusion on how to proceed as quickly as possible. 
 
NO ADDITIONAL LIBERALIZATION PLANS 
---------------------------------- 
 
¶4. (U) DAS Wycoff inquired about Ethiopia's plan to take 
additional steps to liberalize its economy.  Finance 
Minister Sufian replied that it is only the telecom sector 
that remains fully under state control, as sectors such as 
energy and banking are open to private investment.  (Note: 
the banking sector is closed to foreign investment, but not 
local private investment. End Note.) He went on to say that 
the Ethiopian Telecommunications Corporation (ETC) has an 
open tender out soliciting international firms to revamp 
 
ADDIS ABAB 00002878  002.2 OF 002 
 
 
its management operations (reftel).  Minister Sufian also 
revealed that investors' main complaint about the banking 
industry is its bureaucracy.  During the discussion, the 
point was made several times that the WTO process would 
inevitably involve further discussions on liberalization 
of the economy, including these specific fields. 
 
FOREX CRUNCH SLOWS BUILDING CONSTRUCTION 
---------------------------------------- 
 
¶5. (U) A/DCM McBride raised the ongoing problem of the 
foreign exchange (forex) crunch and its effect on slowing 
many of the construction projects around Addis Ababa. 
Without forex, builders are unable to import necessary 
materials to complete construction.  Specifically, it is 
most difficult to furnish the inside of buildings without 
imported goods.  Minister Sufian recapped the genesis of 
the forex crunch, starting with the spike in fuel prices 
last year.  He also explained that the GoE's tighter 
monetary policy, which restricted the lending limits of 
banks, has also put a damper on construction progress. 
 
INVESTMENT SUCCESS STORIES 
-------------------------- 
 
¶6. (U) DAS Wycoff asked which sectors had experienced the 
most success as the result of private investment.  Minister 
Sufian and State Minister Tadesse both commented that the 
flower and textile industries were good examples.  Most 
foreign investors in the flower industry are from the 
Netherlands, India, and Israel, while the Turkish and 
Indians are active in the textile sector.  State Minister 
Tadesse mentioned a desire to augment current successful 
private investment in agro-processing, shoe production, and 
sugar production. 
 
PROPOSED ECONOMIC WORKING GROUP 
------------------------------- 
 
¶7. (U) CDA Meece proposed the idea of forming a bilateral 
"economic working group" to explore investment 
opportunities and impediments for U.S. companies in 
Ethiopia.  The working group would be comprised of various 
mission components on our side and various ministries on 
the Ethiopian side.  All positively responded to the 
suggestion.  The State Ministers agreed to follow up on 
this issue with post's economic section.  The point was 
made that this would be a concrete manifestation of our 
intent to follow up on the November 5th bilateral talks. 
 
¶8. (U) This cable was cleared by DAS Karl Wycoff. 
MUSHINGI