VZCZCXRO0517
RR RUEHDBU RUEHPW RUEHSL
DE RUEHBUL #0360/01 0281543
ZNR UUUUU ZZH
R 281543Z JAN 10
FM AMEMBASSY KABUL
TO RUEHC/SECSTATE WASHDC 5156
INFO RUCNAFG/AFGHANISTAN COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC

UNCLAS SECTION 01 OF 02 KABUL 000360 
 
SIPDIS 
 
DEPT FOR SCA/RA, SCA/A, EEB 
DEPT PASS USTR FOR LILIENFELD AND KLEIN 
DEPT PASS TDA FOR STEIN AND GREENIP 
NSC FOR JWOOD 
TREASURY FOR ABAUKOL, BDAHL, AND MNUGENT 
COMMERCE FOR DEES, CHOPPIN, AND FONOVICH 
USAID/W FOR: ASIA/SCA: CAROLINE BREARLEY; AMI MORGAN 
 
E.O. 12958:  N/A 
TAGS: ETRD EAID PGOV EINV EIND AF
SUBJECT: ACTING COMMERCE MINISTER SURVEYS TRADE POLICY PRIORITIES 
 
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Summary: 
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¶1. (U) On January 26, USAID's Economic Growth Team and the Economic 
Counselor met with newly-designated Acting Minister of Commerce 
Ghulam Mohammed Aylaki to assess his support for trade 
liberalization and introduce the USG's new Trade and Accession 
Facilitation for Afghanistan (TAFA) project designed during former 
Commerce Minister Shahrani's tenure.  Acting Minister Aylaki 
welcomed and strongly supported a forward-leaning trade agenda, 
while highlighting his top four priorities at the Ministry: (1) the 
Afghanistan-Pakistan Transit Trade Agreement (APTTA), (2) WTO 
accession , (3) capacity building within the ministry, and (4) a 
vision for more comprehensive support of export promotion.  END 
SUMMARY 
 
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FIRST PRIORITY: CONCLUDE THE AFGHANISTAN-PAKISTAN TRANSIT TRADE 
AGREEMENT (APTTA) 
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¶2. (U) Acting Minister Aylaki said APTTA was his most immediate 
priority.  After the Afghan government obtains national treatment 
for Afghan trucks at the India-Pakistan Wagah border crossing, his 
country would have much improved access to India's near 
400-million-strong middle class market.  He expressed appreciation 
for guidance that USAID's TAFA Advisor provided to Afghanistan's 
negotiating team during the fifth round of talks in Islamabad in 
December 2009.  Advice centered on ensuring that concessions made or 
solutions proposed would be consistent with international standards 
and practices, in line with WTO principles.  The Acting Minister 
noted this was very helpful and requested such assistance continue. 
 
¶3.  (SBU) Aylaki expressed appreciation for USG efforts to maintain 
high-level political momentum to conclude APTTA.  Acknowledging the 
need for both sides to show flexibility, particularly on re-export 
issues, Aylaki added that he was also trying to establish a rapport 
with Pakistani Commerce Minister Fahim to help close the deal when 
the time was right. 
 
¶4.  (SBU)  Aylaki confirmed that the Afghan business delegation led 
by Afghan Chamber of Commerce and Industry Vice Chair Alkozay had 
departed for Pakistan on January 25, well ahead of February 2-5 
re-export and customs talks scheduled in Karachi.  On the way to 
Karachi, Alkozay stopped in Peshawar to explore the possibility of 
forming a joint chamber of commerce and to review cross-border trade 
issues. 
 
¶5.  (SBU) According to Pakistani press reports, ACCI Vice Chair 
Alkozay did find the Peshawri Chamber leadership supportive of a 
bilateral free-trade arrangement that would lower or eliminate 
tariffs on Pakistani-origin items such as cement, ghee, and fruit in 
return for similar tariff cuts on Afghan-origin products.   However, 
the Peshawri Chamber leadership reportedly underscored to Alkozay 
long-standing Pakistani business concerns about re-exports. 
 
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SECOND PRIORITY: ACCELERATE WTO 
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¶6.  (U) Despite Afghanistan's limited progress toward WTO accession 
since it became an Observer Member in 2004, Acting Minister Aylaki 
noted recent advances and stated that WTO accession is a top 
priority.  He observed that former Minister Shahrani submitted 
Afghanistan's Memorandum of Foreign Trade Regime (MFTR) to the WTO 
in March 2009.  The MFTR is a comprehensive document that presents a 
snapshot of a country's trading environment, key statistics and 
composition of the economy - the first step toward WTO accession. 
In May 2009, Shahrani established the WTO Unit, which now consists 
of two highly-qualified individuals, but lacks sufficient 
institutional support and authority to effectively coordinate with 
other ministries.  Afghanistan also lacks a full-time trade 
representative stationed in Geneva, Switzerland dedicated to 
follow-up on the WTO accession process and keep Kabul informed about 
WTO activities. 
 
¶7.  (U) Afghanistan is currently responding to MFTR questions 
submitted by WTO member countries, and will need to convene an 
effective inter-ministerial committee (IMC) to accelerate the work. 
USG assistance will support the Ministry in organizing the IMC, 
advise the committee on responses to the MFTR by March, and support 
committee members at the first WTO Working Party meeting slated for 
late June 2010. 
 
KABUL 00000360  002 OF 002 
 
 
 
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THIRD PRIORITY: CAPACITY BUILDING FOR GENERATIONS, OLD AND NEW 
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¶8.  (U) Aylaki highlighted the importance of training and mentoring, 
asking for help in strengthening the ministry's capabilities.  USAID 
expressed willingness to train and advise staff but stressed that 
the Ministry appoint committed counterparts.  The USG has had an 
excellent working relationship with the Director General of the WTO 
Unit, Mozammil Shinwari, who was appointed under Ex-Minister 
Shahrani.  However, more trained personnel will be required to 
support key ministerial initiatives.  Aylaki acknowledged former 
Minister Shahrani's effort to bring 30 young Afghan graduates of 
Indian universities into the Ministry, but noted "a clash of 
generations" had ensued as the more senior Civil Servants feared 
they would lose their jobs.  Alayki seemed constructive about 
engaging with his staff in overcoming this generational divide -- 
and highlighted the need to offer learning opportunities for both 
old and new generations within the ministry.  USAID requested that 
both the Ministry and TAFA advisors monitor the situation to ensure 
both achieve a good return on resources invested in this effort. 
 
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FOURTH PRIORITY: ADDRESSING PRIVATE SECTOR NEEDS 
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¶9.  (U) In the Acting Minister's meetings with private sector 
representatives -- including the handicrafts, fresh fruits, and 
carpet sectors (with carpets employing about 2.5 million Afghans) -- 
these groups requested help on overcoming trade restrictions and 
increasing support for export promotion and market access. 
Entrepreneurs noted that participation in fairs abroad was helpful 
but not sufficient in solving trade- and marketing-related problems. 
 The USG's trade and Small and Medium Enterprise (SME) development 
programs are initiating work together with the Export Promotion 
Agency of Afghanistan (EPAA) to address this issue more 
comprehensively. 
 
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COMMENT 
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¶10.  (SBU) President Karzai's first nominee for Commerce Minister in 
December 2009, Aylaki failed to garner Parliament's support; a 
second nominee withdrew his candidacy, and a third nomination will 
likely be presented soon.  Parliament is scheduled to return from 
recess on February 21 and will reportedly not approve the 
semi-annual budget until the remaining unfilled ministerial posts 
are submitted.  Should a new Minister be confirmed, Aylaki is 
expected to remain in the ministry in some capacity -- as a Senior 
Policy Advisor or Deputy Minister.  Although approaching 70 years of 
age, with limited English and educated in the era when Command 
economies ruled, Aylaki was refreshingly receptive to a proactive 
trade agenda and USG technical assistance, and could thus prove to 
be a helpful partner in advancing Afghanistan's trade agenda. 
 
RICCIARDONE