Cablegate: Request for Tifa with Maldives

VZCZCXYZ0003
PP RUEHWEB

DE RUEHLM #1406/01 2840904
ZNR UUUUU ZZH
P 110904Z OCT 07
FM AMEMBASSY COLOMBO
TO RUEHC/SECSTATE WASHDC PRIORITY 6968
INFO RUCPDOC/DEPT OF COMMERCE WASHDC
RUEHRC/DEPT OF AGRICULTURE WASHDC

UNCLAS COLOMBO 001406

SIPDIS

SENSITIVE
SIPDIS

DEPT PLS PASS TO USTR
DEPT FOR SCA AND EEB

E.O. 12958: N/A
TAGS: ETRD ECON ECIN EINV KISL CE
SUBJECT: REQUEST FOR TIFA WITH MALDIVES

REF: A. 1. COLOMBO 289

B. 2. BLAKE-HARTWICK-GABOR EMAILS (AUG/SEPT 07)

1. (U) This is an action request for USTR. Please see para
two.

2. (SBU) Summary and action request: Post recommends, and
seeks USTR guidance on, the start of Trade and Investment
Framework Agreement (TIFA) talks with the Government of the
Republic of Maldives (GoRM). Post supports the negotiation
of a TIFA to enhance current trade and investment between the
U.S. and Maldives, to explore new initiatives to increase
trade in products and services, to have a forum to discuss
implementation of WTO commitments, and to serve as a
positive, bilateral engagement forum with this pro-Western,
100% Islamic country. End summary and action request.

Good for Trade and Investment
------------------------------

3. (SBU) Although U.S. trade and investment in Maldives is
small when compared with the remainder of South Asia, it
continues to grow. U.S. exports have increased 18% to date
this year and are expected to reach USD 20 million (out of a
total of USD 800 million of imports) by year's end.
Well-known U.S. brands Hilton, IBM, and Coca-Cola, among
others, operate in the local market. Maldivian laws and
attitudes on investment by foreign entities are favorable,
including: no income, corporate, or property taxes
(companies pay royalties -- at most -- of 15% of net profits
or 3% gross turnover); right to 100% foreign ownership;
exemption of import duties on raw materials; legally-backed
investment guarantee; freedom to repatriate profits and
capital proceeds; long-term lease of land for large scale
projects; freedom to use foreign managerial, technical and
unskilled workers; and overseas arbitration of disputes.
Nevertheless, trade and investment lags when compared with
European and regional players.

4. (SBU) Despite a positive investment climate, U.S.
engagement in various sectors, such as insurance and banks,
ports and aviation, and telecommunications, as well as
regulatory areas such as IPR, the environment, and labor,
would lead to a more favorable atmosphere for U.S. companies
operating or hoping to operate in Maldives.

5. (SBU) Maldives joined the WTO in 1995. However, it
continues to work towards fulfillment of its WTO membership
commitments. A TIFA would serve as a forum to discuss
Maldives implementation of WTO commitments and foster faster
implementation of these commitments. For example, increased
U.S. engagement within the TIFA context would likely
encourage Maldives to finalize its WTO IPR commitments in
advance of the 2013 deadline.

Not Just for TIFA's Sake
-------------------------

5. (SBU) A TIFA would also add value as a basis for positive
bilateral engagement with the GORM to build on the goodwill
engendered by U.S. assistance for tsunami reconstruction. As
highlighted in ref a, Maldives is a moderate, pro-American
Islamic country that is responsive to U.S. advice and
supportive of U.S. diplomatic and military objectives. It is
currently as a crossroads as it determines the future and
pace of its pro-Western evolution towards democracy. As the
September 29, 2007 first-ever terrorist bombing in Maldives
demonstrates, if this process stalls or fails, Islamic
extremism will be the likely beneficiary. A TIFA forum will
not only help U.S. companies interested in taking advantage
of investment opportunities and increasing trade
opportunities, but will also serve as a forum to demonstrate
positive U.S. engagement with senior government leaders.

6. (SBU) Comment: Post maintains good relations with senior
Maldivian officials, but our bilateral relationship
nevertheless suffers from a lack of daily on-the-ground
presence. Officials are generally positive about trade and
investment with U.S. companies, and welcome the opportunity
to discuss both public and private-sector opportunities with
investors. Based on our interactions with senior Maldivian
officials, post believes Maldives would welcome the
opportunity to sit down with senior Washington officials
regularly via the TIFA format to discuss the entire range of
trade, investment, and economic issues that concern our two

countries. End Comment.
BLAKE

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