Viewing cable 05MUSCAT1463
Title: OMAN PINS TEXTILE HOPES ON FTA

IdentifierCreatedReleasedClassificationOrigin
05MUSCAT14632005-10-01 13:44:00 2011-08-30 01:44:00 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Muscat
This record is a partial extract of the original cable. The full text of the original cable is not available.
UNCLAS MUSCAT 001463 
 
SIPDIS 
 
SENSITIVE 
 
STATE FOR EB/TPP/ABT EHEARTNEY AND NEA/ARPI 
USDOC FOR ITA/OTEXA MDANDREA 
STATE PASS USTR FOR AHEYLIGER, JBUNTIN 
 
E.O. 12958: N/A 
TAGS: KTEX ECON ETRD MU
SUBJECT: OMAN PINS TEXTILE HOPES ON FTA 
 
REF: A. STATE 146213 B. 04 MUSCAT 2112 C. 04 MUSCAT 
     1748 
 
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SUMMARY 
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¶1. (SBU) Government statistics point to a continuing decline 
in Omani textile production in terms of value and employment. 
 Manufacturers are pinning their hopes on the pending 
U.S.-Oman Free Trade Agreement to at least slow this trend. 
End Summary. 
 
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STATISTICAL SNAPSHOT 
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¶2. (U) Responding to reftel A, the Ministry of Commerce and 
Industry has provided the following statistical information 
regarding Oman's textile and apparel industry for 2004 
(unless otherwise indicated): 
 
Gross industrial production (including oil products): $4.94 
billion 
Total Production capacity of textiles and apparel factories: 
74 million pieces 
Export of textiles and apparels: $137.12 million 
Ratio of textiles and apparels to total exports (excluding 
oil exports): 3.31% 
Ratio of textiles and apparels to total imports: 2.21% 
Manufacturing employment (2003): 34,891 
Employment in the textile and apparel industry (2003): 3,915 
 
¶3. (U) These statistics confirm the continuing decline in 
Oman's textile industry, as reported reftels B and C.  In 
2004, textile and apparel exports shrank approximately 30.5% 
from the $196.8 million reported in 2003.  Employment in the 
textile and apparel industry likewise continued its steady 
decline.  In 2001, we reported that 4,625 were employed by 
the textile industry, comprising 13.5% of the manufacturing 
workforce.  For 2003, that number declined to 3,915, which 
now constitutes only 11% of the manufacturing workforce. 
 
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FTA TO THE RESCUE? 
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¶4. (SBU) Omani textile manufacturers are counting on the 
upcoming U.S.-Oman Free Trade Agreement for a reversal of 
their fortunes.  Several of these manufacturers have reported 
that buyers are paying very low prices for products ordered 
as a result of the lifting of quota restrictions.  They 
remain in business, however, on the anticipation that the 
FTA's duty exemption on textiles and apparel would assist in 
their price competitiveness.  Without the FTA, manufacturers 
feel that they would not be able to maintain operations in 
Oman. 
 
¶5. (SBU) Once in force, the FTA will provide for duty-free 
treatment for textiles and apparels, promoting new 
opportunities for US and Omani fiber, yarn, fabric, and 
apparel manufacturing.  Textile and apparel products must 
contain US or Omani yarn to qualify for duty-free treatment; 
however, the Agreement will allow for duty-free treatment of 
limited quantities of textile and apparel products not 
meeting this requirement for the first ten years of the FTA. 
Oman and USTR reached agreement to allow duty-free an annual 
total quantity of 50,000,000 square meters equivalent of 
goods assembled in Oman from fabric or yarn produced outside 
of Oman.  This was a significant reduction from Oman's 
previous proposal of 57,000,000 square meters equivalent. 
 
¶6. (U) Dr. Said Amer Sultan al-Riyami, Economic Advisor for 
the Ministry of Commerce and Industry, expressed optimism 
that this temporary exemption would help sustain Oman's 
hurting textile industry.  He noted that the quota system had 
been important in nurturing the industry in the first place. 
Without quotas, al-Riyami lamented that price competition 
from Chinese manufacturers proved to be too intense for some 
Omani producers, with many Omanis losing their jobs in the 
sector.  With FTA, al-Riyami believes that Omani 
manufacturers would remain competitive, at least until the 
exemption expires. 
BALTIMORE