US embassy cable - 03AMMAN7181

UNCLAS SECTION 01 OF 03 AMMAN 007181 
 
SIPDIS 
 
SENSITIVE 
 
DEPARTMENT FOR NEA/ARN - A. SCHEDLBAUER 
USTR FOR SAUMS 
COMMERCE FOR NAOMI WIEGLER 
 
E.O. 12958: N/A 
TAGS: ETRD, PREL, JO, WTO 
SUBJECT: JORDAN BACKTRACKS SLIGHTLY ON PRE-SHIPMENT 
INSPECTIONS; NEW TRADE MINISTER IS OPEN TO WORKING IT OUT 
 
REF: A. AMMAN 6449 
 
     B. SAUMS-LAWLESS EMAIL (10/27/03) 
     C. LAWLESS-SAUMS TELCON (10/27/03) 
     D. SAUMS-MATALKA EMAIL (10/17/03) 
     E. USDOC 3249 (27 JUNE 2003) 
     F. AMMAN 808 --- ALL REFS NOTAL 
 
SENSITIVE BUT UNCLASSIFIED.  FOR INTERNAL USG USE ONLY. 
HANDLE ACCORDINGLY. 
 
1.  (SBU)  SUMMARY:  The Jordan Institute for Standards and 
Metrology is wedded to its new Pre-Shipment Inspection (PSI) 
scheme, called DAMAN, while attempting to address potential 
WTO-related issues of national treatment and discrimination. 
Importers complain about the system that forces their 
counterpart supplier companies abroad to pass through a 
gauntlet of paperwork, potential lab tests, and inspections. 
Importers are none too pleased about paying as much as three 
dollars per thousand dollars of goods imported for the 
privilege of inspection (or USD 38 dollars per new vehicle 
inspection).  A new complaint surfaces weekly about DAMAN's 
lack of transparency, high fees, or inconvenience to small 
and medium-sized enterprises. 
 
2.  (SBU)  SUMMARY CONTINUED:  JISM Director General Ahmed 
Al-Hindawi claims that he will soon require inspections of 
products made by home industries initially exempted from the 
regime.  At the same time, the JISM head hosted 11 
neighboring states in a workshop on an "Arab Strategy for 
Standardization" at which EU-based Bureau Veritas (AKA BIVAC) 
was prominently hailed for its progress in the DAMAN program. 
 Econoff on October 28 passed to Dr. Hindawi some preliminary 
observations on DAMAN (Ref B) which urged consideration of 
alternatives to the program.  While the architect of the PSI 
program appears concerned about the effects on free trade of 
his consumer protection scheme -- and has offered 
"clarifications" -- he has not signaled he will do more than 
make cosmetic changes at the margins.  However, when 
Ambassador raised the issue November 3 with Deputy Prime 
Minister and Minister of Industry and Trade Mohammad Halaiqa, 
the DPM indicated he understood our concerns and suggested an 
approach to review the issues.  If it were to proceed 
unchecked, DAMAN could grow in the region, and could be a 
foothold for EU-based standards as the preferred baseline, 
thus potentially disadvantaging free trade from other regions 
of the world to Jordan and other Arab states.  END SUMMARY. 
 
JISM HEAD DEFENDS DAMAN PROGRAM ... 
----------------------------------- 
 
3.  (SBU)  In the meeting on October 28 also attended by 
Washington Jordan Embassy Commercial Officer Maher Matalka, 
Hindawi reviewed a four-page summary passed to him by Matalka 
(Ref D) that was based on Reftel (A).  The background found 
in that report was accurate, Hindawi said, but a few points 
needed clarification.  First, he said, if a product could be 
shown to meet certain BIVAC-promulgated, JISM-supported, or 
international standards, then it would automatically be 
eligible for a one-year, license-type approval.  The 
inspection fees were clear, he said, and were no higher than 
0.2 percent to 0.3 percent of the FOB cost of a shipment. 
The standards required were on the BIVAC website, he averred. 
 If a company did not automatically meet the published 
standards and laboratory testing were required, he said, then 
a manufacturer in the U.S. could use any/any lab duly 
certified by any of 12 accreditation bodies in the U.S. 
Hindawi provided the list from the ILAC directory.  (Post is 
faxing a copy to the desk.)  Hindawi also stated that no U.S. 
company to date had been the subject of an unfavorable BIVAC 
"discrepancy report." 
 
4.  (SBU)  On the issue of National Treatment, Hindawi 
acknowledged that the Government of Jordan must address the 
planned exemption for national industries for the first four 
years, while JISM set up its own national labs.  "We don't 
want to be in breach," he said, in an apparent reference to 
WTO standards on national treatment.  The DAMAN program will 
be implemented on a national level, he claimed.  If 
manufacturers could not get proper testing done in Jordan 
then they would have to go to a lab in the region, he said. 
This national plan was not yet initiated, he continued.  JISM 
would have to develop a schedule and a plan for national 
implementation of DAMAN.  It would result in the issuance of 
a type-approval for one year, functioning in exactly the same 
manner as the requirement for foreign manufacturers shipping 
goods to Jordan, he stated.  Hindawi at first said the issue 
would be "dealt with very fast and implemented very soon." 
He noted that the implementation in Jordan would be at the 
cost of national industries which would need to resort to 
outside labs.  He claimed the industries had been notified 
about DAMAN through their national associations earlier in 
2003 and they "fully support" DAMAN.  (COMMENT:  It is 
unclear whether these groups gave their consent for a DAMAN 
program that would be delayed in Jordan; they may not to date 
have been informed of DAMAN's immediate implementation nor of 
the potential costs.  END COMMENT.)  In a new twist among the 
objections raised by importers, one toy importer was quoted 
in the November 2 Jordan Times complaining the scheme will 
raise toy prices and favors rich consumers;  the importer 
asked for DAMAN's simplification. 
 
...BUT A "PLAN FOR A TIMELINE" ON NATIONAL TREATMENT 
--------------------------------------------- ------- 
 
5.  (SBU)  When asked when DAMAN would be implemented in 
Jordan, Hindawi said "within the coming few weeks."  By 
November 11, JISM would at least have initiated "a plan for a 
timeline," he stated.  Commenting on other aspects of DAMAN, 
Hindawi gave assurances of equitable fees, protection of c o 
n f i d e n t i a l business information, avoidance of 
unreasonable delays, and non-discrimination and transparency. 
 Bureau Veritas had taken out a performance bond, he noted, 
and could be penalized if they did not live up to their 
contract with the GOJ.  When asked, he responded that the 
contract with BIVAC is not public information. 
 
6.  (SBU)  Hindawi held a discussion October 19 with 
representatives of General Motors and Daimler Chrysler on the 
effects of DAMAN on new car shipments en route to Jordan that 
would not meet the baseline requirements adopted by JISM (50 
standards harmonized to the EU standards, he noted).  Hindawi 
volunteered that he would be sending a letter to those car 
manufacturers noting there would be a "grace period" for U.S. 
new vehicles "until our dialogue ends."  He expected that the 
U.S. could meet a majority of the EU-based standards, in any 
event, but he also noted there might be a few exceptional 
areas, such as with U.S. cars' higher noise levels. 
 
7.  (SBU)  Econoff passed to Dr. Hindawi a list of potential 
problems with DAMAN (Ref B) which parallel many of the points 
raised with GCC states in June (Ref E).  Noting these were 
preliminary observations, some of which may be OBE by 
Hindawi's latest clarifications, Econoff stressed the need to 
address the list of concerns and to seek alternatives to 
DAMAN.  Matalka, noting that the two sides may have a few 
differences, some of which we could work out and others of 
which would remain differences between good friends, urged 
strongly that the issue not be elevated to higher levels. 
(NOTE:  Matalka was then going on to see newly installed 
Trade Minister Mohammad Halaiqa. END NOTE.) 
 
TRADE MINISTER RESPONDS TO AMBASSADOR'S CONCERN 
--------------------------------------------- -- 
 
8.  (SBU)  In a call on DPM and Trade Minister Halaiqa 
November 3, Ambassador raised the DAMAN program and expressed 
concern about its potential effects on U.S. goods imported 
into Jordan.  Halaiqa conveyed his understanding of the issue 
and said that he would speak to Dr. Hindawi.  He also noted 
that Jordan had to protect its consumers against faulty 
goods, giving the example of an untested electrical toy from 
China potentially not meeting a known  safety standard. 
Halaiqa proposed that both sides review the list of roughly 
40 product categories covered under DAMAN's four main 
headings --  toys, electronics, vehicles, and safety devices 
-- and match them against the list of specific U.S. products 
already being imported into Jordan.  With this information in 
hand, tailored solutions might be found for each product 
category, as had been done for U.S.-manufactured vehicles. 
 
9.  (SBU)  COMMENT:  Hindawi is strongly wedded to DAMAN, 
considering that he has put his name behind a GOJ contract 
with Bureau Veritas.  The French company's offer to upgrade 
all JISM laboratories over the next four years must also play 
into JISM's support for the program.  An October 22 workshop 
on an "Arab Strategy for Standardization" was attended by 
representatives of Algeria, Bahrain, Egypt, Iraq, Jordan, 
Kuwait, Libya, Palestine, Qatar, Saudi Arabia, Syria, and the 
UAE.  During the meeting, Bureau Veritas was praised for its 
"remarkable and significant strides in progress."  It would 
appear, however, that DPM and Trade Minister Halaiqa is 
committed to finding a middle way that honors Jordan's FTA 
and WTO commitments. 
GNEHM