US embassy cable - 04AMMAN783

C O N F I D E N T I A L AMMAN 000783 
 
SIPDIS 
 
PASS TO USTR - A/USTR CATHERINE NOVELLI 
 
E.O. 12958: DECL: 01/29/2014 
TAGS: ETRD, PREL, IS, JO 
SUBJECT: JORDAN, ISRAEL SEEK QIZ CONTENT OF EIGHT PERCENT 
FOR AN INDEFINITE PERIOD 
 
REF: AMMAN 686 
 
Classified By: DAVID M. HALE, CDA.  REASONS 1.5 (B.D) 
 
1. (U)  This is an action cable.  See paras 7 - 9. 
 
2. (SBU)  Government of Jordan (GOJ) Deputy Prime Minister 
and Minister of Industry and Trade January 29 delivered a 
package to the Ambassador containing a letter addressed to 
USTR Zoellick informing the USG that Israel and Jordan have 
reached an agreement on the specified Israeli content in 
products manufactured in Qualifying Industrial Zones (QIZs) 
under the FTA.  In an agreed letter to be signed by both DPM 
Halaiqa and Vice Prime Minister Ehud Olmert, they state that 
they will be "maintaining the 8 percent Israeli content."  No 
period for the length of the agreement is stated.  GOJ 
Ministry of Industry and Trade has delivered to Israeli 
counterparts in Tel Aviv via express courier the letter 
Halaiqa has signed; VPM Olmert is expected to initial the 
letter as early as January 30.  (Embassy is faxing copy of 
the draft letter from Halaiqa and Olmert to NEA/ARN and 
Embassy Tel Aviv.) 
 
INDEFINITE AGREEMENT LIKELY TO HOLD 
----------------------------------- 
 
3. (C)  Amer Hadidi, a senior MOIT official, explained 
January 29 that the agreement is indefinite in length by 
mutual agreement.  He stated that both sides are satisfied 
with the agreement on the technical trade terms.  Because of 
"turbulence in the political relationship," the agreement 
will probably remain unchanged, he added.  He said that he 
did not foresee either side returning to the negotiating 
table on QIZ content anytime soon, if at all. 
 
4. (SBU)  The letter requests that USTR Zoellick approve the 
proposal.  (NOTE:  This follows the terms of the U.S.-Israeli 
Free Trade Agreement Law, as amended in 1996, which governs 
this QIZ provision.  END NOTE.)  "It is our intention that it 
(the agreement) will enter into force after your approval," 
the letter to USTR concludes. 
 
PLANS TO CONTINUE QIZ'S WITHOUT INTERRUPTION 
-------------------------------------------- 
 
5. (C)  Hadidi said that a GOJ draft version of the letter 
had proposed entry into force "immediately" after USTR's 
approval.  However, the Israelis asked to drop the reference 
to "immediately", explaining that the GOI would have to take 
one final step of reviewing and approving any USTR-sanctioned 
agreement.  Hadidi confirmed that Jordan is prepared to 
continue with the 8 percent Israeli content specification 
without interruption. (COMMENT: Given the current political 
irritants, if USTR is prepared to approve, any USG action to 
quickly finalize the agreement is strongly recommended.  END 
COMMENT.) 
 
6. (SBU)  In the meantime, manufacturers have been awarded 
QIZ product approvals that last 12 months;  there is little 
prospect QIZ operations will be severely hampered.  In 
addition, January has seen an uptick in the number of QIZ 
products approved, an indication that QIZ factories have been 
making contingency plans to keep their production lines going. 
 
ACTION REQUESTS: 
---------------- 
 
7.  (SBU)  FOR TEL AVIV:  Hadidi stated that the GOJ has 
asked the GOI to forward the signed letter to Embassy Tel 
Aviv for final transmission to Washington.  The GOJ will be 
on an extended Eid holiday until February 8, and would not be 
able to follow through in a timely fashion.  To avoid the 
uncertainties of a lapsed QIZ Israeli content agreement, we 
request that Embassy Tel Aviv follow up with Israeli 
counterparts immediately, and secure a signed letter as soon 
as possible for transmission to Department. 
 
8.  (SBU)  If USTR approves this agreement, post requests 
that Embassy Tel Aviv press for the GOI's final approval of 
the USTR-sanctioned deal as soon as possible. 
 
9.  (SBU)  FOR DEPARTMENT:  Embassy strongly recommends 
USTR's immediate approval of this agreement and urges 
Department to use all means possible to secure and send a 
reply soonest. 
HALE