US embassy cable - 02AMMAN2720

C O N F I D E N T I A L AMMAN 002720 
 
SIPDIS 
 
E.O. 12958: DECL: 05/28/2012 
TAGS: ETTC, PREL, ETRD, IZ, JO 
SUBJECT: IRAQ/GRL: PASSAGE OF UNSCR 1409 CAUSES BARELY A 
RIPPLE IN JORDAN; GOJ SEEKS GREATER CLARITY ON "FAST TRACK" 
MECHANISM 
 
 
Classified By: AMBASSADOR EDWARD W. GNEHM.  REASONS 1.5 (B,D). 
 
1. (C) Since UNSCR 1409's passage two weeks ago, there has 
been surprisingly little reaction from either the GOJ or 
Jordan's business community on the new international rules 
governing Iraq trade.  Those who follow the issue have 
greeted 1409 with caution, unsure whether or not Jordan will 
benefit from the new system. 
 
2. (C)  For the past year, the GOJ's main concern regarding 
revision of Iraq sanctions has been preservation of the 
Kingdom's oil-barter arrangement outside of O-F-F.  As 1409 
does not make mention of extra-O-F-F trade, that concern 
appears -- at least for the time being -- to have subsided. 
A new area of Jordanian anxiety is more commercial than 
political: whether the Kingdom can remain competitive in an 
Iraqi market that has easier access to goods from a wider 
range of sources.  Jordanian business people, for example, 
note with worry the reported opening of the Saudi-Iraqi 
border to bilateral trade. 
 
3. (C)  On May 19, Haidar Murad, President of the Federation 
of Jordanian Chambers of Commerce, urged Jordan's industrial 
and trade sectors to enhance the competitive edge of the 
products destined for Iraq.  His statement expressed a worry 
felt in various quarters here: that while 1409 will allow 
Iraq to increase importation of civilian goods, Jordan will 
lose out to others who can win on price and/or quality. 
(Prime Minister Abul Ragheb argued again to the Ambassador 
May 20 that Jordan must sign a Free Trade Agreement with 
Baghdad to maintain its economic competitiveness with other 
Arab states that have Iraq FTAs.) 
 
4. (C) Meanwhile, Samer al-Tawil, the number two official at 
the Ministry of Trade and Industry, told Econcouns that on 
balance the resolution was good for Jordan.  Greater 
competition in the Iraqi market would, he said, help refocus 
Jordanian manufacturers on new markets, upgrading standards 
and quality in the process.  He contrasted 1409 favorably 
with proposals last year for "smart sanctions" that would, 
Tawil said, have stationed UN inspectors in Jordan and could 
have interfered with Jordan's bilateral trade protocols with 
Iraq.  He noted, however, that the volume of goods shipped 
under the bilateral protocol should decline markedly this 
year.  He estimated that the value of total goods exported in 
2002 will reach USD 150 million, down from USD 227 million in 
2001, and well short of the USD 260 million ceiling allowed 
in the protocol for 2002. 
 
5. (C) Samer Naber, the MFA's Legal Advisor, told Polcouns 
and Poloff May 23 that the GOJ's concerns at present center 
more on what 1409 does not specify rather than what it does. 
In particular, the GOJ is interested in learning more details 
of how the "fast track" mechanism noted in paragraph 4 of SCR 
1409's procedures would work.  Many of Jordan's current 
exports, Naber noted, would probably fall within the 
categories of goods governed by these procedures.  The GOJ 
and Jordanian businesspeople are looking for clarity on this, 
as well as a better understanding of how the SYG's periodic 
reports could prompt additional revisions. 
 
6. (C) Action request: Any information the Department or USUN 
could provide us to pass to the GOJ on the envisioned "fast 
track" mechanism would be very helpful. 
Gnehm