US embassy cable - 05AMMAN4297

UNCLAS SECTION 01 OF 02 AMMAN 004297 
 
SIPDIS 
 
SENSITIVE 
 
STATE PASS TO USTR 
 
E.O. 12958: N/A 
TAGS: ETRD, PREL, KTIA, BEXP, JO 
SUBJECT: NEW CARS REMOVED FROM DAMAN INSPECTION PROGRAM 
 
REF: A. AMMAN 2850 
 
     B. 04 USDOC 05774 
 
SENSITIVE BUT UNCLASSIFIED.  FOR USG USE ONLY. 
NOT FOR DISSEMINATION ON THE INTERNET. 
 
1.  (SBU)  SUMMARY:  A Jordan standards official announced 
May 31 the immediate removal of new passenger vehicles from 
the list of products covered by its DAMAN product conformity 
program, a story covered by most of Jordan,s Arabic-language 
dailies on June 1.  This is the first in what post expects to 
be a series of GOJ moves to address USG concerns (Ref B) and 
dismantle trade barriers raised by the DAMAN program.  It 
appears that GOJ words are finally turning into deeds, though 
a review of the fine print is in order.  Minister of Industry 
and Trade Sharif Zu'bi is directly responsible for ordering 
this rapid action, just a sampling of the private-sector 
oriented, market-based reforms he is attempting to bring to 
the trade ministry and to the investment climate in Jordan. 
The announcement is a breath of fresh air from a new 
government committed to decisive action on USG concerns that 
former governments only acknowledged.  END SUMMARY. 
 
Used Cars Still Covered 
----------------------- 
 
2.  (SBU)  Jordan Institute of Standards and Metrology (JISM) 
Director General Yaseen Khayyat May 31 held a press 
conference to announce the immediate withdrawal of new 
passenger cars from the DAMAN program.  Khayyat later told 
Acting Econ/C that the change had been approved by the Prime 
Minister and was to be effective immediately.  (NOTE: The 
PM,s decision was at the behest of the Minister of Industry 
and Trade, who issued the final directive.  END NOTE.) 
Khayyat noted that used cars would continue to be covered by 
DAMAN and it appears that only new cars in the current model 
year would be excluded from DAMAN.  Product categories still 
covered by DAMAN include electrical appliances, electronic 
devices including cellular telephones and IT equipment, 
children,s toys, and personal protection equipment. 
(COMMENT:  Post will continue to follow up on a number of 
unresolved issues with what remains of the DAMAN program, 
such as why a new vehicle is only new in the "model year". 
END COMMENT.) 
 
3.  (SBU)  Khayyat explained that this was the first in a 
number of changes to DAMAN that JISM was contemplating.  (The 
changes  were driven by a May 24 meeting with Trade Minister 
Zu'bi, in which Zu'bi commissioned the JISM staff to come up 
with  creative solutions to the trade barrier problem.) 
Khayyat added that he also explained to the press that DAMAN 
would be converted to a risk-based system.  He claimed that, 
under the proposed risk-based monitoring system, products 
would no longer be inspected prior to export from the country 
of origin, but only upon import and then only in random 
checks or based on the relative risk (derived from country of 
origin and other standard criteria) as well as on conformity 
marks, such as the "UL" mark of U.S.-based Underwriters 
Laboratories.  (NOTE: The Jordan Times was explicit in 
referring to the U.S. and EU as "low risk" countries in this 
proposed scheme, a sign that the JISM briefing was on-target 
and that the final proposed changes will more or less waive 
most U.S.-origin products from DAMAN,s costly and 
time-consuming bureaucracy, now estimated to take two weeks 
at best before a U.S. export shipment gets the green light. 
END NOTE.) 
 
Some New Products 
----------------- 
 
4.  (SBU)  Khayyat told us  that he also noted to the press 
that under the streamlined inspection system, new products 
would be covered by the DAMAN program.  He has offered baby 
carriages as one example of the type of product that might be 
covered, but has emphasized that no final decision has been 
made on these additions.  He stressed privately that every 
effort was being made to avoid product categories in which 
American-origin products had traditionally competed in 
Jordan.  (COMMENT:  We understand the new products are being 
added to "compensate" Bureau Veritas for the loss of 
inspection fees from the removal of new cars under its 
sweetheart contract with the GOJ that JISM apparently cannot 
break.  The B.V. contract expires in September 2007; we have 
been assured that JISM has no intention of renewing that 
contract.  END COMMENT.) 
 
Jordan's New Car Imports From the U.S. Growing 
--------------------------------------------- - 
 
5.  (U)  In the three years 2002-2004, Jordan averaged annual 
car imports from the United States amounting to USD 5.8 
million.  Last year, imported cars from the U.S. amounted to 
USD 9.3 million.  With the removal of the burdensome DAMAN 
inspection system and the re-structuring of taxes based on 
engine size (that disproportionately singled out U.S. cars 
versus European, Japanese, and Korean competitors), new car 
imports to Jordan from the U.S. are likely to increase 
rapidly in the near term. 
 
Comment 
------- 
 
6.  (SBU)  The announcement on new cars is a breath of fresh 
air after 19 months of slow-motion action by the GOJ to 
address USG concerns regarding DAMAN trade barriers that two 
previous trade ministers said they understood but could not 
decisively act on.  An interagency Embassy team is being 
invited by JISM to review a concept paper with all of the 
proposed trade-friendly changes to DAMAN in a meeting on June 
9.  What is in the fine print and how that translates into 
action will be key;  post will provide an update then.  It 
appears that Minister Zu'bi achieved in one meeting in late 
May what took other ministers months of letter-writing and 
hand-wringing.  We expect more such rapid changes, especially 
in investment climate reform, if and when the new government 
is approved by parliament. 
HALE