US embassy cable - 05BAGHDAD3411

UNCLAS SECTION 01 OF 02 BAGHDAD 003411 
 
SIPDIS 
 
SENSITIVE 
 
STATE PASS TO EB WAYNE, NEA:GODEC AND NEA/I SILVERMAN; 
COMMERCE FOR PETER HALE 
 
E.O. 12958: N/A 
TAGS: ETRD, EINV, KBCT, PGOV, IZ 
SUBJECT:  IRAQ TRADE MINISTER SEEKING SUPPORT OF OTHER 
MINISTRIES TO NOT ENFORCE THE ARAB LEAGUE BOYCOTT 
 
REF:  A.  BAGHDAD 3132 
B.  BAGHDAD 2527 
C.  STATE 97018 
 
This cable is sensitive but unclassified.  For government 
use only.  Not for internet distribution. 
 
1. (SBU) Summary:  On August 15, Acting Econ  Min. 
Counselor and IRMO Senior Consultant met with the 
Minister of Trade Abdel Basset Karim to express the USG's 
continuing concern regarding enforcement of the Arab 
League Boycott (ALB) against foreign investors in Iraq 
(reftels).  The Trade Minister agreed to raise the issue 
with the other ministers to obtain their support and 
nd 
asked that the Embassy see him next week regarding his 
progress.  He also discussed Iraq's Foreign Trade 
Memorandum (FTM) for WTO accession, as well as his desire 
to increase trade through the Trade and Investment 
Framework Agreement (TIFA).  End Summary. 
 
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FOREIGN INVESTMENT, ALB, AND CPA ORDER 39 
----------------------------------------- 
 
2. (SBU) We stressed during the meeting that U.S. 
companies need to be able to register their businesses 
and trademarks in Iraq without having to sign the ALB 
declaration.  The Trade minister explained he has taken 
steps in his own ministry (reftel A) towards non- 
enforcement, but that other ministries are still 
enforcing the ALB.  We stressed that this includes the 
Ministry of Foreign Affairs (MFA), whose transmittal of 
ALB information led to some ships being blacklisted by 
the Ministry of Transportation from coming to Iraq (six 
ships barred in 11/2004).  In addition, Pepsi has 
encountered problems in registering its trademark, 
because the trademark office has required the company to 
sign the ALB declaration.  (Note:  There still is no 
trademark office at the Ministry of Industry and Minerals 
MIM, despite CPA Order 80 establishing it).  We asked 
that the Trade Minister discourage other ministries from 
implementing the ALB.  We stressed that the USG is 
concerned that if Iraq is listed by the USG as a country 
that enforces the ALB, it might deter significant U.S. 
private investment.  As a result, the USG is urging Iraq 
not to implement or enforce the ALB. 
 
3. (SBU) The Trade Minister responded that he has 
proposed to the MIM, the Iraqi Chamber of Commerce, and 
the Iraqi Federation of Industries that they convene an 
"all hands" meeting to discuss CPA Order 39 and Iraqi 
corporate law.  He noted that he wants the Ministry of 
Oil and other ministries in the ITG to be able attract 
foreign direct investment to Iraq.  Working with the 
Ministry of Finance (MoF) and Ministry of Planning and 
Development (MoPD), he explained he hopes to finish 
instructions on CPA Order 39.  We stressed that the USG 
needs written ALB non-implementation instructions to send 
to Washington.  The Minister of Trade agreed to issue the 
written instructions after the "all hands" meeting.  He 
also emphasized that he would develop a technical 
solution whereby the director generals of respective 
ministries will be provided guidance on non- 
implementation of the ALB. 
 
4. (SBU) The Minister of Trade explained further that he 
intends to bring these written instructions to the 
Council of Ministers and will stress to the Council the 
importance of the instructions in helping to facilitate 
foreign trade and foreign direct investment (FDI) in 
Iraq.  When asked if the Council must take a vote to make 
the instructions legally effective, he responded that he 
would not put it to a vote there.  Although he plans to 
hold two meetings  one with selected ministers and the 
second meeting with the Council of Ministers, he assured 
us that the instructions would be valid if agreed to by 
the MoF and MoPD, as stipulated by CPA Orders 39 and 46. 
The Minister stressed that this effort is a "work in 
progress" and that one set of instructions will not solve 
the problem once and for all.  He emphasized that he is 
looking for a practical solution, not just something in 
writing.  We conveyed to him that we would like to work 
together with him to solve these problems in a practical 
way. 
 
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OTHER:  WTO ACCESSION AND TIFA 
STATE PASS TO EB WAYNE, NEA:GODEC AND NEA/I S)51V, KBCT, PGOV, IZ 
SUBJECT:  IRAQ TRADE MINISTER SEEKING SUPPORT OF OTHER 
MINISTRIES TO NOT ENFORCE THE ARAB LEAGUE BOYCOTT 
 
------------------------------ 
 
5. (SBU) On a separate issue, the Minister of Trade 
mentioned that he had signed the Foreign Trade Memorandum 
(FTM) this week and that it will be sent to the WTO 
Secretariat in Geneva.  We responded positively to this 
 
SIPDIS 
development and added that we look forward to working 
with the Minister to boost trade through the Trade and 
Investment Framework Agreement (TIFA) signed at the JCRED 
in July. 
6. (SBU) Comment.  The Minister of Trade was supportive 
of Embassy's efforts to prevent Iraq from being listed as 
a country enforcing the Arab League Boycott.  We will 
follow-up with him to check on what progress he has made 
on this issue with individual ministries as well as the 
entire Council of Ministers. 
 
Khalilzad