US embassy cable - 03AMMAN2006

UNCLAS SECTION 01 OF 02 AMMAN 002006 
 
SIPDIS 
 
SENSITIVE 
 
USDOC FOR 4520/ITA/MAC/ONE/COBERG 
STATE PASS USTR FOR NED SAUMS 
GENEVA FOR USDEL WTO 
 
E.O. 12958: N/A 
TAGS: ETRD, JO, WTRO 
SUBJECT: JORDAN GPA OFFER PRELIMINARY RESPONSES 
 
REF: A. USDOC 1003 
     B. CAMPBELL-OBERG/SAUMS/SCHEDLBAUER EMAIL OF 4/2/03 
 
Sensitive but Unclassified; please protect accordingly. 
 
1.  (sbu)  Below are informal responses to questions posed 
ref a based on our conversations with Jordan's GPA 
negotiating team and on our own research.  Answers keyed to 
PARAGRAPHS in ref a. 
 
2.  (sbu)  Para 4:  The list of units in Annex Three 
represents a fairly complete list of units subordinate units 
to Annex One entities.  Excluded units are comprised 
primarily of units with very low levels of annual procurement 
(less than $28,000), and partially or wholly state-owned 
companies, which do not procure through government tendering 
in any case, according to the GOJ's GPA negotiating team. 
Units in Annex 3 are subordinate to Annex 1 entities, though 
the line is not always straight - for instance, the head of 
the National Library reports directly to the Culture Minister 
(straight line), but the Jordan Institute of Standards and 
Metrology is run by a Board of Directors chaired by the Trade 
Minister (indirect).  Both, however, contract through the 
Government Tenders Directorate (GTD) and the Government 
Services Directorate (GSD). 
 
3.  (sbu)  Para 5:  Embassy passed to action addressees ref b 
a list of websites that provides a complete outline of the 
GOJ structure.  We note that the newly-formed Ministry of 
Environment has been excluded from the list in Annex 1, and 
that several key "independent" regulatory agencies have been 
excluded from Annex 3, including (but nor limited to) the 
Telecommunications Regulatory Commission (TRC), the 
Electricity Board, the Atomic Energy Commission, the Central 
Bank, the Institute for Diplomacy, and the Public Transport 
Regulatory Commission.  Possible explanations for these 
exclusions could be "National Security" exclusions per 
General Note 2(b), or that these entities are considered to 
fall below the $28,000 annual procurement threshold, thus 
obviating the need to list them in the Annex. 
 
4.  (sbu)  Para 6:  No GOJ ministry has a formal definition 
of SME's.  However, the National Fund for Enterprise Support 
(NAFES), a government-controlled small business support 
agency, defines SME's as companies with 5-100 employees (no 
definitions based on revenue or capital).  Support from NAFES 
for these companies is in the form of technical assistance 
for capacity building, along the lines of the USAID-funded 
Jordan-U.S. Business Partnership (JUSBP).  Such support could 
include training employees on how to enter the procurement 
market.  In addition, Chambers of Industry and Commerce in 
Jordan's primary population centers, along with professional 
associations representing key sectors like contracting and 
engineers, maintain an active dialogue with the GOJ and 
encourage it to distribute contracts evenly among members 
(since these organizations are mandatory membership groups 
under Jordanian law, they effectively "represent" all 
concerned SME's in relevant fields). 
 
5.  (sbu)  Para 7:  Ref b contains a listing of key 
procurement set-ups for the Water, Energy, and Transport 
Ministries, as well as an illustrative (not exhaustive) list 
of companies supplying the sectors.  The Ministry of 
Information, Communications, and Technology (MoICT) 
traditionally procures from the GTD/GSD, but was excluded 
from the Entities offer in Annex 1.  With the privatization 
of the Postal service, though, most of their procurement 
needs fall beneath the $28,000 threshold and are hence done 
internally.  Detailed information on MoICT procurement sent 
to action addressees via sep e-mail. 
 
6.  (sbu)  Para 8:  New procurement legislation and 
implementing regulations are in draft and under consideration 
by the cabinet.  There are no "new" regulations in English. 
Ref b, however, contains links to websites with 
English-language versions of all current legislation and 
regulations, as well as documentation relevant to the 
USAID-funded AMIR program's workplan for promoting GPA 
accession. 
 
7.  (sbu)  Para 9:  Most construction contracts for the GOJ 
are tendered by the Ministry of Public Works and Housing, 
though other ministries may have input on specific projects 
(e.g., the Water Ministry or Jordan Valley Authority on dams 
and such).  Local infrastructure construction contracts are 
usually tendered by individual municipalities, provided the 
project is funded by the municipality.  For instance the 
Greater Amman Municipality (GAM) is tendering a 
bridge-building project to connect Abdoun with fourth circle. 
 In addition, the Aqaba Special Economic Zone Authority 
(ASEZA) has MOU's with most government ministries to allow it 
to act on their behalf within the ASEZ.  Thus ASEZA may have 
construction contracting authority within the zone. 
 
8.  (sbu)  Para 10:  The GOJ's GPA accession process is not 
widely known in the business community.  A "national 
committee" of interested associations including chambers of 
industry and commerce, professional associations, and 
Jordan's AmCham, was formed last year to carry out the 
background analysis that formed the basis for the initial GPA 
offer.  That committee, the negotiating team tells us, will 
continue to advise the team throughout the negotiating 
process to ensure the interests of all groups are addressed. 
 
9.  (sbu)  The AmCham for its part has also  actively lobbied 
the GOJ for swift conclusion of the GPA accession process. 
For most AmCham members (who by and large are local 
representatives of U.S. companies or licensed importers of 
U.S. goods and services), the GPA and the attendant 
legislative reform required to accede will mean an important 
step forward in liberalizing procurement within the local 
market.  They see this as a critical improvement to a system 
that has heretofore been marked by a lack of transparency in 
the procurement process.  For a few selected companies - 
notably Petra Air Conditioning - the GPA represents an 
opportunity to grow the U.S. side of their business.  One 
company rep estimated U.S. orders for Petra could triple once 
Jordan became a GPA member and it could bid on federal, 
state, and local government procurement contracts. 
 
10.  (sbu)  The sectors most sensitive to the potential 
market adjustments resulting from GPA accession include the 
Engineers' Association and the Contractors' Association, both 
of which are dominated by relatively small companies that 
survive on one or two small ($250,000 or less) government 
contracts annually to stay afloat.  These companies do not 
look to other countries to secure contracts.  They are not 
particularly worried about competition from GPA members, 
since they believe most western firms would only bid on 
tenders that would be too large for them in any case. 
Rather, they fear competition down the road from developing 
countries like China or India which might accede in the 
future, and which they fear would provide stiff competition 
for even small contracts.  We and the GOJ have explained that 
those small markets can be carved out of the offer, but the 
sensitivities remain. 
 
11.  (sbu)  We will provide additional to ref a questions as 
they become available. 
GNEHM