Cablegate: A/Ustr Novelli's June 21 Meeting with Trade

This record is a partial extract of the original cable. The full text of the original cable is not available.





E.O. 12958: N/A

1. (sbu) Summary: A/USTR Novelli discussed the President's
MEFTA plans, US-Jordan FTA follow-up, and QIZ's with Trade
Minister Salah Eddin al Bashir in a June 21 meeting on the
margins of the World Economic Forum at the Dead Sea. Novelli
and Bashir also discussed the possibility of expeditiously
working out a bilateral Government Procurement Agreement
(GPA) to provide for better access into procurement markets
in each country while Jordan negotiates its accession into
the WTO's GPA. Finally, Bashir asked for additional USG
assistance to improve Jordan's capacity to produce
agricultural products acceptable to the US market. End


2. (sbu) A/USTR Novelli outlined the President's goals for
the Middle East Free Trade Area, highlighting the USG's
desire to create a free trade area encompassing all willing
partners in the region within ten years. Novelli explained
the USG's strategy to move partner countries along the path
to free trade in stages depending on their current level of
reform - i.e., bringing non-WTO member countries into the
WTO; creating conditions precedent for an FTA in liberalizing
countries, and concluding FTA's with countries with the
appropriate level of reforms in place. She added that
Jordan, along with Morocco and ultimately Bahrain, would be
the "poles" around which neighboring countries in the Levant,
Maghreb and Gulf, respectively, would cluster in creating
compatible free trade infrastructures. These free trade
"clusters" would ultimately be united in a greater free trade
area that would adopt the most rigorous standards from each
agreement. Novelli noted that Egypt represented a special
challenge, and that it was still unclear how the free trade
relationship with Egypt would develop.


3. (sbu) Bashir said the GOJ looked forward to having
regional FTA partners to cooperate with, noting especially
that new opportunities for cumulation of origin among FTA
partners would help boost intra-regional trade. He noted
that Singapore had expressed interest in signing an FTA with
Jordan (its first with a middle eastern country), and that
the GOJ was considering the offer favorably. Bashir asked
Novelli if it would be possible for Jordan to cumulate origin
with Iraq, given the centrality of Iraq to Jordan's trade
future. Novelli responded that cumulation was currently only
being considered among countries that enjoyed FTA's with the
U.S., primarily because opening cumulation up to countries
that had not made appropriate commitments to reform would
degrade the integrity of the FTA's themselves.

4. (sbu) Following up on the December 17, 2002 Joint
Committee meeting, Bashir said the GOJ had nearly completed
the list of tariff line items for which it was requesting
accelerated tariff reduction under the FTA. He added that
the GOJ was ready to move forward expeditiously to hold the
first Joint Environmental Forum meeting. Novelli said the
USG was ready to work with the GOJ to conclude all the
outstanding items from the December meetings, and urged
Bashir to submit any requests as early as possible. She
emphasized, though, that under the terms of the Trade
Promotion Authority granted by the U.S. Congress, USTR would
have to look for some measure of reciprocity in any request
for further tariff reductions.


5. (sbu) Bashir informed Novelli that the GOJ and Israeli
governments would soon pass to USTR applications for QIZ
designation for two new sites in Jordan, as well as an
application to expand the al Tajammouat QIZ in Amman. He
said a recent visit to Amman by Israeli QIZ chief Gaby Bar
had set the stage for Israel's trade minister to sign off on
the new QIZ's. Bashir noted the visit also brought the GOI
and GOJ closer to an agreement to adjust the Israeli input
percentage requirement under the QIZ initiative. He
described a "sliding scale" incorporating marginal rates for
progressively higher-cost goods (i.e., goods would be
assessed 11% input requirement on the first $2 of value, 8%
on the next $2, and so on, to a floor of 2% for every dollar
of value above an agreed limit - e.g., $10). Bashir said he
was confident the two sides could reach a final agreement on
the mechanism "within weeks." Finally, Bashir said he was
trying to put together a conference for current and potential
textile sector investors, aiming for a mid-October date. He
promised to keep USTR apprised of QIZ developments.


6. (sbu) Novelli recounted remarks she heard in other
events regarding difficulties U.S.-Jordanian joint ventures
are experiencing when bidding on government procurement
contracts in the U.S., and expressed willingness to work with
the GOJ to expedite the opening of procurement markets on a
bilateral, and reciprocal, basis. Bashir noted that the GOJ
had submitted its initial entities offer to the WTO's GPA
committee, but acknowledged that negotiations on final
accession could take some time. He agreed with Novelli that
a bilateral agreement with the U.S. would be a useful interim
measure, and said the GOJ would follow up through the embassy.


7. (sbu) Bashir said the GOJ is taking a greater interest
in building capacity in the agricultural sector, with an eye
to exporting Jordanian ag products to the U.S. and other
western markets. He noted the GOJ recently established its
own autonomous food and drug administration, and added that
Jordan's health ministry is developing a relationship with
the U.S. Department of Health and Human Services.

8. (u) A/USTR Novelli did not have an opportunity to clear
this message.

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