Cablegate: Jordanian Press Lauds Entry Into Force of Free Trade

VZCZCXRO6228
RR RUEHBC RUEHDA RUEHDH RUEHKUK
DE RUEHAM #0232 0241354
ZNR UUUUU ZZH
R 241354Z JAN 10
FM AMEMBASSY AMMAN
TO RUEHC/SECSTATE WASHDC 6746
INFO RUCNRAQ/IRAQ COLLECTIVE

UNCLAS AMMAN 000232

SIPDIS
SENSITIVE

STATE FOR NEA/ELA, NEA-I, AND EEB

E.O. 12958: N/A
TAGS: ECON ETRD PREL JO IZ
SUBJECT: JORDANIAN PRESS LAUDS ENTRY INTO FORCE OF FREE TRADE
AGREEMENT WITH IRAQ; OFFICIALS DOWNPLAY SIGNIFICANCE

REFS: A) 09 Amman 2671
- B) 09 Amman 1955
- C) 09 Amman 1177
- D) 09 Amman 672
- E) 09 Amman 226

1. (SBU) The Jordanian press has recently been reporting stories
about the "breakthrough" Iraq-Jordan Free Trade Agreement (FTA)
entering into effect in January 2010, suggesting the Iraq-Jordan FTA
represents a major step toward restoring pre-2003 trade ties between
the two countries. Ministry of Industry and Trade (MOIT) officials
confirmed to EmbOffs that the Government of Jordan (GOJ) signed an
FTA with Iraq in September 2009, but explained the agreement had no
defined timeline for implementation and was still awaiting
ratification by the legislative and executive authorities of both
countries. The officials, however, reported that they were not
concerned about this "vagueness" because both countries had
previously signed a regional waiver of tariffs in January 2005, and
therefore the FTA was merely a du jure documentation of an already
existing practice. MOIT officials went on to explain that the
purpose of this FTA was to ensure that both countries were
in-compliance with the Greater Arab Free Trade Agreement (GAFTA), to
which both countries are signatories and which requires members to
establish favorable, reciprocal trade agreements.

2. (U) Regardless of the FTA, MOIT officials noted that trade with
Iraq experienced significant increases in 2008 and 2009, making Iraq
one of Jordan's top five export destinations, with an estimated USD
800 million worth of exports to Iraq in 2009 (ref B). They further
noted that 2009 decreases in U.S. demand for garments manufactured
in Jordan's Qualifying Industrial Zones (QIZs) and the related
decrease in Jordanian exports to the U.S. further increased the
statistical standing and importance of Iraq as a trading partner
(refs C, D, and E).

3. (SBU) The media is optimistic the FTA will further strengthen
commercial ties. Prior to 2003, Jordan had a broad trade
relationship with Iraq, which included the purchase of oil at
concessionary prices. Notwithstanding the increases of the past two
years, trade has been hampered, in part, by the GOJ's strict border
control measures to control migration and tighten security following
the 2005 Amman hotel bombings, lack of infrastructure in Iraq, and
reluctance by Jordanian firms to reestablish themselves in Iraq.

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