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Cablegate: Bangladesh Trade Boycott On Israel Impacts U.S.

VZCZCXYZ0000
OO RUEHWEB

DE RUEHKA #0019 0070932
ZNR UUUUU ZZH
O 070932Z JAN 10
FM AMEMBASSY DHAKA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 9842
INFO RUEHTV/AMEMBASSY TEL AVIV PRIORITY 0134
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC PRIORITY
RHEHNSC/NSC WASHDC PRIORITY

UNCLAS DHAKA 000019

SIPDIS

STATE PASS TO USTR MARK MOWREY AND CHRIS DEANGLELIS
STATE FOR SCA/INSB, EEB/CBA, H

E.O. 12958: N/A
TAGS: ECON ETRD EINV BG
SUBJECT: BANGLADESH TRADE BOYCOTT ON ISRAEL IMPACTS U.S.
FIRM AND GARMENT SECTOR

REF: A. 09 STATE 00118797
B. 09 DHAKA 841

1. Bangladesh's ban on trade with Israel has impeded one
U.S. firm, Avery-Dennison, from investing to expand its
operations in Bangladesh. The ban has blocked
Avery-Dennison's local affiliate from importing two printing
presses to upgrade its services to Bangladesh,s ready-made
garment industry and improve the competitiveness of
Bangladesh's main export sector. Post has pressed the
government to lift the ban or grant a waiver to
Avery-Dennison. In an August 2009 meeting with Ambassador
Moriarty, Commerce Minister Faruk Khan expressed interest in
finding a practical solution that would allow Avery-Dennison
to import the equipment (ref B). His Ministry has
nonetheless confirmed the ban on trade with Israel in its
2009-2012 import-export policy and failed to grant a waiver
to Avery-Dennison. Post will continue to press for removal
of the trade ban, noting the damage to Bangladesh's economic
interests illustrated by this case.

BACKGROUND: AVERY-DENNISON PRESSES TO IMPORT EQUIPMENT
--------------------------------------------- ---------

2. In 2009, Avery-Dennison requested assistance from post in
encouraging the government to allow the import of
Hewlett-Packard (HP) printing presses manufactured in Israel.
The company's Bangladeshi affiliate, Paxar Bangladesh,
employs 715 workers to produce tags and labeling for the
ready-made garment industry. Avery-Dennison proposed to
invest $1.3 million to import two printing presses from
Israel in order to upgrade and expand its services to the
ready-made garment industry. However, they were blocked by
provisions in Bangladesh's import-export policy banning trade
with Israel.

3. During a meeting with the Commerce Minister in August,
Ambassador Moriarty urged him to ease the ban or issue a
waiver to allow Avery-Dennison to import the HP equipment.
The Ambassador underscored the economic benefits of
Avery-Dennison's proposed investments through expansion and
improvement of its services to the ready-made garment
industry, Bangladesh's principal export sector. Minister
Khan acknowledged the value of this investment and expressed
interest in finding a practical way to allow Avery-Dennison
to import the equipment. He suggested that Avery-Dennison
send him a letter to explain the details of the case, and he
promised to follow up.

4. Avery-Dennison's CEO sent a letter to Minister Khan on
August 25, providing background information and requesting
assistance in facilitating the company's proposed investment.
Commerce Ministry sources later reported that the Ministry
was in the process of revising its export-import policy and a
decision on relaxing or waiving the trade ban with Israel
might depend on the outcome of this policy review. Post
underscored U.S. Congressional interest in this case,
expressed through a letter to the Prime Minister from four
Members of Congress. Ministry sources confirmed on January 4
that the policy review was completed and the ban on trade
with Israel was retained.

COMMENT
-------

5. Although Minister Khan expressed sincere interest in
supporting Avery-Dennison's proposed investment, career staff
in his Ministry continue to obstruct efforts to relax the ban
or issue a waiver. Post will continue to press GOB contacts
to follow through on Minister Khan's commitment and find a
practical solution that will allow Avery-Dennison to import
this equipment.
MORIARTY

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