JORDAN GPA OFFER PRELIMINARY RESPONSES

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