JORDAN BACKTRACKS SLIGHTLY ON PRE-SHIPMENT

UNCLAS SECTION 01 OF 03 AMMAN 007182

SIPDIS

SENSITIVE

DEPARTMENT FOR NEA/ARN - A. SCHEDLBAUER
USTR FOR SAUMS
COMMERCE FOR NAOMI WIEGLER

E.O. 12958: N/A
TAGS: ETRD PREL JO WTO
SUBJECT: JORDAN BACKTRACKS SLIGHTLY ON PRE-SHIPMENT
INSPECTIONS; NEW TRADE MINISTER IS OPEN TO WORKING IT OUT

REF: A. AMMAN 6449

B. SAUMS-LAWLESS EMAIL (10/27/03)

C. LAWLESS-SAUMS TELCON (10/27/03)

D. SAUMS-MATALKA EMAIL (10/17/03)

E. USDOC 3249 (27 JUNE 2003)

F. AMMAN 808 --- ALL REFS NOTAL

SENSITIVE BUT UNCLASSIFIED. FOR INTERNAL USG USE ONLY.
HANDLE ACCORDINGLY.


1. (SBU) SUMMARY: The Jordan Institute for Standards and
Metrology is wedded to its new Pre-Shipment Inspection (PSI)
scheme, called DAMAN, while attempting to address potential
WTO-related issues of national treatment and discrimination.
Importers complain about the system that forces their
counterpart supplier companies abroad to pass through a
gauntlet of paperwork, potential lab tests, and inspections.
Importers are none too pleased about paying as much as three
dollars per thousand dollars of goods imported for the
privilege of inspection (or USD 38 dollars per new vehicle
inspection). A new complaint surfaces weekly about DAMAN's
lack of transparency, high fees, or inconvenience to small
and medium-sized enterprises.


2. (SBU) SUMMARY CONTINUED: JISM Director General Ahmed
Al-Hindawi claims that he will soon require inspections of
products made by home industries initially exempted from the
regime. At the same time, the JISM head hosted 11
neighboring states in a workshop on an "Arab Strategy for
Standardization" at which EU-based Bureau Veritas (AKA BIVAC)
was prominently hailed for its progress in the DAMAN program.
Econoff on October 28 passed to Dr. Hindawi some preliminary
observations on DAMAN (Ref B) which urged consideration of
alternatives to the program. While the architect of the PSI
program appears concerned about the effects on free trade of
his consumer protection scheme -- and has offered
"clarifications" -- he has not signaled he will do more than
make cosmetic changes at the margins. However, when
Ambassador raised the issue November 3 with Deputy Prime
Minister and Minister of Industry and Trade Mohammad Halaiqa,
the DPM indicated he understood our concerns and suggested an
approach to review the issues. If it were to proceed
unchecked, DAMAN could grow in the region, and could be a
foothold for EU-based standards as the preferred baseline,
thus potentially disadvantaging free trade from other regions
of the world to Jordan and other Arab states. END SUMMARY.

JISM HEAD DEFENDS DAMAN PROGRAM ...
--------------


3. (SBU) In the meeting on October 28 also attended by
Washington Jordan Embassy Commercial Officer Maher Matalka,
Hindawi reviewed a four-page summary passed to him by Matalka
(Ref D) that was based on Reftel (A). The background found
in that report was accurate, Hindawi said, but a few points
needed clarification. First, he said, if a product could be
shown to meet certain BIVAC-promulgated, JISM-supported, or
international standards, then it would automatically be
eligible for a one-year, license-type approval. The
inspection fees were clear, he said, and were no higher than
0.2 percent to 0.3 percent of the FOB cost of a shipment.
The standards required were on the BIVAC website, he averred.
If a company did not automatically meet the published
standards and laboratory testing were required, he said, then
a manufacturer in the U.S. could use any/any lab duly
certified by any of 12 accreditation bodies in the U.S.
Hindawi provided the list from the ILAC directory. (Post is
faxing a copy to the desk.) Hindawi also stated that no U.S.
company to date had been the subject of an unfavorable BIVAC
"discrepancy report."


4. (SBU) On the issue of National Treatment, Hindawi
acknowledged that the Government of Jordan must address the
planned exemption for national industries for the first four
years, while JISM set up its own national labs. "We don't
want to be in breach," he said, in an apparent reference to
WTO standards on national treatment. The DAMAN program will
be implemented on a national level, he claimed. If
manufacturers could not get proper testing done in Jordan
then they would have to go to a lab in the region, he said.
This national plan was not yet initiated, he continued. JISM
would have to develop a schedule and a plan for national
implementation of DAMAN. It would result in the issuance of
a type-approval for one year, functioning in exactly the same
manner as the requirement for foreign manufacturers shipping
goods to Jordan, he stated. Hindawi at first said the issue
would be "dealt with very fast and implemented very soon."
He noted that the implementation in Jordan would be at the
cost of national industries which would need to resort to
outside labs. He claimed the industries had been notified
about DAMAN through their national associations earlier in
2003 and they "fully support" DAMAN. (COMMENT: It is
unclear whether these groups gave their consent for a DAMAN
program that would be delayed in Jordan; they may not to date
have been informed of DAMAN's immediate implementation nor of
the potential costs. END COMMENT.) In a new twist among the
objections raised by importers, one toy importer was quoted
in the November 2 Jordan Times complaining the scheme will
raise toy prices and favors rich consumers; the importer
asked for DAMAN's simplification.

...BUT A "PLAN FOR A TIMELINE" ON NATIONAL TREATMENT
-------------- --------------


5. (SBU) When asked when DAMAN would be implemented in
Jordan, Hindawi said "within the coming few weeks." By
November 11, JISM would at least have initiated "a plan for a
timeline," he stated. Commenting on other aspects of DAMAN,
Hindawi gave assurances of equitable fees, protection of
confidential business information, avoidance of unreasonable

SIPDIS
delays, and non-discrimination and transparency. Bureau
Veritas had taken out a performance bond, he noted, and could
be penalized if they did not live up to their contract with
the GOJ. When asked, he responded that the contract with
BIVAC is not public information.


6. (SBU) Hindawi held a discussion October 19 with
representatives of General Motors and Daimler Chrysler on the
effects of DAMAN on new car shipments en route to Jordan that
would not meet the baseline requirements adopted by JISM (50
standards harmonized to the EU standards, he noted). Hindawi
volunteered that he would be sending a letter to those car
manufacturers noting there would be a "grace period" for U.S.
new vehicles "until our dialogue ends." He expected that the
U.S. could meet a majority of the EU-based standards, in any
event, but he also noted there might be a few exceptional
areas, such as with U.S. cars' higher noise levels.


7. (SBU) Econoff passed to Dr. Hindawi a list of potential
problems with DAMAN (Ref B) which parallel many of the points
raised with GCC states in June (Ref E). Noting these were
preliminary observations, some of which may be OBE by
Hindawi's latest clarifications, Econoff stressed the need to
address the list of concerns and to seek alternatives to
DAMAN. Matalka, noting that the two sides may have a few
differences, some of which we could work out and others of
which would remain differences between good friends, urged
strongly that the issue not be elevated to higher levels.
(NOTE: Matalka was then going on to see newly installed
Trade Minister Mohammad Halaiqa. END NOTE.)

TRADE MINISTER RESPONDS TO AMBASSADOR'S CONCERN
-------------- --


8. (SBU) In a call on DPM and Trade Minister Halaiqa
November 3, Ambassador raised the DAMAN program and expressed
concern about its potential effects on U.S. goods imported
into Jordan. Halaiqa conveyed his understanding of the issue
and said that he would speak to Dr. Hindawi. He also noted
that Jordan had to protect its consumers against faulty
goods, giving the example of an untested electrical toy from
China potentially not meeting a known safety standard.
Halaiqa proposed that both sides review the list of roughly
40 product categories covered under DAMAN's four main
headings -- toys, electronics, vehicles, and safety devices
-- and match them against the list of specific U.S. products
already being imported into Jordan. With this information in
hand, tailored solutions might be found for each product
category, as had been done for U.S.-manufactured vehicles.


9. (SBU) COMMENT: Hindawi is strongly wedded to DAMAN,
considering that he has put his name behind a GOJ contract
with Bureau Veritas. The French company's offer to upgrade
all JISM laboratories over the next four years must also play
into JISM's support for the program. An October 22 workshop
on an "Arab Strategy for Standardization" was attended by
representatives of Algeria, Bahrain, Egypt, Iraq, Jordan,
Kuwait, Libya, Palestine, Qatar, Saudi Arabia, Syria, and the
UAE. During the meeting, Bureau Veritas was praised for its
"remarkable and significant strides in progress." It would
appear, however, that DPM and Trade Minister Halaiqa is
committed to finding a middle way that honors Jordan's FTA
and WTO commitments.
GNEHM