Identifier
Created
Classification
Origin
04YEREVAN1936
2004-09-01 12:32:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Yerevan
Cable title:  

ARMENIA CONCERNED OVER US CUSTOMS ACTIONS

Tags:  ECON EAID ETRD AM 
pdf how-to read a cable
This record is a partial extract of the original cable. The full text of the original cable is not available.

011232Z Sep 04
UNCLAS SECTION 01 OF 02 YEREVAN 001936 

SIPDIS

SENSITIVE

STATE FOR EB/CBA, EUR/CACEN, EUR/ACE
USTR FOR KATRIN KUHLMAN
DHS FOR JANET LABUDA

E.O. 12958: N/A
TAGS: ECON EAID ETRD AM
SUBJECT: ARMENIA CONCERNED OVER US CUSTOMS ACTIONS

Refs: A) Labuda/Gudie email 8/30/2004

B) Labuda/Gudie telecon 8/30/2004
C) Letter from U.S. Customs to Hilltop Industries re:
detention number 0216754

Sensitive but unclassified. Please protect accordingly.

UNCLAS SECTION 01 OF 02 YEREVAN 001936

SIPDIS

SENSITIVE

STATE FOR EB/CBA, EUR/CACEN, EUR/ACE
USTR FOR KATRIN KUHLMAN
DHS FOR JANET LABUDA

E.O. 12958: N/A
TAGS: ECON EAID ETRD AM
SUBJECT: ARMENIA CONCERNED OVER US CUSTOMS ACTIONS

Refs: A) Labuda/Gudie email 8/30/2004

B) Labuda/Gudie telecon 8/30/2004
C) Letter from U.S. Customs to Hilltop Industries re:
detention number 0216754

Sensitive but unclassified. Please protect accordingly.


1. (U) This is an action request. See paragraph 8.

--------------
SUMMARY
--------------


2. (SBU) Six containers of clothing shipped from Armenia are
being held by U.S. Customs (ref A). The containers hold
clothing purportedly produced by two of Armenia's largest
textile plants. U.S. Customs suspects that the garments may
have been produced outside of Armenia and that their origin
has been falsified to avoid quota limits. The American
importer refuses to ship any more products from these
plants, DavGar and Hed Hayas, or give any more orders to the
plant until the dispute is resolved. Factory owners and
workers are getting nervous about their jobs and have called
on the Government of Armenia to intervene; on August 24,
Deputy Minister of Foreign Affairs Ruben Shugarian appealed
to the Embassy to intervene for the release of the
containers. Deputy Minister of Trade Tigran Davtyan told us
that he intends to raise this issue with USTR
representatives during the upcoming Trade and Investment
Panel in Washington. During Emboff's visit to the
factories, managers told us they were considering bussing
employees to Yerevan to protest at the Embassy. End
Summary.

--------------
THESE ARE REAL FACTORIES
--------------


3. (SBU) While we cannot confirm with complete certainty
that the goods held by U.S. Customs were produced in
Armenia, it is clear that these factories do make clothing
from imported rolls of fabric and do export the lion's share
of that product to a single American client, Prestige
Apparel. We visited both factories and have seen the entire
production process -- from rolled fabric to finished product
-- involving hundreds of workers, machines, and thousand of
items of clothing. Our contact with the factories predates
this matter: USAID administers a technical assistance
project, through Development Alternative International
(DAI),that assists one of the plants in marketing and
business development and, among other things, helps them

meet international standards of records so as to avoid
export problems.

-------------- --
STOCK IS BUILDING UP, FACTORIES MAY CUT WORKERS
-------------- --


4. (SBU) On a recent visit we saw a storeroom where two
containers of product were being stored because the American
importer refuses to export the product until his other
shipments clear. The manager of Hed Hayas told us that they
only had fabric to run the factory for another two weeks
before he would cut forty percent of his staff. Dav Gar did
not talk to us about cutting staff but noted that currently
100 percent of his production was for Prestige Apparel.

-------------- --------------
ARMENIAN COUNTRY OF ORIGIN CERTIFICATES NOT HONORED
-------------- --------------


5. (SBU) Deputy Minister of Trade Tigran Davtyan points out
that the Chamber of Commerce and Industry of the Republic of
Armenia has the government-sponsored monopoly on issuing
country of origin certificates for goods made in Armenia.
He told us that he is disturbed that these were not honored
although no one has made any effort to verify the validity
of the certificate with the Chamber of Commerce or the
procedures for its issuance with the Ministry of Trade.

--------------
FIX THIS OR TELL THEM WHY WE HAVE A REAL CASE
--------------


6. (SBU) While the Ministry of Trade has admitted to us that
they cannot personally vouch for the shipments that are
actually being held, it is clear that they believe that the
clothes did originate from these two well-known factories in
Armenia. Dav Gar and Hed Hayas have operated since Soviet
times and together employ more than 2,000 workers, which in
Armenia is enough to make them well known. The ministry
told us that the last time U.S. Customs held a shipment on
suspicion of transshipment in March and April of 2004, it
was another well-known Armenian firm, and U.S. Customs
ultimately released the shipment and did not pursue the
case. The Ministry is concerned that holding the shipment
another week will endanger the onward sales contracts and
will discourage American importers from using Armenian
textile factories. We have agreed with the Ministry of
Trade that we will work together to implement a system
where, in the future, U.S. Customs can check the validity of
Certificates of Origin issued in Armenia and can trust that
the certificates were issued pursuant to appropriate rules
of origin subject to sufficient oversight and control (ref.
B).


7. (SBU) On August 12, U.S. Customs sent a letter to the
importer requesting more "production records" from Hed
Hayas, and attached the U.S. code specifying which records
U.S. law requires for import (ref. C). Factory managers and
the Deputy Ministry of Trade have commented to us that they
have already sent sufficient production records to U.S.
Customs, and the broad request for "production records
sufficient to establish the country of origin" is vague and
subjective.

--------------
ACTION REQUEST
--------------


8. (U) This detention has already become a bilateral issue
and has the potential to become a more serious irritant.
Post requests that appropriate agencies review this case to
determine whether the continued detention is appropriate.
Following that review, we request instruction on substance
for a credible response to the GOAM. This response should
explain why the U.S. believes these factories do not produce
the product, mix the product with transshipped clothes, or
are being used as a front for other transshipped clothes.
Please also advise on how to proceed in order to create a
channel of communication whereby Certificates of Origin
issued in Armenian can be verified and trusted by the U.S.
Customs Service.
EVANS