IRAQ TRADE MINISTER SEEKING SUPPORT OF OTHER

UNCLAS SECTION 01 OF 02 BAGHDAD 003411 SIPDIS SENSITIVE STATE PASS TO EB WAYNE, NEA:GODEC AND NEA/I SILVERMAN; COMMERCE FOR PETER HALE E.O. 12958: N/A TAGS: ETRD EINV KBCT PGOV IZ SUBJECT: IRAQ TRADE MINISTER SEEKING SUPPORT OF OTHER MINISTRIES TO NOT ENFORCE THE ARAB LEAGUE BOYCOTT REF: A. BAGHDAD 3132 ¶B. BAGHDAD 2527 ¶C. STATE 97018 This cable is sensitive but unclassified. For government use only. Not for internet distribution. ¶1. (SBU) Summary: On August 15, Acting Econ Min. Counselor and IRMO Senior Consultant met with the Minister of Trade Abdel Basset Karim to express the USG's continuing concern regarding enforcement of the Arab League Boycott (ALB) against foreign investors in Iraq (reftels). The Trade Minister agreed to raise the issue with the other ministers to obtain their support and nd asked that the Embassy see him next week regarding his progress. He also discussed Iraq's Foreign Trade Memorandum (FTM) for WTO accession, as well as his desire to increase trade through the Trade and Investment Framework Agreement (TIFA). End Summary. -------------- FOREIGN INVESTMENT, ALB, AND CPA ORDER 39 -------------- ¶2. (SBU) We stressed during the meeting that U.S. companies need to be able to register their businesses and trademarks in Iraq without having to sign the ALB declaration. The Trade minister explained he has taken steps in his own ministry (reftel A) towards non- enforcement, but that other ministries are still enforcing the ALB. We stressed that this includes the Ministry of Foreign Affairs (MFA),whose transmittal of ALB information led to some ships being blacklisted by the Ministry of Transportation from coming to Iraq (six ships barred in 11/2004). In addition, Pepsi has encountered problems in registering its trademark, because the trademark office has required the company to sign the ALB declaration. (Note: There still is no trademark office at the Ministry of Industry and Minerals MIM, despite CPA Order 80 establishing it). We asked that the Trade Minister discourage other ministries from implementing the ALB. We stressed that the USG is concerned that if Iraq is listed by the USG as a country that enforces the ALB, it might deter significant U.S. private investment. As a result, the USG is urging Iraq not to implement or enforce the ALB. ¶3. (SBU) The Trade Minister responded that he has proposed to the MIM, the Iraqi Chamber of Commerce, and the Iraqi Federation of Industries that they convene an "all hands" meeting to discuss CPA Order 39 and Iraqi corporate law. He noted that he wants the Ministry of Oil and other ministries in the ITG to be able attract foreign direct investment to Iraq. Working with the Ministry of Finance (MoF) and Ministry of Planning and Development (MoPD),he explained he hopes to finish instructions on CPA Order 39. We stressed that the USG needs written ALB non-implementation instructions to send to Washington. The Minister of Trade agreed to issue the written instructions after the "all hands" meeting. He also emphasized that he would develop a technical solution whereby the director generals of respective ministries will be provided guidance on non- implementation of the ALB. ¶4. (SBU) The Minister of Trade explained further that he intends to bring these written instructions to the Council of Ministers and will stress to the Council the importance of the instructions in helping to facilitate foreign trade and foreign direct investment (FDI) in Iraq. When asked if the Council must take a vote to make the instructions legally effective, he responded that he would not put it to a vote there. Although he plans to hold two meetings one with selected ministers and the second meeting with the Council of Ministers, he assured us that the instructions would be valid if agreed to by the MoF and MoPD, as stipulated by CPA Orders 39 and 46. The Minister stressed that this effort is a "work in progress" and that one set of instructions will not solve the problem once and for all. He emphasized that he is looking for a practical solution, not just something in writing. We conveyed to him that we would like to work together with him to solve these problems in a practical way. -------------- OTHER: WTO ACCESSION AND TIFA STATE PASS TO EB WAYNE, NEA:GODEC AND NEA/I S)51V, KBCT, PGOV, IZ SUBJECT: IRAQ TRADE MINISTER SEEKING SUPPORT OF OTHER MINISTRIES TO NOT ENFORCE THE ARAB LEAGUE BOYCOTT -------------- ¶5. (SBU) On a separate issue, the Minister of Trade mentioned that he had signed the Foreign Trade Memorandum (FTM) this week and that it will be sent to the WTO Secretariat in Geneva. We responded positively to this SIPDIS development and added that we look forward to working with the Minister to boost trade through the Trade and Investment Framework Agreement (TIFA) signed at the JCRED in July. ¶6. (SBU) Comment. The Minister of Trade was supportive of Embassy's efforts to prevent Iraq from being listed as a country enforcing the Arab League Boycott. We will follow-up with him to check on what progress he has made on this issue with individual ministries as well as the entire Council of Ministers. Khalilzad