AMBIGUOUS STANDARDS CONTINUE TO FRUSTRATE

UNCLAS JERUSALEM 001107 SIPDIS SENSITIVE SIPDIS NEA/IPA FOR WILLIAMS/SHAMPAINE/BELGRADE; NSC FOR ABRAMS/WATERS E.O. 12958: N/A TAGS: EAGR ECON ETRD IS KWBG SUBJECT: AMBIGUOUS STANDARDS CONTINUE TO FRUSTRATE PALESTINIAN IMPORTERS ¶1. (SBU) Summary: Palestinian importers of U.S. products continue to complain of obstacles to trade. Among the obstacles cited are: (1) an arbitrary GOI standards-compliance process for imported products, including baby formula; (2) extended delays in the release of products from Ashdod port; and (3) the prohibition of Palestinian companies' access to the East Jerusalem market. End summary. Businesses Obstructed By Ambiguous Standards -------------- ¶2. (SBU) Regional FAS Senior Attache Chris Rittgers and Econoff met June 5 in Jerusalem with Palestinian businessmen whose companies import U.S. agriculture products. The Arab Company for Medical and Agricultural Products imports Wyeth Co. baby formula into the West Bank/Gaza through Israel. Its General Manager, Ghassan Mustaklem, said that the Israeli government (GOI) should establish a transparent standards-compliance process, as its Ministry of Health's (IMOH) standards often change overnight, resulting in extended delays at port for importing companies. According to Mustaklem, the IMOH system is ad hoc and does not provide standards information in paper form, creating an unpredictable import environment. Mustabklem claimed that the IMOH discriminated specifically against Palestinian pharmaceutical companies by holding products at Ashdod port for an average of three months during the last year - more than twice the wait time for Israeli companies importing the same product. ¶3. (SBU) Medical Supplies and Services (MSS) General Manager Samer Kreitem, who imports Abbott Co. baby formula, said the ambiguous IMOH standards-compliance process is designed to protect local Israeli producers by increasing importers' costs with extended delays at port and general product prohibition. In June 2006, according to Kreitem, the IMOH decided that a shipment of Abbott baby formula contained too much vitamin A for Israeli standards. Following a year of negotiations between MSS and IMOH, and with FCS advocacy involvement, the product was released to be sold in the WB/G. Kreitem claimed that MSS' additional demurrage costs in Ashdod were NIS 160,000 (USD 40,000),in addition to the high legal costs incurred to secure the shipment's release. Fighting For Access To East Jerusalem Market -------------- ¶4. (SBU) Kreitem and Mustaklem confirmed that the IMOH prohibits the sale in East Jerusalem of products imported first into the WB/G. Kreitem described this prohibition as a non-tariff barrier to protect Israeli importers, and noted that MSS had been selling its imported products in East Jerusalem since 1994. Kreitem plans to open an Israeli-licensed MSS office in East Jerusalem in order to import the same Abbott products he cannot ship from his West Bank warehouse. He opined that the IMOH's goals are two-fold: (1) support local Israeli importers and (2) disrupt the operations of Palestinian businesses to the point that they decide to become sub-contractors for competing Israeli companies. WALLES