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