DE FACTO NON-IMPLEMENTATION OF ARAB LEAGUE BOYCOTT

C O N F I D E N T I A L SECTION 01 OF 02 BAGHDAD 000090

SIPDIS

SIPDIS

TREASURY FOR CMORAVEC, SBLEIWEIS
COMMERCE FOR AKLEINER, SHAMROCK

E.O. 12958: DECL: 01/13/2018
TAGS: ECON ETRD EFIN IZ
SUBJECT: DE FACTO NON-IMPLEMENTATION OF ARAB LEAGUE BOYCOTT
IN IRAQ

REF: A. BAGHDAD 0042

B. 07 BAGHDAD 1944

C. 07 BAGHDAD 1308

D. 06 BAGHDAD 4690

Classified By: Charles P. Ries, Economic Minister, for reasons 1.4 (b)
and (d).


1. (C) SUMMARY: Embassy's quiet diplomacy on the issue of
Iraq's implementation of the Arab League Boycott (ALB) has
borne fruit. The Council of Ministers (CoM) has agreed to
allow trademark applications submitted by PepsiCo to be
registered, and the first five were officially registered on
January 8, 2008. The Minister of Industry and Minerals, who
championed the decision in the CoM on the grounds that ALB
provisions hinder economic development, states that this
decision to not implement ALB provisions should apply to
other areas affected by ALB provisions handled under
different ministries.


2. (C) From another angle, it has become apparent that Iraqi
firms are free to sign contracts with Embassy that contain
clauses certifying that the firm will not comply with ALB
provisions, without fear that they will be prosecuted under
current Iraqi law. Although current Iraqi law continues to
contain ALB provisions, the GoI has taken a clear step in the
trademark case in the direction of non-implementation, as
have other League of Arab States members. This should have a
positive impact on Iraq's ability to attract foreign direct
investment. We suggest that the accumulation of de facto
non-implementation practices warrants consideration of
removal of Iraq from the Department of Treasury's
anti-boycott list as a "country under review". END SUMMARY.

Trademarks, Patents,
Copyrights, Company
Registration
--------------


3. (C) PepsiCo's VP for International Government Affairs
notified Embassy and USG agencies that the company's five
most important trademark applications in Iraq were officially
registered on January 8, 2008. NOTE: PepsiCo has suggested,
and we agree, that publicity of this fact is not appropriate,
in part to allow the company space within which to prepare
future action against product counterfeiters. END NOTE. She
said that other applications, presented through a different
agent, would soon be registered as well. This is the end of
a process by which the applications are submitted, and if
found to be in proper form, are gazetted and subject to a
60-day notification and objection period. In the absence of
objections, the official date of registration was the end of
the 60-day period for the first five applications.


4. (C) This is the culmination of nearly three years of quiet
diplomacy on behalf of U.S. businesses seeking trademark
protection in Iraq. It is the result of the decision of the
Minister of Industry and Minerals, Fawzi Hariri, to champion
a practice of non-implementation of the ALB provisions that
exist in Iraqi law. As in many League of Arab States member
countries, it would be politically difficult for the GoI to
publicly renounce the ALB, but it appears that the GoI is
ready to establish a practice of non-implementation. In a
meeting with EMIN on January 9, Hariri stressed that his
winning argument was that ALB implementation acts as an
unacceptable break to foreign investment in Iraq, and
unnecessarily hampered the country's economic recovery and
development. He noted that while the PepsiCo trademark
applications are handled by the Trademark office within his
ministry, he had obtained the cooperation of the entire
Council of Ministers on the question. He said that this
would affect other areas where
ALB provisions impact on investors and businesses. We
presume this means that applications for copyright protection
in the Ministry of Culture, patent protection in the Ministry
of Planning, and company registration applications in the
Ministry of Trade, should now all receive the same treatment.

Firms Free To Do
Business with the USG
--------------


5. (C) Reftel A reported that, although Embassy felt it wise
to request a waiver of the provisions Section 565 of Title V,
Part C of the Foreign Relations Authorization Ace, Fiscal
Years 1994 and 1995 (PL 103-236, 22 CFR 2679c) to ensure our
ability to carry on diplomatic functions, in practice over

BAGHDAD 00000090 002 OF 002


the previous year it had become apparent that Iraqi firms
with which we had contracted did not seem constrained by ALB
provision in Iraqi law. In all cases, firms had willingly
signed contracts containing clauses certifying that the firm
would not comply with ALB provisions. We believe this to be
anecdotal evidence of another area in which the GoI has
determined that implementation of ALB provisions is not in
the country's national interest.

COMMENT
--------------


6. (C) Post believes PepsiCo's news warrants quiet
celebration of significant progress made. The anecdotal
evidence of non-implementation against Iraqi firms should
also be taken as evidence of progress. This pattern of
non-implementation, and the CoM's response to Minister
Hariri's economically-based arguments, seems to show that the
GoI "gets it".


7. (C) As we have urged in the past, we believe that
generating public attention to these decisions for
non-implementation is likely to undercut the CoM, and may
push individual ministers to make public statements in
support of the ALB. We will seek opportunities to applaud
the CoM's decision in private; determine whether our
experience in contracting indicates another instance of
implicit non-implementation; and encourage an explicit if
private statement from instances of authority that the GoI
has determined to make this a de facto, if not de jure,
policy. Given the positive evidence, we suggest that it is
time to consider removing Iraq from the Department of
Treasury's anti-boycott list as a country "under review".
END COMMENT.
CROCKER