Scenesetter for the U.S. - Jordan FTA Joint Committee

UNCLAS AMMAN 002663 SENSITIVE SIPDIS STATE FOR NEA/ELA AND EEB STATE PASS TO USTR (CWILSON, SFRANCESKI) AND USAID E.O. 12958: N/A TAGS: ETRD ECIN ECON ELAB EFIN EAID JO SUBJECT: Scenesetter for the U.S. - Jordan FTA Joint Committee Meeting on December 15 in Amman REFS: A) Amman 2597 B) AMMAN 2572 C) AMMAN 2459 D) AMMAN 2408 E) AMMAN 1177 ¶1. (U) This is an action request. See paragraph 9. ¶2. (U) Jordan's Ministry of Industry and Trade (MOIT) will host the December 15 U.S.-Jordan Free Trade Area Agreement (FTA) Joint Committee (JC) meeting in Amman. This JC occurs on the eve of the FTA coming into full force in January 2010. The meeting also takes place after the recent signing by Jordan of bilateral free trade agreements, notably with Canada and earlier this month with Turkey (ref A). Jordan has also signed bi-lateral free trade agreements with multiple Arab states and Singapore and has multilateral free trade agreements with the European Free Trade Association. Jordan is a member of the Greater Arab Free Trade Area and is a signatory of the Agadir Agreement linking Jordan with Egypt, Morocco and Tunisia. Trade As a Response to Crisis -------------- ¶3. (SBU) GOJ trade policy is currently focused on increasing two-way trade with the United States and other trading partners and in further increasing its trade ties with neighboring countries, most notably with Iraq, Syria and Saudi Arabia, and now regionally, with Turkey. The focus on trade comes in the context of the impact of the global financial crisis on Jordan, its growing budget deficit, and as Jordan finalizes its 2010 budget in a tough fiscal environment (refs B and D). Jordan's budget deficit is forecast to reach $1.6 billion for 2009, or about 7 percent of GDP. The 2009 budget has been hit hard by lower than expected growth, a sharp decrease in foreign grants (related to the global crisis),and a vast increase in capital expenditures begun before the crisis hit. Furthermore, the 2010 budget situation is expected to be worse. GOJ ministries and other agencies are being forced to significantly cut their 2010 budgets, and will have to eliminate almost all new capital expenditures, new hiring, overtime, and much of their travel budgets. Desire to Further Strengthen Ties -------------- ¶4. (SBU) Jordan - U.S. trade relations are strong. The value of two-way trade peaked in 2007 at $2.2 billion and trade levels are expected to exceed $2 billion for 2009 as well. While exports from �0A;QIZ's to the U.S. have decreased since 2006 and have been significantly hit by the global financial crisis, some QIZ contacts have told EconOffs that orders for the first quarter of 2010 are up and that the outlook for the near term is good. The impact of full FTA implementation on the QIZ arrangement is one that will need to be monitored as the textile industry adapts in early 2010, but EconOffs have heard that while some factories will certainly shift their business models toward exporting under the FTA, others have indicated that they are satisfied and will stay with the QIZ exporting mechanism. Positive Steps on Customs, IPR, and Labor -------------- ¶5. (SBU) The GOJ of Jordan has made advances in other areas related to the FTA, including in customs, intellectual property rights (IPR),and labor issues. Customs contacts have told EmbOffs that amendments to Article 41 of the Customs Law, which include "ex officio" authority for customs officers to seize and prosecute IPR violations, have recently been submitted by the Customs Department to the Ministry of Finance for approval. The National Library and Jordan Institution for Standards and Metrology have continued to increase their enforcement operations to counter IPR violations, even while they face the challenge of lax legal punishments for convicted violators. Also, it is expected that the Ministry of Labor will sign a labor cooperation agreement with the U.S. Department of Labor and announce during the day of the JC, that it will make factory participation in Better Work Jordan mandatory. Note: Better Work Jordan is an International Labor Organization and International Finance Corporation project funded by the GOJ and USAID that supports the efforts of the GOJ to improve labor standards. End note. Opportunities To Expand Agricultural Trade -------------- ¶6. (SBU) Opportunities exist for increasing trade in agricultural and food products. Currently, the inconsistent implementation of trade policies regarding import certificates from the U.S. and seemingly arbitrary decisions by GOJ officials create obstacles for food and agricultural importers. These obstacles impact animal-origin products and processed foods which are imported in relatively low quantities, making the high costs of additional GOJ-ordered testing a financial burden for the importer and undermining the market for the products. The USG should continue to press the GOJ to adhere to international sanitary and phytosanitary standards. Progress has been achieved on Jordan's concerns regarding Pest Risk Assessments for its agricultural exports to the U.S., but it is almost certain that GOJ interlocutors will complain about the lengthy process and perceived U.S. delays. Increased Technical Assistance Needs -------------- ¶7. (SBU) In addition to stating their goals to increase two-way trade levels, Jordanian interlocutors will raise their desire for increased technical assistance and cooperation programs with their American counterparts. GOJ officials across the board during the JC are likely to request increased levels in training opportunities and new avenues of technical assistance. These requests are likely to include the call to examine the possibility of arranging for two-way exchanges of trade experts and officials between Jordan and the U.S. The GOJ has informally proposed that officials could be embedded for a year or two in partner entities with the aim of exchanging expertise, training, and advancing the professional development of Jordanian trade officials. As an example, they suggested that a USG trade official work in the MOIT or at the Jordan Investment Board for one year. Agenda and Schedule for the JC -------------- ¶8. (SBU) The updated draft agenda and schedule for the upcoming JC compiled by the MOIT with post and USTR input follows (additional schedule details will be provided to the traveling party via email): Tuesday, December 15 0930 - U.S. delegation Arrives at the Ministry of Industry of Trade (MOIT) 0930 - Ambassador R. Stephen Beecroft and Assistant U.S. Trade Representative (AUSTR) for Europe and the Middle East Christopher Wilson will have a brief courtesy call with MOIT Minister Amer Hadidi and Secretary General Montasser Oklah. 1000 - Welcoming/opening remarks by Minister Hadidi, Ambassador Beecroft and AUSTR Wilson 1030 - 1330 JC morning session A) Bilateral Trade Issues ¶1. Bilateral trade developments with the FTA entering into full force in 2010. ¶2. Investment promotion (twinning project between JIB and its counterparts in the U.S.) ¶3. Labor -- a. Labor cooperation mechanism -- b. Update on labor conditions in the QIZs -- c. Status of labor law amendments ¶4. Agriculture -- a. The accreditation of Jordanian agricultural exports -- b. Cooperation and technical assistance programs ¶5. Customs -- a. Cooperation and technical assistance programs -- b. Petra Engineering Case (delay in security inspection at U.S. ports of entry) ¶6. Standards and Metrology -- a. Cooperation and technical assistance programs ¶7. Environment / Science and Technology ¶8. E1/E2 Treaty Trade/Investor visas 13:30 - 15:00 Lunch hosted by MOIT 15:00 - 18:00 JC afternoon session A) Bilateral Trade Issues (continued) ¶9. IPR -- a. 301 Review -- b. Copyright update - status of amendments -- c. Trademarks - update of legislation -- d. Customs - update on legislation ¶10. TRIDE -- a. Funding 2009-2010 budget ¶11. Other Issues -- a. The Jones NY belts' case -- b. Technical Assistance programs and capacity building for the MOIT -- c. FTA Joint Committee's future role B) Regional and Multi-Lateral Issues ¶1. WTO-related issues -- a. Results of the WTO Ministerial conference -- b. Update on the Doha Development Agenda -- c. Update on Jordan's Revised Offer to join the WTO Government Procurement Agreement ¶2. Regional Cumulation ¶3. Qualifying Industrial Zones C) World Financial Crisis ¶1. Updates on the latest economic developments in each country ¶2. Updates on government actions taken to overcome the crisis ¶3. Areas of cooperation D) Conclusion: summary and closing statements ¶9. (SBU) Action request: Post requests Department, USTR, and other stakeholder feedback, if any, on the above draft agenda for the JC before Monday, December 14. Post point-of-contact for the JC is EconOff Ali Lejlic, e-mail: LejlicAE@state.gov. Visit Amman's Classified Website at http://diplopedia.state.sgov.gov/index?title< /a> =Embassy_Amman BEECROFT