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
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