RESPONSE TO ARAB LEAGUE BOYCOTT REPORTING

UNCLAS KUWAIT 001156 SENSITIVE SIPDIS STATE FOR NEA, TREASURY, COMMERCE/BIS/OIC, USTR FOR JASON BUNTIN E.O. 12958: N/A TAGS: KBCT ECON KIPR EIND EINT ETRD XF KU SUBJECT: RESPONSE TO ARAB LEAGUE BOYCOTT REPORTING REQUIREMENTS REF: STATE 120272 ¶1. (U) Kuwait still applies a primary boycott of goods and services produced in Israel and there is no direct trade between Kuwait and Israel, but Kuwait does not require U.S. firms to participate in or cooperate with either the secondary or tertiary Arab League boycott. In September 1994, Kuwait along with all GCC countries, announced an end to the enforcement of secondary and tertiary aspects of the Arab League boycott of U.S. firms with commercial ties to Israel, eliminating a significant trade barrier to U.S. firms. ¶2. (SBU) Kuwait does not require U.S. firms to comply with boycott requirements, it claims to have eliminated all direct references to the boycott in its commercial documents as of 2000, and affirms that it has removed all firms and entities that were on the boycott list due to secondary or tertiary aspects of the boycott prior to 1991. Kuwait has a three person boycott office (comprised of a director, staffer, and secretary),which is part of the Ministry of Customs. The director has been out of the office for more than a year on medical leave. Kuwaiti officials regularly attend Arab League boycott meetings, although whether they are active participants remains unclear. ¶3. (SBU) In 2008, there were four reported cases of prohibited boycott request allegations from Kuwait provided to the Department of Commerce. In the year and a half since Econcouns has been in Kuwait and the two years that Commercial Counselor has been in Kuwait, we have only been approached once by a U.S. firm about a possible boycott-related case. After consultation with the Department of Commerce, we advised the U.S. firm that the language did not appear to be a boycott violation. The German Ambassador recently claimed that he understands from German firms that boycott-related language still appears in some tender documents, though we have no confirmation of this from U.S. companies. ¶4. (SBU) Given the overall problems with Kuwait's tendering practices, including frequent retendering and regulations that stress price over quality (once a certain threshold is passed),post has no evidence to suggest the Arab League boycott poses a significant barrier to U.S. businesses seeking to operate here. Post has not conducted any Arab League Boycott outreach during 2009. We have a pending request to meet with the acting head of the office and will report further following that discussion. ********************************************* ********* For more reporting from Embassy Kuwait, visit: visit Kuwait's Classified Website at: http://www.intelink.sgov.gov/wiki/Portal:Kuwa it ********************************************* ********* JONES