ALB: ANOTHER STEP CLOSER TO DE FACTO

C O N F I D E N T I A L BAGHDAD 000399

SENSITIVE
SIPDIS

DEPT FOR NEA/RA FOR MARK KELLY
USTR FOR DAWN SHACKLEFORD
USTR FOR CHRIS DEANGELIS
COMMERCE FOR FRED DAVIDSON

E.O. 12958: DECL: 02/03/2020
TAGS: KBCT ECON ETRD XF IZ
SUBJECT: ALB: ANOTHER STEP CLOSER TO DE FACTO
NON-IMPLEMENTATION

REF: A. 09 BAGHDAD 3152 ET. AL

B. 09 BAGHDAD 2527

C. MCFARLAND/DEANGLIS E-MAIL 02/14/2010

Classified By: EMIN John Desrocher for reasons 1.4 (b, d).


1. (C) Summary: "In the next few days," the Ministry of
Health (MOH) plans to quietly amend its licensing and
registration regulations to remove a troublesome Arab League
Boycott (ALB) compliance requirement that MOH imposes ad hoc
on some foreign firms (ref A),MOH Senior Advisor Dr. Salah
Shubber told Assistant United States Trade Representative
Michael Delaney during Delaney's February 7-11 visit to
Baghdad. A close-hold "verbal directive" issued by the
Council of Ministers in late 2009 reportedly instructed
ministries to cease ALB implementation practices despite
Iraqi regulatory requirements to the contrary. The MOH did
not amend its regulations, however, and foreign firms have
reported occasional ALB compliance requests initiated by the
MOH. With the MOH making changes that would bring it in line
with other formerly problematic ministries (Trade, Patent and
Trademark, and Oil),the GOI appears to be taking another
important step toward de facto non-implementation. Proof,
however, will be in new regulations that omit ALB compliance
requirements. Senior GOI officials have asked us to avoid
drawing attention to these changes based on concerns that
public discussion could create a political backlash,
particularly ahead of national elections on March 7. End
Summary.

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SFA JCC TRADE AND INVESTMENT WORKING GROUP ANNOUNCES CHANGE
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2. (C) During his February 7-11 visit to Baghdad, Assistant
United States Trade Representative Michael Delaney co-chaired
a special meeting of the Strategic Framework Agreement's
Joint Coordinating Committee Working Group on Trade and
Investment (septel). During the February 7 working group
meeting, Ministry of Health Senior Advisor Dr. Salah Shubber
announced that the Health Minister had "just taken the
decision" to remove ALB compliance requirements from the
Health Ministry's registration and licensing regulations.
Shubber thanked econoff for moderating the discussion between
Shubber and Ministry of Trade Senior Advisor Dr. Abdulhadi
al-Hamiri that resulted in the change to the regulations.

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SPECIFIC CHANGE WOULD REMOVE ALB COMPLIANCE REQUIREMENTS
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3. (C) The change in regulations would specifically remove
Section C, Paragraph 4, "Requirements for the Registration of
Pharmaceutical Companies." This regulation and the full text
of the "Drug Registration Regulations" is currently available
at http://www/kim-moh.net/Register/1.pdf. If properly
implemented, the change would mean that U.S. and other
foreign firms prohibited by domestic laws from complying with
the ALB could use Israeli parts, labor, or transit/shipping
facilities, as a component of their contract with the MOH or
its state purchasing company, Kimadia. Currently, Section C,
Paragraph 4 reads:

"Requirements"

"- Certification letter regarding the boycott with Israel
(i.e. (Products) Do not comprise any parts, raw materials,
labor or capital of Israeli origin). It is acceptable to
simply specify the country of origin for raw materials.
(This certificate should be sign and stamp (sic) by the
company itself.)"
Qcompany itself.)"

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SOME IN GOI RECOGNIZE PROBLEM, WANT QUIET SOLUTION
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4. (C) National Investment Commission Acting Chairman and SFA
JCC Trade and Investment Working Group co-chair Dr. Sami
al-Araji told Delaney that he understood USG and EU
restrictions on ALB compliance and that the GOI was pursuing
non-implementation as a practical matter to increase trade
and investment. Al-Araji stressed, however, that public
revelations of a softening of policy toward Israel would
provide political capital for opponents of the current

government to exploit. "This issue would unite a lot of
people -- Baathists, religious zealots, secularists,
everyone," al-Araji told us; "Public debate would stop this
(removal of the ALB requirement) in its tracks."

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COMMENT: ENCOURAGING PROGRESS, BUT PROOF STILL PENDING
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5. (C) The straightforward commitment by a senior Ministry of
Health official at a formal meeting of the U.S-Iraq Joint
Coordinating Committee Working Group is a promising sign that
the GOI is taking yet another step toward de facto
non-implementation of the ALB. We have already followed up
with Dr. Shubber and will advise addressees when/if the new
regulations are published.
FORD