JORDAN/ISRAEL/QIZ QUARTERLY MEETING LOOKS FOR WAYS TO KEEP QIZ PRGRAM ACTIVE

UNCLAS TEL AVIV 000386

USTR FOR SFRANCESKI, STRICKLER
STATE FOR KFRELICH,TGOLDBERGER
AMMAN FOR PISANI/LEJLIC

SIPDIS
SENSITIVE, NO FOR INTERNET DISTRIBUTION

E.O. 12958: N/A
TAS: ECON, ETRD, IS, JO
SUBJECT: JORDAN/ISRAEL/QIZ QUARTERLY MEETING LOOKS FOR WAYS TO KEEP
QIZ PRGRAM ACTIVE


1. (U) Jordan and Israel held their uarterly Qualified Industrial
Zones (QIZ) meetin in Jerusalem on February 4th to review the
secod and third quarter of 2009. 26 companies were aproved to
continue exporting under the QIZ program. Six companies did not
meet the eight percent Israeli content requirement and will have to
fulfill the content requirement in the first quarter of 2010 in
order to continue exporting under the QIZ program, a concession that
has not been made explicit in the past. Three companies lost their
privilege of exporting under the QIZ program.


2. (SBU) The meeting was marked by the surprising absence of
Secretary General of the Jordanian Ministry of Industry and Trade
Muntasir Oklah. According to the GOI, the meeting had been
rescheduled four times to accommodate Oklah's schedule and this is
the third quarterly meeting that he has missed. Nevertheless, the
meeting was a lively exchange of views regarding the future of the
QIZ, now that Jordan's Free Trade Agreement (FTA) with the United
States has diminished the free trade benefits to exporting through
the QIZ. Both countries agreed informally that meetings would take
place less frequently (around twice per year).


3. (SBU) A pleasant surprise was that several companies still
intend to use the QIZ for their exports, as there is a perceived
added advantage at expediting QIZ goods through U.S. customs. Both
countries agreed that Jordan would draft a letter to its QIZ
companies, reinforcing that the QIZ program was still functioning.
Gabi Bar, principle GOI interlocutor for the QIZ, confided in an
aside to Econoff that Jordanian companies might still need the QIZ,
as they could face difficulties in meeting the 35 percent Jordanian
content requirement in the U.S. FTA. In addition, QIZ products do
not require Jordanian exporters to carry costs for a significant
period of time due to geographic proximity.


4. (SBU) In addition to the QIZ, there was a brief discussion on
future Israeli investments in Jordan, including a large potential
investment in solar panels. The discussion then moved to Jordanian
exports to the Palestinian Authority (PA). In a recent meeting with
the new Israeli Ambassador to Jordan, Oklah delivered a non-paper
outlining specific difficulties Jordan faces in exporting to the PA,
including: Jordanian beef; returning Palestinian products imported
through Israel; working hours at the borders; standards; and
renegotiating the A1 and A2 lists within the context of the Paris
Protocol. The two sides were able to engage in constructive
dialogue on these issues and agreed on a way forward.
CUNNINGHAM