DE RUEHJM #5055/01 3621458
ZNY CCCCC ZZH
O 281458Z DEC 06
FM AMCONSUL JERUSALEM
TO RUEHC/SECSTATE WASHDC IMMEDIATE 6194
INFO RUEHXK/ARAB ISRAELI COLLECTIVE PRIORITY
RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY
RHEHNSC/NSC WASHDC PRIORITY
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY
RUEHBS/USEU BRUSSELS PRIORITY C O N F I D E N T I A L SECTION 01 OF 02 JERUSALEM 005055
NEA FOR FRONT OFFICE; NEA/IPA FOR
WILLIAMS/SHAMPAINE/STEINGER; NSC FOR ABRAMS/DORAN/WATERS;
TREASURY FOR SZUBIN/LOEFFLER/NUGENT/HIRSON; COMMERCE FOR
E.O. 12958: DECL: 12/28/2016
SUBJECT: PALESTINIAN IT COMPANIES SAY RESTRICTIONS ON U.S
IMPORTS BENEFITING ISRAELI FIRMS
REF: JERUSALEM 4807
Classified By: Consul General Jake Walles, Reasons 1.4 (b) and (d).
1. (U) This cable has been cleared by FCS Tel Aviv.
2. (C) Summary. West Bank-based representatives of U.S.
companies complain that Israeli restrictions on IT products
entering the West Bank and Gaza result in significant delays
and high transportation costs. Identical products offered by
Israeli agents of U.S. firms are available more quickly and
at lower prices. Palestinian agents of U.S. companies assert
that they are losing business to their Israeli counterparts.
While noting some success on a case-by-case basis in freeing
up delayed U.S. shipments, Palestinian businessmen say that
in recent months onward shipment of these and other goods to
Gaza has become virtually impossible, thus obliging their
customers there to purchase from Israeli vendors. End
2. (SBU) In response to complaints heard during a visit to
ExpoTech 2006 in November (reftel), Econ Chief, Econoff and
Tel Aviv FCS Acting Chief met December 5 with Palestinian IT
companies, including several representing U.S firms, to
discuss difficulties they are facing when attempting to
import U.S. products. The Palestinian IT Association of
Companies (PITA) hosted the meeting.
Palestinian Importers Face Delays
3. (C) Products such a routers and devices equipped with
modems are held by Israeli authorities for as long as eight
months, according to the Palestinian representatives of
several U.S. IT companies, including HP, Microsoft, Dell,
IBM, and Cisco. Delays begin at Ben Gurion airport where
officials charged with inspecting imports hold the goods for
extended periods. Hazem Eideh, a logistics manager for the
local IT firm SAFAD -- the West Bank/Gaza agent for Cisco --
stated that 70 percent of Cisco shipments are seized and held
for between 40-60 days on average. After the goods pass
inspection, MATAK offices in Beit El in the West Bank must
approve entry through Israel-West Bank crossings. Securing
this approval can take months. Eideh said that no reason is
usually given for any delay. Companies waiting for their
goods to be cleared are instructed not to inquire about the
status of their shipments until at least forty days after a
clearance request has been submitted. The response time may
be somewhat better if the Palestinian company has a contact
at Beit El to assist or a sympathetic IDF officer is handling
the case, according to the PITA members. PITA members allege
that Israeli companies exporting the same types of products
to the West Bank do not always apply for MATAK approval and
when they do their requests are handled more expeditiously.
PITA board member Maher Al-Shalabi claimed that there appear
to be two sets of importation procedures: one for
Palestinians and another for Israelis.
Sales Going to Israeli Companies
4. (C) PITA Executive Director Safa Abdel Raman said that
Israeli agents have a distinct advantage over their
Palestinian counterparts whether importing goods into Gaza or
the West Bank, Transportation costs are driving up the
prices of goods imported by Palestinian companies, and
preferential treatment at checkpoints and crossings have
allowed Israeli companies to meet delivery dates that
Palestinians firms cannot. PITA Chairman Jamil Daher noted
that Palestinian companies are required to pay storage fees
while their goods await inspection and clearance, thus
hurting any competitive edge by driving up costs. Daher
asserted that in recent months Israeli representatives of
U.S. firms have contacted their Palestinian counterparts and
offered to handle the importation of certain U.S. products
destined for the West Bank and Gaza. Software company head
Michael Younes charged that some Israeli companies have
approached U.S. partner companies and Palestinian customers
directly with an offer to facilitate shipment of goods to the
West Bank and Gaza without any involvement from the current
Palestinian agent. Although Palestinian agents are pressing
their U.S. partners on the matter, Daher acknowledges that,
due to lower prices and greater reliability, an increasing
JERUSALEM 00005055 002 OF 002
number of Palestinian customers are opting to deal directly
with Israeli firms. In some cases, a non-U.S. product is
substituted, according to several PITA members.
Gaza: A Lost Market
5. (C) PITA members asserted that that due to closures,
reduced throughput at the Karni/al-Mintar crossing and
staggering transport costs, Gaza can no longer be considered
a reliable market for their products. HP and Cisco agent
Eideh said that an Israeli shipping company recently quoted
him a fee of NIS 20,000 (USD 4,762) to transport one
truckload of goods from Ramallah to Gaza. Given such high
transportation costs and unpredictability in meeting delivery
due dates, West Bank companies are finding it difficult to
satisfy customers and maintain offices in Gaza.
Progress on Some U.S. Cases
6. (C) BCI CEO Said Baransi praised Tel Aviv FCS efforts to
raise specific cases of delayed U.S. goods with Israeli
authorities. He suggested that on a case-by-case basis the
Israelis have become more responsive, at least when U.S.
products are involved. He asked that the USG expand its
efforts to include the free flow of all goods into and out of
the West Bank and Gaza. EconChief noted that the USG
continues to promote greater adherence to the November 2005
Access and Movement Agreement (AMA) and the elimination of
non-tariff barriers to trade. FCS Acting Chief urged PITA
members to continue providing information on delayed U.S.
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