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ACTION NEA-16
INFO OCT-01 ISO-00 EB-11 USIA-15 CIAE-00 INR-10 NSAE-00
RSC-01 DRC-01 /055 W
--------------------- 090279
P R 091153Z JUN 74
FM USINT DAMASCUS
TO AMEMBASSY BEIRUT PRIORITY
INFO SECSTATE WASHDC 804
USDOC WASHDC
LIMITED OFFICIAL USE DAMASCUS 1120
BEIRUT FOR RTDO LEFEAVER
E.O. 11652: N/A
TAGS: BEXP, SY
SUBJ: DAMASCUS US INTERNATIONAL FAIR
1. SUMMARY: TO ASSIST YOU IN YOUR PLANNING FOR COMMERCIAL PRESENCE,
ON JUNE 8 DURING MEETING BETWEEN DPO
GNEHM AND FAIR DIRECTOR GENERAL HAFEZ, CURRENT
STATUS OF 51 AMERICAN FIRMS, WHICH HAVE ALREADY APPLIED
TO PARTICIPATE IN FAIR, AROSE. HAFEZ MADE TWO POINTS
OF INTEREST. NORMALLY EACH GOVERNMENT IS RESPONSIBLE
FOR EXHIBITS OF ITS NATIONAL FIRMS. SECONDLY, NOW THAT
USG IS PARTICIPATING OFFICIALLY, IT IS RESPONSIBILITY
OF USG TO CONTROL USE OF QUOTA FOR DUTY-FREE IMPORTATION
OF GOODS BY ALL AMERICAN FIRMS INCLUDING 51. QUITE OBVIOUSLY
WE WILL BE MORE INVOLVED WITH THESE 51 CONSUMER-TYPE
U.S. FIRMS THAN WE HAD PREVIOUSLY EXPECTED. END SUMMARY.
2. ON FIRST POINT HAFEZ ASKED IF WE PLANNED TO GIVE
SPACE FOR 51 AMERICAN FIRMS WHICH HAVE ALREADY APPLIED
TO PARTICIPATE. GNEHM RELATED CONVERSATION WITH MINISTER
IMADI (DAMASCUS 1075) AND INDICATED OUR DECISION WAS TO
LEAVE CONSUMER COMPANIES AS THEY WERE AND TO TRY TO EN-
COURAGE SOME ADDITIONAL COMPANIES MORE DIRECTLY INVOLVED
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IN DEVELOPMENT RELATED ACTIVITIES TO PARTICIPATE IN USG
PAVILLION. HAFEZ AGREED INDICATING THAT SINCE COMPANIES
(AGENTS) ONLY INTERESTED IN SALES OF PRODUCTS IMPORTED
DUTY-FREE, HE SAW NO REASON FOR THEM TO PARTICIPATE.
GNEHM POINTED OUT THAT WHILE USG HAD SOME PREFERENCE FOR
THEME IN US PAVILLION, WE STILL SUPPORTED PARTICIPATION OF
OTHER AMERICAN COMPANIES REGARDLESS OF THEIR PRODUCTS.
AFTER FURTHER CONVERSATION, IT BECAME CLEAR THAT FAIR NEEDS
SPACE ELSEWHERE AND IF WE DO NOT CARE ENOUGH TO INCLUDE
THEM IN OUR PAVILLION, THEY DO NOT SEE ANY PARTICULAR
REASON TO DO ANYTHING FOR THEM EITHER. WE MAY WELL HAVE
TO CONSIDER ARRANGING SOME SPACE (PREFERABLY OUTSIDE) FOR
THE AMERICAN FIRMS WHO HAVE ALREADY ASKED TO PARTICIPATE.
3. HAVING SAID THIS THERE ANOTHER REASON WHY WE NOW HAVE
TO CONCERN OURSELVES WITH THESE 51 COMPANIES- THE DUTY-
FREE IMPORT QUOTA. HERE IS BEST DESCRIPTION WE HAVE BEEN
ABLE TO GET OF THE QUOTA PROBLEM.
4. EACH COUNTRY WHICH DECIDES TO PARTICIPATE RECEIVES A
QUOTA TO IMPORT DUTY FREE GOODS FOR DISPLAY AND SALE IN
COUNTRY'S PAVILLION. THIS QUOTA IS BASED ON AMOUNT OF
SPACE RESERVED FOR NATIONAL EXHIBIT. THIS QUOTA, IN
ADDITION, PROVIDES AN INTERESTING LOOPHOLE IN THE SYRIAN
CUSTOMS LAW IN THAT THE COUNTRY AND/OR COMPANIES MAY IMPORT
GOODS NORMALLY PROHIBITED FROM IMPORTATION, SUCH AS HOUSE-
HOLD APPLIANCES, COSMETICS AND THOSE FOOD PRODUCTS WHICH
COMPETE WITH SYRIAN FOOD PROCESSING PLANTS. AS A RESULT
SYRIAN AGENTS PARTICIPATE IN THE FAIR ON BEHALF OF AMERICAN
FIRMS TO REAP LIMITED PROFITS FROM SALE OF SUCH IMPORTED
GOODS. IN THOSE CASES WHERE THERE IS NO NATIONAL PAVILLION-
WHEN THERE NO OFFICIAL GOVERNMENT PARTICIAPTION - BUSINESS
FIRMS (OR AGENT) OF A GIVEN NATIONALITY ARE PERMITTED TO
COMBINE THEIR PRIVATE PARTICIAPTION TO OBTAIN DUTY-FREE
QUOTA.
5. AGENTS OF AMERICAN FIRMS HAVE SINCE 1965 GROUPED THEM-
SELVES TOGETHER IN THE INTERNATIONAL PAVILLION TO OBTAIN
DUTY-FREE QUOTA. THIS YEAR TO DATE 51 FIRMS HAVE SO APPLIED
FOR THIS YEAR. WITH THE USG DECISION TO PARTICIPATE THESE
FIRMS LOSE THE QUOTA SINCE IT IS NOW GIVEN TO USG. THIS
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HAS, IN FACT, ALREADY LED TO SEVERAL LOCAL AGENTS CALLING
AT USINT TO APPLY FOR PERCENTAGE OF USG QUOTA. WE CAN
EXPECT TO HEAR FROM ALL 51 FIRMS AS WELL AS OTHERS WHO
ARE BOUND TO LEARN VERY SOON THAT USG IS PARTICIPATING.
IN FACT OUR PARTICIPATION IS A WINDFALL TO THESE FIRMS AS
PREVIOUSLY THEY WERE ENTITLED TO ONLY A 90,000 SYRIAN
POUND (L. .) ($24,658) QUOTA FOR ALL. WITH OUR OFFICIAL
PARTICIPATION- AN INCREASE IN EXHIBIT SPACE - THE
QUOTA IS NOW 120,000 L.S. ($32,877).
6. THE OBVIOUS PROBLEM IS HOW DOES USG ACT NOW THAT WE
HAVE BEEN PLACED IN THE MIDDLE. OUR PREFERENCE IS TO
FOLLOW SAME PROCEDURE THAT COMPANIES WOULD HAVE FOLLOWED
HAD WE NOT BEEN PARTICIPATING OFFICIALLY. UNDER THIS
ARRANGEMENT THE COMPANIES ELECT A CHAIRMAN WHO SITS DOWN
WITH ALL LOCAL AGENTS AND PRO-RATES NATIONAL QUOTA AMONG
VARIOUS COMPANIES. IN THIS WAY FINAL DECISION IS TOTALLY
IN THE HANDS OF BUSINESS COMMUNITY. ALL OF THIS ASSUMES, OF
COURSE, THAT USG ITSELF HAS NO REASON TO USE QUOTA ITSELF.
AS WE UNDERSTANT IT, ITEMS WHICH WE ARE IMPORTING FOR
PAVILLION ARE TO BE EXPORTED FROM SYRIA AND THUS ENTER
DUTY-FREE.
7. THE OTHER OBVIOUS OPTION IS ACCEPT THAT QUOTA
BELONGS TO USG AND MAKE NO ATTEMPT TO TRY TO APPORTION IT.
COMPANIES MAY PARTICIPATE IN FAIR EVEN WITHOUT QUOTA; BUT
THERE LITTLE LIKELIHOOD THEY WILL DO SO AS PRIMARY PURPOSE
IS TO IMPORT DUTY-FREE GOODS FOR SALE. THE OBVIOUS DRAWBACK
TO THIS COURSE OF ACTION IS THAT OTHER NATIONAL PAVILLIONS
DO GIVE THEIR QUOTAS OUT TO THEIR NATIONAL FIRMS. AND IN
FINAL ANALYSIS WE ARE HERE TO PROMOTE REPUTABLE AMERICAN
BUSINESSES REGARDLESS OF THEIR PRODUCTS.
SCOTES
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