Cash-strapped Jordan aims high (page 1 of 2)

After spending several years carefully negotiating free-trade agreements with the United States, Europe and fellow Arab countries, Jordan is determined to gain a competitive advantage for Jordanian industries in world markets. And Washington appears eager to help them achieve success.

Why? Because the administration hopes that economic reforms and trade liberalization in Jordan will spur change throughout the region.

King Abdullah was one of the first heads of state to travel to Washington in the weeks following the September 11th terror attacks; his visit was welcomed as a gesture of support for Americans - at a time when they needed support the most.

It was indeed a gesture of support, but it also served another purpose: the trip was the final step in cementing an agreement to cut tariffs on nearly all goods and services exchanged between the two countries by 2010. President Bush signed into law the legislation needed to implement the Jordan-United States Free-Trade Agreement (JUSFTA).

First bilateral US FTA

The agreement was the first of its kind between the United States and an Arab country, and was years in the making. The deal gave both men what they wanted. It provided Abdullah with an important tool needed to shape Jordan - a country with limited natural resources, staggering internal debt, and high rates of poverty and unemployment - into a central trading depot in the region. The deal gave Bush a prototype for expanding trade partnerships throughout the Middle East.

Three years later, though, international trade specialists say JUSFTA's potential has not been fulfilled because the private sector has still not taken advantage of it.

"Neither side is happy with the level of trade and investment between Jordan and the US since the signing of the agreement," said Rasim Abderrahim, chief executive officer at the Export Expert Program and a former economic and commercial specialist at the American embassy in Jordan.

Nevertheless, commercial ties between the two countries have flourished. Exports from Jordan to the United States have jumped from $31 million in 1999 to $673 million in 2003. By 2003, Jordanian industries shipped 30 percent of their exports to the United States.

But this increase in trade has more to do with agreements the United States negotiated in the late 1990s with Israel and Jordan to promote relations between the two countries. The agreements allow goods that are partially produced in Jordanian qualifying industrial zones (QIZs) and Israel to qualify for duty-free tariffs in the United States. Textile exports produced in QIZs account for 90 percent ($587 million in 2003) of all Jordanian exports to the United States.

Abderrahim says the JUSFTA rules provide greater flexibility and opportunity. JUSFTA will eliminate all tariff and non-tariff barriers to bilateral trade in nearly all industrial goods and agricultural products; it provides intellectual property rights that will - among other things - require Jordan to provide copyright protection on the Internet and adhere to World Intellectual Property Organization treaties; and it includes requirements that the two countries maintain labor and environmental protections.

Public relations

As JUSFTA enters its third stage of tariff elimination in January, the Jordanian government is devoting more resources to publicizing the benefits of the agreement to US businesses.

"Not many people know about the arrangements that Jordan and the US enjoy in terms of the QIZs, in terms of the FTA, in terms of the bilateral investment treaty," says Maher Matalka, director of the economic and commerce bureau at the Jordanian embassy in Washington.