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Jordan-Syria trade agreement: Arab trade makes the right step, opens Amman to the world

Jordan's eagerness to strengthen its inter-Arab trade relations have often been regarded a cornerstone for establishing an Arab common market.

Jordan's eagerness to strengthen its inter-Arab trade relations have often been regarded a cornerstone for establishing an Arab common market. Yet the recent ratification of the US-Jordan Free Trade Agreement last month was seen a threat to such a long-awaited dream. Jordanian economists, meanwhile, see in Jordan's trade agreement with Syria this week, a step in the right direction. Economists noted the Jordan-Syria agreement helps Jordanian merchants and investors extend their businesses to other Arab countries, as Syria currently enjoys open trade relations with many Arab countries. "Inter-Arab trade agreements are healthy when it comes to the quality and quantity of products exported between Arab countries," said Munir Hamarneh, professor of economics at the University of Jordan. "Hence, we need to diversify our exports to include products that are not available in other Arab countries." What makes the Jordan-Syrian agreement different from the one signed with Washington is the size of the US market would pave the way for Jordanian products to reach the American consumer. In the case of the inter-Arab agreements, including Syria's, Jordanian products remain subject to a margin of customs tariffs that later could hinder the flow of some of the Jordanian products to the Arab markets.

"Each Arab country retains the right to protect its own products," Hamarneh told The Star. "Arab industries are very much alike and most of Jordan's products have rival and competitive products in other Arab countries." The free trade agreement with Syria, which will become effective in February 2002, is expected to double the trade balance between the two countries over the next three years to JD 200 million, as it used to be five years ago. Samer Al Tawil, secretary-general of the Ministry of Trade and Industry, noted trade exchange between the two sides is on the rise. In the first seven months of 2001, the trade volume reached JD 39 million and is expected to increase to around JD 75 million.

The agreement between the two countries named products, including confectionery and textiles, to be included under the tariff exemption. Hamarneh stressed Syria has a strong and promising textile industry that is well received in Arab and foreign markets.

Similar to Damascus, Jordan has just reached an agreement with Iraq to bulk their trade balance to around $1 billion in 2002. The agreement also aimed to quicken the use of the $450 million trade protocol between the two countries.

Economic observers believe trade relations with Iraq were the most significant for Jordan as the two countries share historic, political and economic co-operation. That said, the two countries have used up only 60 percent of this year's trade protocol.

"Jordan's economy faces mounting challenges because of the rapid political and economic developments in the world. This forces us to find better chances to secure sustainable growth in economic relations with Arab and foreign countries alike," said Reem Badran, director-general of the Jordan Investment Corp.

Her words flourish as efforts are in full swing to watch over the potential economic growth in Jordan in the aftermath of the attacks on Afghanistan. Similar to Badran, economists fear the US-led strikes may hinder the government's attempts to achieve a substantial growth in the economy, estimated at 4 percent.

But such growth can't be achieved unless there is level ground for a trade balance between the Kingdom and the world, including Arab countries. Deputy Prime Minister and Minister of Economic Affairs Mohammed Halaiqa noted four factors play a key-role in developing the Jordanian economy: the Arab Free Trade Market, the EU-Jordan Association Agreement, WTO membership, and the recent FTA with the US. "Each of these factors can influence the local economy positively. This can be sustained by pursuing a market economy, which Jordan is very much familiar with," Halaiqa added.

Economists, on the other hand, agree the government is making use of the FTA with the US to invigorate its exports. Despite the fact that the US-Jordan FTA would eventually benefit the whole of the economy, it is still too early for Jordanians to weigh in. We should not forget the regulations and procedures Jordan must undertake to adjust its economic sectors to meet FTA objectives.

In this regard, the government feels positive about the extent of its free trade ties with its Arab counterparts that enhance mutual investments among Arab merchants.

But calls were heard recently urging the government to give a hand to the private sector to improve its businesses and make it more competitive. One of the calls requested the establishment of a JD 50 million fund to upgrade local industries to make them meet coming global challenges.

Moreover, the Jordan-Syrian talks also highlighted ways to bolster non-conventional economic relations. These include joint water projects on the Yarmouk River, the gas pipeline that extends from Egypt and the power-generating network, in which six Arab countries are participating.

Prime Minister Ali Abul Ragheb pointed out Tuesday that the government is working on joint projects with Arab countries worth JD 1 billion. He called on the private sector to take the initiative and participate in these projects, including the oil pipeline between Iraq and Jordan and the development of the Aqaba Special Economic Zone. "These projects require an efficient and strong infrastructure. I believe the private sector in the Kingdom is fully aware of the needs and requirements to make this infrastructure a dream come true," added the Premier. He noted that the private sector in Jordan can create partnerships with foreign companies to work on these potential projects.

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