|Jordan-US Free Trade Agreement
|Ten months in, analysts debate effectiveness.
Some two years after the signing of the Free Trade Agreement (FTA) with the US, Jordan has yet to reap any real reward, though economists believe the opportunity remains and stressing patience in the early stages of the program.
With more than JD 350 million in trade volume between the two countries, Jordan's access to the US markets seem potent so long as local businessmen and merchants focus their attention on what the market desires.
According to the Ministry of Industry and Trade (MIT), Jordanian exports to the US under the FTA are worth $3 million, equal to one percent of the $230 million Jordan already exported to the US in the first half of this year.
Observers warn challenges are increasing for Jordan as the US administration looks into more FTAs with other countries in the region and the Far East. Recent press reports indicate Egypt, Morocco, Turkey, Vietnam and Singapore are all being considered potential FTA trade zones in the coming months. Sources at MIT indicate Jordan is closely watching these developments. They indicate future FTAs with the US will take time before becoming effective.
The Ministry's Secretary-General, Samer Al Tawil, explained the government has made plans to seize FTA opportunities soon, pushing private sector initiatives and upgrading the quality and quantity of exports.
"The challenge for us lies in developing the competitiveness and quality of our exports," Al Tawil told The Star. "Jordan already enjoys access to US markets, thanks to the Qualified Industrial Zones (QIZs) and foreign investments." Jordanian exports to the US are currently estimated at $230 million, something Al Tawil assured would grow over time by 50 percent to some $350 million by the end of 2002.
Jordanian exports to the US are primarily marble, textiles, foodstuffs, precious stones and industrial products. Local pharmaceuticals have to wait for US Food and Drug Administration (FDA), which puts conditions on the access of generic drugs to US markets.
Jordan is the fourth country to sign an FTA with the US, following Israel in 1985, then Canada and Mexico in 1994. From the US point of view, the trade agreement with Jordan provides a strategic partner in the region, since the Kingdom is a US ally in the Arab world. Recognizing this, Jordan has works tirelessly to make use of relations with Arab neighbors and Europe.
Criticism has begun amongst MIT officials and economists. Each blaming the other for a lack of mechanisms or initiatives to take advantage of US markets. Although Al Tawil stressed government efforts to support the private sector's efforts, local merchants have condemned the government for not showing any real interest in providing them what they need.
Compared to Jordan, countries such as Egypt and Turkey are significant trading partners with the US. Statistics indicate Egyptian exports to the US this year will reach $900 million, almost one-third textile. Turkish exports to the US are worth $3.1 billion. What concerns Jordanians most is the tremendous acclaim Egyptian and Turkish exports receive in the US for their quality.
The question remains: What type of assistance does the private sector require? "Jordanian industry will be negatively affected upon entering new US markets. We need to expand our industry to the US by enhancing preferential trade ties with the Americans," explained Mohammed Al Mohtasseb, member of the Amman Chamber of Trade. He said the Jordanian garment industries would have to grow faster, in both quality and quantity.
Halim Abu Rahmeh, director general of the Jordan Exporters Association, sees US efforts at additional FTAs in the Arab world as clear evidence of Jordan's restricted opportunity. "It should be clear to Jordanian merchants and exporters that Jordanian exports have a limited potential to reach US markets. These potentials require not only anticipation, but a great deal of hard work and dedication."
Abu Rahmeh did emphasize the opportunity Jordan will have when the US has signed additional FTAs in the region. "Jordan can play a regional role, enhancing its exports to the US through mutual cooperation with Arab counterparts with the same access to American markets," added the economist.
Al Tawil agrees, saying Jordan can increase its chances if other Arab countries sign free trade agreements with the US. "The Arabs have worked for decades to integrate their trade into one market. Other Arab FTAs with the US can serve as the cornerstone of building such a market in the future," he explained.
Jordan's Ambassador to the US, Karim Kawar, recently explained how the US-Jordan FTA is a bilateral accord. "Through this agreement we can attract more US investments to Jordan and increase the potential to reach US markets," he said. "The US market has its own features, which mostly depend on the quality of services we can provide for American citizens."
Kawar explained that the US is not a single market, but one with differing tastes and attitudes. Some Jordanian products may have greater success in the West than the East for instance. "Such attitudes can be utilized by intelligent marketing and promotional campaigns. These campaigns are what Jordan must work on in future," he explained.
"Such service must be promoted from the origin-Jordan-where the public and private sector must work together to increase the quality of national exports to the US. When American citizens want to buy Jordanian products, they pay attention to quality as a reason for purchase," said Kawar Al Tawil appeared more optimistic, reassuring Jordanian trade with the US would remain high. "Jordan's place in the US market is safe. No one is going to steal it. Time is on our side. All that is required is for us to produce products of adequate quality for US markets."