Regional and Global Integration

Realizing the interdependence of the economies of the world, Jordan has taken the lead in a number of areas aimed at integrating its economy with the region and the world. On the trade side, the government is determined to further liberalize the trade regime in order to improve the efficiency of Jordanian firms and meet the challenges of increased international competition.

Jordan has also launched several formal rounds of negotiations for accession to the World Trade Organization, and has submitted a detailed memorandum to WTO members describing the status and the prospects of the country's economy with special emphasis on trade. The response of the WTO to this memorandum has been positive so far, and Jordan may become a member in the WTO in the first half of 1999.

The Jordan-European Union Free Trade Agreement and other Agreements

The Partnership Agreement with the European Union is one of the early benefits and a significant manifestation of Jordan's drive toward integrating its economy both on a regional and global level. The agreement calls for the gradual removal of trade barriers and the establishment of a free trade zone with the European Community over a twelve year period.

In addition to benefits in the political, social and cultural fields, the new Partnership Agreement promises distinct economic yields for Jordan's development. The accord, which will come into force on January 1, 1999, will:

• encourage more direct European investment in Jordan;
• provide free access to EU markets for the Kingdom's agricultural and industrial products; the Partnership Agreement also allows for future increases in the quotas and the variety of agricultural produce that Jordan can export to the EU; and,
• facilitate the transfer to Jordan of state-of-the-art technology.

Moreover, the EU has pledged to set up a special fund for assisting Jordanian industries to adjust to the requirements of the agreement, enhance their export capacity and improve their competitiveness. Currently, Jordan is hosting the Business Service Team, a group of local and European experts funded by the EU that provide technical and managerial support to businesses in Jordan.

The Jordan-US Bilateral Investment Treaty

In July 1997, Jordan and the United States signed a bilateral agreement on the encouragement and reciprocal protection of investment. The agreement emphasizes the desire of both nations to promote greater economic cooperation between them, and to mutually allow the free flow of investment between both countries. The agreement:

• grants investors from both sides the right to move their capital freely;
• awards US investment in Jordan national treatment or MFN, whichever is better;
• requires that all laws, regulations, procedures, administrative practices, etc., that are directly or indirectly related to US investment be published and made publicly available; and,
• allows financial transfers, without any form of delay, into and out of Jordan.

Jordan has concluded similar agreements with Germany, Switzerland, France, the United Kingdom, Romania, Turkey, Malaysia, Tunisia, Yemen, Egypt, Italy, Algeria and Indonesia.

The Qualifying Industrial Zones

In March 1998, Jordan and Israel signed a bilateral agreement designating El Hassan Industrial Estate in Irbid as Jordan's first Qualifying Industrial Zone (QIZ). The QIZ has attracted a very fast inflow of foreign investment, as it provides investors the unique opportunity of full duty-free access to the US market for any goods produced within the zone. Jordan benefits greatly from the investment, in the form of increased employment opportunities for Jordanians and a transfer of technology.

The QIZ, which was first announced during the 1997 MENA Conference in Doha, Qatar, requires that Jordanian and Israeli manufacturers should each contribute an input of at least 11.7% of the investment capital.

The success of El Hassan Industrial Park has prompted the establishment of another QIZ, south of the Sheikh Hussein border crossing in the Jordan Valley. The US$ 280 million joint Jordanian-Israeli industrial park straddles the border between the two states. The park is expected to open in its first phase in late-1999 or 2000. El Hassan Industrial Estate in Irbid is also slated for major expansion, due to the overwhelming demand for space there. Other areas in the Kingdom may be designated QIZ in the near future.