Imports from US surpass Jordanian exports under QIZ, FTA arrangements

Jordan Times | 22 January 2010

Imports from US surpass Jordanian exports under QIZ, FTA arrangements

By Abeer Nouman

AMMAN — After peaking at $1.42 billion in 2006, Jordanian exports to the US dropped to $866 million through the first 11 months of 2009 whereas the Kingdom’s imports from the US rose to $1.09 billion during the same period of last year.

The value of Jordanian exports began to decline in 2007 when the total amounted to $1.33 billion and $1.14 billion in 2008.

Jordanian commodities are exported to the US mainly under the Qualifying Industrial Zones (QIZ) agreement or the Free Trade Agreement (FTA) signed between Jordan and the US.

Jordan’s main exports to the US include apparel, jewellery and machinery while imports include vehicles, machinery, aircraft, cereals and electrical and medical equipment.

Industry and Trade Secretary General Muntasir Oqla attributed the drop in Jordan’s exports to the US, particularly from the QIZs, over the past two years to the global financial crisis.

“The purchasing power of US consumers declined and this led to a drop in demand on apparel and on buying orders,” he said in a telephone interview, noting that apparel represent the OIZ principal exports.

According to Oqla, fierce competition from Egyptian QIZs also contributed to the decline.

US Embassy Economic Counsellor Natalie E. Brown said: “The decline is related to what is happening globally,” adding that Jordan’s exports under the FTA are increasing compared to those under the QIZ.

“Both the QIZ and FTA programmes are complimentary and are available to exporters today,” the embassy’s economic deputy chief, Ali Lejlic, indicated. “Traders can export their products under either arrangement or both.”

Lejlic added: “Exporters must meet the requirements to be able to export under those arrangements. Exports under the QIZ programme must be from a designated QIZ factory.”

Under the FTA, Jordanian products which have at least 35 per cent value-added content from Jordan can be exported to US markets without customs duties while exports under the QIZ agreement, which promotes regional economic cooperation, requires an 8 per cent input from Israeli or West Bank sources, Lejlic indicated.

By putting together assembly, labour and packaging, products can make up the value added, US Embassy Commercial Counsellor Sheryl Maas explained.

Underlining the FTA signed between the two countries, she said: “The agreement makes Jordan a more attractive market,” noting that there is still room for many opportunities to increase the trade volume between the two countries.

Maas noted that the FTA is advantageous to traders if they start to use it, emphasising the importance of companies learning more about the accord and about its requirements.

Commenting on Jordan-US trade agreements, a Jordanian economist said trade between Jordan and the US increased, in general, in light of the two accords. With regard to the FTA, he said: “Traders faced difficulties in the first few years due to their lack of knowledge with regard to requirements under the FTA,” such as packaging conditions or approval from the US Food and Drug Administration.

He added that competition from Egypt’s QIZs affected the exports volume of the QIZs in Jordan.

To create more jobs for Jordanians, the Kingdom and the US agreed last year to establish satellite factories in urban areas, Brown indicated.

Sterling Apparel Manufacturing Company is now operating a satellite factory in Madaba where 250 Jordanians are employed.

In Shobak, Camel Textile Corporation is operating where about 100 Jordanians, almost all women, are working. Other QIZ satellite factories are expected to begin operations in 2010, Brown added.

At present, the QIZ factories employ some 30,000 people, including 9,000 Jordanians.

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source: Jordan Times