Cablegate: November 2008 Trade Policy Review of Jordan

R 191222Z NOV 08



E.O. 12958: N/A

SUBJECT: November 2008 Trade Policy Review of Jordan

1. SUMMARY: WTO Members conducted the Trade Policy Review of
Jordan on November 10 and 12, 2008. Jordan's Minister of Industry
and Trade Al-Hadidi stressed the importance the country attaches for
its first TPR and stated its top priority is to improve its business
climate in order to unleash its growth potential. Al-Hadidi stated
that Jordan is developing a national trade strategy to further
diversify exports, a new industrial policy to increase the
competitiveness of SMEs, and a new investment strategy to streamline
administrative procedures. Other Members highlighted the importance
of FDI in Jordan's economy and the need to further improve the
business climate to encourage more investment. Canada and the EC
both spoke favorably about Jordan's recent progress in GPA accession
and criticized Jordan's SPS measures relating to beef imports. END

Statement of the United States

2. The representative of the United States made the following

3. "Thank you, Chair. The United States is pleased to participate
in Jordan's first Trade Policy Review (TPR) since it joined the WTO
in 2000. The U.S. delegation warmly welcomes Jordan's Minister of
Industry and Trade Amer Al-Hadidi, Ambassador Breizat, and the rest
of Jordan's delegation. The government of Jordan's informative
report helped us understand developments in Jordan's trade policy
regime and practices since its WTO accession. The Secretariat's
report was similarly informative and comprehensive. I would also
thank Mr. Teepu Khan (of Pakistan) for his meaningful contributions
as discussant."

4. "The United States and Jordan have enjoyed close relations for
six decades, with 2009 marking the 60th anniversary of such ties.
United States-Jordan cooperation spans many of the economic and
security issues confronting the Middle East and the world."

5. "Since 1952 the United States has worked closely with Jordan to
improve the lives of Jordanian citizens. U.S. total development
assistance exceeds $5 billion (since 1952) and has funded a range of
projects such as health care, education, construction to increase
water availability, and support for microeconomic policy shifts
toward the free market. Jordan signed a Threshold Agreement with
the Millennium Challenge Corporation (MCC) in October 2006, and the
MCC subsequently deemed Jordan to be eligible for a Compact
Agreement in recognition of the country's progress on economic,
social, and political reform indicators. In December 2007, the MCC
Board of Directors re-selected Jordan to be eligible for MCC Compact
funding. We commend the government of Jordan for this notable

6. "Both the Secretariat's and Jordanian government reports
indicate that Jordan is pursuing a strategy of trade liberalization
at the multilateral, regional, and bilateral levels. The United
States commends Jordan's great strides, following its accession to
the WTO, to reform its economy and liberalize its trade regime. As
the Secretariat notes, Jordan's economy has shown resilience in a
challenging external environment and is likely to remain vulnerable
to international prices for energy and food. But, the Secretariat
notes, Jordan is addressing these and other structural problems
(including water shortage) through a policy agenda in which
privatization, investment, and trade liberalization play key roles.
This is a policy direction that the United States welcomes and
encourages. Jordan developed a new energy strategy in 2007 that
aims to develop more indigenous and renewable energy sources,
including oil shale, nuclear energy, wind, and solar power. Fuel
subsidies were eliminated in 2008. We recognize the value of these
formidable efforts, especially for a small economy so dependent on
external resources."

7. "The U.S.-Jordan Free Trade Agreement (FTA) entered into effect
in December 2001. It was the United States' third free trade
agreement, and the first ever with an Arab state. The Jordan FTA
achieves significant and extensive liberalization across a wide
spectrum of trade issues. It will eliminate all tariff and
non-tariff barriers to bilateral trade in virtually all industrial
goods and agricultural products within ten years."

8. "The United States and Jordan have gained from our expanding
economic relationship. Looking back to 1999, at a time when the
United States was working to support Jordan's accession to the WTO,
Jordan's goods exports to the United States were $31 million. Our
bilateral goods trade that year totaled $307 million. By
comparison, our total bilateral goods trade in 2007 totaled $2.2
billion, a 500 percent increase over 1999."

9. "U.S. goods imports from Jordan totaled $1.3 billion in 2007, a
6.6 percent decrease ($93 million) from 2006. But, U.S. goods
imports from Jordan are up 480 percent from their 2001 Pre-FTA
level. We note that since the FTA's implementation, non-textile FTA
exports from Jordan continue to grow, topping more than $150 million
in 2007. The growth in Jordan's FTA exports demonstrates the FTA's
important role in helping Jordan diversify its economy.
Furthermore, the Jordanian Government reports that more than 50,000
jobs have been created by Jordan's expanding trade with the United
States; and foreign direct investment, hugely important to Jordan's
economic growth, rose from more than $600 million in 1995 to greater
than $2 billion in 2007."

10. "While the FTA is a key part of the United States-Jordan
economic relationship, it is just one component of close bilateral
economic cooperation that began in earnest with joint efforts on
Jordan's accession to the WTO in 2000. U.S. efforts to support
Jordan's rapid and successful WTO accession were followed on the
bilateral front by the conclusion of the United States-Jordan Trade
and Investment Framework Agreement and a Bilateral Investment
Treaty. Agreements like these help bolster Jordan's efforts to
diversify its economy and promote growth, and at the same time
reduce reliance on exports of phosphates, potash, and textiles;
overseas remittances; and foreign aid. The government of Jordan has
emphasized information technology (IT) as a growth sector. In fact,
as the government states, Jordan has signed the WTO Information
Technology Agreement (ITA). Tourism is seen as another promising
growth sector."

11. "As the Secretariat suggests, 'Jordan could gain from further
dismantling its tariff and non-tariff barriers to trade.
Rationalization of the MFN tariff through the reduction of tariff
bands and rates should help reduce the distortions that result from
Jordan's proliferating investment incentives regime. Furthermore,
Jordan is subsidizing exports through income tax exemptions.' We
take this opportunity to remind Jordan of the WTO General Council
decision to grant a conditional extension for maintaining these
export subsidies until 2015 at the latest. This deadline is
serious, and we hope that Jordan and others are taking preparatory
steps now to honor that deadline."

12. "The government, in its report, states that 'Integration with
the international trading system is important element of
Jordan's overall economic growth strategy.' This is a welcome
statement, as is the statement that the 'Government of Jordan
recognizes and supports the importance of maintaining and
strengthening the central role of the WTO in coordinating trade
policies of its Members.' I would like to commend Jordan for its
efforts in negotiating accession to the Plurilateral Agreement on
Government Procurement. We appreciate the progress that has been
made in its GPA accession and are hopeful that it can be completed
this year. Jordan's accession will demonstrate the flexibilities of
the revised GPA for developing countries. We are, of course,
willing to continue to work with you to complete your accession. On
intellectual property rights, we appreciate the effort that the
Government of Jordan has made to update its copyright legislation to
strengthen its protection and enforcement. We urge Jordan to
undertake the same efforts for trademark legislation."

13. "Finally, we note that the Government of Jordan 'considers the
success of the DDA negotiations as paramount for its own prosperity
and for the region's and the global economy's prospects'. Let me
say that the United States will continue to work with Jordan to
strengthen and deepen our relationship and to achieve an ambitious
result in the Doha negotiations. That is, a result that includes
new market access in services, industrial goods and agriculture,
which could further enhance opportunities for Jordan to expand its
exports and its export markets. The United States looks forward to
working with Jordan toward bringing the Round to a successful
conclusion. And we wish you a successful TPR. Thank you."

Chairperson's Summary Remarks

14. The Chairman, Ambassador Agah of Nigeria summarized the meeting
as follows:

15. "This first Trade Policy Review of the Hashemite Kingdom of
Jordan has allowed us to improve our understanding of its trade and
related policies, and the developments since its accession to the
WTO in 2000. Our discussions have greatly benefited from the
participation of H.E. Amer Al-Hadidi, Minister of Industry and
Trade, and his delegation. We are also grateful for the
contribution of our discussant, Mr. Teepu Khan, and for the full
engagement of many Members."

16. "Members commended Jordan on its impressive economic
performance in spite of a challenging external environment. High
real GDP growth, relatively low inflation, and a declining public
debt are the fruits of an ambitious economic reform programme
centred on structural reforms and trade liberalization. While
Jordan's measures to liberalize its investment regime were welcomed,
it was also noted that foreign investment remains restricted in
certain activities, notably transport services. Members encouraged
Jordan to improve its business environment, strengthen
competitiveness and further open up its economy, with a view to
diversifying it."

17. "Members recognized Jordan's commitment to the WTO, including
the current round of trade negotiations. They also acknowledged
Jordan's participation in various regional and bilateral trade
agreements. It was noted that the reduction of bound tariff rates,
and further simplification and rationalization of Jordan's tariff
regime should contribute to better resource allocation. Some
Members encouraged Jordan to reform its government procurement
regime, and looked forward to its accession to the plurilateral
Agreement on Government Procurement. Clarification was sought on
why a penalty is charged at customs when importers fail to present
an importer card and as to why not all importers were eligible for
an importer card."

18. "A number of concerns were also raised, notably with regard to
certain aspects of Jordan's SPS regime, compliance with notification
obligations under the WTO, customs procedures (including customs
formalities), import prohibitions and licensing, price controls, and
internal taxation. Members also asked questions with respect to
technical barriers to trade; intellectual property; agriculture;
energy; manufacturing (including textiles and clothing); and
services. Jordan was reminded of its commitment to phase out export
subsidies by 2015 at the latest. Some Members also urged that
trade-related technical assistance be provided to Jordan."

19. "Members expressed their appreciation for the responses
provided by the Jordanian delegation to questions that were posed
during the review exercise, and looked forward to receiving written
answers to any outstanding questions within one month."

20. "In conclusion, Members congratulated Jordan on the positive
economic results it has achieved since its WTO accession. They
encouraged Jordan to pursue its reforms and improve its multilateral
commitments on goods and services, with a view to enhancing the
transparency and predictability of its trade regime, and adherence
to WTO principles. Members could help by keeping their markets open
for products and services of interest to Jordan."

21. "Once again, I thank Members for their active participation in
the first Trade Policy Review of Jordan and the Secretariat for the
excellent report. I also thank the interpreters for their usual and
efficient good work."


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