Useful information

Joining the WTO (World Trade Organization)

On April 11th, 2000, Jordan officially became the WTO’s 136th member. Jordan signed a set of agreements allowing the access of foreign products into its local market. In order to conform to the Organization’s requirements, Jordan had to either modify the already existing laws, or legislate new ones.

These laws are particularly concerned with registered trade names, copyrights, patents, designs and draftsmanship, integrated circuits, production secrets and unfair competition, geographical indications and plants varieties.

Furthermore, substantial modifications had to be made on laws concerning customs duty, taxes and import duties, and non-Jordanian investments.

Agreements related to joining the WTO

Bern Convention
On July 28th, 1999, the Kingdom ratified the Bern Convention dealing with the protection of literature and art.
The Intellectual Property protection laws agreements
Jordan is committed to the protection of intellectual property through laws concerning registered trade names, patents, and unfair competition.
WIPO copyright treaty.
WIPO Performance and Phonograms Treaty (WPPT).
The International Convention for the Protection of New Varieties of Plants (UPOV 1991).

IMF agreements

Under the IMF aegis, some reforms, such as the introduction of VAT and privatizations were set up. The IMF has urged the Jordanian authorities to particularly pursue the reduction of the budget deficit and the reforming of public systems of social protection pensions.

Regional Agreements

FTA agreement

In September 2001, the President of the United States signed a Free-Trade Agreement (FTA) between Jordan and the United States. The agreement came into effect on December 17th, 2001. The target of this agreement is the establishment of strong economic relations in order to increase the living standards and to promote the economic growth. This agreement covers goods and services, intellectual property, environment, employment and e-commerce.
This Free-Trade Agreement aims at removing the customs duties between both countries according to a calendar planned for 10 years. However a safeguard clause is anticipated in the case of a strong penetration of American products bringing too much distortion.

The EU-Jordanian agreements

In 1997, some agreements (called Euro-Mediterranean Agreement Association) were signed with the EU. These agreements replace those signed in 1977. They came into effect on May 1st 2002. They aim at establishing a free-trade area between the EU and Jordan in 2010 and have a social, political and cultural component. This free-trade area is founded on a simplification of the accumulated rules of origin prevailing over the former agreement. In addition, the Kingdom is committed to dismantling the tariff barriers, particularly those on raw materials and on capital equipping the industries and finally to lowering the tariffs on semi-finished and finished products. From its side, the EU opens its market to the agricultural products. Source: Jordan Embassy in Washington.

Inter-Arab agreements

The MENA agreements (Middle East North Africa) Algeria, Bahrain, Egypt, Iran, Iraq, Jordan, Kuwait, Lebanon, Libya, Mauritania, Morocco, Oman, Qatar, Saudi Arabia, Somalia, Sudan, Syria, Tunisia, Yemen, United Arab Emirates. There are thirty three signatory countries of MENA agreements. The objective is to contribute to the stability and the construction of an economic zone. Furthermore, Jordan is committed to liberalizing access to foreign importers and investors, and this would be through a wide range of services.

AFTA

In 1998, inter-Arab agreements (still called AFTA, Arab Free Trade Agreement) were signed. But Jordan also signed bilateral agreements with Bahrain, Kuwait and Libya.

Bilateral agreements

Jordan signed some bilateral agreements. Among the signatory countries figure :
    The United States
    Syria
    Kuwait
    Bahrain
    Egypt
    Algeria
    Libya

The Agadir agreements
The Declaration of Agadir” signed in 2001 between Egypt, Morocco, Jordan and Tunisia has the role of accelerating the regional integration process with the creation of an extended free-trade area open to all Arab countries. This agreement will permit facilitating the application of agreements already signed with the EU, in addition to the four partners, in particular, according to the rules of the origin.

Jordan and the Palestinian National Authority
Lastly, agreements between Jordan and the Palestinian National Authority were signed in order to establish a free-trade area in 2007 with identical standards. An agreement anticipates as well a joint industrial park near Jericho.

The Jordan-Syrian agreements
The agreement concluded between Jordan and Syria will open a new potential market of 20 million consumers to the Jordanian exporters. It removes the customs duties (30 % in Jordan but 80 % in Syria) on almost all of the products exchanged between both countries except for five of them: clothing, shoes, chocolate, biscuits and mineral water. These latter will be subject to a progressive lowering of tariff reaching 60 %, until the total exemption anticipated in 2005. The date will correspond in theory to the bringing into force of another agreement of free exchange widened to include all Arab countries: the Greater Arab Free Trade Area (GAFTA).
Jordanian exports to Syria, which reached 36 million USD in 2001, more than doubled in the first quarter of 2003 (16 million USD against 7 million USD).
Similarly, Syrian exports to Jordan (66 million USD in 2001), increased of some 77 % during the first three months of 2003 (19 million USD against 11 million USD). Among Syrian products, which Jordan usually buys, are fruits and vegetables, foodstuffs and clothing.
Source: Economic Department of the French Embassy-Jordan.

Franco-Jordanian agreements

The agreements concern the repatriation of subsidiaries profits and income taxes.
This agreement was signed in Amman on May 28th, 1987 and concerns both French and Jordanian taxes.

   QIZ

A privileged access to the American market was possible thanks to the creation of “QIZ” (Qualifying Industrial Zones). It concerns industrial parks allowing sale on the American market without quotas and with exemption from taxes. The main conditions of this agreement are related to production contents: products must contain 11.7% of Jordanian value-added, 8% of Israeli value-added and 15.3% of the West Bank or Gaza value-added. The QIZ allowed the creation of 45 800 jobs and contributed with an investment up to 540 million dollars since 1999. These zones allowed the investors of various origins such as the Chinese, the Pakistanis, and the Americans to produce textile and leather at lower prices.
However, textile represents 95 % of the total production of the QIZ. The clothing industry became the first industrial export sector. In addition, the QIZ made it possible to vitalize the exchange with the United States, passing from 13 million USD in 1999 to 400 million USD in 2002. Exports from QIZ are estimated in 2004 at 919.9 million USD.
However, these zones are threatened by the application of the WTO agreements: in 2005, the trade of textile must be entirely liberalized.

    ASEZ

The port of Aqaba, the country's unique maritime outlet, constitutes, as well, an economic special zone (ASEZ, Aqaba Special Economic Zone) with low taxes, a minimum of administrative authorization and an attractive investment policy.

   The first 8 clients of Jordan in 2005

We must notice that the free-trade zones rank 8th with an amount of 37 895 203 JD.
The amount of imports coming from the European Union reached 63 250 000 JD, in the year 2004, including 1 543 000 JD coming from France.

Around 95% of the QIZ production is destined to USA, which makes this country Jordan’s number one client.

   The first 8 suppliers of Jordan in 2005

The amount of the exports coming from the European Union reached 1 294 156 000 JD, in the year 2004, including 159 716 000 JD coming from France.

Source : Department Of Statistics (www.dos.gov.jo)

VOLUME OF INVESTMENTS IN JORDAN (JD)

Source: JIB (Jordan Investment Board) www.jordaninvestment.com
1 USD = 0,71 JD (fix rate)

   Franchise :

The franchise is the exporter’s favorite form, especially when it comes to opening shops of current consumption goods and services. This penetration form has been particularly developed for about 12 years.

The most concerned sectors are :
    Clothing industry
    Jewelry business
    Cosmetic and perfume industries
    Hotel business
    Food industry

Specific legislation does not exist. However, laws dealing with free competition and intellectual property offer a legal framework sufficient to protect the franchise. Generally, the franchise contract includes very detailed stipulations clarifying the obligations of each of the parties, and thus, necessitates resorting to a specialized law firm.

The main brands, among others, introduced into the Jordanian market are :
    Etam 
    Mango 
    Zara 
    Benetton
    Celio

Source : Economic Department of the French Embassy/Amman.

    Agents :

Agents have a strong presence in the Jordanian market. Thus, French automobile constructors have exclusive agents. Citroën, Peugeot and Renault distribute their brands via these agents. The same applies to Danone.

    Joint-venture :

A joint venture is an agreement between two partners from different countries and consists of the creation or the acquisition of a joint subsidiary in the market of the foreign partner. This cooperation is considered on long-term.

The creation of a joint subsidiary implies that each of the partners will contribute his unique specific skills, whether they are commercial (distribution networks…), technical (production tools, license…) or managerial, in addition to financial and human resources, with a common spirit of cooperation. The partners will share management, control, risks and profits associated with the common structure. 

    Retail distribution :

Retail distribution was modernized very recently. Selling of food products is assured through three channels: civil and military co-operatives, supermarkets and groceries, wholesalers and markets. However, evolution will cause a tendency towards concentration on the development of supermarkets and large commercial/trade centers (mall) and, thus, central purchasing agencies.

    E-commerce :

Wholesale and retail trade is the sector that employs the most people in Jordan (more than 17% of the active population).

E-commerce success comes from companies employing traditional distribution channels and which are seeking new means in order to increase their market share in this way. Jordanian companies do not depart from this rule and oriental pastry producers have been e-commerce success stories.
Depending/relying on strong demand in the local market, they can absorb the cost of website development to open up to the world market.

There is a specificity that is peculiar to Jordan: the number of expatriates is significant and there are important opportunities for this distribution channel (example: the success of flower shops through distribution networks, via Internet site).

The banking sector is being consolidated and several small banks are competing. The Central Bank rigorously supervises the whole banking system, which is in conformance with international standards.

The means of payment : 
    SWIFT 
    Bill of exchange 
    Commerce promissory note
    Documentary transfer (delivery) 
    Documentary credit 
    Credit letter