VZCZCXRO4694
RR RUEHBC RUEHDE RUEHKUK RUEHROV
DE RUEHAM #4678/01 3291403
ZNR UUUUU ZZH
R 251403Z NOV 07
FM AMEMBASSY AMMAN
TO RUEHC/SECSTATE WASHDC 1010
INFO RUEHEE/ARAB LEAGUE COLLECTIVE
RUEHBJ/AMEMBASSY BEIJING 0145
RUEHIL/AMEMBASSY ISLAMABAD 0260
RUEHAK/AMEMBASSY ANKARA 0570
RUEHGP/AMEMBASSY SINGAPORE 0044
RUEHTA/AMEMBASSY ASTANA 0002
RUEHBS/AMEMBASSY BRUSSELS 0240
RUEHRK/AMEMBASSY REYKJAVIK 0005
RUEHNY/AMEMBASSY OSLO 0078
RUEHSW/AMEMBASSY BERN 0133

UNCLAS SECTION 01 OF 03 AMMAN 004678 
 
SIPDIS 
 
AMEMBASSY OTTAWA 
DEPARTMENT OF COMMERCE WASHDC 
DEPARTMENT OF AGRICULTURE WASHDC 
 
 
SIPDIS 
 
STATE PLEASE PASS TO USTR 
STATE FOR EEB, NEA/RA, AND NEA/ELA 
CAIRO FOR AGCOUNS 
 
E.O. 12958: N/A 
TAGS: ETRD ECON EAGR WTRO JO
SUBJECT: U.S. Remains Jordan's Top Trading Partner as Jordan Builds 
Trade Relations Around The World 
 
Refs: A)  Amman 3755 
 B)  Amman 3472 
 
¶1.  Summary:  Jordan's trade deficit increased 12.3 percent to JD 
3.807 billion (USD 5.377 billion) during the first nine months of 
¶2007.  Although exports to the United States have slightly decreased 
in 2007, Jordan has increased imports of American goods by 
approximately 8.1%, yielding an overall increase in U.S.-Jordan 
trade and a more favorable trade balance towards the United States. 
While the U.S. remains Jordan's top trading partner, the GOJ 
maintains an active trade relationship with neighboring countries, 
and has been energetically pursuing enhanced trade arrangements with 
Canada, Pakistan, Turkey, China, and Kazakhstan.  The Greater Arab 
Free Trade Area countries, as a whole, represent Jordan's largest 
export-import market which includes the purchase of crude oil from 
Saudi Arabia.  Jordan also imports a significant amount of products 
from the European Union (EU) and Asian countries, particularly 
China.  End Summary. 
 
Overall Trade 
------------- 
 
¶2.  The Department of Statistics (DOS) reported a rise in Jordan's 
total exports by 10.5% to JD 2.997 billion (USD 4.233 billion) 
during the first nine months of 2007.  Specifically, Jordan 
increased national exports of vegetables, pharmaceutical products, 
phosphates, fertilizers, and potash.  During this timeframe, Jordan 
also increased imports by 11.5% to JD 6.804 billion (USD 9.61 
billion).  As a result, Jordan's trade deficit widened to JD 3.807 
billion (USD 5.377 billion). 
 
U.S.-Jordan Trade 
----------------- 
 
¶3.  In 1998, the U.S., Jordan, and Israel designated Qualifying 
Industrial Zones (QIZ's) in Jordan, allowing goods produced in the 
zones to enter the U.S. duty and quota free contingent on meeting 
certain rules of origin, including a requirement for 8% Israeli 
content.  The QIZ's helped fuel Jordan's exports to the U.S. and set 
the stage for the U.S.-Jordan Free Trade Agreement (FTA), which 
entered into force in December 2001.  Jordan continues to laud the 
FTA as a model for its current and future trade regimes.  NOTE:  In 
addition to the QIZ agreement, Jordan and Israel have had a trade 
relationship since 1995.  For the period January - September 2007, 
Jordan exported JD 71.5 million (USD 100 million) worth of goods to 
Israel and imported JD 75 million (USD 106 million).  END NOTE. 
 
¶4.  According to the DOS, Jordanian exports to the U.S. decreased 
0.1% to JD 672.6 million (USD 950 million) during January - 
September 2007, compared to 673 million (USD 950.6 million) during 
the same period last year.  This change largely reflected a slight 
1.9% decline in Jordan's total garment exports to JD 650.6 million 
(USD 918.9 million) during the first three quarters of 2007. 
 
¶5.  However, Jordan imported JD 323.7 million (USD 457.2 million) 
from the United States during the first three quarters of 2007, 
representing a 8.1% increase over the same period in 2006.  This 
increase offset the decrease in Jordanian exports to the U.S., 
resulting in an overall rise in the total bilateral trade to USD 
1.41 billion.  It also decreased the U.S. trade deficit with Jordan 
to USD 492.9 million for the first nine months of 2007, compared to 
USD 527.7 million for January-September 2006. 
 
Greater Arab Free Trade Area: Exports to Iraq Rising 
--------------------------------------------- ------- 
 
¶6.  Jordan is part of the Greater Arab Free Trade Area (GAFTA) which 
has been in force since January 1998, and as a whole, represents a 
larger market than the U.S.  The GAFTA reached full trade 
liberalization of goods in January 2005 through full exemption of 
customs duties and charges for all 17 Arab members, with the 
exception of gradual reductions for Sudan and Yemen which are 
expected to benefit from full exemption by the end of 2010.  Jordan 
 
AMMAN 00004678  002 OF 003 
 
 
has also signed trade preference agreements and bilateral free trade 
agreements with several Arab countries, including Egypt (entered 
into force in 1999), Syria (2002), Morocco (1999), Tunisia (1999), 
the UAE (2001), Algeria (1999), Lebanon (1993), the Palestinian 
National Authority (1995), Kuwait (2005), Sudan (2003), and Bahrain 
(2005).  The Jordanian Ministry of Industry and Trade (MOIT) has 
noted that these agreements are applied in parallel to the GAFTA, 
with the GAFTA often providing more trade preferences than most of 
the bilateral trade agreements (www.mit.gov.jo provides more 
information on the provisions in each bilateral agreement). 
 
¶7.  During the first nine months of 2007, Jordan increased exports 
by 13% to JD 996 million (USD 1.4 billion) to the GAFTA countries. 
In particular, Jordanian exports to Iraq grew 2.8% to JD 265 
million, compared to JD 258 million during the same period last 
year.  Jordan also imported JD 2.155 million in goods from the 
GAFTA, which comprised 31.5% of Jordan's total imports.  Imports 
from these Arab countries, however, represented a 0.5% decrease over 
last year, including a notable 16% drop in imports from Saudi 
Arabia, which is the main crude oil exporter to Jordan. 
 
EU-Jordan 
--------- 
 
¶8.  In May 2002, the EU-Jordan Association Agreement went into force 
with the aim of creating a free trade area between Jordan and the EU 
Member States through the elimination of tariffs and the reduction 
of non-tariff barriers over a transitional period of 12 years. 
Specific provisions apply to trade in agriculture, with the goal of 
full liberalization by 2010.  Jordan also signed a Free Trade Area 
Agreement in 2001 with the European Free Trade Association (EFTA) 
states (Iceland, Liechtenstein, Norway, and Switzerland), which aims 
for complete trade liberalization by 2014. 
 
¶9.  In 2006, the Agadir Agreement between Jordan, Egypt, Tunisia, 
and Morocco went into force.  The Agadir Agreement adopted the 
Pan-EUROMED Rules of Origin system to allow diagonal accumulation of 
origin amongst member countries.  In other words, production input 
components originating in any of the Agadir countries, EU countries, 
or EFTA countries can be used towards meeting the rules of origin 
requirements for EU customs duties exemptions when exporting under 
the member countries' respective Association Agreements with the EU. 
 
 
¶10.  During the first nine months of 2007, Jordanian imports from 
the European Union rose 19.7% to reach JD 1.725 billion.  Jordanian 
goods, however, have still not been able to penetrate European 
markets under the EU-Jordan Association or Agadir Agreement to the 
desired level, demonstrated by only JD 81.1 million in exports to 
the EU during the first nine months of 2007. 
 
Expanding Trade with Asian Countries 
------------------------------------ 
 
¶11.  In 2004, Jordan and Singapore signed an agreement to establish 
a free trade area between the two countries that went into force in 
August 2005.  In addition to expanding bilateral trade ties, the 
agreement aimed to create new export opportunities for Jordanian 
products worldwide through the possibility of diagonal accumulation 
of origin with countries that have concluded free trade agreements 
with both Jordan and Singapore. 
 
¶12.  Although Jordan's trade with Singapore continues to consist 
primarily of imports totaling about JD 57 million (USD 80.5 million) 
from January to September 2007, more Jordanian products entered 
other Asian countries during this time period, demonstrated by a 
21.8% increase in Jordanian exports to India.  Jordanian imports 
from Asian countries, China in particular, also rose 16% to JD 1.971 
billion.  Jordanian officials report that according to test results, 
Jordan has not imported any of the tainted Chinese products that 
have emerged in the U.S. and other markets. 
 
Pursuing Trade Partners Across the Globe 
 
AMMAN 00004678  003 OF 003 
 
 
---------------------------------------- 
 
¶13.  As part of its efforts to expand markets, Jordan has pursued 
several other trade arrangements: 
 
- Turkey:  MOIT Secretary General Oklah told Econoffs November 13 
that Jordan and Turkey are entering the final negotiation stages on 
a free trade agreement, with the goal of signing an agreement by 
early December.  Oklah noted that trade between the two countries 
from January to September 2007 was about JD 300 million (USD 423.7 
million) with the trade balance largely in Turkey's favor, as Jordan 
imported JD 200 million (USD 282.5 million) worth of goods. 
 
- Canada:  During a July 2007 visit to Canada, King Abdullah 
expressed interest in entering negotiations for a free trade 
agreement.  Although developments like the resumption of Royal 
Jordanian airline flights to Montreal have demonstrated new business 
opportunities between the two nations, at present bilateral trade 
volumes are not very high, with the balance in Canada's favor. 
Imports from Canada stood at JD 41.2 million (USD 57.7 million) in 
2006, while Jordan's exports to Canada were JD 5.5 million (7.7 
million), according to the DOS. 
 
- Pakistan:  As reported in the Jordan Times, King Abdullah said 
during a November 2007 visit to Islamabad that Jordan is keen to 
conclude as soon as possible a free trade agreement with Pakistan. 
During the first nine months of 2007, Jordan exported JD 20 million 
(USD 28.2 million) to Pakistan and imported JD 11.7 million (USD 
16.5 million). 
 
- Kazakhstan: A memorandum of understanding will facilitate the 
regular importation of wheat from Kazakhstan, but does not 
constitute a free trade agreement, explained MOIT Secretary General 
Oklah (Ref A). 
 
- China: During the King's state visit to China in October 2007, 
China and Jordan signed an agreement on economic and technological 
cooperation.  According to the DOS, Jordan imported JD 707 million 
(USD 998.6 million) from China and exported only about JD 30.7 
million (USD 43.4 million) to China from January to September 2007. 
China imports chemical products, leather, and agricultural products 
from Jordan and exports chemical products and machinery. 
 
Visit Amman's Classified Web Site at 
http://www.state.gov.sgov.gov/p/nea/amman/ 
 
HALE