The Association Agreement

Full text of The Association Agreement

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Jordan- EU Association Agreement, Executive Summary

Framework

The EU Association Agreement with Jordan was signed in November 1997, was ratified by the Government of Jordan in September 1999, and has come into force in May 2002. The objectives of the Association Agreement are:

1.  Provide an appropriate framework for the political dialogue, allowing for the development of close political relations between the Parties.
2.  Establish the conditions for the progressive liberalization of trade in goods, services and capital.
3. Foster the development of balanced economic and social relations between the parties through dialogue and cooperation.
4. Improve living and employment conditions and hence productivity and financial stability.
5. Encourage regional cooperation with a view to the consolidation of peaceful co-existence and economic and political stability.
6. Promote cooperation in other areas which are of reciprocal interest.
7. Therefore, and in light of the objectives of the Barcelona Process, the agreement revolves around three major themes: political, economic and financial, and social and cultural.

Political and Security Partnership:

This section addresses principles that govern cooperation in the political field.  This initiative involves a dialogue that leads to the adoption of common principles by the partners, emphasizing the achievement or movement toward peace, security, democracy, human rights, and regional development as the engine for change.

Economic and Financial Partnership:

This component aims at establishing a Euro-Jordanian Free Trade Area, in progressive steps by the year 2014. The free trade agreement shall be based on the provisions of this Agreement as well as the General Agreement to Tariffs and Trade (GATT) and the General Agreement to Services. The provisions of the agreement covers: trade in agricultural and industrial products, right of establishment and services, payments and capital movements, competition, intellectual property rights, financial cooperation, economic cooperation in the fields of industry, agriculture, investment, standards and measurements, transportation, telecommunications, energy, science and technology, environment, tourism, statistics, and the fight against illegal drugs.

Social, Cultural and Human Partnership: 

This section addresses principles that govern cooperation in the cultural and social fields. Emphasis is placed on education, training, youth, culture, migrant population groups, and health. Greater co-operation in the field of home affairs and justice is also envisaged, with action in particular against drug trafficking, terrorism, and international crime.

 Trade-Related Commitments within the Jordan-EU Association Agreement

 The following comprises the main commitments within the context of the Euro-Jordanian Association Agreement:

1. Trade in Industrial Products. The agreement entails establishing a free trade area in industrial goods between Jordan and the European Union. European exports into Jordan are exempted from duties, over a transitional period of twelve years upon entry into force of the agreement, in accordance with a specific arrangement.
2. Trade in Agricultural Products. In terms of trade in agricultural products, the agreement constitutes of an agricultural calendar that governs Jordan’s trade in agricultural products.
3. Removing Non-tariff Restrictions. The agreement sets out the provisions that relate to requirements regarding non-tariff restrictions between Jordan and the EU. 
4. Rules of Origin. In terms of the rules of origin requirements, the third protocol attached to the agreement specifies the minimum requirements of working or processing that has to be carried out on non-originating materials to confer originating status in Jordan. The agreement offers Jordan the bilateral system of cumulating.
5. Right of Establishment. In terms of the requirements regarding the right of establishment, the agreement addresses treatment that both Jordan and the EU offer each other in this regard.
6. Trade in Services. In terms of trade in services, the EU Member States and Jordan commit to use their best endeavors to allow the progressive liberalization of the trade in services.
7. Movement of Capital. In this regard, the agreement entails that current payments connected to the movement of goods, persons, services and capital shall be free of restrictions.
8. Competition. Jordan’s commitment regarding competition entails the prevention of monopolistic practices, state monopolies of a commercial character, public enterprises and enterprises to which special or exclusive rights have been granted.
9. Public Procurement. Jordan is committed to hold consultations within the Association Council on implementing a gradual liberalization in public procurement.
10. Intellectual Industrial and Commercial Rights. The agreement states the multilateral conventions on intellectual property rights that Jordan shall accede to within varying transitional.

Trade and Investment

Trade

The EU is the major trade partner for Jordan. For 2004, Jordan’s imports from the EU represented about 22% of the total imports. During the last decade, the ratio of Jordan’s imports from the EU has been consistent.

Jordan’s exports to the EU mainly go to Germany, the U.K. and Italy. Major export items include: chemical products, plastics, textiles and clothing, wood pulp, cellulose, paper and packaging materials, metals and metal products, mining products, vegetables, processed foods, beverages, tobacco, precious metals, precious and semi-precious stones, leather products such as saddles, luggage and handbags, arts, antiques and collectors items, in addition to various types of floor covers, carpets and electrical parts and appliances.

Jordan’s imports from the EU mainly come from Germany, France, the U.K and Italy. Imported items consist of transport machines and equipment, electrical appliances and spare parts, chemicals, plastics, and pharmaceutical industry inputs, manufactured items such as paper, clothes, textiles and shoes, in addition to iron and steel, processed foods and live animals.

Over the period 2000-2004, on average, Jordan’s annual imports from the EU have exceeded JD 1 billion (Euro 1.17 billion), whereas annual exports to the EU markets were below JD 65 million (Euro 73.3 million).

In 2005, Jordan’s imports from the EU markets have reached JD 1697.8 million (Euro 2008.3 million), whilst for the same period exports to the EU markets stood only at JD 77.6 million (Euro 91.8 million).

The largest value of Jordanian exports to the EU was registered in 1996, representing 8.3% of total exports. Since 1997, Jordanian exports to the EU registered a decline reaching JD 35.5 million by the end of 2000 and increased slightly to reach JD 62.3 million in 2004 and to reach JD 77.6 million in 2006 representing 3% of the total exports respectively.

In 2005, the exports and imports increased from their values in 2004, leading to an increase in the trade deficit which reached to JD 1233.5 million in 2004 and JD 1620.2 million in 2005.

Investment

During the last several years, EU investments in Jordan were below expectations. Available statistics indicate that the EU’s share in total foreign investment flows into Jordan has declined from 54% in 1996 to 6.1% in 2004.

In 1996, the majority of European investments in Jordan were in agriculture. Afterwards, there was a rise in the value of investments in the Jordanian industrial sector.

JD million