Jordan Times
Friday, May 21, 2004
JGate seminars help
industrialists compare benefits of QIZ and FTA
By Rami Abdelrahman
AMMAN — Jordanian and foreign industrialists, exporting through the Qualified
Industrial Zones (QIZ) agreement with the US, are participating in seminars to
learn more about the Jordanian-US Free Trade Agreement (FTA).
Organised by the Jordanian Garments, Textiles and
Accessories Exporters Association (JGate), the seminars provide QIZ
manufacturers with training in evaluating and comparing the financial benefits
of the two trade agreements with the US.
Participants will walk away with specific tools that will enable them to
calculate expenses per garment and determine whether the QIZ agreement or the
FTA offers the most competitive and lucrative margins for exporters.
CEO Rashed Darwazeh told The Jordan Times that the seminars come under the
umbrella of the “export readiness component” of JGate's seven strategy pillars.
“When we scanned the market, we discovered that QIZ manufacturers know little
about the FTA, and only one or two exporters are working under both agreements,”
Darwazeh said ahead of the first seminar on Wednesday.
“We have designed a course which will take those agreements and simplify them
for manufacturers, by giving them general information, teaching them how to
access and navigate the US customs' website,” Darwazeh explained.
JGate developed a software solution enabling investors to learn about the
feasibility of exporting under each agreement, through inputting the exported
item name and learn about the preferential treatments the item has according to
each agreement. It also developed a help centre to hand all the needed documents
to interested investors.
The FTA will eliminate duties and commercial barriers to bilateral trade in
goods and services originating in the United States and Jordan.
Specifically, the agreement will eliminate tariffs on virtually all trade
between the two countries within 10 years, in accordance with WTO principles
governing the operation of FTAs.
The tariff reductions will take place in four stages: Current tariffs of less
than five per cent will be phased out in two years; those that are now between
five and 10 per cent will be eliminated in four years; those between 10 and 20
per cent will be eliminated in five years; and those that are currently higher
than 20 per cent will be eliminated in 10 years.
Jordan and the US will not increase any customs duties, except for antidumping
or countervailing duties, duties adopted under Section 201 of the Trade Act of
1974, user fees, certain duties on agricultural products, and duties on imports
that are equivalent to internal taxes imposed on similar domestic goods.
As the tariffs under the FTA continue to phase out, QIZ manufacturers are
finding more opportunities to optimise profitability.
Once a QIZ investor decides to switch to FTA, the manufacturer can stop using
“the eight per cent” Israeli input, and can switch to Jordanian or US materials.
The FTA requires that 35 per cent of the customs value of the product exported
to the US to be of Jordanian origin and/or to have Jordanian direct costs of
processing.
However, the value of US-origin materials can be counted towards this domestic
content requirement as well, but only up to 15 per cent of the customs value.
A foreign manufacturer told The Jordan Times it would be feasible for him to
switch to FTA.
Preferring anonymity, the investor said QIZ provides tariff free exporting to
the US, while the FTA did not reach that level yet, “but if I use Jordanian
materials instead of Israeli, it would compensate for the tariffs, as Jordanian
materials are much cheaper.”
JGate emerged from the USAID-funded Jordan-United States Business Partnership's
specialised support for sector specific associations. It is a nonprofit, private
sector driven initiative that is establishing itself as the focal point of
Jordan's garment industry. JGate's vision is to transform the sector into a
world-class fashion industry.