Jordan Times
Sunday, October 7, 2001
Industrialists can take advantage of Jordan-US FTA rules of origin
By Rana Awwad
AMMAN — Industrialists can take advantage of “one of the simplest rules of origin” stipulated in the recently-endorsed Jordan-US Free Trade Agreement (FTA) to access the world's largest market, officials stressed.According to the agreement 35 per cent of the value of an exported good must originate in the exporting country. However, if 15 per cent of this value is produced in the US, only 20 per cent is needed for Jordanian exports to qualify under the agreement, explained Majed Hammoudeh, director of the Department of International Organisation at the Trade and Industry Ministry.
The pact, the first with an Arab country, which will enter into force early next year, eliminates all tariffs on two-way trade in goods and services over a 10-year period.
Hammoudeh added that direct and indirect production costs — wages, research and development, training and domestic taxes — are also considered value added, which allows for many Jordanian products to qualify.
Industrialists have repeatedly complained of the 35 per cent value added condition for products to qualify since they are sometimes unable to meet the rule.
They are further demanding that the FTA allow for the accumulated rules of origin. Under this formula, raw material originating in other countries with which US has an FTA would be considered as Jordanian value added.
The US has free trade arrangements with Canada, Mexico and Israel.
Samer Tawil, the ministry's secretary general said that Jordanian and US officials might negotiate the issue.
Hammoudeh added that local exporters will not be burdened with issuing certificates of origin from the Jordanian authorities. Rather, he told businessmen, such documents will be issued from concerned bodies in the US.
Exports from the Qualifying Industrial Zones (QIZs) will not be affected by the new pact for at least ten years, according to Tawil.
Goods produced in a QIZ can access the US market quota- and duty-free provided that a minimum 8 per cent of their input is from Israel.
Tawil added that most goods exported under the QIZ formula will not undergo the gradual tariffs elimination schedule stipulated in the FTA. Rather, he explained, customs will be immediately dropped on these goods after the ten-year phaseout period.