Feature: The EU-Jordan Association Agreement - opportunities and challenges

By Chris Patten

Jordan Times
Thursday, May 9, 2002

The Association Agreement between Jordan and the European Union (EU) has
finally entered into force on May 1, 2002, representing a major step in our
relations.
The new agreement builds on the principles of the Euro-Mediterranean
Partnership, established in 1995, which include: a) the creation of a common
zone of peace and stability through reinforced political dialogue and
security cooperation, b) the creation of a zone of shared prosperity through
the gradual move towards Euro-Mediterranean free trade and, c) a cultural,
human and social partnership, namely through dialogue between cultures and
civilisations of the peoples of the region.
Together with the bilateral agreement, the Euro-Mediterranean Partnership
has also a regional dimension; in this context, the 5th Euro-Mediterranean
Foreign Ministers Meeting has taken place in Valencia on April 22-23, 2002.
As usual, Jordan has played a constructive role in the run-up to this
meeting. Against the background of severe crisis in the Middle East, the
foreign ministers were able to reconfirm and extend their commitment to the
common agenda through an action plan.
Amongst other things, the conference recommended the creation of a
Euro-Mediterranean Parliamentary Assembly, endorsed a framework programme of
"cooperation in the field of justice, in combating drugs, organised crime
and terrorism, as well as cooperation in the treatment of issues relating to
the social integration of migrants, migrations and movements of people" and
agreed in principle to the creation of a Euro-Mediterranean Foundation to
promote dialogue of cultures and civilisations, through intellectual,
cultural and civil society exchanges.
Concerning the EU-Jordan Agreement, I have to admit that its ratification
process has been slow; the agreement was signed in 1997, and ratification
was only completed in 2002. Nonetheless, Jordan has made good use of this
time lapse to advance courageously on broad economic reforms, creating a
more favourable regulatory framework for investment and overall trade
liberalisation by joining the WTO in 2000 and concluding bilateral and
regional free trade arrangements. This will facilitate the implementation of
the agreement. To compensate for this delay, we have to concentrate now on
its fast implementation; I am sure that Jordan will continue to be a
trailblazer for the region in this phase. An encouraging signal of rapid
implementation of the agreement will be the meeting of the first Association
Council in June 2002.
On the political side, the agreement is based on democracy, respect of human
rights and reinforcement of political dialogue. There are very important
issues that have to be addressed under this aspect of the partnership; for
example, the fight against organised crime and terrorism. The EU would
welcome enhanced cooperation with Jordan in this field, in accordance with
international conventions and relevant UN resolutions, namely UN Security
Council Resolution 1373, adopted in the aftermath of the Sept. 11 events.
On the economic side, the agreement contains a detailed timetable for the
creation of a free trade area compatible with WTO requirements, to be
completed over a transitional period of up to twelve years, starting with
May 1, 2002, in which Jordan will gradually eliminate customs duties on EU
exports of industrial products to the Kingdom. Industrial exports from
Jordan already had duty-free access to the EU under the Cooperation
Agreement of 1978. However, the EU has not been, until now, a prominent
export destination for Jordanian products, something that the new agreement
may contribute to change.
In agricultural trade, a gradual liberalisation is foreseen, with immediate
further concessions for Jordanian exports. These concessions will be
reviewed as early as this year; we must examine the best ways of bringing
further liberalisation to this sector, subject to a gradual and reciprocal
approach, which will benefit all our people. In this sense, I appreciate
that the Valencia Action Plan provides for a study on the impact of trade
liberalisation in agriculture through the Association Agreements and
progress achieved in the multilateral context, by the union and
Mediterranean partners.
The agreement also entails a process of alignment of policies and
regulations and upgrading of administrations with a view to create a single
Euro-Mediterranean market, for example in the fields of technical standards,
conformity assessments and certifications, protection for industrial and
intellectual property rights, competition, state aid and monopolies,
veterinary and plant health, company law, accounting and auditing standards,
data and consumer protection, financial services, public procurement and
customs.
The Euro-Mediterranean trade and industry and foreign ministers have
recently decided in principle to extend the system of pan-European
cumulation of origin to our Mediterranean partners, once the technical
problems are solved. With political will and hard work, in the future, a
fabric could be produced in France or Egypt, dyed in Hungary and made into a
dress in Jordan for export to Ireland without paying any duty. Such opening
would bring about tremendous new trade and investment opportunities in
Jordan, for regional and European business partners. To make the change
operational, the "origin protocol" of the EU-Jordan Agreement must be
amended, and Jordan must conclude free trade agreements with harmonised
rules of origin with other Mediterranean partners.
This is an ambitious, long-haul agenda to be implemented by the EU and
Mediterranean partners over time. Now it is important that Jordan take
advantage of the agreement. Only around 3 per cent of Jordan's exports go to
the EU, and the trade deficit with Europe is rising. This is unsustainable
in the long run. Therefore: the private sector should take advantage of a
huge, open and enlarging European market. Given Jordan's volatile external
environment, i.e., the Kingdom's exposure to economic and political shocks
in the Middle East and the Gulf countries, it would be better if exports
were more diversified to alternative export destinations and not
concentrated in the region. Jordan's industries have to continue to work
towards improved variety, quality and marketing of products to become
competitive in the EU and elsewhere.
Moreover, the modest level of domestic and south-south investment and trade
in the Mediterranean is worrying. Investors looking at this region will see
compartmentalised small and separate markets, with conflicting standards and
regulations. Drawing from the experience of the candidate countries of
Eastern Europe, we know that regional integration and alignment to the
single market can induce a massive increase in investment, which has a
knock-on effect on job creation, trade increase and economic stabilisation.
Jordan's authorities have proven their commitment to regional trade
liberalisation, and we are pleased to see the Kingdom as a motor for
enhanced regional free trade with Morocco, Tunisia and Egypt within the
"Agadir" initiative. There was good news at Valencia from the four countries
involved in the Agadir process that an agreement between them should be
signed very soon. We reiterate our offer to assist the parties involved in
this process in any way we can, political, technical and financial.
The EU has been supporting Jordan financially; while the EU is already the
largest single source of foreign direct investment in Jordan, we will
continue to try to improve our assistance. In this sense, we welcome the
decision of the European Council of Barcelona of March 2002 to establish,
within the European Investment Bank, a reinforced Investment Facility to
promote infrastructure and private sector investment in the Mediterranean
partners.
Our financial cooperation programme (MEDA) is targeted to support Jordan in
harvesting the benefits of the association. An example is, for instance, our
ongoing euro 40 million EJADA programme to assist small and medium
industries. During 2002-2004, an indicative euro 142 million in grants are
available for new operations. We are also preparing a new programme in Aqaba
to help ASEZA in trade facilitation, as well as in the environmental and
tourism fields. I am very pleased with Jordan's performance in seizing the
opportunities made available by MEDA funds.
Strengthening and deepening the Barcelona process will allow the countries
of the region to jointly face and meet the array of daunting challenges
which are emerging in the 21st century, including the pursuit of peace in
the Middle East. We are confident that Jordan, under the dynamic leadership
of King Abdullah, yearns for a conflict resolution based on an agenda of
peace, the arrival of sustainable prosperity and development in the whole
region. Barcelona is a sound process to which the EU and Jordan are fully
committed - a process which, with perseverance, will succeed in bringing
peace and prosperity throughout the region.

The writer is commissioner for external relations at the European Commission
in Brussels.

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