by Adam Nicky

Wednesday, October 10, 2012

Jordanian Businesses Divided over Potential Impact

AMMAN – Mohammed Abu Hassan owns a small shoe factory in the Sahab Industrial Zone on the eastern edge of Jordan’s capital, Amman. He is struggling to keep his factory open and he is worried that the new Free Trade Agreement (FTA) could put him out of business.

“We are already losing our traditional local market and we worry that this agreement will be the beginning of the end, unless the government takes measures to protect local industries,” he told The Media Line.

While the FTA allows Jordan to export goods tax-free to Canada, it also allows Canadian firms to export to Jordan, increasing competition. The economy of Canada, with more than 34 million people, dwarfs that of Jordan’s population of six million.

Jordan imports more than it exports. In 2010, according to government statistics, it imported almost $15 billion worth of goods, and exported just $5.8 billion worldwide. When it comes to Canada, in 2012, Jordan exported $10 million dollars worth of good and imported $54 million.

Jordanian officials say the FTA offers new opportunities for Jordanian businesses seeking to explore North American markets or to partner with Canadian companies who want to enter the oil-rich Gulf States.

“The agreement gives Jordanian industries an opportunity to expand, but they must step up their level and find a place in the cutthroat market,” Hatem Halawani, the head of Jordan’s Chamber of Commerce, told The Media Line.

He said that textiles, chemicals, jewelry and limestone are poised to compete in the Canadian market. He dismissed concerns that the agreement could negatively affect local businesses like Abu Hassan’s shoe factory, with the country being swamped with cheaper or better products from larger industrialized nations.

But businessmen in Jordan are concerned that small firms could even go out of business.

“Local products face a daunting task to compete with products from industrialist nations” said Mohammad Abu Fares, owner of a Jordanian petrochemical factory. “We had hailed a similar agreement with the European Union a few years ago, but we ended up importing European products and we were not able to export to the EU because of their strict rules,” he told The Media Line.

Jordan enjoys a similar FTA with the US, Turkey and Pakistan. Textile and pharmaceutical companies say they have already benefited.

Jordan’s Minister of Trade Shabeeb Amari hailed the agreement as a landmark, saying it would inject life into the country’s anemic economy. Tourism, which had previously been an important component, is struggling because of the Arab Spring. Although Jordan has been relatively quiet, many tourists are staying away from the Middle East entirely.

“The [Canadian] agreement will herald a new era of cooperation and allow more investment between the two countries,” he told The Media Line. “It will provide protection to products from both sides and increase investment in various fields.”

The head of the Jordanian-Canadian Businessman’s Association, Nabeel Khouri, who is also the head of the Arab Petrochemical Company, said the agreement will open up new markets for Jordanian products. He said the total trade volume of $89 million annually will improve and predicted that the FTA will mean more cash pouring into the Jordanian economy as Arab investors seek to reach the Canadian market via Amman.

Canadian officials said the agreement will provide Canada with a gateway to the Middle East.

“Jordan is the best opportunity for Canada to establish a hub or a gateway into the Middle East,” Canadian Minister of International Trade Ed Fast said during a news conference in Amman to mark the launch of the FTA. “What set Jordan apart from other countries is that it is moderate and stable. Canada appreciates that,” he said.

Meanwhile, Jordanian officials said they are working to upgrade the competitiveness of Jordanian manufacturers.

“The FTA will be the catalyst for our project to improve the level of Jordanian products through providing companies with the needed expertise to upgrade their quality in line with international standards,” Nayef Esteiteh, head of the Jordan Enterprise Development Corporation, told The Media Line. “We brought in a Canadian expert who is working with three factories in the food processing sector to help them set up strategies to conquer the Canadian market and link up with Canadian partners.”

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