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Experts say EU-Jordan deal on relaxed rules of origin ‘fails’ to bring desired benefits

By Ana V. Ibáñez Prieto - Jan 31,2018 - Last updated at Jan 31,2018

For Jordanian industries to be able to benefit from the simplified rules of origin by the EU, each factory needs to hire Syrians to constitute 15 per cent of its employees (File photo)

AMMAN — The Jordan Labour Watch (JLW) on Sunday issued a statement calling for a review of the 2016 EU relaxed rules of origin for Jordanian exports to Europe, stressing that “the current terms of the agreement lack justice and fail to achieve the expected benefits for both Jordanian enterprises and their workers.”

 In July 2016, the EU and Jordan signed a 10-year deal under which manufacturers in Jordan can import up to 70 per cent of the raw materials used in production and still label the finished products as “Made in Jordan".

“Two years have passed since the agreement entered into force, and yet, the benefits that Jordan has obtained from it are very modest,” the statement said.

Previous reports by the EU confirm that Jordanian factories have not benefited much from the deal, stressing that “only two enterprises across the Kingdom have been able to export within the framework of the agreement until now.”

An official at the Ministry of Planning and International Cooperation told The Jordan Times that “to date, 11 Jordanian factories have met all the requirements under this joint decision and were granted an authorisation number allowing them to export to the EU,” adding that “from this group, three factories have been successful in exporting under this scheme to four EU countries with a total value of 1.9 million euro, and additional exports are expected in the coming few months”.

Economist Maher Mahrouq told The Jordan Times that “the EU relaxed rules of origin are neither fair nor useful,” adding that “they need to be revised as soon as possible in order to expand the sectors to which they are applied, as well as the period of the agreement itself”.

 “It is not feasible for companies to restructure their whole business to start exporting to Europe for a period of 10 years or less,” he added, calling for an extension of the deal period.

“There are a number of challenges preventing Jordanian companies from benefiting from the simplified rules of origin scheme,” a ministry official said, explaining that “these include the difficulties Jordanian manufacturers face in collecting the necessary market intelligence of the European export market and value chain, the lack of the required EU quality certifications, the limited matchmaking opportunities with European buyers, and the difficulty of finding qualified Syrian workers in order to meet the employment requirements”.

JLW Director Ahmad Awad pointed out “the need to reconsider the conditions imposed on factories wishing to export within the deal, including the requirement to employ Syrians as a 15 per cent of their total workforce”.

 In this regard, Awad noted the “reluctance” of Syrian employees to obtain permits to work in factories, explaining that “they fear the loss of their rights as refugees and especially the financial and in-kind assistance provided by UNHCR and other bodies, as well as their right to resettle in a third country.”

 “Many refugees are considering returning to their home countries in light of the past events, and in this scenario, it is essential for this rule to be reviewed,” Mahrouq said.

“The agreement is a unique opportunity provided by the EU as an integral component of the support for Jordan in light of the Syrian refugee crisis,” the EU delegation said in a statement to The Jordan Times, noting that “it is complementary to development efforts to improve the investment climate, create vocational education opportunities for Jordanians and Syrians in sectors that add value to the Jordanian economy, support private sector development and generate additional production capacity.”

“On the employment of Syrians, we are very appreciative of the work conducted by the Ministry of Labour to facilitate the provision of free work permits to Syrians,” the statement continued, noting that “we continue to work closely with the authorities to uphold transparency, awareness, and regulatory stability with regards to the rules that apply to Syrians, Jordanians, and migrant workers on the labour market.” 

 The JLW statement stressed the need to cancel the exemption on agricultural and food materials, noting that "eliminating this condition would contribute to an increase in the proportion of Jordanian exports, since the majority of the Kingdom's production is concentrated in agricultural and food products."

 “It is not fair to place exemptions in the products that we are allowed to export,” Mahrouq said, noting that “Jordan is a small country and, even if we exported the majority of our production, it would not suppose a threat to the European economies.”

“Several efforts are currently under way to improve the performance under the rules of origin decision,” the ministry official said, noting that “the government is currently in the final stages of negotiating an amendment to the agreement with the EU that aims to expand the geographic coverage of this decision beyond the current 18 industrial zones, to extend the period of this decision beyond the current 10 years, and to revise the Syrian labour requirements to make it easier for Jordanian manufacturers to meet the quota.”

 

“The agreement is at the beginning of its implementation and we are duly taking stock of the concerns raised to us by the Government of Jordan,” the EU said, adding that “we are in the process of looking into potential adjustments which would facilitate investment opportunities and access to the rules of origin scheme, therefore creating more opportunities for Jordanians  and Syrians in companies exporting to Europe.” 

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