Strengthening ties with new and old trading partners to bolster Jordanian exports

Text size +-
Recommend

Jordan has taken steps to increase its international trade flows by re-establishing links with traditional partners and expanding connections with new markets.

In late July Jordan resumed exporting agricultural produce to the UAE following the lifting of an import ban that had prevented products such as courgette, sweet pepper, aubergine, cabbage, green beans, cauliflower and lettuce from being delivered to the country.

The three-month embargo concerned the presence of pesticide residue on Jordanian produce, and followed similar bans imposed by the UAE on fruit and vegetable imports from Egypt, Lebanon, Oman and Yemen. The ban was lifted after Jordanian and Emirati officials reached an agreement on common food quality standards.

The resumption of trade is set to provide a significant boost to Jordan’s agriculture sector. The UAE is one of the largest importers of Jordanian produce, receiving an estimated 155,000 tonnes per year, according to the Ministry of Agriculture.

Mixed results for export segments in 2017

While an initial post-embargo delivery of 500 tonnes of fruit and vegetables to the country in late July contributed to an 18% year-on-year (y-o-y) increase in overall fruit and vegetable exports that month, to 84,000 tonnes, this followed a decline in the value of the segment’s exports in the first half of the year.

Exports of fruit and vegetables totalled JD141.4m ($199.6m) in the January-to-June period, representing a y-o-y drop of 15.9%, according to the Department of Statistics (DoS). Similar declines were seen in crude phosphates (-15.5%) and pharmaceutical products (-11.3%).

However, growth in the value of crude potash (25.8%), fertiliser (16.7%) and clothing (8.7%) exports helped offset losses, with total exports reaching JD2.1bn ($3bn) over the period, a y-o-y fall of 1.6%.

Border crossing key to boosting trade with traditional partners

The overall reduction in the value of Jordan’s exports comes largely on the back of decreasing trade with countries in the region.

While still overwhelmingly the major destination for Jordanian products, exports to Greater Arab Free Trade Area countries dropped to JD943.1m ($1.3bn) in the first half of the year, according to the DoS, down 10.8% y-o-y, with deliveries to Saudi Arabia falling by 22% over the same period.

In light of this drop in activity, which has been largely attributed to regional conflict and instability, Jordan has taken steps to resume cross-border activity with some traditional partners.

The government reopened the Turaibil-Al Karameh border crossing with Iraq – closed in 2015 over security concerns – on August 30. While the border will initially be open only to passenger traffic, there is hope that trade at the crossing will resume in the near term.

Such a development would significantly reduce export costs for Jordanian companies, which have been forced to transport goods by sea from the Port of Aqaba to the Iraqi port of Umm Qasr, via the Red Sea and Gulf Peninsula.

“Given the needs of the Iraqi market, transport and agriculture are set to benefit directly from the opening of the border,” Mohammed Al Jafari, director-general of Jordan Loan Guarantee Corporation, told OBG. “However, the process will be more gradual for other sectors, as they need to re-establish business relations and make new arrangements with their partners.”

Trade at Turaibil-Al Karameh was valued at $1.2bn in 2014 before falling to $690m the following year following the closing of the border.

The development also comes as Jordanian officials continue talks aimed at reopening some of the country’s borders with Syria.

Africa targeted in efforts to develop new trade links

Along with reconnecting with partners in the Middle East, Jordan has taken steps to improve links in Africa this year, most notably with Kenya and Sudan.

On the back of strengthened trade and security ties in recent years, Jordan opened an embassy in Kenya in February. This was followed by an announcement in April that the two countries would establish a joint business council aimed at expanding bilateral trade and providing Jordan with a base to access other markets in Africa.

A raft of agreements signed with Sudan in early August should also help bolster Jordan’s trade links to the continent. The two countries signed 10 cooperation agreements in a wide range of fields, including education, vocational training, electricity and renewable energy, which are expected to support the 228 Jordanian investment projects already under way with the country. At present, trade between Jordan and Sudan is estimated at between $80m and $120m per year, Yarab Qudaa, Jordan’s minister of industry, trade and finance, told local media in August.

Read Next:

In Jordan

Jordan outlines tax reforms as part of efforts to bridge budget gap

Expected revisions to Jordan’s tax code seek to tackle avoidance and reduce the basket of goods covered by subsidies – measures aimed at cutting the budget deficit.

In Economy

Chris Bendl, CEO, Zurich Topas Life

What is your assessment of the potential for Indonesia’s life insurance market?

Latest

Louvre opening to bolster Abu Dhabi’s cultural tourism segment

Abu Dhabi’s tourism sector marked a significant milestone earlier this month, with the official opening of its landmark cultural project, the Louvre Abu Dhabi, on November 11.