Ministry of Trade Communique on
Israel-Jordan Trade Agreement

October 25, 1995

On the eve of the signing of the Israel-Jordan trade agreement, the spokesman of the Ministry of Trade and Industry issued a statement explaining the nature of the agreement, its background and highlights. The agreement dealt with customs and customs exemptions, preferential treatment for certain products, exchange of information and the removal of trade barriers. Israel regretted the inability of Jordan to join an Israel-Jordan Free Trade Zone. The Jordanian Parliament had, prior to the signing of the agreement, passed legislation ending the economic boycott of Israel. Text of the communique follows:

Tomorrow, 25.10.95, Industry and Trade Minister Micha Harish and Jordanian Trade Minister Abu al-Rajoub will sign a bilateral trade agreement which will signal the opening of trade between Israel and Jordan.

The agreement is the culmination of the trade negotiations which the two countries have been conducting for nearly a year, during which the economic delegations of Israel and Jordan met more than 10 times to work out an economic and trade agreement. Their efforts have produced an agreement which establishes a framework for bilateral commercial ties.

The text of the agreement, which will be signed at the Moriah Dead Sea Hotel, expresses the two countries' desire to act jointly to create commercial ties and economic cooperation for their mutual benefit, in accordance with the Israel-Jordan Peace Treaty.

In the agreement, the two countries undertake to work towards removing trade barriers, economic discrimination and the boycott of goods. In this framework, the Jordanian parliament has already passed a bill ending the economic boycott of Israel.

The agreement also establishes procedures for conducting inquiries, ways of increasing trade and exchanging information. Economic ties will be handled by a joint economic committee, which has been established.

An additional protocol has established the granting of preferential customs treatment to a list of products agreed upon by the parties, following a series of discussions on the subject. This agreement on preferences is limited to a period of three years, during which the sides will discuss ways to deepen the customs preferences and to find ways of increasing the exchange of goods between the two markets.

This limited arrangement was achieved in the light of the Jordanian delegation's difficulty on explicitly committing itself, now, to a future Israel-Jordan free trade zone. The goal is to enable further negotiations to be held to complete the process of opening markets, in light of possible trade developments. The commitment to a future free trade zone agreement is mentioned in the agreement, consistent with the peace treaty in this respect.

There is a three-level structure of preferences which Israel will grant to Jordan: an exemption from customs duty and preferences of 20% and 50% On the accepted base tariff vis-a-vis imports from third countries to Israel. In practice, Israel will grant the preferences to most Jordanian industrial products, including cement, furniture, foodstuffs, antennas, pharmaceuticals, toys and other products. The preferences that Jordan will grant to Israeli imports are set at 15% of the current customs rate followed in Jordan when the goods are released and 5% of them will apply two years after the start of the agreement.

The Israeli products which will enjoy import preferences to Jordan include plywood, tires, foodstuffs, pharmaceuticals, electronic components, medical equipment, communications equipment, locks and safes and other products. Similarly, the two delegations also agreed on an annex concerning rules-of-origin, which lists the conditions for defining an "original product" that may enjoy the agreed-upon trade preferences.

The negotiations took into account the economic gap between the abilities of the two countries, while preserving the important interests of local industries, giving preference to exports to Jordan - especially for products that do not compete with Jordanian industry, such as tires, plywood, etc. This is, as mentioned above, in exchange for preferences that have been given to imports from Jordan.

Industry and Trade Minister Micha Harish expressed his satisfaction at the successful conclusion of the negotiations and expressed his hope that the two sides will make every effort to ensure a smooth implementation of the agreement in order to fully realize the advantages that it confers on both sides.

The Israeli and Jordanian Industry and Trade Ministries have already received numerous inquiries from both countries' business sectors regarding commercial ties, which will become possible following the signature of the agreement.