Jordan–United States Free Trade Agreement
The United States–Jordan Free Trade Agreement, signed on 24 October 2000, was the first free trade agreement (FTA) the United States signed with an Arab country (and the fourth FTA overall behind Israel, Canada, and Mexico). Products have to be composed of a minimum of 35% Jordanian content to be eligible for trade benefits.
Furthermore, the Qualifying Industrial Zones (QIZs) established in 1996 under President Bill Clinton allowed products manufactured in Israel, Jordan, Egypt, or the West Bank and Gaza to enter the United States duty-free. Exports need at least 35% of their value added to come from Israel, Jordan (i.e., in the QIZ) and the West Bank or Gaza to qualify as a QIZ beneficiary. Jordanian exports also needed at least 8% of their value added to come from Israel.
Support in the United States
The U.S. House of Representatives ratified the FTA on 31 July 2001 and the U.S. Senate ratified it on 7 December 2001; both were by voice vote, an indication of its widespread support. Former President George W. Bush signed the United States–Jordan Free Trade Area Implementation Act into law on 28 September 2001. It was implemented by both countries on 17 December 2001.
Unlike many trade agreements, the U.S.–Jordan Free Trade Agreement enjoyed widespread, bipartisan, and multisectoral support. Proponents pointed to the reduction of customs duties and other trade barriers as a boon for exports.
More importantly, the U.S. government looked to the political gains to make the FTA worthwhile; economic gains for U.S. businesses, if any, were expected to be small. Ideally the "economic linkages" generated by the FTA would "normalize strained relationships and offer institutional mechanisms to resolve and prevent political disputes". This, in turn, would act as the "turning point in which hope begins to replace the despair on which violent extremists breed", as Assistant Secretary for the Bureau of Near Eastern Affairs William Burns put it. The assumption was that in the course of jointly controlling and valuating rules of origin, Jordanian and Israeli customs officers would engage in interpersonal interactions resulting in understanding if not friendship. In other words, the U.S. government has adopted a neoliberal worldview that believes stronger economic relations will bring about peace and stability in the Middle East.
Impact on the textile industry
Jordan became a "magnet for apparel manufacturing", as American companies such as Wal-Mart, Target, and Hanes established factories so they could cut costs by eliminating tariffs. In its first year, Jordan had increased exports by 213% and created 30,000 jobs. By 2002 Jordan enjoyed a marginal trade surplus with the United States. Five years after the FTA came into effect, Jordanian exports to America had increased twentyfold; Jordan's apparel exports to the United States in 2005 amounted to $1.2 billion. Most of Jordan's exports to the United States come from one of 114 companies.
Impact on labor conditions
In 2006 the National Labor Committee, an American non-governmental organization, released a series of reports on Jordanian sweatshops, whose conditions according to the NLC's executive director were "the worst": 20-hour workdays, not being paid for months, and physical abuse. Most laborers are not Jordanians; they are contracted guest workers from countries such as Bangladesh, Sri Lanka, and China who pay a lump sum of about $2,000 to $3,000 to get hired by a garment factory. However, some factories then confiscate their passports, subjecting them to de facto involuntary servitude bordering on human trafficking. Many members of Congress expressed concern, especially because the Jordan FTA was lauded as "historic and progressive" for including labor and environmental provisions "directly within the agreement as opposed to being in a side agreement".
- Momani, Bessma (November 2007). "A Middle East Free Trade Area: Economic Interdependence and Peace Considered" (PDF). The World Economy. 30 (11): 1682–1700. doi:10.1111/j.1467-9701.2007.01036.x. Archived from the original (PDF) on 11 March 2012. Retrieved 12 June 2012.
- "President Signs into Law H.R. 2603". Whitehouse Press Releases. 28 September 2001. Retrieved 12 June 2012.
- "Jordan Free Trade Agreement". Office of the United States Trade Representative. Retrieved 12 June 2012.
- Burns, William (16 May 2003). Democratic Change and American Policy in the Middle East. Fourth Annual Conference on the Study of Islam and Democracy. Washington, D.C.: Centre for the Study of Islam and Democracy.
- Dale C. Copeland (Spring 1996). "Economic Interdependence and War: A Theory of Trade Expectations". International Security. The MIT Press. 20 (4): 5–41. doi:10.2307/2539041. Retrieved 12 June 2012.
- Greenhouse, Steven; Michael Barbaro (3 May 2006). "An Ugly Side of Free Trade: Sweatshops in Jordan". New York Times. Retrieved 12 June 2012.
- "Jordan shutting abusive factories". Washington Times. 16 June 2006. Retrieved 12 June 2012.
- Bustillo, Miguel (20 June 2011). "Sex Abuse Alleged at Apparel Maker". Wall Street Journal. Retrieved 12 June 2012.