Order Code RL30652
CRS Report for Congress
Received through the CRS Web
U.S.-Jordan Free Trade Agreement
Updated January 23, 2001
Joshua Ruebner
Analyst in Middle East Affairs
Foreign Affairs, Defense and Trade
Congressional Research Service ˜ The Library of Congress

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U.S.-Jordan Free Trade Agreement
Summary
On June 6, 2000, President Bill Clinton and King ‘Abdullah II announced that
the United States and Jordan would commence negotiations for a bilateral free trade
agreement (FTA). The two sides signed the FTA on October 24, 2000, and President
Clinton submitted the FTA to Congress on January 6, 2001.
In the past, Congress has shown an interest in developing free trade relations
between the United States and select Middle East countries. In 1985, Congress
approved the U.S.-Israel FTA and amended it in 1996 to include the West Bank and
Gaza Strip as well as qualifying industrial zones (QIZs) between Israel and Jordan,
and Israel and Egypt. Since 1994, when Jordan and Israel signed a peace treaty,
Congress and the Clinton Administration have also undertaken several initiatives
designed to assist the Jordanian economy. These initiatives included increased levels
of foreign assistance, debt forgiveness, and the QIZ program.
Like some Members of Congress, the Clinton Administration showed enthusiasm
for the U.S.-Jordan FTA. An economic impact study and an environmental review of
the FTA were prepared both before and during recent negotiations. Jordan is also
conducting an environmental review of the agreement. Most U.S. private sector
companies and associations that filed public comments on the FTA expressed either
qualified or unqualified support for a U.S.-Jordan FTA.
In addition to covering traditional reductions in barriers to trade in goods and
services, the FTA also deals with other issues that became part of the U.S. trade
policy agenda during the Clinton Administration such as intellectual property rights
(IPRs), e-commerce, and labor and environmental standards. The inclusion of labor
and environmental standards within the text of the FTA has provoked disagreement
between those with differing visions of what should be included in future U.S. FTAs.
The volume of bilateral trade between the United States and Jordan throughout
the 1990s was consistently modest. Many top Jordanian exports to the United States
already enter the United States duty-free through various programs, and cereals– the
top U.S. export to Jordan–already face low or zero-level tariff rates. Therefore, a free
trade agreement is unlikely to have an immediate and dramatic impact on the volume
of bilateral trade. However, Jordanian exports of textiles and apparel to the United
States, as well as U.S. exports to Jordan of various commodities that face high
Jordanian tariffs, could expand under an FTA.
In addition to a modest increase in the bilateral trade of goods, a U.S.-Jordan
FTA could have several economic and political implications. These include the
possibility of increased levels of trade in services, greater foreign direct investment
(FDI) to Jordan both from U.S. and foreign-based companies, and reinforced
momentum for further economic reform in Jordan. If approved by Congress and the
Jordanian parliament, the U.S.-Jordan FTA will also mark the first U.S. free trade
agreement with an independent Arab country, thereby reflecting the strength of U.S.-
Jordanian bilateral relations and the importance that the United States attaches to
these relations.

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Contents
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Congressional Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Congressional Interest in Free Trade in the Middle East . . . . . . . . . . . . . . . 2
Congressional Interest in the Jordanian Economy . . . . . . . . . . . . . . . . . . . . 3
U.S.-Jordan FTA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Reactions to the Proposed Free Trade Agreement . . . . . . . . . . . . . . . . . . . . . . . 6
U.S. Administration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
U.S. Private Sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Jordanian Public and Private Sectors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Selected Provisions of the U.S.-Jordan FTA . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Trade in Goods and Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Intellectual Property Rights (IPRs) . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Labor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Electronic Commerce . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Safeguard Measures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Joint Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Dispute Settlement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Potential Effects of the U.S.-Jordan FTA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Trade in Goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Foreign Direct Investment (FDI) in Jordan . . . . . . . . . . . . . . . . . . . . . . . . 18
Economic Reform in Jordan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Political Implications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
List of Tables
Table 1. U.S. Foreign Assistance to Jordan, FY1993 to FY2001 . . . . . . . . . . . . 4
Table 2. U.S.-Jordanian Bilateral Trade and Trade Balance, 1992-1999 . . . . . 13
Table 3. Top 10 U.S. Domestic Exports to Jordan, 1999 . . . . . . . . . . . . . . . . . 15
Table 4. Top 5 U.S. Imports for Consumption from Jordan, 1999 . . . . . . . . . . 17
Table 5. U.S. Foreign Direct Investment in Jordan, 1994-1999 . . . . . . . . . . . . 19
Appendix A. Public Comments Received by USTR on U.S.-Jordan FTA . . . . . 21
Appendix B. Public Comments Received by USTR on Environmental Impact
of U.S.-Jordan FTA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

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U.S.-Jordan Free Trade Agreement
Introduction
On June 6, 2000, President Bill Clinton and King ‘Abdullah II announced that
the United States and Jordan would commence negotiations for a bilateral free trade
agreement (FTA),1 eventually leading to reciprocal duty-free trade in goods. The
United States and Jordan conducted three main rounds of negotiations before signing
the FTA on October 24, 2000. The first round took place in Washington during the
week of June 26, 2000 and was headed by United States Trade Representative
(USTR) Charlene Barshefsky and Jordanian Deputy Prime Minister and Minister of
State for Economic Affairs Dr. Muhammad al-Halayqah. The second and third
rounds were held in Amman, Jordan during the week of August 1, 2000, and in
Washington during the week of September 11, 2000, respectively. During the
October 2000 summit meeting at Sharm al-Sheikh, Egypt, King ‘Abdullah reportedly
expressed to President Clinton his desire to conclude the negotiations as rapidly as
possible.2 Soon after, the two negotiating teams completed their talks and the FTA
was signed on October 24, 2000.3
According to the agreement, the FTA’s entry into force is “subject to the
completion of necessary domestic legal procedures by each Party,” and the Clinton
Administration submitted the agreement to Congress on January 6, 2001. According
to Dr. Muhammad al-Halayqah, who headed the Jordanian delegation that negotiated
the FTA, the agreement will be submitted to the Jordanian parliament during its next
regular session; he has indicated that he hopes that the Jordanian parliament will be
able to complete the enabling legislation by February 2001.4 The agreement will enter
into force two months after the Parties exchange written notification that the
necessary domestic legal procedures have been completed.
1Steve Holland, “Clinton, with Jordan’s King, Sees Progress on Peace,” Reuters, June 6,
2000.
2Jonathan Peterson, “U.S.-Jordan Trade Deal Is Likely Today,” Los Angeles Times, October
24, 2000.
3For the texts of President Clinton’s and King ‘Abdullah’s remarks at the signing ceremony,
see “FTA Good for the U.S., Good for Jordan, Good for Long-Term Prospects of
Peace–Clinton,” and “Jordanians Embrace New Challenge of Progress and Fulfillment,”
Jordan Times, October 26, 2000.
4“Jordan and America Sign a Free Trade Agreement. The King: We Chose the Path of
Partnership to Build a Better Future. al-Halayqah: The Agreement Is a Powerful Indicator
Confirming Jordanian Economic Measures,” ad-Dustour (Amman), October 26, 2000.

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CRS-2
Congressional Interest
Congressional Interest in Free Trade in the Middle East
If the FTA wins U.S. congressional and Jordanian parliamentary approval,
Jordan will become only the fourth country in the world to have a bilateral free trade
agreement with the United States. Prior to the Jordanian negotiations, the United
States concluded FTA’s with Canada and Mexico, forming the North American Free
Trade Area (NAFTA), and with Israel.
In 1985, Congress strongly supported the U.S.-Israel FTA negotiated by the
Reagan Administration. Congress began its approval process of the FTA on April 29,
1985 when the United States-Israel Free Trade Area Implementation Act (H.R. 2268)
was introduced in the House. The House passed the bill unanimously on May 7, 1985
and the Senate passed it without amendment on May 23, 1985. President Reagan
signed the bill into law (P.L. 99-47) on June 11, 1985. U.S.-Israeli bilateral trade has
increased substantially since the conclusion of the FTA. When the agreement was
signed in 1985, total U.S.-Israeli bilateral trade amounted to $4.7 billion. Since then,
the volume of bilateral trade has increased steadily, reaching more than $17.5 billion
in 1999, representing nearly a four-fold increase in total bilateral trade.5
In 1996, Congress amended the United States-Israel Free Trade Area
Implementation Act through the GSP Renewal Act of 1996 (P.L. 104-234).6 This
legislation expanded the geographic scope of the U.S.-Israel FTA in two important
ways. First, it extended the FTA to cover goods produced or manufactured in the
West Bank and Gaza Strip. By providing Palestinian exporters with duty-free access
to the U.S. market, Congress hoped that such a ‘peace dividend’ would strengthen
the Palestinian economy and thereby reinforce support for the peace process. The
extension of the U.S.-Israel FTA to the West Bank and Gaza Strip has had a modest
impact on direct Palestinian exports to the United States. In 1995, there were no such
exports, but by 1999, the United States directly imported $3.5 million of Palestinian
goods.7 These figures might understate the actual amount of Palestinian exports to
the United States in recent years because of Israel’s continuing role in heavily
intermediating Palestinian trade with the rest of the world. In other words, some
Palestinian goods may be exported indirectly to the United States via Israel, and
therefore appear in U.S.-Israeli bilateral trade statistics.
Second, P.L. 104-234 also granted the President additional proclamation
authority to extend the U.S.-Israel FTA to cover products from qualifying industrial
zones (QIZs) between Israel and Jordan, and Israel and Egypt. QIZs are designed to
5“U.S. Trade Balance with Israel,” United States Census Bureau, Department of Commerce.
6This bill was introduced in the House on March 13, 1996, as H.R. 3074. The House passed
H.R. 3074 by voice vote on April 16, 1996, and the Senate passed it without amendment by
unanimous consent on September 27, 1996. President Clinton signed the bill into law (P.L.
104-234) on October 2, 1996.
7“U.S. Trade Balance with Gaza Strip Administered by Israel,” and “U.S. Trade Balance with
West Bank Administered by Israel,” U.S. Census Bureau, Department of Commerce.

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CRS-3
further Arab-Israeli economic cooperation by providing goods produced with certain
levels of Israeli, Jordanian, Egyptian, or Palestinian content duty-free access to the
U.S. market. (For further details on Jordanian-Israeli QIZs, see the following section
on Congressional Interest in the Jordanian Economy.) Egypt has yet to express
interest in participating in the QIZ program, probably because it entails a level of
Arab-Israeli economic cooperation that Egypt would prefer to engage in only after the
conclusion of a comprehensive regional peace.
Although Egypt, for the time being, has decided not to participate in the QIZ
program, some analysts have suggested Egypt as a potential candidate to be the
United States’ next free trade partner after Jordan.8 Some Members of Congress have
expressed interest in this idea as well. On August 4, 2000, 26 Senators sent President
Clinton a letter urging him to negotiate an FTA with Egypt that would form the basis
for a Middle East Free Trade Region that would include Israel, the West Bank and
Gaza Strip, Jordan, and Egypt.9 While the conclusion of FTAs with Jordan and Egypt
could form the basis for a wider Middle East free trade region with the United States,
negotiations for such an intra-regional zone would probably be politically unfeasible
until a comprehensive regional peace is achieved.
Congressional Interest in the Jordanian Economy
In the early 1990s, before Jordan and Israel achieved substantive progress on
their bilateral track of the peace process, Congress did not undertake any large-scale
initiatives to assist the Jordanian economy. U.S. foreign assistance to Jordan was
limited, largely due to U.S. concern over Jordan’s refusal to join the U.S.-led coalition
against Iraq during the 1990-1991 Gulf War. However, since Jordan and Israel
signed the Washington Declaration, which terminated the state of belligerency
between Jordan and Israel, on July 25, 1994, and a peace treaty on October 26,
1994,10 Congress and the Administration have taken a number of initiatives intended
to benefit the Jordanian economy. These steps have included increasing the level of
bilateral economic and military assistance provided to Jordan, forgiving Jordan’s debt
to the United States, and establishing qualifying industrial zones (QIZs) in Jordan and
Israel. The primary Congressional motivation behind attempting to improve the
Jordanian economy has been to provide Jordan with a ‘peace dividend’–an economic
reward designed to demonstrate the benefits of peace to a Jordanian population that
has sometimes criticized and protested its government’s pace and depth of
normalization of relations with Israel.
In recent years, one of the most visible aspects of Congressional interest in the
Jordanian economy has been in the realms of foreign assistance and debt forgiveness.
In the wake of the Washington Declaration, President Clinton promised King Hussein
8For an analysis of a possible United States-Egypt Free Trade Agreement, see Ahmed Galal
and Robert Z. Lawrence, Building Bridges: An Egypt-U.S. Free Trade Agreement, Brookings
Institution Press, Washington, D.C., 1998.
9“U.S. Senators Seek Free-Trade Pact with Egypt,” Reuters, August 4, 2000.
10For the text of these two agreements, see the web site of Israel’s Foreign Ministry, at
[http://www.israel-mfa.gov.il].

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CRS-4
that he would work towards forgiving Jordan’s debt to the United States. Congress
responded with subsidy appropriations mainly in FY1994 and FY1995 that forgave
the equivalent of roughly $700 million of Jordanian debt to the United States.
Beginning in FY1996, Congress agreed to increase first military and then economic
assistance to Jordan. In FY1999 and FY2000, at the request of the Administration,
Congress also earmarked $300 million for Jordan in its supplemental appropriations
for funding the 1998 Israeli-Palestinian Wye River Memorandum. Congress provided
Jordan with Wye River funds in gratitude for King Hussein’s prominent role in
mediating the agreement and to help Jordan withstand internal and regional opposition
to its supportive role. Table 1 provides a summary of U.S. assistance and debt
forgiveness to Jordan since FY1993. (For further details on U.S. assistance to
Jordan, see CRS Issue Brief IB93085, Jordan: U.S. Relations and Bilateral Issues,
by Alfred B. Prados, updated regularly.)
Table 1. U.S. Foreign Assistance to Jordan, FY1993 to FY2001
(All figures in Millions of U.S. Dollars)
Debt
FY
Economica
Militaryb
Sub-Total
Total
Forgivenessc
1993
35.0
9.5
44.5
–
44.5
1994
28.0
9.8
37.8
99.0
136.8
1995
28.9
8.3
37.2
275.0
312.2
1996
36.1
201.5
237.6
–
237.6
1997
120.4
32.1
152.5
15.0
167.5
1998
151.2
77.1
228.3
12.0
240.3
1999d
201.5
123.5
325.0
–
325.0
2000d
200.0
226.6
426.6
–
426.6
2001 (Proposed)
150.0
76.7
226.7
–
226.7
Total
951.1
765.1
1,716.2
401.0
2,117.2
a.
Economic assistance includes Economic Support Funds (ESF), Development Assistance, Food
Assistance, and Peace Corps.
b.
Military assistance includes Foreign Military Financing (FMF), Drawdowns of Military
Equipment, International Military Education and Training (IMET), and De-Mining
Operations.
c.
Debt forgiveness amounts represent subsidy appropriations, which under the scoring
procedures employed forgave $702.3 million of Jordanian debt to the United States.
d.
Figures for FY1999 and FY2000 include additional appropriations that Jordan has received
or will receive for its role in helping to mediate the Israeli-Palestinian Wye River
Memorandum. Some FY2000 Wye River appropriations might not be obligated until FY2001
or FY2002.

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CRS-5
Apart from foreign assistance and debt forgiveness, Congress has also promoted
joint Jordanian-Israeli economic ventures through the Qualifying Industrial Zones
(QIZ) program. In 1996, Congress adopted this program as an amendment to the
United States-Israel Free Trade Area Implementation Act of 1985 (H.R. 3074) and
President Clinton signed the bill into law (P.L. 104-234) in October 1996. Under this
legislation, products with a certified minimum content of Jordanian and Israeli inputs
that are manufactured in specially designated qualifying industrial zones are eligible
for unilateral duty-free access to the U.S. market. To date, the United States Trade
Representative (USTR) has designated ten QIZs in Jordan, which have had a
modestly successful effect in spurring Jordanian-Israeli business partnerships,
promoting job creation in Jordan, and encouraging foreign direct investment (FDI)
in Jordan. (For further details, see CRS Report RS20529, United States-Israel Free
Trade Area: Jordanian-Israeli Qualifying Industrial Zones, by Joshua Ruebner,
updated January 9, 2001.)
U.S.-Jordan FTA
Some Members of Congress began to consider the idea of negotiating a U.S.-
Jordan FTA more than six years ago in the immediate aftermath of the signing of the
July 1994 Washington Declaration. Then House Majority Leader Richard Gephardt
sent President Clinton a letter urging him to expand the U.S.-Israel FTA to include
countries that sign “comprehensive peace agreements with Israel.” The letter was co-
signed by an additional 42 Representatives.11 However, both in Congress and in the
Administration, the idea of establishing a U.S.-Jordan FTA lay dormant for the most
part, until King ‘Abdullah II ascended the Jordanian throne upon the death of his
father, King Hussein, in February 1999, and made the U.S.-Jordan FTA one of his
top priorities.
The high priority that King ‘Abdullah has attached to economic reform in
general, and to the U.S.-Jordan FTA in particular, helped to rekindle Congressional
interest in this issue. Toward this end, between March and May 2000, over 45
Members of Congress sent President Clinton letters12 urging him to enter into
negotiations for an FTA with Jordan as soon as possible. In these letters, Members
provided several interrelated rationales for supporting a U.S.-Jordan FTA: 1) it would
strengthen bilateral relations and express the United States’ appreciation for Jordan’s
role in furthering the Middle East peace process and actively cooperating in
international counter-terrorism activities; 2) it would promote economic growth in
Jordan and regional economic cooperation, thereby enhancing stability and security
in Jordan and the Middle East; and 3) it would assist in further promoting economic
reform and liberalization in Jordan.
About a month after formal U.S.-Jordanian negotiations on the FTA began, on
July 17, 2000, a bipartisan group of 41 Senators sent President Clinton a letter urging
the Administration to “promptly conclude negotiations” so that the Senate could
11For the text of the letter, see “House Letter on Middle East Trade,” Inside U.S. Trade, July
29, 1994, pp. 30-31.
12Statement by Stuart E. Eizenstat, “A New Era of Economic Cooperation,” Amman, Jordan,
June 26, 2000, United States Information Service.

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CRS-6
consider and pass the FTA during the 106th Congress.13 Eighteen Democratic
Members of Congress wrote a letter to President Clinton on October 24, 2000,
expressing their “congratulations and strong support” for the U.S.-Jordan FTA and
pledging “to work hard to pass the implementing bill for this free trade agreement in
the 107th Congress.”14
Reactions to the Proposed Free Trade Agreement
U.S. Administration
Prior to the signing of the agreement, the Clinton Administration expressed its
support for a U.S.-Jordan free trade agreement (FTA) in terms similar to those
employed by Members of Congress who urged the President to undertake this
initiative. The Clinton Administration viewed the FTA as a potential catalyst to
sustained economic growth in Jordan, providing its people with a long-awaited ‘peace
dividend,’ which in turn would reinforce support for the peace process. United States
Trade Representative (USTR) Charlene Barshefsky recently articulated the link
between economic growth and regional peace, stating that the FTA “can be a step
toward the creation of a future Middle East which is peaceful, prosperous, and open
to the world; whose nations work together for the common good; and whose people
have hope and opportunity.”15
As noted above, President Clinton and King ‘Abdullah agreed to commence
negotiations on an FTA on June 6, 2000. Shortly thereafter, on June 15, the United
States Trade Representative (USTR) gave official notice of the United States’ intent
to conclude an FTA with Jordan.16 The USTR also requested the United States
International Trade Commission (USITC) to study the economic impact of a U.S.-
Jordan FTA on the U.S. economy. Consequently, USITC initiated investigation No.
332-418, entitled “Economic Impact on the United States of a U.S.-Jordan Free
Trade Agreement.”17 The economic impact study was completed and submitted to
the USTR on July 31, 2000, and was declassified and released to the public on
September 26, 2000.18
13For the text of the letter, see “Senators Letter on Jordan FTA,” Inside U.S. Trade, August
18, 2000, p. 20.
14For the text of this letter, see “Democrats Letter on Jordan FTA,” Inside U.S. Trade,
October 27, 2000, p. 12.
15 Ambassador Charlene Barshefsky, U.S. Trade Representative, “Bridges to Peace: The U.S.-
Jordan Free Trade Agreement and American Trade Policy in the Middle East,”Jordanian-
American Business Association, Amman, Jordan, July 31, 2000, United States Information
Service.
16Federal Register, June 15, 2000, v. 65 n. 116, pp. 37594-37595.

17Federal Register, June 26, 2000, v. 65 n. 123, pp. 39426-39427.
18For a summary of the investigation, see “A U.S.-Jordan Free Trade Agreement Would Have
No Measurable Impact on U.S. Production or U.S. Employment, Says ITC,” News Release
(continued...)

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CRS-7
In this investigation, the USITC concluded that a U.S.-Jordan FTA “would have
no measurable impacts on total U.S. exports, total U.S. imports, U.S. production, or
U.S. employment.” USITC arrived at this conclusion after conducting 16 qualitative
industry sector analyses of U.S. exports to and imports from Jordan. By running
partial equilibrium analyses, in which tariffs levels were hypothetically reduced to zero
and all other factors influencing levels of trade flows were held constant, USITC
concluded that had zero-level tariffs been in place in 1998, U.S. exports to Jordan
would have increased in three sectors. Under this model, U.S. exports of cereals
(other than wheat) would have increased by 14% (or $2.9 million); U.S. exports of
electrical machinery would have increased by 104% (or $22 million); and U.S. exports
of machinery and transportation equipment would have increased by 39% (or $48
million). USITC also predicted that the FTA “will likely lead to an increase in U.S.
imports of textiles and apparel from Jordan.” However, USITC did not run a partial
equilibrium analysis for this Jordanian export sector, and therefore, was unable to
quantify the potential increase. Though USITC concluded that the overall impact of
the FTA on the U.S. economy will be negligible, it did infer that the FTA could
occasion a modest increase in bilateral trade.
The Office of the USTR, through the Trade Policy Staff Committee (TPSC), is
also conducting an environmental impact study of the U.S.-Jordan FTA. This
environmental review responds to a new U.S. commitment to “factor environmental
considerations into the development of its trade negotiating objectives,” embodied in
Executive Order 13141, issued by President Clinton on November 16, 1999.19 Some
view this Executive Order as the Administration’s response to criticisms of the
environmental effects of United States trade policy expressed before and during the
November 1999 Seattle Round of the World Trade Organization (WTO) talks.
(Coincidentally, violent confrontations between the police and protesters in Seattle
curtailed the agenda of the WTO talks, forcing Jordan’s accession to the WTO to be
deferred until April 2000.20) Many individuals and groups concerned with trade and
environmental issues watched the U.S.-Jordanian negotiations with great interest since
their results could serve as a model for future U.S. trade negotiating strategy on
environmental issues.
In September 2000, the USTR released a draft environmental review of the
proposed U.S.-Jordan FTA.21 In this draft review, the USTR stated that “the U.S.
18(...continued)
00-112, September 26, 2000, United States International Trade Commission (USITC). The
complete text of the investigation is available at the web site of USITC, at
[http://www.usitc.gov/].
19Federal Register, November 18, 1999, v. 64, n. 222, pp. 63167-63170.
20William A. Orme, Jr., “Jordan’s Long Road to the Free-Trade Club,” New York Times, May
21, 2000.
21For the text of the draft, see “Draft Environmental Review of the Proposed Agreement on
the Establishment of a Free Trade Area Between the Government of the United States and the
Government of the Hashemite Kingdom of Jordan,” Office of the United States Trade
Representative, September 2000, at
(continued...)

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CRS-8
Government (USG) expects that the FTA with Jordan will not have any significant
environmental effects in the United States. While it is conceivable that there may be
instances in which environmental effects are concentrated regionally or sectorally in
the United States, the USG could not identify any such instances.”
U.S. Private Sector
When the Office of the USTR gave official notice of the United States’ intention
to enter into free trade negotiations with Jordan, it also solicited comments from
private sector corporations and associations on the objectives to be pursued during
these negotiations.22 In total, twenty corporations and associations filed public
comments with the USTR–seventeen of which concerned the economic components
of the FTA and three of which dealt with the environmental aspects of the
agreement.23 (For a brief overview of the positions taken by these corporations and
associations, see Appendices A and B.)
In general, those private sector corporations and associations that responded to
the USTR’s call for public comments on the FTA expressed their support for the idea.
Manufacturers, importers, and marketers of textile and apparel products accounted
for the plurality of public comments received by the USTR (six of seventeen public
comments filed on the economic aspects of the FTA primarily dealt with textiles and
apparel, while another one secondarily dealt with these sectors as well). The interest
that U.S. textile and apparel companies have shown in the U.S.-Jordan FTA is
unsurprising since these sectors could prove to be the largest potential area of growth
for Jordanian exports to the United States under an FTA.
Some of these textile manufacturers, such as BCTC Corporation and certain
members of the American Apparel Manufacturing Association (AAMA), have
recently invested in Jordan’s qualifying industrial zones (QIZs) and therefore have an
interest in expanding Jordanian textile and apparel access to the U.S. market. Those
supportive of greater Jordanian textile and apparel access to the U.S. market have
tended to urge the USTR to adopt the U.S.-Israel FTA ‘rules-of-origin’ in the U.S.-
Jordan FTA. The ‘rules-of-origin’ clauses in the U.S.-Israel FTA allow Israeli exports
to qualify for duty-free access to the United States if Israel added at least 35% (of
which up to 15% can be from the United States) to the value of the product.
Those who fear that greater Jordanian textile and apparel access to the U.S.
market could harm textile and apparel manufacturers and workers within the United
States, such as the American Textile Manufactures Institute (ATMI), have urged the
USTR to apply North American Free Trade Agreement (NAFTA) ‘rules-of-origin’
standards to the U.S.-Jordan FTA. NAFTA ‘rules-of-origin,’ including those for
21(...continued)
[http://www.ustr.gov/environment/draftjordanreview.html].
22“USTR Seeks Public Comment on U.S.-Jordan Free Trade Agreement,” USTR Press
Release, June 15, 2000.
23These public comments are maintained in a file in the USTR Reading Room and are
available for public inspection by appointment.

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CRS-9
textile and apparel, are stricter than those in the U.S.-Israel FTA, and if applied to the
U.S.-Jordan FTA would probably result in a smaller growth potential for Jordanian
exports of textiles and apparel to the United States. (For further details on NAFTA
‘rules-of-origin,’ see CRS Info Pack IP445N, NAFTA: The North American Free
Trade Area, updated as needed.)
Another topic that elicited multiple responses is the issue of protecting
intellectual property rights (IPRs). In particular, pharmaceutical and motion-picture
interests urged the USTR to ensure that the FTA addresses Jordan’s implementation
of all WTO and Trade- Related Aspects of Intellectual Property Rights (also known
as “TRIPS”) commitments. Other respondents who filed public comments either
export to Jordan or import from Jordan particular commodities and urged the USTR
to negotiate immediate zero-level tariffs for these commodities in the FTA.
As noted above, USTR also received three public comments specifically relating
to the environmental aspects of the U.S.-Jordan FTA. Two of these comments, filed
by the World Resources Institute and the American Lands Alliance, expressed support
for conducting an environmental impact study and incorporating environmental
standards within the proposed FTA. The American Federation of Labor and
Congress of Industrial Organizations (AFL-CIO), in its public comment on the
economic aspects of the FTA, also supported the introduction of core environmental
standards in the FTA. However, the United States Council for International Business
has opposed the introduction of environmental standards within the framework of the
FTA and argues instead for bilateral environmental agreements to be concluded
outside the framework of the FTA.
At the same time that it called for public comments on the FTA, the USTR also
announced that it would be negotiating labor standards within the text of the proposed
FTA. As a result, three organizations filed comments with the USTR that dealt with
the advisability of including labor standards within an FTA. Women’s Edge and the
AFL-CIO both supported the idea of including core international labor standards
within the text of the agreement. The United States Council for International
Business countered that the purview of an FTA should not include international labor
standards.
Jordanian Public and Private Sectors
Like the USTR, the Jordanian government has also called for the Jordanian
private sector to file comments on the environmental aspects of the U.S.-Jordan
FTA.24 The Jordanian delegation negotiating the FTA, led by Deputy Prime Minister
and Minister of State for Economic Affairs Dr. Muhammad al-Halayqah, will
incorporate these public comments into a separate Jordanian environmental review of
the FTA. It appears that the Jordanian environmental review of the FTA will also
double as an economic impact study, since it will “summarize the likely economic
outcomes of an FTA on Jordan.” At this point, it remains unclear how Jordan will
classify the environmental review or if it will be released to the public. Jordan has
24“Notice of Opportunity to Comment on the Environmental Considerations of the Proposed
Jordan-U.S. Free Trade Agreement,” Jordan Times, July 10, 2000.

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CRS-10
active environmental non-governmental organizations (NGOs) that are likely to
welcome the opportunity to comment on the U.S.-Jordan FTA. For example, in the
past, Jordanian environmental NGOs have raised concerns about and influenced the
planning and building of the Jordan Gateways Project QIZ.
In general, the Jordanian private sector responded enthusiastically to the idea of
the U.S.-Jordan FTA. For instance, the Jordanian American Business Association
(JABA) surveyed prominent business leaders from both private and public sector
organizations and found that “overall sentiment ran strongly in favor of increased
economic ties between Jordan and the United States. Many expressed an expectation
especially that foreign direct investment into Jordan will increase and that the FTA
will help expand this into multiple sectors, from textiles to technology and from
financial services to tourism.”25 However, JABA also noted that some of those
surveyed worried that an FTA could lead to an expanded level of U.S. imports that
could have a detrimental impact on Jordan’s manufacturing sector. Some also
expressed concern that Jordan’s reorientation of its trade relations toward the United
States (and toward Europe with the signing of an EU-Jordanian partnership
agreement) could come at the expense of its trade relations with neighboring
countries. In the immediate aftermath of the signing of the FTA, several prominent
Jordanian private sector personalities, including the President of the Union of
Jordanian Chambers of Commerce, the Vice President of the Amman Chamber of
Commerce, and the Chairman of the Administrative Council of the Amman Chamber
of Industry, welcomed and endorsed the FTA.26
Selected Provisions of the U.S.-Jordan FTA
As noted above, the U.S.-Jordan FTA was signed on October 24, 2000. This
section highlights selected provisions of the FTA and is based on the text, annexes,
schedules, and related understandings of the agreement as published by the USTR.27
This section does not offer a legal interpretation of the rights and obligations that the
FTA entails. Those who are interested in further details on specific provisions of the
agreement are urged to consult the full-text of the agreement, which is accessible via
the hyperlink provided in the footnote below. The subsequent section discusses some
of the potential economic and political effects of the FTA.
Trade in Goods and Services. The FTA provides for a 10-year transitional
period during which duties on almost all goods will be phased-out, leading to duty-
free trade in goods between the United States and Jordan. The duties on many goods
25“The Proposed Free Trade Agreement between the United States of America and the
Hashemite Kingdom of Jordan: Expected Impact and Benefits,” Jordanian American Business
Association (JABA), no date.
26“A Rapid Move of Economic Activity and a Strengthening of the Investment Climate.
Economic Circles Welcome the Free Trade Agreement with America,” ad-Dustour (Amman),
October 26, 2000.
27For the complete text of the FTA and accompanying documents, see the web site of the
USTR, at [http://www.ustr.gov/regions/eu-med/middleeast/US-JordanFTA.shtml].

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CRS-11
will be phased-out prior to the end of the 10-year transitional period. The FTA also
provides for a liberalization of bilateral trade in services, stating that “each Party shall
accord to services and service suppliers of the other Party, in respect of all measures
affecting the supply of services, treatment no less favorable than that it accords to its
own like services and service suppliers.” (Article 3.2(b)) The Parties undertook
specific market-opening commitments in various service sectors, such as business,
communications, construction and engineering, distribution, education, environment,
finance, health, tourism, recreation, and transportation.
Intellectual Property Rights (IPRs). The FTA obligates the United States
and Jordan to give effect to various articles in several World Intellectual Property
Organization (WIPO) multilateral agreements. The FTA provides protections for
trademarks, copyrights, and patents, and specifically mentions the protection of
software and pharmaceuticals, two categories of products whose copyrights and
patents are especially prone to violation. The FTA also provides for the enforcement
of the IPRs that it protects: Article 4.24 states, in part, that each country “shall
ensure that its statutory maximum fines are sufficiently high to deter future acts of
infringement with a policy of removing the monetary incentive to the infringer.” The
agreement stipulates that the protection of some of the IPRs will take effect
immediately from the date of entry into force while others will take effect between six
months and three years from that date. The United States and Jordan also signed a
Memorandum of Understanding on Issues Related to the Protection of IPRs,
specifying that Jordan will raise its criminal penalties for the infringement of IPRs to
approximately $8500 (6000 Jordanian dinars) in order to deter future infringements.
Environment. In the FTA, the United States and Jordan recognize the
principle that it is “inappropriate to encourage trade by relaxing domestic
environmental laws. Accordingly, each Party shall strive to ensure that it does not
waive or otherwise derogate from, or offer to waive or otherwise derogate from, such
laws as an encouragement for trade with the other Party.” (Article 5.1) The agreement
also recognizes the right of each country to establish its own levels of domestic
environmental protection, policies, and priorities. The FTA states that “a Party shall
not fail to effectively enforce its environmental laws, through a sustained or recurring
course of action or inaction, in a manner affecting trade between the Parties.” (Article
5.3(a)) The United States and Jordan also issued a Joint Statement on Environmental
Technical Cooperation. The joint statement establishes a Joint Forum on
Environmental Technical Cooperation, which will work to “advance environmental
protection in Jordan by developing environmental technical cooperation initiatives,
which take into account environmental priorities, and which are agreed to by the two
governments, consistent with the U.S. country strategic plan for Jordan, and
complementary to U.S.-Jordanian policy initiatives.” An annex to the joint statement
details ongoing and future U.S.-Jordanian environmental technical cooperation
programs.
Labor. Under the FTA, the United States and Jordan reaffirm their obligations
as members of the International Labor Organization (ILO) and their commitments
under the ILO Declaration on Fundamental Principles and Rights at Work and its
Follow-Up. Mirroring the language used in the section on environmental standards,
the FTA states that “the Parties recognize that it is inappropriate to encourage trade
by relaxing domestic labor laws. Accordingly, each Party shall strive to ensure that

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CRS-12
it does not waive or otherwise derogate from, or offer to waive or otherwise derogate
from, such laws as an encouragement for trade with the other Party.” (Article 6.2)
The agreement also recognizes the right of each country to establish its own domestic
labor standards, laws, and regulations, striving to ensure that these are consistent with
international recognized labor rights. The FTA states that “a Party shall not fail to
effectively enforce its labor laws, through a sustained or recurring course of action or
inaction, in a manner affecting trade between the Parties.” (Article 6.4(a))
Electronic Commerce. The FTA states that the United States and Jordan
will seek to refrain from deviating from the existing practice of not imposing customs
duties on electronic transmissions or imposing unnecessary barriers on electronic
transmissions.
Safeguard Measures. The FTA contains safeguard measures to ensure that
if the implementation of the agreement leads to “a substantial cause of serious injury,
or threat thereof” to a domestic industry, either country may temporarily suspend
further tariffs reductions on the affected goods. If either country decides to enact a
safeguard measure, its duration cannot exceed 4 years or the 10-year transitional
period, and no measure shall be maintained “except to the extent and for such time as
may be necessary to prevent or remedy serious injury and to facilitate adjustment.”
(Article 10.2.(a)(i)) The FTA also recognizes the special challenges faced by “infant
industries” during a period of trade liberalization and that therefore neither country
should create obstacles to “infant industries” that seek the imposition of safeguard
measures.
Joint Committee. The FTA establishes a Joint Committee whose functions
include reviewing the general functioning of the agreement; improving trade relations;
avoiding and settling disputes; amending the agreement; developing guidelines,
explanatory material, and rules on the implementation of the agreement; and
reviewing the environmental impact studies conducted by both countries. The Joint
Committee will be headed by the USTR and by “Jordan’s Minister primarily
responsible for international trade” and will make all decisions by consensus. The
committee will consider “the views of interested members of the public in order to
draw upon a broad range of perspectives in the implementation of this Agreement”
and “seek the advice” of non-governmental organizations (NGOs).
Dispute Settlement. The FTA sets out a multi-step procedure for dispute
settlement. First, the United States and Jordan “shall make every attempt to arrive
at a mutually agreeable resolution through consultations” if a dispute arises. If the
Parties do not resolve the dispute through consultations, either Party has the right to
refer the dispute to the Joint Committee. If the Joint Committee does not solve the
dispute within 90 days, the dispute may be referred to a specially appointed three-
person dispute panel. The dispute panel is authorized to make non-binding
recommendations to resolve the dispute. After the dispute panel issues its
recommendations, the Joint Committee “shall endeavor to resolve the dispute, taking
the report into account.” If the Joint Committee stills fails to resolve the dispute, then
“the affected Party shall be entitled to take any appropriate and commensurate
measure.” The United States and Jordan also signed a Memorandum of
Understanding on Transparency in Dispute Settlement, obligating the Parties to
“solicit and consider the views of members of their respective publics in order to draw

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CRS-13
upon a broad range of perspectives.” According this memorandum, if a dispute panel
is established, any submission made to it shall be made available publicly; oral
presentations before the panel shall be open to members of the public; the panel shall
“accept and consider” amicus curiae submissions by individuals, legal persons, and
NGOs; and the panel shall release its report to the public.
Potential Effects of the U.S.-Jordan FTA
Trade in Goods
Throughout most of the 1990s, bilateral trade between the United States and
Jordan has been modest. In 1999, Jordan ranked as the United States’ 101st largest
trading partner in the world.28 Between 1992 and 1999, yearly bilateral trade flows
between the United States and Jordan have stayed fairly constant, registering a low
of $275 million in 1992 and a high of nearly $430 million in 1997. Trade between the
United States and Jordan has been predominantly uni-directional, with the United
States enjoying a healthy trade surplus. In some years, U.S. exports to Jordan have
dwarfed U.S. imports from Jordan by a magnitude of more than 10:1. Table 2
provides an overview of the bilateral trade flows between the United States and
Jordan between 1992 and 1999.
Table 2. U.S.-Jordanian Bilateral Trade and Trade Balance,
1992-1999
(All figures in Millions of U.S. Dollars)
U.S. Exports
U.S. Imports
U.S. Trade
Year
Total Trade
to Jordan
from Jordan
Balance
1992
257.7
18.1
275.8
239.6
1993
360.5
18.7
379.2
341.8
1994
287.3
29.0
316.3
258.3
1995
335.3
28.8
364.1
306.5
1996
345.2
25.2
370.4
320.0
1997
402.5
25.3
427.8
377.2
1998
352.9
16.4
369.3
336.5
1999
275.6
30.9
306.5
244.7
Source: “U.S. Trade Balance with Jordan,” United States Census Bureau, Department of Commerce.
28“U.S. Trade Balance, by Partner, 1999,” United States International Trade Commission
(USITC) Trade Database.

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CRS-14
In 1999, total bilateral trade between the United States and Jordan was roughly
$300 million. U.S. exports to Jordan accounted for approximately 90% ($275
million) of this total. Table 3 presents an overview of the top ten categories of
commodities that Jordan imported from the United States in 1999, ranked by
Harmonized Tariff Schedule (HTS) chapter. Table 3 also presents the Jordanian tariff
rate, as calculated by the Jordan Customs Department, for leading commodities within
each of the ranked chapters, as well as the tariff schedule for these commodities as
negotiated in the FTA. In 1999, cereals (wheat, rice, and corn) were the largest U.S.
export to Jordan, accounting for nearly 20% of total exports. Under the prevailing
tariff rates, cereals enter Jordan either duty-free or with a low 5% tariff. These low
tariff rates reflect the sensitivity of food pricing in Jordan. Food prices have tended
to be a volatile domestic political issue in Jordan since the government began to lower
food subsidies in the context of its structural adjustment reform program.29
Therefore, the free trade agreement is likely to have only a marginal impact on the
volume of U.S. cereal exports to Jordan and on cereal pricing for Jordanian
consumers since tariffs on cereals are already at low levels.
However, other leading U.S. commodity exports to Jordan do face substantial
tariff barriers and a free trade agreement leading to the phasing out of these tariffs
could increase Jordanian demand for these products. Exports such as machinery and
mechanical appliances, aircraft, and electrical machinery would likely be the primary
beneficiaries of lower Jordanian tariff rates.
In 1999, U.S. imports from Jordan totaled $31 million and accounted for
approximately 10% of total bilateral trade. Table 4 presents an overview of the top
five categories of commodities that the United States imported from Jordan in 1999,
ranked by Harmonized Tariff Schedule (HTS) chapter. Table 4 also presents the U.S.
tariff rate for leading commodities within each of the ranked chapters, as well as the
tariff schedule for these commodities as negotiated in the FTA. Of this total, nearly
60% ($18.5 million) of Jordanian exports to the United States were classified under
Chapter 98–Special Classification Provisions of the Harmonized Tariff Schedule
(HTS). In the case of these Jordanian exports, the HTS defines them as “U.S. goods
returned without having been advanced in value or improved in condition while
abroad.” Typically these are products that Jordan had previously imported from the
United States and sent back temporarily for repair, servicing, or other reasons. Trade
falling under Chapter 98 of the HTS is not considered to be actual merchandise trade.
Therefore, if Chapter 98 products are excluded, U.S. imports of merchandise
from Jordan totaled roughly $12.5 million in 1999. Leading imports of merchandise
included precious metals and stones, usually in the form of metal articles of jewelry,
articles of apparel, antiques, and carpets.
Some of these leading Jordanian merchandise exports to the United States
already enjoy preferential duty-free access to the U.S. market either under the
29Jordanian central government expenditures on food subsidies have decreased from
approximately $140 million in 1996 to $21 million in 1999. Data adapted from Central Bank
of Jordan, Monthly Statistical Bulletin, Table 26: Economic Classification of Central
Government Expenditures, July 2000.

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CRS-15
Generalized System of Preferences (GSP) for developing nations or through the
qualifying industrial zones (QIZs) program. (For further details on the Generalized
System of Preferences, see CRS Report 97-389, Generalized System of Preferences,
by William H. Cooper, November 22, 1999.) For instance, Jordan’s top merchandise
export to the United States in 1999, precious metal (other than silver) articles of
jewelry, which accounted for approximately 25% of Jordanian merchandise exports
to the United States, entered the U.S. market duty-free under the GSP. In addition,
Jordan began exporting QIZ-designated products from the al-Hassan Industrial Estate
in Irbid to the United States in 1999. According to data from the United States
International Trade Commission (USITC), U.S. imports of QIZ-designated products
amounted to $159,000 in 1999. All of these imports were classified under Chapters
61 and 62 of the HTS which deal with apparel. As the other nine QIZs become
operational and more product lines become eligible for QIZ status in upcoming years,
U.S. duty-free imports of products under the QIZ are expected to increase.
Table 3. Top 10 U.S. Domestic Exports to Jordan, 1999
(All figures in millions of U.S. Dollars)
# Harmonized Tariff Schedule (HTS) Category
$
%
Jordanian
FTA

Tariff Rate
Tariff
Schedule
Total U.S. Domestic Exports to Jordan
$270.0
100.0
1 Ch. 10 Cereals
$52.1
19.3
100190 Wheat (other than Durum Wheat) &
$26.8
9.9
0%
E
Meslin
100630 Rice, Semi-Milled or Wholly Milled
$14.3
5.3
5%
A
100590 Corn (Maize)
$10.9
4.0
5%
A
2 Ch. 84 Machinery & Mechanical Appliances
$36.5
13.5
843139 Parts for Lifting, Handling, Loading or
$2.1
0.8
30%
D
Unloading Machinery
847149 Digital Automatic Data Processing
$1.5
0.6
10%
E
Machines
3 Ch. 88 Aircraft & Spacecraft
$27.7
10.3
880330 Parts of Airplanes or Helicopters
$25.1
9.3
10%
A
880212 Helicopters
$1.9
0.7
0%
E
4 Ch. 15 Animal or Vegetable Fats and Oils
$22.8
8.4
151521 Corn (Maize) Oil, Crude
$5.1
1.9
5%
A
5 Ch. 98 Special Classification Provisions
$15.2
5.6
6 Ch. 90 Optical, Photographic,
$14.3
5.3
Cinematographic, Measuring, Checking,
Precision, Medical or Surgical Instruments
and Apparatus
902119 Orthopedic or Fracture Appliances
$1.8
0.7
0%
E
other than Artificial Joints

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CRS-16
# Harmonized Tariff Schedule (HTS) Category
$
%
Jordanian
FTA

Tariff Rate
Tariff
Schedule
901420 Instruments & Appliances for
$1.4
0.5
30%
D
Aeronautical or Space Navigation other than
Compasses
7 Ch. 85 Electrical Machinery & Equipment
$12.7
4.7
853620 Automatic Circuit Breakers
$2.3
0.9
35%
I
8 Ch. 24 Tobacco
$11.2
4.2
240310 Smoking Tobacco
$9.3
3.4
70%
N/A
9 Ch. 47 Pulp of Wood; Paper & Paperboard
$7.3
2.7
470321 Bleached Coniferous Woodpulp
$5.2
1.9
5%
A
1 Ch. 87 Vehicles
$7.2
2.7
0
870829 Parts & Accessories of Bodies for
$0.4
0.1
30%
D
Motor Vehicles
Sources: United States International Trade Commission Trade Database; Jordan Customs
Department.
Notes: A=duties shall be removed in two equal annual stages and be duty-free effective year two
D=duties shall be removed in ten equal annual stages and be duty-free effective year ten
E=duties shall be removed in accordance with existing WTO duty-elimination commitments
I=duties shall be removed in eight equal annual stages and be duty-free effective year eight
N/A=Non-applicable. The USTR did not negotiate the reduction of tariffs on tobacco
products in order to comply with its interpretation of the “Doggett Amendment” to the Departments
of Commerce, Justice, and State, the Judiciary, and Related Agencies Appropriations Act, 1998 (H.R.
2267, signed into law as P.L. 105-119, November 26, 1997). The “Doggett Amendment, Sect. 618,
states that “none of the funds provided by this Act shall be available to promote the sale or export
of tobacco or tobacco products, or to seek the reduction or removal by any foreign country of
restrictions on the marketing of tobacco or tobacco products, except for restrictions which are not
applied equally to all tobacco or tobacco products of the same type.” Similar language has appeared
in subsequent appropriations acts for these agencies.

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CRS-17
Table 4. Top 5 U.S. Imports for Consumption from Jordan, 1999
(All figures in millions of U.S. Dollars)
# Harmonized Tariff Schedule (HTS) Category
$
%
U.S.
FTA

Tariff
Tariff

Rate
Schedule
Total U.S. Imports for Consumption from
$31.0
100.0
Jordan
1 Ch. 98 Special Classification Provisions
$18.5
59.8
98010010 U.S. Goods Returned without having
$18.5
59.8
0%
E
been Advanced in Value or Improved in
Condition while Abroad
2 Ch. 71 Pearls, Precious Stones, Precious
$4.5
14.5
Metals
71131950 Precious Metal (other than Silver)
$3.0
9.7
0%
G
Articles of Jewelry
3 Ch. 62 Articles of Apparel & Clothing
$1.8
5.9
Accessories, Not Knitted or Crocheted
62034240 Men’s or Boys’ Trousers and Shorts
$0.5
1.6
17.2%
C
4 Ch. 97 Works of Art, Collector’s Pieces &
$0.8
2.6
Antiques
97060000 Antiques of an Age Exceeding 100
$0.7
2.3
0%
E
Years
5 Ch. 57 Carpets & Other Textile Floor
$0.7
2.4
Coverings
57024220 Carpets & Other Textile Floor
$0.4
1.3
4%
E
Coverings, of Pile Construction, Woven, not
Tufted or Flocked
Source: United States International Trade Commission Trade Database.
Notes: C=duties shall be removed in five equal annual stages and be duty-free effective year five
E=duties shall be removed in accordance with existing WTO duty-elimination commitments
G=duties shall be eliminated entirely and be duty-free effective year one
Since some Jordanian exports to the United States already qualify for duty-free
access under the above-mentioned programs and the regular tariff rates (in the HTS),
the free trade agreement with an across-the-board zero-tariff level is unlikely to have
a large impact on the volume of Jordanian exports to the United States. However,
one sector that shows growth potential under a future U.S.-Jordan FTA is the textile
and apparel sector. This sector occupies a significant position in Jordanian industrial
production. For instance, in 1993, 1750 textile and ready-made apparel firms
employed over 7500 people. Excluding mineral and petrochemical production,
textiles and apparels were Jordan’s second leading industrial export (roughly $50

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CRS-18
million) in 1994.30 Since 1994, the textile and apparel sector has become an even
more important part of Jordanian manufacturing since several American, Israeli, and
other multi-national textile and apparel firms have relocated some of their operations
to Jordan both within and outside the context of the QIZ program. However, only
a few firms have qualified their products for QIZ status. Therefore, most of the
Jordanian textile and apparel industry still faces fairly substantial tariffs when
exporting to the United States. A general phasing-out of these tariffs within the
context of an FTA would presumably increase Jordanian textile and apparel exports
to the United States.
Foreign Direct Investment (FDI) in Jordan
Although a U.S.-Jordan FTA might not have a large and immediate impact on
the volume of bilateral trade in goods and services, many predict that the FTA could
substantially increase foreign direct investment (FDI) in Jordan, both from the United
States and from the rest of the world. In the context of an FTA, multinational
companies seeking greater U.S. market access could relocate some of their operations
to Jordan in order to take advantage of its eventual duty-free access to the United
States. In addition, U.S. companies that currently import inputs or finished products
from other countries could reroute their purchases to Jordanian suppliers in order to
reduce production or import costs stemming from tariffs. Already, some U.S.,
foreign, and multinational companies have relocated their operations to Jordan in
order to benefit from the QIZ program, thereby attracting larger amounts of FDI to
Jordan. A U.S.-Jordan FTA could promote a similar pattern on a country-wide scale.
In recent years, U.S. direct investment in Jordan has been limited. Table 5
presents available data on U.S. companies’ direct investment position in Jordan
between 1994-1999. It also presents the capital outflows and profits stemming from
these investments. In 1999, U.S. FDI in Jordan increased to $30 million, up from $15
million in 1995, probably as a result of U.S. textile and apparel manufacturers
investing in the al-Hassan Industrial Park QIZ in Irbid, Jordan. However, even with
this increase, Jordan is still a rare destination for U.S. FDI in the Middle East. In
1999, U.S. FDI in Jordan represented less than 0.3% of total U.S. FDI in the region.
30Jordan: An Industrial Review (1989-1994), The Amman Chamber of Commerce and the
Industrial Development Bank, Amman, Jordan, 1995, p. 28, 53.

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CRS-19
Table 5. U.S. Foreign Direct Investment in Jordan, 1994-1999
(All figures in Millions of U.S. Dollars)
Direct Investment
Capital
Income to
Year
Position on a
Outflows
U.S. Firms
Historical-Cost Basis
1994
13
1
2
1995
15
2
2
1996
D
D
D
1997
D
D
5
1998
D
D
D
1999
30
D
-3
Notes: Entries designated (D) are suppressed in order to avoid disclosure of
data of individual companies.
Source: “International Accounts Data: U.S. Direct Investment Abroad,”
Bureau of Economic Analysis, Department of Commerce.
To help stimulate bilateral investment flows, the United States and Jordan
negotiated a Bilateral Investment Treaty (BIT) on July 2, 1997.31 The United States
has negotiated similar treaties with dozens of other countries, designed, according to
the USTR, to (1) protect U.S. investments abroad, (2) encourage market-oriented
economic reform, and (3) support international law standards regarding foreign
investment.32 (For further information on Bilateral Investment Treaties, see CRS
Report 98-39, Foreign Investment Treaties: Impact on Direct Investment, by James
K. Jackson, January 12, 1998.) On May 23, 2000, President Clinton transmitted a
message to the Senate seeking its advice and consent for ratification of the U.S.-
Jordan BIT (Treaty Document No. 106-30).33 On the same day, the Senate referred
the treaty to the Committee on Foreign Relations by unanimous consent.34 The
Senate considered the treaty and gave its advice and consent to ratification on
October 18, 2000.
31For the text of the agreement, see the web site of the U.S. Department of State at
[http://www.state.gov/www/issues/economic/treaty_bit_jordan.html].
32See “U.S. Bilateral Investment Treaty Program,” United States Trade Representative,
[http://www.ustr.gov/agreements/index.html].
33Weekly Compilation of Presidential Documents, May 29, 2000, v. 36, n. 21, p. 1200.
34Congressional Record, May 23, 2000, p. S4330.

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CRS-20
Economic Reform in Jordan
Since ascending the throne in February 1999, King ‘Abdullah has made economic
reform a top governmental priority. As a result, Jordan has undertaken a number of
structural adjustment reforms within the past year. For instance, in the context of its
accession to WTO membership in April 2000, Jordan harmonized its General Sales
Tax (GST) rates on domestic and imported goods, amended its customs law, and
enacted new legislation protecting intellectual property rights (IPRs). In July 1999
and April 2000, Jordan also lowered tariff levels, further liberalizing its trade regime.
Outside the realm of trade, Jordan has begun to corporatize some public sector
companies in preparation for their eventual privatization. Public sector
telecommunications and cement companies, in addition to companies in other sectors,
have been partially or wholly privatized as well.35 Jordan’s accession to the WTO,
combined with a free trade agreement with the United States, will likely increase the
momentum for further economic reforms in Jordan.
Political Implications
Should Congress and the Jordanian parliament agree to the FTA, Jordan would
become the first independent Arab country to have concluded an FTA with the United
States. This would be interpreted by many as a sign of the strength of U.S.-Jordan
bilateral relations and of the importance that the United States attaches to this
relationship. The U.S.-Jordan FTA would also be interpreted as a demonstration of
the United States’ confidence in and approval of King ‘Abdullah’s leadership in
general and of his economic reforms in particular. In addition, the FTA could
modestly reorient Jordan’s trade pattern towards the United States and therefore
implicitly away from Iraq. If, as a result of the FTA, Jordan could generate
substantial export revenues from the United States, it could eventually decrease its
reliance on Iraq as a major trading partner.36 If the FTA results in a significant ‘peace
dividend’ through increased levels of foreign direct investment (FDI) and exports,
potentially leading to job creation and sustained economic growth, support for the
peace process within Jordan could increase. In addition, this could provide tangible
proof to other countries in the region that the peace process can yield economic
benefits for their people as well.
35For further details on recent economic reform in Jordan, see “Jordan Letter of Intent and
Memorandum on Economic and Financial Policies for 2000, July 4, 2000,” International
Monetary Fund (IMF), Washington, D.C.
36A highly respected pan-Arab daily newspaper quoted unnamed Congressional sources who
said that one of the aims of the U.S.-Jordan FTA is to reduce Jordan’s economic dependence
on Iraq. The apparent rationale for reducing this dependence is to make it easier to maintain
the sanctions regime against Iraq by alleviating the economic dislocations that these sanctions
have caused to countries, like Jordan, friendly to the United States. Muwafiq Harb, “A Free
Trade Agreement between the United States and Jordan Will Be Signed before the End of the
Month,” al-Hayat, October 8, 2000.

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CRS-21
Appendix A. Public Comments Received by USTR on U.S.-
Jordan FTA
Company/Association
Position on FTA
Comment
Rubber and Plastic
Exclude products of Ch.
Trade association
Footwear Manufacturers
64 of HTS (footwear &
representing producers
Association
gaiters) from the FTA
of footwear w/ rubber or
plastic soles, protective
footwear and slippers
American Textile
Adopt NAFTA model
National trade
Manufacturers Institute
for rules of origin,
association representing
customs procedures, and
562,000 workers
safeguards on textiles
Pharmaceutical Research
FTA provides
Represents research-
and Manufactures of
opportunity to
based pharmaceutical
America
strengthen economic
and biotechnology
reform in Jordan for
companies
mutual interest of U.S.
& Jordanian
pharmaceutical
industries; concerned
about Jordan’s
implementation of WTO
& TRIPS commitments
Blue Diamond Growers
FTA should eliminate
Non-profit farmer-
tariff on almonds
owned almond
marketing cooperative
Philip Morris Companies
FTA should eliminate
Subsidiaries manufacture
Inc.
tariff on dairy products,
tobacco (Philip Morris),
edible preparations, and
food (Kraft), and beer
tobacco; concerned that
(Miller)
non-tariff barriers
(labeling & regulatory
requirements) hinder
exports to Jordan
BCTC Corporation
“Wholeheartedly” in
U.S. importer of apparel;
support, especially on
establishing a
free trade in apparel
manufacturing facility in
the Irbid QIZ; products
sold in Walmart, K-
Mart, & Sears

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CRS-22
Company/Association
Position on FTA
Comment
Women’s EDGE
FTA should not
Coalition of international
undermine universal
development & U.S.
access to water or food
women’s organizations
security and should
that advocate policies
include international
that empower women &
labor standards; a social
improve their living
and gender impact study
conditions
should be conducted
Motion Picture
FTA should address the
Trade association
Association
enforcement of anti-
representing Buena Vista
video piracy intellectual
International (Walt
property rights (IPRs)
Disney), Sony
(Columbia/Tri-Star),
MGM/United Artists,
Paramount Pictures, 20th
Century Fox, Universal
International Films, and
Warner Bros.
American Federation of
FTA should include
Voluntary federation of
Labor and Congress of
enforceable provisions
American unions,
Industrial Organizations
protecting core labor &
representing more than
(AFL-CIO)
environmental standards
13 million people
nationwide
American Apparel
“Strongly” supports
Central trade association
Manufacturers
FTA; FTA should
for U.S. companies that
Association (AAMA)
preserve the advantages
produce clothing; some
of QIZs and adopt U.S.-
members have shifted
Israel FTA rules of
production to the QIZs
origin
Energy Services
FTA provides the
Coalition of 51
Coalition
opportunity to fully
companies & trade
liberalize trade in the
associations whose goal
energy services sector;
is to promote the
FTA should include
liberalization of energy
market-access
services
commitments & pro-
competitive regulatory
framework
Chocolate
FTA should achieve
Represents 300
Manufacturers
reciprocal duty-free
companies that
Association (CMA) &
access for confectionery
manufacture more than
National Confectioners
products
90% of chocolate &
Association (NCA)
confectionery products
in the United States

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CRS-23
Company/Association
Position on FTA
Comment
U.S. Dairy Export
FTA should lower tariffs
Independent membership
Council
on dairy products from
organization
20% to zero
representing more than
80% of national milk
production & other dairy
products
West Point Stevens, Inc.
FTA should adopt rules
Largest U.S.
of origin based on U.S.-
manufacturer of sheets
Israel FTA
& towels
United States
FTA should be
Represents more than
Association of Importers
compatible w/ QIZs,
200 importers,
of Textiles & Apparel
lead to immediate
exporters,
(USA-ITA)
reciprocal elimination of
manufacturers,
duties on textiles &
distributors, & retailers
apparel, and have
minimum customs
formalities
Kellwood Company
“Strongly supports”
Manufacturer &
FTA & a rapid phase-
marketer of women’s
out of apparel tariffs
apparel
National Retail
“Strongly supports”
World’s largest retail
Federation (NRF)
FTA & immediate duty-
trade association,
free treatment of
representing more than
consumer goods; FTA
1.4 million U.S. retail
should incorporate U.S.-
establishments
Israel FTA rules of
origin on textiles &
apparel
Source: United States Trade Representative Reading Room.

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CRS-24
Appendix B. Public Comments Received by USTR on
Environmental Impact of U.S.-Jordan FTA
Company/Association
Position on FTA
Comment
World Resources
Supports environmental
Provides information,
Institute
impact study; anticipates
ideas, and solutions to
that FTA will have a
global environmental
minimal environmental
problems
impact
United States Council
FTA should be modeled
Organization addressing
for International
on U.S.-Israel FTA;
a broad range of policy
Business
“regrets” the
issues with the objective
introduction of
of promoting an open
environmental & labor
system of world trade,
provisions in FTA ;
finance, & investment
environmental & labor
issues should be taken
up outside the
framework of the FTA
American Lands Alliance
FTA provides
Composed of Center for
opportunity to
International
demonstrate
Environmental Law,
compatibility of
Defenders of Wildlife,
economic development
Earthjustice Legal
& environmental
Defense Fund, Friends of
protection;
the Earth, National
environmental side
Wildlife Federation,
agreement to NAFTA
Pacific Environment and
should set minimum
Resources Center, Sierra
standards for U.S.-
Club, & World Wildlife
Jordan FTA
Fund
Source: United States Trade Representative Reading Room.

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