G/C/W/705/Rev.2  
 
6 November 2015  
(15-5880)  Page: 1/8  
Council for Trade in Goods  Original: English  
 
REQUEST FOR A WAIVER RELATING TO THE TRANSITIONAL PERIOD FOR THE 
ELIMINATION OF THE EXPORT SUBSIDY PROGRAM OF JORDAN 
Revision 
The following submission, dated 5 November 2015,  is being circulated at the request of the 
Delegation of Jordan.  
_______________ 
  Pursuant to Article IX of the Marrakesh Agreem ent Establishing the World Trade Organization, 
Jordan hereby submits a revised request for a waiver to extend after the year 2015 the transitional 
period for the elimination of the Jordan Export Subsidy Program (Partial or Total Exemption from Income Tax for Profits on Certain Export) which in  accordance with Article 27.4 of the Agreement 
on Subsidies and Countervailing Measures (SCM Agreement) and following the procedures for 
continuation of extension of this period, as adopted by the General Council Decision (WT/L/691 on 27 July 2007), is subject to an extension of the tr ansition period pursuant to Article 27.4 of the 
SCM Agreement program until the end of 2015. 
 Jordan presents this revised request in light of  the comments raised by Members at the meetings 
of the Council for Trade in Goods (CTG) in November 2014, March and June 2015 and extensive 
consultations with Members. 
 1  PURPOSE AND CIRCUMSTANCES OF THE REQUEST 
Background: 
In compliance with the "procedures for continuation of extensions pursuant to Article 27.4 of the 
SCM Agreement of the transition period under Ar ticle 27.2(b) of the SCM Agreement for certain 
developing countries" (document WT/L/691), and with reference to document G/SCM/39 Jordan 
was granted an extension for the elimination of export subsidy program which take the form of partial or total exemption from income tax of profits generated from certain exports.  
Jordan was granted an extension for its export subsidy program not later than 31 December 2015, 
with no requests for extension beyond those foreseen pursuant to the procedures (WT/L/691 on 27 July 2007). 
 
The extensions were granted in recognition that Jordan is a developing country Member, whose share of world merchandise export trade was not greater than 0.10%, and the total Gross National 
Income for the year 2000 – as published by the World Bank – was at or below US$20 billion, and 
was eligible to request an extension pursuant to Article 27.4 of the SCM Agreement.  The main rationale for introducing this export subsidy program in Jordan was to offset the negative 
effects of the 1991 Gulf war and the loss of Jordan's main trading partner – Iraq, and to stimulate 
export performance and to promote exports to no n-traditional markets. The program contributed 
to a temporary recovery of Jordan's economic performance. 
 G/C/W/705/Rev.2 
 
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  Beneficiaries and Trade Effects 
Currently, domestic industrial companies exporting local products are entitled to benefit from the 
program.  
In the year 2014, the value of exports entitl ed for exemption was US$4,855,876,052 while the 
approximate calculated value of exemption amounted for US$87,405,769. The income tax relief in the preceding years amounted to US$98,238,849 in 2013, US$86,206,563 in 2012. 
 
These figures indicate that the program supported beneficiaries' efforts to explore more export opportunities. However, the total amount of exemption implies that the income tax relief still has a minimal effect on Jordan's international trade, real izing that Jordan is a developing country with a 
share not more than 0.1% of world's export trade. Moreover, this exemption amount is negligible 
compared to Jordan's Net Public Debt (internal and external) which reached to US$29 billion in 2014 (80.8% of GDP). 
 
2  JUSTIFICATION 
Jordan's original waiver request was to extend the transition period for the export subsidy program 
for a further seven years after 2015, i.e., through 31 December 2022. 
 Taking into account the comments raised by Members at the meetings of the Council for Trade in Goods in November 2014 and March 2015 at which the original waiver request was considered, 
and after extensive bilateral consultations with Members, Jordan submitted a revised request to 
reduce the amount of time for which it is seeking a waiver, to only 4 years after 2015, i.e. through 31 December 2019. 
 
Further to an extensive consultation with the interested Members in Geneva, Amman and in the capitals, and after an intensive internal consultation and evaluation of the critical and special 
circumstances of the Jordanian economy due to the geopolitical situation in the region, Jordan has 
decided to reduce the amount of time needed to only three years after 2015, i.e., through December 2018 in accordance with the attached ti me-frame (Table 1) during which there will be 
an intensive work to replace the current export subsidy program with a new one in compliance 
with the WTO rules with the technical assistance provided by the interested Members and the 
WTO Secretariat.  
The purpose of the requested waiver is to allow Jo rdan to continue to provide benefits under the 
program to the existing beneficiaries while providing Jordan with the necessary time to design and implement an entirely new, WTO-consistent subsidy program to benefit small- and medium-sized 
enterprises. 
 When Jordan initially was granted the extension for its export subsidy program pursuant to the 2007 procedures adopted by the General Council, it fully intended and expected to bring the 
program into compliance with its WTO obligations by the date foreseen in those procedures, as 
demonstrated by the program's expiry date of 31 December 2015.  
Major intervening events since then, however, in Jordan and the region, have impeded the 
program's beneficiaries (all of which are small and medium enterprises) from achieving a level of competitiveness and market diversification that would allow them to survive without government 
support. It thus became clear to the government that it would need to continue to provide support 
to its SMEs post-2015, but the major challenges and crises facing the country have so dominated the government's agenda, that Jordan requires more time to design and implement a WTO-compliant replacement program. 
 
Jordan's only feasible option at this point therefore is to extend the existing legislation in its current form for a modest period while it establishes the new program. 
 
Jordan commits, that throughout the extension period it will report to the General Council on its activities and progress in implementing the new program. 
 
Jordan's initial request, for an additional seven years after 2015, was to help the country in reducing the implications of regional and international circumstances, to stimulate private sector G/C/W/705/Rev.2 
 
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  investments, and to maximize the capabilities of the industrial sector to adjust with current and 
future challenges. In light of the reform measures taken by the government and infrastructure projects including alternative gas supplies, it is foreseen that the situation may ease optimistically only from 2018 onwards. For these same reasons, it is critical that Jordan find a sustainable 
WTO-compliant incentive program to replace the export subsidy program. 
 The industrial sector is a main pillar of the Jordanian economy contributing to almost a quarter of 
the GDP, in addition to its connection with many other economic sectors such as services and 
agriculture, absorbing a significant part of the la bour force, providing them also opportunities for 
education and training. Industrial exports constitute around 90% of the total goods exports of the country. 
 
Jordan has to deal with major economic, financial,  and political challenges as well as development 
needs that can be summarized as follows: 
 
1. The unprecedented regional volatility, continuing negative consequences of the global 
financial crisis and the accompanying crisis in the Eurozone greatly affected the 
Jordanian economy. The GDP has recorded a growth rate of 3.1% in 2014 compared 
to a growth rate of 2.8% in 2013; neverthe less, this registered growth rate is still 
modest compared to its levels during the period (2000-2008), which amounted to an average of about 6.6% per annum. 
 
2. In a bid to finance its increasing expenses and budget deficit, the government adopted 
austerity measures in terms of cutting back fuel subsidies and freezing public 
recruitment. Nonetheless, the Net Public debt (internal and external) has increased to 
US$29 billion (80.8% of GDP) in 2015 compared with US$27 billion in 2014. 
 
3. The unemployment rate has increased during the 1
st nine months of 2015 to record 
12.9% compared with 11.7% during the same period of 2014. This unemployment rate comes in light of the structural imbalances in the labour market on the one hand, and low-paid foreign workers spreading in large number of jobs created in economy 
on the other hand. 
 
4. In the past few years, Jordan hosted seve ral influxes of refugees from neighbouring 
countries, mainly from Iraq and Syria, which had a negative impact on the national 
budget and infrastructure. With Syrian citizens residing in the country exceeding 1.4 million, including refugees, the financial burden on the economy is expected to hit 
around US$2 billion in 2015. The burden strained the infrastructure, education, 
health, water, food and other sectors. Syrian labour force is also pushing into the job market traditionally reserved to Jordanians and thus reduces job opportunities for locals. 
 
5. Jordan's trade with Arab countries constitutes more than 50% of its total external 
trade. Jordan's Exports to Arab countries represented around 52% in 2014 and 
54% in 2013 relative to the total domestic exports. 
 
6. Jordan is suffering from the drawbacks of several crises in the region; the most 
important one is the recent closure of Jordanian-Syrian borders and Jordanian-Iraqi 
borders, which negatively affect Jordanian trade with these countries and the world, and forced Jordan to look for other alternative routes for its exports with a double freight cost. 
 
7. To this effect, the instability in the region as a result of the political situation in many 
Arab countries had severe impacts on the trade performance of Jordan while 
threatening the loss of traditional markets for Jordanian exports as well as of losing 
other significant markets. The trade deficit has significantly increased from US$9.2 billion in 2008 to reach US$11.8 billion in 2014. 
 
8. From the bilateral perspective, the Jordanian-Syrian trade amounts to around 10% of 
Jordan's total trade with Arab countries. The partial closing of the northern border since 2011 had a significant negative impact on the Jordanian economy by virtue of 
geographical location. The Jordanian na tional exports to Syria during the 1
st G/C/W/705/Rev.2 
 
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   seven months of 2015 decreased by 40.7% compared with the same period of 2014. 
Noting that the border was closed completely since April 2015. 
 
9. Furthermore, the northern border was the privileged gateway for Jordan's exports to 
other strategic markets such as the EU and Turkey. Because of the ongoing crisis in 
Syria, transportation costs drastically increased on Jordan's industry for both imports and exports due to longer alternatives or different transportation routes. In many 
cases, no more viable transportation alternatives exist apart from sea and air freight. 
 
10. Bilateral trade with Iraq has been negatively  affected due to the security conditions in 
the country, and because Jordan's eastern borders are being completely closed since 
July 2015, the Jordanian exports are negatively affected. The Jordanian national 
exports to Iraq during the 1
st eight months of 2015 decreased by 36.5% compared 
with the same period of 2014. 
 
11. Moreover, the disruption of the Egyptian gas supplies that was used by industries and 
for energy generation has very negative impacts on Jordan economy as a whole. 
Jordan's trade deficit rose unprecedentedly due to the rise in the bill of energy 
imported from global markets. Consequently, the government was forced to use more expensive diesel and heavy fuel for electricity generation instead of the cheaper gas, which drastically raised the price of electricity. 
 
12. The persistent rising of world commodity prices, especially oil and food has had 
consequential impact on production cost of Jordan's industry and depressingly affected 
Jordan's exports competitiveness. The drastic increase in oil prices and its persistent 
fluctuations afterward have in addition led to a slower activity for small and medium size enterprises that also suffered from trade liberalization and the incident of the 
financial crisis. On the other hand, the energy pricing policy in some producing and 
exporting countries in addition to the volatility of the price of raw materials in global markets had led to the inability of domestic industry, specifically small and medium sized enterprises, to compete fairly, and caused some industries to shut down their 
factories, and for others to move abroad. As from January 2013, 1080 factories were 
shut down; and almost 14 thousand employees were left jobless. 
 
13. Given Jordan's budgetary constraints, it is imperative that the new program be 
carefully designed to generate the maximum impact from limited sources. Establishing such a program will require time and contributions from a broad group of 
stakeholders. 
 3  BENEFITS FROM THE EXTENSION OF THE PROGRAM AFTER 2015: 
1. Allowing continuity of benefits to the industries while the new program is being 
implemented, in furtherance of the following important economic goals. 
 
2. Supporting small and medium sized enterprises (SMEs), noting that large industries 
such as phosphate, potash, and cement are excluded from the benefits of the 
program. 
 
3. Enabling and reinforcing the domestic indu stry to respond positively to the current 
difficult situations and multitude of challenges of political and economic nature in the region. 
 
4. Complementing the government efforts in helping productive sectors, specifically 
SMEs, to integrate with the global economy. 
 
5. Expanding opportunities and prospects for Jordanian goods in diversified markets. 
 
6. Maintaining the program's positive effects for SMEs by enabling the beneficiaries to 
regain a certain competitive ground and to find new markets while maintaining the 
existing ones. 
 G/C/W/705/Rev.2 
 
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  7. Attracting investments in the industrial SME sector by maintaining these investment 
incentives to enable producers and investors to open new markets and promote job creation and specifically the SMEs, to play a key role in the economic development process and to attain more resilience at the exposure to global markets. 
 
4  SCOPE OF THE REQUEST 
The requested waiver is limited in scope to extend ing the transitional period for three years after 
2015, so that the beneficiaries, all of which are SMEs – large industries are not eligible – can 
continue to receive assistance to deal with the unprecedented difficult situation and challenges of 
political and economic nature in the region.  
5  CONCLUSION 
In light of the exceptional circumstances explained above and the expiry of the Jordan's Partial or 
Total Exemption from Income Tax for Profits on Certain Export on 31 December 2015, Jordan 
requests a waiver on the basis of Article IX.3 of the WTO Agreement from its obligations of the 
transition period under Article 27.2(b) of the SCM Agreement and continuation of extensions pursuant to Article 27.4 of the SCM Agreement, so that the current legislation can be extended in 
its present form, in accordance with Annex A of the Draft Waiver Decision attached hereto, until 
31 December 2018, and in accordance with the attached action plan and the time-frame (Table 1).  During the extension period, the program will be operated while the replacement program is 
created and implemented, and Jordan will provide full transparency to the CTG during the period 
of extension in respect of its progress.  
Jordan requests that the General Council give this application for a waiver expeditious and 
favourable consideration.  
Table (1): Timetable for implem enting a new subsidy program: 
No. Period Action Note 
1. 1/1/2016 -
30/6/2016 Data Collection and exploring 
alternative programs In cooperation with the USAID 
and any of the interested Members 
2. 1/7/2016- 
31/12/2016 Revision of the data and 
designing the new program 
according to the WTO rules In cooperation with the USAID 
and any of the interested 
Members 
3. 1/1/2017- 
30/6/2017 Finalizing drafting the new 
legislation and consulting with the stakeholders and Members who expressed interest in Jordan's request With the interested Members, the 
Secretariat, and stakeholders in 
Jordan. (To see if there are comments or other requests including amendments) 
4. 1/7 2017-
31/12/2018 Legislative process Government and parliament 
5. 31/12/2018 Terminating the current export 
subsidy program and implementing the new program Refining alternative program in 
case of delay at the legislative level, including terminating the export subsidy program at the end of 2018 
 
 
_______________ G/C/W/705/Rev.2 
 
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  ANNEX 1 
DRAFT DECISION ON WAIVER CONCERNING THE EXTENSIONS PROVIDED FOR IN 
ARTICLE 27.4 AND ARTICLE 27.2(B) OF THE AGREEMENT ON SUBSIDIES AND 
COUNTERVAILING MEASURES OF  THE TRANSITION PERIOD 
FOR THE ELIMINATION OF EXPO RT SUBSIDIES OF JORDAN 
DRAFT WAIVER DECISION OF [….] 20151 
The General Council, 
 
 Conducting  the function of the Ministerial Confer ence in the interval between meetings 
pursuant to paragraph 2 of Article IV in accordan ce with Article IV: 1 of the Marrakesh Agreement 
Establishing the World Trade Organization (the "WTO Agreement"); 
 
Having  regard to paragraphs 3 and 4 of Articl e IX of the WTO Agreement, the Guiding 
Principles to be followed in considering applications for Waivers adopted on 1 November 1956, and 
the Understanding in Respect of Waivers of Obligations under the General Agreement on Tariffs 
and Trade 1994;  
 Recalling  that the Members of the Committee on Subsidies and Countervailing Measures 
("SCM Committee" or "Committee"), as directed by the Ministerial Conference
2 have granted, 
pursuant to the procedures set forth in document G/SCM/39, extensions pursuant to Article 27.4 of the SCM Agreement of the transition period und er Article 27.2(b) of the SCM Agreement for the 
elimination of export subsidies, in respect of certain programs of certain developing country 
Members;  
 Recalling  that, in recognition of the economic, financial and development needs, as well as 
the capacity and administrative constraints, of certain Developing Country Members in implementing their commitments pursuant to the SCM Agreement in respect of the elimination of 
export subsidies, the General Council has adopted, as set forth in document WT/L/691 on 
27 July 2007, procedures for continuation of extensions pursuant to Article 27.4 of the SCM Agreement of the transition period under Ar ticle 27.2(b) of the SCM Agreement for certain 
Developing Country Members up to 31 December 2013 with a final two-year phase-out period 
which shall end not later than 31 December 2015; 
 
Recalling  that Jordan has received extensions under the procedures set forth in G/SCM/39 
and WT/L/691 in respect of its program "Partial or Total Exemption from Income Tax for Profits on 
Certain Export";  
Noting  that Jordan has been fulfilling its obligations and commitments in respect to the 
General Council decision contained in document WT/L/691 submitted to the SCM Committee annual notifications regarding its export subsidy program
3; 
 
 Noting  the proposal submitted by Jordan to further extend the procedures contained in 
G/SCM/394; and WT/L/691 for Jordan uniquely; 
 
Recognizing  Jordan's continuing needs to mitigate the challenges arising from the global 
financial crisis and the recent political and economic instabilities in the region, which have severe impacts on the industrial sector and the trade pe rformance of Jordan while threatening the loss of 
traditional markets of Jordanian exports as well as of losing other significant markets. 
 
                                               
1 Adopted in accordance with the Decision Making  Procedures under Articles IX and XII of the 
WTO Agreement agreed by the General Council on 15 November 1995 (WT/L/93). 
2 Ministerial Decision on Implementation Related Issues and Concerns, (WT/MIN(01)/17), 
paragraph 10.6. 
3 See documents: G/SCM/N/275/JOR, G/SCM/N/253/JOR, G/SCM/N/243/JOR, G/SCM/N/220/JOR, 
G/SCM/N/226/JOR, G/SCM/N/211/JOR, G/SCM/N/186/JOR, G/SCM/N/192/JOR, G/SCM/N/155/JOR/Suppl.1, 
G/SCM/N/177/JOR, G/SCM/N/155/JOR, G/SCM/N/160/JOR, G/SCM/N/146/JOR, G/SCM/N/123/JOR, 
G/SCM/N/128/JOR, G/SCM/N/114/JOR, G/SCM/N/95/JOR/Suppl.1, G/SCM/N/99/JOR, G/SCM/N/71/JOR. 
4 See documents G/SCM/W/535 and G/SCM/W/537 and addenda. G/C/W/705/Rev.2 
 
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  Taking into account  the unprecedented ongoing situations in the region, and the complete 
closure of northern borders with Syria and Iraq recently in 2015 that greatly affected the Jordanian economy;  
Noting  that the industrial sector has also been si gnificantly affected by the sharp increase of 
energy prices as well as imported raw materials, which led to a decrease in the overall value added of the sector, a slowdown in its growth rates and a reduction of the size of its workforce; 
 
Noting  the financial burden of hosting 1.4 million Syrian citizens residing in the country 
which is expected to hit US$2 billion in 2015. The burden strained the infrastructure, education, health, water, food and labour market; 
 
Realizing  that the extension of the existing program is expected to support Jordan's efforts 
and policies to address unemployment and poverty which both registered constant increases, while 
a WTO-consistent replacement program is established and implemented; 
 
Noting  that, in light of the reform measures ta ken by Jordan and infrastructure projects 
including alternative gas supplies, that foreseen the situation may ease optimistically only from 
2018 onwards;  
Considering  that Jordan requests this waiver of extending the transitional period of the 
export subsidy program for additional three years after 2015 in order to extend the period of 
application of the existing legislation so that Jordan can continue to provide benefits under the program while the WTO-consistent replacement program is being established and implemented 
which requires amendments to relevant legislations and securing financial resources; and that 
Jordan commits to making no further requests for extension beyond that foreseen in this waiver; 
 
Taking into account  Jordan's commitments, during the extended transition period, to provide 
full transparency to the General Council throughout the extended transition period as to its activities and progress in developing and implementing the WTO-consistent replacement program;  
Noting  that obtaining this waiver to extend the transition period will allow Jordan to avoid a 
break in continuity of incentives to the industries, and thus help the country to reduce the implications of regional and international circumstances, to stimulate private sector investments, 
and to maximize the capabilities of the industrial sector to adjust with current and future 
challenges;  
Decides, 
 
1. Jordan is granted a waiver from its phase out obligation set out in Article 27.4 of the 
Agreement on Subsidies and Countervailing Measures, in respect of its export subsidy 
program Partial or Total Exemption from Income Tax for Profits on Certain Export until 
31 December 2018 and in accordance with the attached action plan and time-frame (Table 1); 
 
2. Jordan shall use the extended transition period to establish and implement a 
WTO-consistent replacement program, and shall provide an annual report to the 
General Council concerning its progress in respect of the replacement program; 
 
3. There shall be an annual review of this waiver by the General Council to determine 
whether the exceptional circumstances justifying this waiver still exist and whether 
the terms and conditions herein have been met. On the basis of this annual review, 
the General Council may modify or terminate this waiver; 
 
4. Jordan shall make no requests for further extension of the transition period for its 
export subsidy program; 
 
5. Jordan shall provide, for transparency purposes, a yearly notification to the 
Committee on Subsidies and Countervailing Measures regarding its program subject to this waiver; 
 G/C/W/705/Rev.2 
 
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  6. This decision does not affect Members' rights as set out in the understanding in 
respect of Waivers Obligations under the General Agreement on Tariffs and Trade 1994. 
 
Table (1): Timetable for implem enting a new subsidy program: 
No. Period Action Note 
1. 1/1/2016 -
30/6/2016 Data Collection and exploring 
alternative programs In cooperation with the USAID 
and any of the interested Members 
2. 1/7/2016- 
31/12/2016 Revision of the data and 
designing the new program 
according to the WTO rules In cooperation with the USAID 
and any of the interested 
Members 
3. 1/1/2017- 
30/6/2017 Finalizing drafting the new 
legislation and consulting with the stakeholders and Members who expressed interest in Jordan's request With the interested Members, the 
Secretariat, and stakeholders in 
Jordan. (To see if there are comments or other requests including amendments) 
4. 1/7 2017-
31/12/2018 Legislative process Government and parliament 
5. 31/12/2018 Terminating the current export 
subsidy program and implementing the new program Refining alternative program in 
case of delay at the legislative level, including terminating the export subsidy program at the end of 2018 
 
__________