RESTRICTED  WORLD  TRADE  
ORGANIZATION  WT/TPR/S/206 
6 October 2008  
 
(08-4650) 
Trade Policy Review Body  
   
 
  
 
TRADE POLICY REVIEW 
 
Report by the Secretariat 
 
JORDAN 
 
  
 
This report, prepared for the first Tr ade Policy Review of Jordan, has been 
drawn up by the WTO Secretariat on its own responsibility.  The Secretariat has, 
as required by the Agreement establishing the Trade Policy Review Mechanism 
(Annex 3 of the Marrakesh Agreement Establishing the World Trade 
Organization), sought clarification from Jordan on its trade policies and 
practices. 
 
Any technical questions arising from this report may be addressed to 
Mr. Thomas Friedheim (tel: 022/739 50 83). 
 
Document WT/TPR/G/206 contains the policy statement submitted by Jordan. 
 
 
 
Note: This report is subject to restricted circ ulation and press embargo until the end of the first 
session of the meeting of the Trade Policy Review Body on Jordan. Jordan WT/TPR/S/206 
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CONTENTS 
    Page 
 
SUMMARY OBSERVATIONS  
 (1) T HE ECONOMIC ENVIRONMENT  vii 
 (2) I NSTITUTIONAL FRAMEWORK  vii 
 (3) T RADE POLICY INSTRUMENTS  viii 
 (4) S ECTORAL POLICIES  ix 
 (5) T RADE POLICY AND TRADING PARTNERS  x 
I. ECONOMIC ENVIRONMENT 1 
(1) M AJOR FEATURES OF THE ECONOMY  1 
(2) R ECENT ECONOMIC DEVELOPMENTS  2 
(3) T RADE PERFORMANCE AND INVESTMENT  4 
(i) Trade in goods and services 4 
(ii) Investment 8 
(4) O UTLOOK  8 
II. TRADE AND INVESTMENT REGIMES 10 
(1) T HE INSTITUTIONAL FRAMEWORK  10 
(2) T RADE POLICY FORMULATION AND IMPLEMENTATION  11 
(3) P OLICY OBJECTIVES  13 
(4) T RADE AGREEMENTS  13 
(i) WTO 13 
(ii) Regional agreements 16 
(iii) Bilateral agreements 17 (iv) Other preferential arrangements 17 
(5) I
NVESTMENT FRAMEWORK  18 
ANNEX II.1:  AID FOR TRADE 21 III. TRADE POLICIES AND PRACTICES BY MEASURE 23 
(1) I
NTRODUCTION  23 
(2) M EASURES DIRECTLY AFFECTING IMPORTS  23 
(i) Registration and documentation 23 
(ii) Customs procedures 24 
(iii) Rules of origin 25 (iv) Tariffs and taxes 26 
(v) Import prohibitions, restrictions, and licensing 32 
(vi) Contingency trade measures 33 (vii) Standards and other technical requirements 34 
(viii) Government procurement 38 
(ix) Other measures 41 
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    Page 
(3) M EASURES DIRECTLY AFFECTING EXPORTS  41 
(i) Registration and documentation 41 
(ii) Export taxes, charges, and levies 41 (iii) Export prohibitions, re strictions, and licensing 42 
(iv) Export subsidies, finance, insurance, and assistance 43 
(v) Free zone, special economic, an d qualifying industrial zones 45 
(4) M
EASURES AFFECTING PRODUCTION AND TRADE  47 
(i) Incentives 47 
(ii) Competition and pricing policies 49 (iii) State-trading, state-owned enterprises, and privatization 51 
(iv) Intellectual property rights 54 
IV. TRADE POLICIES BY SECTOR 59 
(1) I
NTRODUCTION  59 
(2) A GRICULTURE AND RELATED ACTIVITIES  60 
(i) Main features 60 (ii) Agricultural policy 62 
(iii) Main subsectors 64 
(3) M
INING , ENERGY , AND WATER  66 
(i) Minerals 66 
(ii) Oil and natural gas 68 (iii) Electricity 69 
(iv) Water 70 
(4) M
ANUFACTURING  71 
(i) Policy framework 71 
(ii) Selected industries 72 
(5) S ERVICES  77 
(i) Financial services 77 
(ii) Telecommunications and postal services 83 
(iii) Transport 87 (iv) Tourism 91 
(v) Professional services 93 
REFERENCES   95 
APPENDIX TABLES  99 
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CHARTS 
    P a g e  
I. ECONOMIC ENVIRONMENT  
I.1 Structure of merchandise trade, 2000-07 6 
I.2 Direction of merchandise trade, 2000-07 7 
III. TRADE POLICIES AND PRACTICES BY MEASURE 
III.1 Breakdown of applied MFN tariff rates, 2008 29 
III.2 MFN tariff distribution by ISIC sector, 2008 30 
III.3 Tariff escalation by ISIC 2-digit industry, 2008 30 
IV. TRADE POLICIES BY SECTOR  IV.1 Food trade balance, 2000-07 62 
TABLES 
I. ECONOMIC ENVIRONMENT  
I.1 Selected economic indicators, 2002-07 3 
I.2 Balance of payments, 2001-07 5 
I.3 Foreign direct investment, 2001-06 8 I.4 Main socio-economic targets, 2012 and 2017 9 
II. TRADE AND INVESTMENT REGIMES  
II.1 Main trade-related laws, April 2008 12 
II.2 Selected notifications to the WTO, April 2008 14 
II.3 Foreign equity limitations, July 2008 19 II.4 Bilateral investment treaties, April 2008 20 
III. TRADE POLICIES AND PRACTICES BY MEASURE 
III.1 Structure of MFN tariffs, 2006-08 27 
III.2 Non- ad valorem  MFN tariffs, 2008 27 
III.3 Summary analysis of the MFN tariff, 2008 28 
III.4 Revenue from taxes on trade, 2002-07 31 III.5 Goods subject to import prohibitions, 2008 33 
III.6 Safeguard measures, 2000-08 34 
III.7 Government procurement of construction works, 2000-06 39 III.8 Government procurement of supplies through the General Supplies Department 
 of the Ministry of Finance, 2002-07 40 
III.9 Export fees on mining and quarrying products, 2008 42 III.10 Fees on exports of agricultural products, 2008 42 
III.11 Goods subject to automatic export licensing, 2008 43 
III.12 Export subsidies in the form of income tax exemptions on export profits, 2001-06 44 III.13 Free zones exports and imports, 2002-07 46 
III.14 Cases studied by the Competition Directorate, 2003-08 50 
III.15 Goods subject to price controls, 2008 51 
III.16 State-trading enterprises, 2008 52 
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    P a g e  
 
III.17 Completed privatizations, June 2008 53 
III.18 Patents granted, 2000-07 55 
IV. TRADE POLICIES BY SECTOR  
IV.1 Selected indicators of th e agriculture sector, 2003-07 63 
IV.2 Major fruit and vegetables, 2006 64 IV.3 Livestock, 2006  66 
IV.4 Major mineral extraction industries, 2002-06 67 
IV.5 Electricity tariff, March 2008 69 IV.6 Major manufacturing industries, 2000-06 73 
IV.7 Fuel prices, 2002-08 74 
IV.8 Domestic exports and imports of textiles and clothing, 200-06 75 IV.9 Trade in ph armaceutical products, 2000-06 76 
IV.10 Fertilizer production and exports, 2006 77 
IV.11 Sectoral distribution of license d banks' credit facilities, 2002-07 80 
IV.12 Insurance premiums collected, 2001-06 81 
IV.13 Selected indicators of the Amman Stock Exchange, 2001-07 83 
IV.14 Telecommunications indicators, 2000-07 86 
IV.15 Air traffic, 2000-06 91 
IV.16 Selected tourism indicators, 2002-07 93 
APPENDIX TABLES 
I. ECONOMIC ENVIRONMENT  
AI.1 Structure of exports (including re-exports), 2000-07 101 
AI.2 Destination of exports (including re-exports), 2000-07 103 
AI.3 Structure of imports, 2000-07 104 
AI.4 Origin of imports, 2000-07 105 
III. TRADE POLICIES AND PRACTICES BY MEASURE  
AIII.1 Applied MFN tariff averages by HS2 section, 2008 106 
AIII.2 Classification of food ite ms according to risk, 2008 110 
IV. TRADE POLICIES BY SECTOR  
AIV.1 Self-sufficiency ratios of sel ected agricultural products, 200-06 111 
AIV.2 Applied MFN tariffs, by ISIC Rev.2 category, 2008 112 AIV.3 Summary of Jordan's specifi c commitments in services 115 
 
  
 Jordan WT/TPR/S/206 
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SUMMARY OBSERVATIONS 
(1) The Economic Environment 
1. The continuing reforms by the 
Hashemite Kingdom of Jordan, centred on 
trade liberalization, have resulted in real GDP 
growth of 5.9% and relatively low inflation of 3.1%, on average per year during 2000-07.  The reforms have also contributed to reducing public debt from 98.4% of GDP in 2002 to 
60.3% at the end of March 2008, and 
increasing the average annual inflow of foreign direct investment (FDI) from US$155 million during 1990-00 to US$3,121 million in 2006. 
2. A lower middle income country with a 
GDP per capita of US$2,767 in 2007, Jordan 
has an economy dominated by services (around two thirds of its GDP). Manufacturing is the second important sector (about one fifth of GDP); agriculture's contribution to GDP is 
low, at 3%. Jordan also relies on high (by 
international standards) workers' remittances and public grants (22% of GDP). The remittances reflect the large number of Jordanians working abroad, in the Gulf region in particular. Nonethel ess, Jordan still faces 
relatively large unemployment (14% in 2006), 
with low labour productivity, and an active-to-total population ratio among the lowest in the world. 
3. The business environment remains 
somewhat inhibited by, inter alia , 
administrative hurdles, limitations on foreign participation in certain activities, such as road transport, and costly transport infrastructure and utilities.  State ownership remains 
substantial.  Moreover, the surge in world 
prices of fuel and food is exerting pressure on inflation (6.3% in 2006 and 5.4% in 2007).  To meet these challenges, Jordan is improving education and health services, modernizing its infrastructure, and addressing some structural 
problems, notably through the privatization of 
state-owned enterprises. In addition, steps are being taken to improve the business environment through, inter alia , the launching 
of the one-stop shop facility. 4. The Jordanian dinar (JD), the national 
currency, is fully convertible and has been pegged to the U.S. dollar (JD = US$1.41) since 1995.  The ratio of merchandise trade 
(exports and imports) to GDP averaged 108% 
during 2004-06;  this underlines the importance of trade for the economy.  In 2006, Jordan ranked 70
th among world merchandise 
exporters (counting the EC as one), and 53rd 
among importers. It is a net importer of 
services, with a deficit averaging JD 117.4 million per year over 2001-06; it ranked 49
th among services exporters and 51st 
among importers. Manufactures account for about 80% and 60% of total merchandise 
exports and imports, respectively, with the 
United States buying around one quarter of Jordan's total merchandise exports, and the EC and Saudi Arabia the sources of almost one quarter each of Jordan's merchandise imports. 
(2) Institutional Framework 
5. Jordan became a WTO Member on 
11 April 2000.  It grants at least MFN treatment to all trading partners.  It is a signatory to the Information Technology Agreement (ITA) and an observer to the 
plurilateral Agreement on Government 
Procurement.  Jordan has been participating actively in the multilateral trade negotiations, including through its membership in the group of Recently-Acceded Members (RAMs)  and 
the WTO Arab Group.  It is a member of the 
Pan-Arab Free Trade Area, and the Free Trade Area with Egypt, Morocco, and Tunisia (Agadir Agreement).  Jordan has bilateral trade agreements with the United States, the 
EC, EFTA, and Singapore.  Under the 
Qualifying Industrial Zone (QIZ) initiative, exports from designated industrial parks in Jordan have been be nefiting from duty-free 
and quota-free access to the United States, subject to specified shares of inputs 
originating in certain countries in the region 
(Israel, Jordan, and Palestine) and from the United States. 
6. The Ministry of Industry and Trade is 
responsible for the formulation and 
implementation of Jordan's trade policy.  The 
private sector participates through standing or WT/TPR/S/206 Trade Policy Review 
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ad hoc committees.  The Ministry's Foreign 
Trade Policy and Relations Department has responsibility for all matters relating to WTO, as well as regional and bilateral trade 
agreements between Jordan and other 
countries.  The Department is also the WTO focal point and functions as Jordan's enquiry point for services; it is the notification authority for almost all WTO agreements, with 
the exception of notifications related to SPS 
measures.  In areas such as agriculture, Jordan has faced difficulties in providing notifications in a timely manner. 
7. Jordan has strengthened its investment 
regime.  The Investment Promotion Law, 
adopted in 1995, offers non-discriminatory 
treatment to foreign investors.  Under the law, incentives are targeted to specific subsectors of the economy.  Moreover, certain locations in Jordan are designated for investment 
promotion (industrial estates, development 
areas, free zones, and the Aqaba Special Economic Zone (ASEZ)), each with its own regulatory framework and incentive scheme.  A number of activities, particularly in services (e.g. road transport), are subject to prohibitions 
or restrictions on foreign ownership. 
(3) Trade Policy Instruments 
8. Jordan liberalized its trade regime 
significantly during its WTO accession process.  Its customs tariffs on all products, 
except electricity, are bound.  The simple 
average of the final bound tariffs is 16.3%, with 23.9% for agricultural products (WTO definition) and 15.2% for non-agricultural goods.  Some bound tariff reduction 
commitments will end in 2010.  Jordan has 
bound compound tariffs for nine lines, mostly agricultural products;  the imposition of ad valorem  tariffs on two of these lines (HS 
items 961310000 and 961320100) creates a risk concerning compliance by Jordan with its 
tariff binding commitments on these products. 
9. Jordan's applied MFN tariffs are 
generally within a range of 0-30%, with a peak of 180% on certain alcohol and alcoholic beverages.  All applied MFN tariffs are ad valorem , with the exception of seven 
agricultural tariff lines, which are subject to compound rates.  Jordan has reduced its simple average applied MFN tariff rate from 
14.7% in 2000 to 10.9% in 2008.  For 
agricultural products (WTO definition), the simple average MFN tariff rate is 17.1% and 9.9% for non-agricultural goods.  Using ISIC (Revision 2) definition, applied MFN tariffs 
average 16.7% in agriculture, 10.6% in 
manufacturing, and 7.3% in mining and quarrying. 
10. In aggregate, Jordan’s 2008 applied 
MFN tariff shows mixed escalation, negative from the first stage of processing (12.2%) to 
semi-processed goods (4.4%), and then 
positive to the final stage of processing (14.4%).  At a disaggregated (ISIC two-digit) level, escalation remains mixed in industries such as textiles and apparel, wood products, 
and chemicals and plastics.  However, the 
tariff depicts positive escalation for food and beverages, paper and printing, non-metallic mineral products, and basic metal products.  Reduction of the tariff rates and the number of bands would help to simplify Jordan's tariff 
structure and its complex incentives regime 
with five overlapping schemes (Investment Promotion Law, industrial estates, development areas, free zones, and the ASEZ):  some of the incentives ar e the consequence of 
the tariff structure.  This would also contribute 
to better allocation of resources.  Furthermore, Jordan is subsidizing exports through income tax exemptions.  Under a WTO General Council decision, Jordan has been granted a 
conditional extension for maintaining these 
export subsidies until 2015 at the latest.  Exports are also promoted through the QIZ initiative and free zones. 
11. Jordan has modernized its customs 
procedures through the introduction of 
UNCTAD’s Automated System for Customs 
Data (ASYCUDA), combined with a risk-based inspection system.  A relatively high share of import consignments is nonetheless inspected at the border.  Prohibitions and 
controls are maintained on trade for, inter alia , 
TBT, SPS, moral, and religious reasons, or Jordan WT/TPR/S/206 
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under international conventions to which 
Jordan is a signatory.  All importers are required to present an importer card for customs clearance purposes;  or pay a penalty 
of 2.5% of the value of imports.  Individuals, 
though not eligible for the importer card, are charged the penalty.  In addition, an import processing fee of 0.2% (with a minimum of JD 10 and a maximum of JD 250 per 
declaration) is also collected.  Internal taxes, 
levied equally on imports and locally-produced goods, include the General Sales Tax at a standard rate of 16%, and special taxes of 4% on selected goods and services.  Jordan has adopted trade remedy legislation and has two 
safeguard measures in place, on insecticides 
and on footwear.  Jordan has not applied any anti-dumping or countervailing measures. 
12. In 2002, Jordan was the first Arab 
country in the Middle East to adopt 
competition legislation.  It has also progressed 
in privatizing state-owned companies.  However, de jure  or de facto  monopolies are 
still prevalent in a number of economic subsectors.  Price controls are applied on bread (including wheat, bran and flour), barley, fuel, 
water, electricity, pharmaceuticals, as well as a 
number of services.  Jordan is one of the few developing countries ne gotiating accession to 
the Plurilateral Agreement on Government Procurement.  In para llel, it is amending its 
public procurement legislation.  Its intellectual 
property regime was reformed prior to its accession to the WTO;  it has since further strengthened IPR protection and enforcement. 
(4) Sectoral policies 
13. Services constitute Jordan's main 
economic sector.  Under its accession to the WTO, Jordan made substantial commitments under the GATS, covering a wide range of services.  Nonetheless, restrictions, such as foreign equity limitations or Jordanian 
nationality requirements, are maintained to 
preserve Jordanian control or influence.  No commitments were made on postal services, railway, and road transport services, or on certain environmental, audiovisual, and 
business services. 14. Financial services have been broadly 
opened to foreign competition and the foreign equity limitations in insurance services have been eliminated.  The regulatory framework 
for banking services has been strengthened.  
Telecommunications services have been liberalized in accordan ce with Jordan's GATS 
commitments.  The incumbent, Jordan Telecommunications Company, has been 
privatized, and the market for fixed-line and 
mobile telecommunications services opened to competition.  Recent reforms have focused on establishing a regulatory framework that encourages competition amongst operators and enhances the penetration of services, including 
mobile telecommunications and internet 
services.  In tourism, a key subsector of the economy, Jordan's strategy is targeting niche markets to develop its place as a tourist destination in a competitive regional 
environment.  In this connection, its air 
transport services are being liberalized progressively.  The national flag carrier, Royal Jordan Airlines, has been privatized, albeit with limitations on foreign equity.  In maritime transport, efforts are under way to 
modernize the infrastructure of the port of 
Aqaba and to encourage registration of foreign ships as Jordanian flag carriers.  Overall, Jordan would benefit from accelerating reforms in the transport subsector because of 
its importance for competitiveness;  its internal 
and regional trade takes place predominantly through the port of Aqaba, and by land transport. 
15. Jordan’s agricultural policy has 
become more market-oriented over the past 
decade.  However, its 2008 simple average applied MFN tariff rate of 16.7% for agriculture, hunting, forestry and fishing (ISIC, Revision 2, definition) is still high for a net food-importing country that seeks food 
security.  High MFN tariffs of up to 30% 
apply even to products for which Jordan appears to have comparative advantages, such as tomatoes, its main agricultural export product by far. Domestic consumption of 
bread and barley (used as feed for sheep and 
goat) is highly subsidized, taking current levels of international prices as a benchmark.  WT/TPR/S/206 Trade Policy Review 
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Moreover, despite its chronic water shortage, 
Jordan still subsidizes water consumption.  Its current policy involves the reallocation of water resources from agriculture (the main 
user), towards sectors with higher expected 
returns.   
16. Jordan is almost totally dependent on 
imported oil and petroleum products, gas, and electricity to meet its energy requirements.  To 
diversify its sources of energy supply, Jordan 
has adopted an Energy Master Plan for 2007-20.  Efforts are under way to promote its vast reserves of oil shale as an indigenous source of energy.  The statutory monopoly of the Jordan Petroleum Refinery Company 
(JPRC) was terminated in March 2008, with 
the objective of opening the fuel and petroleum products subsector to competition.  Nevertheless, JPRC still exercises a de facto  
monopoly over the import, storage and 
distribution of petroleum products.  Jordan has 
also taken steps to phase out fuel subsidies, which were a heavy fiscal burden.  In February 2008, virtually all remaining fuel subsidies were eliminated, resulting in a substantial increase in fuel prices.  Jordan has since 
introduced a transitional monthly price 
adjustment mechanism, based on international parity prices.  Its phosphate and potash extraction industries figure amongst the largest in the world.  Both industries are controlled by 
monopolies (Jordan Phosphate Mines 
Company, and Arab Potash Company).  Although the companies have vertically integrated into fertilizer production, phosphate and potash production remains primarily 
export-oriented.  Applied MFN tariffs average 
7.3% in mining and quarrying, with an average tariff of 11% on mineral fuels and oils (and products of their distillation), and 30% on natural gas. 
17. Jordan’s manufacturing policy is 
focussed primarily on advancing 
competitiveness and promoting investment.  Under the Jordan Upgrading and Modernization Program (JUMP), technical and financial assistance is provided to SMEs to 
enhance their competitive position.  The 
simple average applied MFN tariff in manufacturing (ISIC, Revision 2, definition) is 
10.8%, with rates ranging from zero to 180%.  Most manufactured product categories are subject to applied MFN tariffs within the range 
of 0-30%.  The garment industry has benefited 
greatly from quota-free and duty-free access to the United States under the QIZ initiative.  These trade preferences led to a rapid expansion of Jordanian exports of clothing to 
the United States at the time of the now-
defunct MFA.  With the main attraction of exporting textiles from Jordanian QIZs gone, the industry is faced with the challenge of remaining competitive. 
(5) Trade Policy and Trading Partners 
18. Jordan is pursuing a strategy of trade 
liberalization at the multilateral, regional, and bilateral levels.  It has made great strides, following its accession to the WTO, in reforming its economy and liberalizing its 
trade regime.  The economy has shown 
resilience in a challenging external environment but it is likely to remain vulnerable to surges in international prices for energy and food.  These and other structural problems (including water shortage) are being 
addressed through a policy agenda in which 
privatization, investment, and trade liberalization have key roles. 
19. Jordan would stand to gain from 
further dismantling its tariff and non-tariff 
barriers to trade.  Rationalization of the MFN 
tariff through the reduction of tariff bands and rates should help reduce the distortions that result from Jordan's proliferating investment incentives regime.  Jordan would also benefit 
from further opening key service subsectors 
(including transportati on, construction and 
distribution) to foreign competition.  Trading partners could help Jordan by fully opening their markets to goods and services of interest to it, and by providing more technical 
assistance.