Tangible results from Aghadir Agreement seen as a long-term development  

AMMAN — Tangible results from the Aghadir Agreement will not be realised for some time, a European Commission official cautioned on Monday.

"We have to be realistic here. This agreement will be developed in the long term, after a slow and gradual process," Patrick McClay, a trade economist representing the commission in Jordan, told an information session for businessmen at the Amman Chamber of Industry.

McClay indicated that until the individual customs agencies of the four Aghadir member countries are synchronised with one another, "the agreement won't be effective," noting that it would take years to coordinate import and export standards.

The Aghadir Agreement aims at eventually creating a free trade area between Jordan, Morocco, Tunisia, and Egypt. Signed by all four in 2004, it went into effect this July after differences between members delayed its official implementation.

McClay made his comments on behalf of the European Information Correspondence Centre, a network designed to give Europe's partners access to trade-related information.

"Standardisation moves at different speeds in different countries," he said, predicting that it would take customs agencies at least five years until they are calibrated. Once this happens, the countries would then begin the process of lowering trade barriers.

Spearheaded by the European Union (EU) through the Barcelona Process, an EU-sponsored economic and security-related agenda for neighbouring Mediterranean countries, the Aghadir Agreement also grants member states duty-free access to EU markets. EU members see the accord as the foundation for an expanded Euro-Mediterranean free trade area.

The EU is Jordan's largest trading partner, accounting for roughly 17 per cent of the country's imports and exports. But the relationship is lopsided: Roughly 25 per cent of Jordan's imports come from the EU, but only three per cent of its exports penetrate the economic union's markets.

McClay said that Aghadir would help redress this trade imbalances by offering Jordan and Mediterranean Arab states special access to EU markets.

"Tariff rates applied to Aghadir countries will be better than the standard MFN rates," he said, referring to World Trade Organisation's (WTO) most favoured nation (MFN) status, or the maximum tariff levels that can be levied on incoming products from fellow WTO members.

He added that the accord would generate opportunities to expand trade within the region, which he described as "exceptionally low compared to other regional trading blocs in the world."

Saudi Arabia is Jordan's largest Arab trading partner, constituting roughly 15.3 per cent of the country's overall trade activity followed by Iraq and Syria at 6.7 and three per cent, respectively. The only Aghadir member to make Jordan's top-20 list of trading partners is Egypt at 2.8 per cent.

The starting point for fostering intra-regional trade, said McClay, is the concept of rules of origin — a trade barrier used to discriminate between preferred and normal trading partners.

"Products from Egypt sent to Jordan couldn't be re-packaged and then sent to the EU and still receive favoured status," he explained. "But Aghadir is supposed to remove this barrier," he said, because Egypt and Jordan now have preferential access to EU markets.

Both countries, for example, can now export products to one another as inputs, make value-added alterations, and then export the end product to Europe without facing MFN tariff rates.

Despite the agreement's potential, McClay emphasised that benefits would only begin accruing over a long-term horizon.