Jordan is seeking to deepen trade ties with the UK by strengthening the existing Association Agreement between the two countries to make it easier to do business.
With exports to the UK totalling $22.32 million in the first 10 months of 2021, imports hit $165.4m, leaving “a huge trade deficit in favour of the UK”, Manar Dabbas, Jordan's Ambassador to the UK, told delegates attending a roundtable hosted by the Arab-British Chamber of Commerce (ABCC).
While a bilateral preferential trade agreement came into force on May 1, setting the framework for an expansion of business transactions, that pact has not advanced since then, Mr Dabbas said.
“I know there are other priorities for this government in terms of trade agreements,” he said, while noting that Jordan plays a key role in the political security of the wider region.
“For Jordan to continue to play that role, it has to be cushioned properly and one key element of that is through economic growth, which comes by increasing exports, and most importantly, attracting foreign direct investment.”
While Mr Dabbas said he understood that “due to the urgency” of the pandemic, “the UK has not had the chance to discuss individual agreements with countries”, he is now looking to move forward in those discussions at a meeting in April, with plans to focus on increasing the quota of Jordanian products entering Britain, such as dates, processed and halal meats, and fruits and vegetables.
“When you allow that to happen, this means that you have expanded new investments,” he said. “New investments mean there are new job opportunities, which means that you are reducing unemployment, reducing poverty and helping the economic growth numbers to reduce the percentage of debt to [Gross Domestic Product]."
Baroness Symons, chairwoman of the ABCC, said the trade relationship between the UK and Jordan had undoubtedly been affected by the coronavirus pandemic, which has thrown up multiple challenges for both countries.
“Now is the time to really move forward on this,” Ms Symonds told delegates at the roundtable event.
“We've got a trade agreement and we need to have more specific trade agreements in specific areas, but overall, we've got a framework within which to work now.”
Jordan, which has scarce natural resources and more than one million refugees from Syria and Iraq, relies on foreign aid and grants to finance its fiscal and current account needs. The government is trying to overhaul its economy and cut state subsidies as public debt and unemployment, already high before the Covid-19 pandemic, have increased further.
However, fiscal and monetary measures now in place — along with an accelerated vaccination programme — have set Jordan's economy on the road to recovery, according to the International Monetary Fund.
The country’s economy is expected to grow 2 per cent in 2021 and 2.7 per cent this year, the IMF said, with the Washington-based lender approving the disbursement of $335.2 million to Jordan earlier this month, bringing its total payout to the kingdom since the start of 2020 to about $1.23 billion.
“Despite the challenging circumstances brought on by the pandemic, sound policies have helped maintain macroeconomic stability,” the IMF said.
“The government is on track to narrow its fiscal deficit by 1 per cent of GDP in 2021, reflecting robust revenue collection on the back of a significant institutional effort to tackle tax evasion and improve tax compliance.”
It is this economic stability, along with the country's political stability, that Mr Dabbas was keen to promote to secure more trade and investment from the UK.
“The kingdom continues to be a sound destination for international investors,” he said, citing the country’s prudent reform programme and its free-market orientated economy and private-sector-led approach.
“The government's economic team continues to focus on economic and fiscal policy settings that boost the national economy’s competitiveness, making Jordan a more attractive investment destination for regional and global companies, and achieve the best possible balance to achieve better living standards for citizens and fight against poverty,” he added.
Mr Dabbas said Jordan is also a sound investment destination because of its location, positioned between Europe, Africa and Asia, making it “an ideal gateway to the Mena region and beyond”.
He cited the “historic trade agreement” signed with the US in 2001 as evidence of the need for a tighter trade agreement with the UK, which boosted the country’s trade to $1.8 billion currently from $100 million in the year the pact was signed.
Business owners attending the event flagged some of the bureaucratic challenges they have faced setting up and investing in Jordan, but Ms Symons said the two nations “should not be too depressed” about the progress made so far.
The UK and Jordan already have some specific trade agreements on education, aviation, retail, biometrics and technology, Ms Symons said, adding that now might be the time to consider other specific trade agreements.
“We only signed the Association Agreement in November 2019 and then it was confirmed by decree in 2021 in Jordan and virtually all that period has been dominated by Covid,” Ms Symons said.
“We must now get cracking and we hope that Covid is going to disappear completely. Even if it doesn't, we know we can control it. Now is the time for us to really go for it … and make some strong agreements in specific areas for the prosperity of both our countries.”
For British companies looking to invest into Jordan, Mr Dabbas highlighted manufacturing and ICT as two key areas ripe for fresh capital.
With 5,600 ICT graduates every year in the country, it offers potential investors “a pool of educated young people at an affordable cost” he said, with major companies such as Cisco, Microsoft and Expedia already benefiting.
Another area Mr Dabbas was keen to highlight was the manufacturing sector, as well as opportunities in the country's burgeoning healthcare and tourism sectors, and in clean energy as the government joins forces with the private sector to overcome shortages in oil and gas reserves.
Mr Dabbas stressed that more works need to be done to increase the flow of goods from Jordan to the UK.
“We are exporting and we have business agreements between some of the producers of Jordan and Tesco, Waitrose and Sainsbury's, but we need to export more and increase that quota,” he said.
“Sometimes officials argue that they want to protect the UK market but Jordan is a small market; it is not threatening the UK market by increasing our share of exports by 30 per cent or 40 per cent. The UK can absorb far more than that.”