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Jordan – US Economic Relations Profile

Jordan – U.S. Economic Relations Profile

Jordan and the U.S. established diplomatic relations on January 31st 1949 and since then they have enjoyed a dynamic economic relationship characterized by continuous cooperation and groundbreaking achievements. 

The Jordan–U.S. partnership for economic development began in 1952 through President Truman’s Point IV Program, that later became the U.S. Agency for International Development (USAID). USAID has partnered with Jordan on a wide range of projects in areas of economic development, water conservation, healthcare, education and training, and governance.

As the Jordanian economy continued to grow, the Jordan–U.S. economic partnership developed stronger ties. The 1990s witnessed the signing of a number of economic agreements between Jordan and the U.S., pioneering with the Jordan–U.S. Bilateral Commission, which held its first meeting in 1994 to improve trade between both countries.

In 1996, the U.S. Congress established Qualifying Industrial Zones (QIZs) with Jordan the QIZ arrangement grants products of the QIZs duty- and quota-free access to American markets and had an important effect in stimulating trade growth between the two countries.

Jordan–U.S. signed a Bilateral Investment Treaty (BIT) in 1997 that entered into force in 2003.

The economic relations were crowned, in 2000, with the signing of the Jordan–U.S. Free Trade Agreement (JUSFTA), that is designed to lead to the total liberalization of trade in goods and services between the two trading partners by removal of virtually all tariffs on bilateral trade in goods by the end of 2010.

Trade and investment play a critical role in the Jordan – U.S. relations. Jordan has successfully attracted U.S. businesses. Jordan-U.S. trade has grown exponentially from 2001 to 2016, surging by more than 800 percent. U.S. Investments in Jordan are valued at 10% of the total FDI, with companies such as Cargill, Amazon Web Services, Microsoft, Cisco, Sun Edison, First Solar, and AES.

Jordan is also eligible to benefit from the U.S. General System of Presences (GSP)

Trade

The JUSFTA came into effect on 17 December, 2001 and the target of reducing tariffs in all areas except those exempt to 0% have been met. 

Jordanian exports to the U.S. market are mainly in Textiles and clothing, chemical fertilizers, pharmaceutical products, articles of jewelry, phosphates and insecticides. The main Jordanian imports from the US market in the JUSFTA period have remained the same as in the pre-JUSFTA period, but have witnessed rapid growth in the quantity and value of sales. The leading imports are in the following areas: vehicles, cereals (wheat, rice and corn), machinery and aircraft.

Trade Balance

Jordan – US Trade in Goods Value
Year Imports Exports Balance
1999 275.7 30.7 -245
2000 316.9 73.3 -243.6
2001 339 229.2 -109.8
2002 404.4 412.4 8
2003 492.4 673.5 181
2004 551.5 1,093.40 541.9
2005 644.2 1,266.80 622.7
2006 650.3 1,422.10 771.7
2007 856.2 1,328.90 472.7
2008 940.3 1,137.50 197.1
2009 1,191.80 924.1 -267.7
2010 1,172.20 974.1 -198.1
2011 1,449.70 1,060.50 -389.2
2012 1,766.40 1,155.50 -610.8
2013 2,085.00 1,197.30 -887.8
2014 2,050.10 1,401.30 -648.8
2015 1,359.60 1,491.60 -132
2016 1,459.00 1,554.70 -95.8
2017 1,920.70 1,687.00 -233.7
2018 1,581.40 1,813.70 232.3
2019 1,492.70 2,169.80 677.2

Sources: US Census Bureau, https://www.census.gov/foreign-trade/balance/c5110.html

Exports and Imports in Details

Jordan’s Export to the U.S.

Indicator Export (US$ Thousand)
Product Group 2011 2012 2013 2014 2015 2016 2017 2018
  All Products 1,040,465 1,125,340 1,205,678 1,323,267 1,445,605 1,558,303 1,603,242 1,768,378
 Capital goods 7,690 8,704 11,379 10,231 15,425 19,293 20,904 35,343
 Consumer goods 1,026,203 1,102,424 1,186,227 1,304,678 1,400,864 1,448,048 1,548,976 1,696,519
 Intermediate goods 4,806 10,571 5,532 2,195 24,075 86,475 30,056 33,299
 Raw materials 840 2,180 1,392 1,208 2,649 2,589 2,655 1,999
Animal 469 1,313 1,123 735 1,602 1,725 972 1,581
Chemicals 29,741 27,316 22,022 21,308 28,642 40,514 36,716 44,805
Food Products 6,484 7,563 10,421 13,150 11,112 12,511 11,797 9,752
Footwear – – – 5 5 5 2
Fuels 16 11 98 18 79 22
Hides and Skins 64 10 7 23 19 10 12 26
Mach and Elec 6,701 6,565 11,477 8,896 14,180 17,947 19,813 33,567
Metals 1,038 1,863 839 157 704 1,719 1,776 2,896
Minerals 23 58 2 168 39 143 13
Miscellaneous 2,061 3,648 1,739 7,075 4,596 3,561 2,300 2,777
Plastic or Rubber 1,276 1,924 1,230 1,197 1,987 1,574 1,004 988
Stone and Glass 53,208 60,751 70,085 89,957 101,362 119,721 124,685 106,173
Textiles and Clothing 936,299 1,003,178 1,084,248 1,177,068 1,251,995 1,267,332 1,366,738 1,526,414
Transportation 1,445 8,135 475 706 24,318 87,014 32,596 34,842
Vegetable 1,267 1,630 1,580 2,505 4,735 4,371 4,470 4,485
Wood 390 1,371 419 315 213 138 271 47

Sources: http://wits.worldbank.org

Jordan’s Import from the U.S.

Indicator Import (US$ Thousand)
Product Group 2011 2012 2013 2014 2015 2016 2017 2018
  All Products 1,077,560 1,384,679 1,361,122 1,319,844 1,260,084 1,341,213 2,000,351 1,764,189
 Capital goods 286,116 246,347 296,330 347,542 410,009 367,612 674,712 283,335
 Consumer goods 372,724 674,741 684,335 511,076 473,324 543,035 799,666 1,031,197
 Intermediate goods 213,872 258,582 177,297 226,154 169,371 228,091 252,305 243,993
 Raw materials 121,354 125,830 108,644 96,566 93,539 114,457 162,217 85,931
Animal 34,178 36,424 58,203 54,627 28,031 18,630 24,160 18,069
Chemicals 100,207 91,064 89,806 92,894 103,733 118,755 119,189 122,269
Food Products 28,679 37,554 40,269 41,577 43,637 46,431 46,831 43,739
Footwear 698 2,862 2,109 2,154 2,970 4,657 771 514
Fuels 71,297 346,301 251,505 12,338 8,690 76,737 182,309 551,381
Hides and Skins 478 580 626 612 174 197 259 167
Mach and Elec 220,366 155,144 173,938 220,026 287,869 250,896 565,995 176,059
Metals 74,049 66,224 48,213 32,442 24,430 21,707 16,988 14,386
Minerals 1,783 2,337 2,954 2,090 2,845 1,605 2,027 1,902
Miscellaneous 151,828 158,268 170,930 229,159 205,408 172,252 201,932 215,915
Plastic or Rubber 30,704 43,170 32,549 28,102 23,131 24,130 23,653 20,499
Stone and Glass 4,653 4,038 13,557 18,902 12,381 4,226 4,031 3,997
Textiles and Clothing 12,792 15,017 21,780 18,736 19,715 17,242 14,511 9,356
Transportation 125,027 217,629 294,257 386,420 305,415 386,287 525,675 401,528
Vegetable 187,710 183,215 131,168 150,458 165,131 173,486 247,279 158,199
Wood 33,111 24,852 29,257 29,307 26,524 23,975 24,742 26,209

Sources: http://wits.worldbank.org

Trade in Services

Jordan also exports services to the U.S., with registered exports amounting to around $100 million dollars in 2013, in sectors such as IT, consulting, tourism as well as health services. It should be noted that the value of services trade is probably much higher. However, the lack of statistics makes any concrete estimate difficult to make.

Investment

A sizable percentage of value added – profit generating – investments in Jordan are American, amounting to $2.2 billion dollars representing 10% of total foreign direct investment.  A number of global American companies such as AES, Albamar, Cargel, Pepsi and Coca-Cola have made Jordan their home. Equally, Jordanian Companies, specifically in the IT sector, are setting up in the U.S.

U.S. Investments in Jordan

Detailed data on the value and type of U.S. FDI in Jordan is limited. AmCham –Jordan undertook a review of statistical data obtained from the Companies Control Department (CCD) website for all types of companies to exclude public shareholding companies.  For investments in the capital market (stocks and Securities), the consultant relied on the statistical data obtained from the Security Depository Center.

This section below provides the results of this review that reflects actual U.S. investments in Jordan by sector for the period 1998-2006 using ISIC 4 Classification, as well as review U.S. investments in the Jordan Capital Market (Stocks & Securities) for the period 2005-2016.

Actual U.S. Investments by Sector (1998-2016)

The value of registered capital by U.S. nationals in Jordanian companies – to exclude public shareholding companies- has reached JD 40.68 million, invested in 387 companies for the period 1998-2016[1].   As shown in figure 1, the manufacturing sector claimed nearly 31 percent of total investments by U.S. nationals.  Investments in the mining sector and the agricultural sectors were minimal, while the combined investments in the services sector accounted for 67 percent of total US registered capital in Jordanian Companies.

By looking further into the number of companies, U.S .ownership of Jordanian companies were mostly undertaken in the services sector (325 companies) followed by manufacturing (55 companies) (figure 1).

 Figure 1-Breakdown of the value of U.S. Registered Capital by sector (%), and by number of companies per sector (1998-2006)

Sources: Companies Control Department

Summary table of U.S. Investments in Jordan

Values
ISIC Category 2 ISIC Category Sum of Registered Capital Sum of US Capital Count of Registered Capital2
A 250,000 250,000 4
A 250,000 250,000 4
B 1,100,000 610,000 3
B 1,100,000 610,000 3
C 25,095,050 12,419,698 55
C 25,095,050 12,419,698 55
Services 213,177,200 27,404,102 325
D 637,667 379,220 8
E 3,600,000 1,800,000 3
F 4,682,500 3,348,507 53
G 10,555,112 4,261,342 85
H 1,930,000 587,400 10
I 53,751,000 2,271,900 19
J 12,787,800 4,801,821 26
K 9,017,110 4,088,506 15
L 74,445,101 3,214,998 53
M 1,008,000 707,180 17
N 350,000 150,000 3
P 39,077,460 1,049,624 18
Q 440,450 225,000 4
R 630,000 353,600 6
Grand Total 239,622,250 40,683,800 387

Sources: http://wits.worldbank.org

U.S. investments in the Jordanian Capital Market (stocks & securities)

U.S. investments in the Jordanian Capital market averaged JD 840.4 million per year for the period 2005-2016, accounting for only 0.3 percent of the average annual investment in the Jordanian Capital Market (figure 5).  However, there are several companies in the financial services sector that were established as holding companies using US Corporate capital such as Al-Mutarabetah for Investments- a holding company with a total registered capital of JD 240,000. 

This company managed to attract US corporate investors such as the American Life Insurance Company and Philips Electronics North America Corporation Master Retirement Trust.  This company, for example, owns stocks in the Jordanian Capital market but their investments will only show as Jordanian not US investments since they were undertaken by a Jordanian company. 

This illustrates that investments in the capital market could be enhanced by attracting US corporate capital to invest in Jordanian holding companies.

Investments in the Jordan Capital Market by Nationality (Stocks & Bonds) 2005-2016
 Year American Jordanian Other Total
2005 478052710.7 15,319,931,622 10,772,594,131 26,570,578,464
2006 376256803.8 12,591,806,036 8,743,043,019 21,711,105,859
2007 997378396.9 15,988,465,296 12,645,340,624 29,631,184,316
2008 962876542.5 13,767,015,016 11,095,713,923 25,825,605,481
2009 971176678.3 12,485,768,799 9,472,013,614 22,928,959,092
2010 1146432916 11,931,360,184 9,048,854,407 22,126,647,508
2011 1171022087 10,468,843,967 8,093,522,016 19,733,388,070
2012 1235533492 10,300,226,952 8,059,409,723 19,595,170,166
2013 836905229 10,002,832,284 7,819,121,919 18,658,859,433
2014 640671216.4 9,993,608,442 7,826,824,486 18,461,104,145
2015 649081702.7 9,825,995,483 7,872,056,559 18,347,133,745
2016 619945624.9 9,267,967,366 7,796,772,743 17,684,685,734