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12 September 2008
On August 25 2008 the Canadian government announced the conclusion of free trade negotiations with Jordan. The Canada-Jordan Free Trade Agreement (FTA) will open up new opportunities for importers, exporters and Canadian businesses seeking to participate in Jordan’s growing economy, and will permit Canadian businesses to take advantage of the immediate elimination of tariffs on a wide range of products.
Once it comes into effect, the FTA will immediately eliminate all non-agricultural tariffs and most agricultural tariffs. The two countries have also committed to reduce non-tariff barriers to trade.
The highlights of the FTA include:
The FTA will assist in strengthening the relationship between Canada and Jordan which, in 2007, resulted in a two-way merchandise trade valued at C$76 million. Jordan is an important market for Canadian goods, particularly forest products, machinery and agricultural and agri-food products.
The FTA’s immediate elimination of tariffs on the majority of Canadian exports to Jordan will result in substantial savings to Canadian exporters. For example, in 2007 the duties paid by Canadians on electrical machinery sent to Jordan were in the range of C$293,000 on exports of C$3 million. Jordan currently charges duties of up to 30% on certain products. The current average tariff rate is 10.4%. Moreover, the FTA will facilitate access by Canadian businesses not only to Jordan, but also to markets in other Middle Eastern and North African nations. In this connection, the FTA may assist Canadian businesses in expanding the market access available to their goods to other countries with which Jordan has entered into FTAs, including the European Union, the European Free Trade Association (Iceland, Liechtenstein, Norway and Switzerland), Libya, Syria, Kuwait and Bahrain.
The FTA will also offer benefits to importers, providing more cost-efficient access to a wide range of products, including apparel and vegetables, trade in which is valued at approximately C$16 million.
The FTA is a goods-only agreement. In this respect, the FTA will not affect duties imposed on services traded between the two nations. Nonetheless, certain reciprocal rights exist in relation to investment and air services contained in agreements that were concluded between Canada and Jordan in Summer 2007.
Before signing and publicizing the text of the FTA, a formal review will be undertaken by both governments. In Canada, the FTA will be tabled before the House of Commons for a 21-day sitting period, during which the text will be reviewed and debated. Draft legislation to implement the FTA will be introduced following the 21-day period.
Canadian exporters and importers should welcome this new FTA and the opportunities it offers. Canadian traders may wish to review their current sourcing and markets for their products and consider whether the FTA offers opportunities for the reduction of costs or an increase in market access for their goods. Canadian traders should also look to potential opportunities arising from the fact that Jordan has existing FTAs with various regions and countries.
The Canada-Jordan FTA is the fourth FTA Canada has concluded this year, following on the heels of FTAs with Peru, Colombia and the European Free Trade Association. These agreements are part of Canada’s global commerce strategy, which seeks to develop Canada’s access to foreign markets through aggressive international negotiations. After many years of inactivity, Canada has embraced an international trade policy which focuses on entering into bilateral free trade and other related agreements with countries considered to be of interest to companies based in Canada. This bodes well for Canadian exporters and importers, particularly in light of the apparent collapse of negotiations by World Trade Organization members towards a new multilateral trade deal.
For further information on this topic please contact Greg Kanargelidis at Blake Cassels & Graydon LLP's Toronto's office by telephone (+1 416 863 24 00) or by fax (+1 416 863 2653) or by email (firstname.lastname@example.org). Alternatively, contact Elysia Van Zeyl at Blake Cassels & Graydon LLP's Ottawa office by telephone (+1 613 788 2200) or by fax (+1 613 788 2247) or by email (email@example.com).
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Elysia Van Zeyl