Copyright 2008, Blake, Cassels & Graydon LLP
Originally published in Blakes Bulletin on International Trade, August 2008
On August 25, 2008, the Government of Canada announced the conclusion of free trade negotiations with the kingdom of 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.
Canada–Jordan FTA
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:
- Increased access through the immediate elimination of
tariffs on most goods
- Greater transparency with respect to non-tariff barriers
to trade, including regulatory measures affecting trade
- Commitments to ensure non-discriminatory treatment of
imported goods
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, 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 was 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 also facilitate access by Canadian businesses not only to Jordan, but also to the markets in other Middle East and North African nations. In this connection, the FTA may assist Canadian businesses to expand the market access available to their goods to other countries with which Jordan has entered into free trade agreements, including the European Union (EU), the European Free Trade Association (EFTA), Libya, Syria, Kuwait, and Bahrain, among others.
The FTA will offer benefits to importers as well, providing more cost efficient access to a wide range of products, including apparel and vegetables, trade that is valued at approximately C$16-million.
It is important to note that the FTA is a goods-only agreement. In this respect, the FTA will not impact any duties currently imposed on services traded between the two nations. Nonetheless, certain reciprocal rights currently exist in relation to investment and air services, contained in agreements that were concluded between Canada and Jordan in the summer of 2007.
Before signing and publicizing the text of the FTA, a formal review will be undertaken by the governments of both Jordan and Canada. 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.
Canada–Jordan Agreement on Labour Cooperation
Two related agreements were signed alongside the FTA – one on labour and another on the environment.
The Canada–Jordan Agreement on Labour Cooperation (LCA) will seek to protect core labour standards set out by the International Labour Organization. Its provisions will affirm the rights of freedom of association and the right to bargain collectively. The LCA will also address occupational health and safety, employment standards regarding minimum wages and hours of work, and compensation for workplace injuries. Moreover, the LCA will introduce increased rights for migrant workers and call for the elimination of compulsory labour and workplace discrimination. The LCA also stipulates that the employment and labour laws in both countries are not to be weakened for the purposes of encouraging trade or investment. The objectives of the LCA are to be supported by a number of programs in which the countries will participate jointly.
Included in the LCA will be a mechanism for consultation, if one country considers that the other is in breach of their agreement. If a resolution cannot be achieved by consultation, the LCA provides that an independent review panel may be convened to settle the dispute.
Canada–Jordan Agreement on the Environment
The Canada–Jordan Environment Agreement (EA), signed in tandem with the FTA, represents a commitment by both countries to protect the environment primarily through provisions that will require the effective enforcement of domestic environmental laws. Like the LCA, the EA expressly prohibits the relaxation of environmental laws for the purpose of encouraging trade and investment. Canada and Jordan have also committed to increase public awareness of environmental laws and policies, to ensure that environmental impact assessment processes are established and maintained, and to encourage private enterprises to voluntarily implement best practices in respect of the environment.
Comments
Canadian exporters as well as 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 study 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 free trade agreements with various regions/countries, including the EU, EFTA, Libya, Syria, Kuwait and Bahrain, among others.
The Canada–Jordan Free Trade Agreement is the fourth FTA Canada has concluded this year, following on the heels of FTAs with Peru, Colombia and the European Free Trade Association which is comprised of Iceland, Liechtenstein, Norway and Switzerland. These agreements are part of Canada's Global Commerce Strategy, which seeks to develop Canada's access to foreign markets through aggressive inter-national negotiations. After many years of inactivity on Canada's part, 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 exporting and importing companies, especially in light of the apparent collapse of the negotiations by WTO members towards a new multilateral trade deal.
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