Thursday

24th May 2018

Opinion

EU had a plan for Jordan - now it's time to make it work

  • Refugees from Syria in Lebanon. The EU-Jordan deal has fallen short of ramping up trade because the trade concessions that the EU offered are exceedingly modest. (Photo: © Dominic Chavez/World Bank)

Two years ago, the European Union announced a groundbreaking deal providing Jordan with $1.8bn (€1.47bn) in grants and loans as well as trade measures allowing preferential access for certain products from Jordanian businesses employing at least 15 percent Syrian refugees.

For its part, Jordan agreed to expand educational and economic access for Syrian refugees in the country, including 200,000 work permits for Syrian refugees in specific sectors.

The overall compact had a powerful strategic logic for the EU: by creating incentives for increased Jordanian exports to the EU and employment of Syrian refugees, the EU could both help support Jordan - a strategic partner feeling acute pressure from the 1.3 million Syrian refugees it is hosting - and induce refugees to stay in Jordan with concrete job opportunities.

The deal would benefit Jordanians and refugees - as well as the EU.

As the EU prepares to host another summit in Brussels to address the Syria refugee crisis, it must acknowledge that the trade component of the Jordan deal has failed in practice: two years on, only four companies have exported roughly €2.3m worth of products under the deal.

Why has the EU deal failed to deliver?

While some analysis has focused on the challenges in recruiting refugee workers, our assessment is that they are less the cause of the failure than the symptom of Jordanian businesses lacking strong incentives to take advantage of the deal.

Where firms in Jordan have had a clear business reason to hire refugees, they have successfully done so.

The EU-Jordan deal has fallen short of ramping up trade because the trade concessions that the EU offered are exceedingly modest.

The deal made it easier for certain Jordanian products to qualify for duty-free access to the EU by reducing the "local content" requirement (the portion of the product's value that had to be generated in Jordan) from a high threshold of 70 percent to a more manageable threshold of 30 percent - in principle, an important concession as many of Jordan's products use inputs from other countries.

However, the benefits of the trade preference are circumscribed:

The trade preference only extends to certain selected sectors - such as plastics, chemicals, and garments. By one credible assessment, almost two-thirds of Jordan's current international exports are excluded from the deal.

It is limited to companies operating in 18 designated development zones (located far from the majority of Syrian refugees), excluding Jordanian firms with business operations elsewhere in the country.

It provides duty-free access to the EU market - which a large number of other countries already enjoy. In the garment sector, for example, both Turkey (with cheaper transportation costs to the EU) and Bangladesh (with lower labour costs) already have duty-free access - neutralising the advantage for Jordanian firms.

The EU-Jordan deal has generated meagre benefits to date, even while the Jordanian government has made progress on its side of the bargain, issuing 83,500 work permits since the start of the compact.

But the strategic logic that motivated the EU to enter the deal should now compel the EU to improve, not abandon, it.

Three steps

First, the EU can strengthen the deal by expanding the scope of eligibility.

It should start by acceding to the Jordanian government's request to extend trade preferences to businesses operating anywhere in Jordan – an easy fix.

It should go further and include a wider range of Jordan's export sectors – the simplified rules of origin could be particularly beneficial in sectors where Jordanian businesses may have more European market demand and/or greater competitiveness, such as in food processing.

Second, the EU and European governments should play a hands-on role in trying to facilitate Jordanian firms' access to the EU market. Buyer-supplier relationships are often 'sticky' and European companies may be slow to increase their business with lesser-known Jordanian firms.

To accelerate Jordanian firms' access to the EU market, the European Commission and European governments will need to do more to broker these relationships, and also help companies meet EU quality and regulatory standards.

Third, the EU should develop targeted tax incentives for EU businesses that make investments in Jordan generating jobs for both Jordanians and refugees.

With links directly to EU markets and expertise in meeting regulatory standards, European businesses would be well-positioned to leverage the preferential trade arrangement and advance the EU goals of helping Jordanian host communities and refugees – but these businesses may need additional incentives to set up new operations.

Even with the current EU deal, we believe Jordan warrants strong consideration from multinational businesses, both as a place to invest in, and as a place to source goods and services from: Jordan has a stable government, a business-friendly regulatory environment, and preferential trade access to the United States and the Gulf, in addition to the EU.

The opportunity to help Syrian refugees, by hiring them directly or bringing them into their supply chains, should also be a consideration for multinational businesses - for humanitarian, strategic, and reputational reasons.

But with the scale of what Jordan faces – with Syrian refugees amounting to more than 10 percent of its population – the EU must improve its deal with Jordan and deliver on its promise to boost Jordanian exports and refugee hiring.

Gideon Maltz is the executive director of the Tent Foundation. He previously served in key roles at the US mission to the United Nations, USAID, and the White House national security council.

Cindy Huang is the co-director of migration, displacement, and humanitarian policy and senior policy fellow at the Center for Global Development. She previously served in key roles at the US State Department and the Millennium Challenge Corporation.

Agenda

Whistleblowers, Syria and digital revolution This WEEK

The European Commission will present proposals to protect whistleblowers, combat fake news and organise the digital single market. The international community will gather in Brussels to discuss how to help Syrians in the current war and after.

EU toes the line on Syria air strikes

EU foreign ministers to back Western air strikes on Syria, the same way they backed the UK over Russia's chemical attack on an ex-spy in Britain.

Integration of Syrian refugees in Europe needs scrutiny

Most refugee-related services are outsourced to the private sector and NGOs, which are not adequately monitored and evaluated. When governments and EU institutions provide funding for refugee projects, they should scrutinise the NGOs and private players they work with.

Europe's last wild rivers under threat at Balkans summit

The EU is prioritising motorways and gas pipelines across the potential accession Western Balkan countries, plus hydropower energy projects which threaten one of the world's freshwater biodiversity hotspots.

More commitment to renewables from Council, please

More and more consumers are likely to invest in solar panels in the future as it becomes simpler to produce one's own electricity, writes Monique Goyens, director general of BEUC, the European Consumer Organisation.

News in Brief

  1. Gazprom accepts EU conditions on gas supplies
  2. Facebook tells MEPs: non-users are not profiled
  3. Commission proposes ending France deficit procedure
  4. UK households hit with Brexit income loss
  5. Report: EU faces 10% cut in steel exports to US
  6. Australia wants more access to EU agricultural market
  7. CV of Italian PM candidate under scrutiny
  8. Puigdemont Spain extradition rejected by German court

Stakeholders' Highlights

  1. Nordic Council of MinistersOECD Report: Gender Equality Boosts GDP Growth in Nordic Region
  2. Centre Maurits Coppieters“Peace and reconciliation is a process that takes decades” Dr. Anthony Soares on #Brexit and Northern Ireland
  3. Mission of China to the EUMEPs Positive on China’s New Measures of Opening Up
  4. Macedonian Human Rights MovementOld White Men are Destroying Macedonia by Romanticizing Greece
  5. Counter BalanceControversial EIB-Backed Project Under Fire at European Parliament
  6. Nordic Council of MinistersIncome Inequality Increasing in Nordic Countries
  7. European Jewish CongressEU Leaders to Cease Contact with Mahmoud Abbas Until He Apologizes for Antisemitic Comments
  8. International Partnership for Human RightsAnnual Report celebrates organization’s tenth anniversary
  9. Nordic Council of MinistersNordic Cooperation Needed on Green Exports and Funding
  10. Mission of China to the EUPremier Li Confirms China Will Continue to Open Up
  11. European Jewish CongressCalls on Brussels University to Revoke Decision to Honour Ken Loach
  12. Sustainable Energy Week 2018"Lead the Clean Energy Transition"- Register and Join Us in Brussels from 5 to 7 May

Latest News

  1. GDPR does not (yet) give right to global oblivion
  2. Privacy Shield less relevant given GDPR, says data chief
  3. Unknown academic to lead Italy into EU clash
  4. 'Killer robot' projects eligible for EU defence fund
  5. Funding for European values needs radical changes
  6. Feeble EU format deflates Zuckerberg 'hearing'
  7. Are EU data watchdogs staffed for GDPR?
  8. EU pessimistic on permanent US trade exemption

Stakeholders' Highlights

  1. EU Green Week 2018Green Cities for a Greener Future. Join the Debate in Brussels from 22 to 24 May
  2. Nordic Council of Ministers12 Recommendations for Nordic Leadership on Climate and Environment
  3. Macedonian Human Rights MovementOxford Professor Calls for an End to the Anti-Macedonian Name Negotiations
  4. ACCAPeople Who Speak-Up Should Feel Safe to Do So
  5. Mission of China to the EUProgress on China-EU Cooperation
  6. Nordic Council of MinistersWorld's Energy Ministers to Meet in Oresund in May to Discuss Green Energy
  7. ILGA EuropeParabéns! Portugal Votes to Respect the Rights of Trans and Intersex People
  8. Mission of China to the EUJobs, Energy, Steel: Government Work Report Sets China's Targets
  9. European Jewish CongressKantor Center Annual Report on Antisemitism Worldwide - The Year the Mask Came Off
  10. UNICEFCalls for the Protection of Children in the Gaza Strip
  11. Mission of China to the EUForeign Minister Wang Yi Highlights Importance of China-EU Relations
  12. Nordic Council of MinistersImmigration and Integration in the Nordic Region - Getting the Facts Straight

Stakeholders' Highlights

  1. Macedonian Human Rights MovementMacedonians in Bulgaria Demand to End the Anti-Macedonian Name Negotiations
  2. Counter BalanceThe EIB Needs to Lead by Example on Tax Justice
  3. ILGA EuropeTrans People in Sweden to be Paid Compensation for Forced Sterilisation
  4. International Partnership for Human RightsThe Danger of Standing Up for Justice and Rights in Central Asia
  5. Mission of China to the EUChina and EU Must Work Together to Promote Global Steel Sector
  6. Swedish EnterprisesEU Tax Proposal on Digital Services Causes Concern for Small Exporting Economies
  7. European Jewish CongressCondemns the Horrific Murder of Holocaust Survivor Mireille Knoll in Paris
  8. Mission of China to the EUAn Open China Will Foster a World-Class Business Environment
  9. ECR GroupAn Opportunity to Help Shape a Better Future for Europe
  10. Counter BalanceControversial Turkish Azerbaijani Gas Pipeline Gets Major EU Loan
  11. World VisionSyria’s Children ‘At Risk of Never Fully Recovering', New Study Finds
  12. Macedonian Human Rights MovementMeets with US Congress Member to Denounce Anti-Macedonian Name Negotiations