How Much Market Access? A Case Study of Jordan's Exports to the EU

Abstract

The value of preferential market access schemes has fallen sharply. Drawing on a relaxation announcement of July 2016 simplifying origin requirements for access to the EU that should help improve market access, thereby contributing to alleviate the refugee crisis in Jordan, this paper argues that a simplification of origin requirements is a straightforward way to enhance preferential market access. Yet, the EU decision limits the beneficiaries who must be located in designated special economic zones, which limits preferential market access. The paper compares the performance of Jordanian exports to the EU and the US under their respective FTAs. It shows that Jordanian exports to the US have grown more rapidly than exports to the EU over the last 15 years. The study documents lower utilisation of preferences in the EU than in the US, especially in Textiles and Apparel (T&A) in spite of non-negligible preferences. Three contributing factors are identified: (i) higher adjusted preferences for apparel in the US than in the EU; (ii) greater competition from other suppliers (mostly from LDCs) in the EU market than in the US market; (iii) simpler origin requirements in the case of the Jordan–US FTA. Comparative evidence from the two FTAs and econometric estimates suggest that this should help restore market access for Jordanian exports to the EU. These estimates provide additional evidence that origin requirements suppress market access. Other pathways to simplify origin requirements are offered in the conclusion.

Heterogeneous trade agreements and adverse implications of restrictive rules of origin: Evidence from apparel trade

“…In sharp contrast to US–Jordan RTA, the EU–Jordan RTA has no significant effect in promoting apparel imports from Jordan into the EU. This is consistent with the findings by Brunelin et al (2019) that show better performance of Jordanian exports to the US relative to the EU, partly attributed to the stricter RoOs in the EU–Jordan FTA (which involves fabric‐forward or double transformation criterion) than in the US–Jordan FTA (which requires single transformation). Using data from Eurostat Comext and OTEXA, our calculation of the utilisation rates (the ratio of imports under the RTA to imports eligible for preference under the RTA) clearly shows the difference in the two markets.…”

Is the Bangladesh Paradox Sustainable?

“…By contrast, as an LDC, exporting apparel has continued to be profitable for Bangladesh. In the EU and US markets, LDCs still have a 10-15% preferential margin over competitors exporting under Most Favoured Nation (MFN) tariffs (see Brunelin et al (2019), Tables A2 and A3). Also, the double transformation rule for textiles and apparel was removed for LDCs in their exports to the EU in 2011.…”

Assessing the Efficiency and Potential of China’s Apple Exports

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