Economy

Jordan, Iraq enter into energy, trade agreements

By Mohammed Ghazal in Amman

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The prime ministers of Jordan and Iraq take part in a February 2nd ceremony at the border to announce new trade agreements. [Photo courtesy of the Jordan premier's Facebook page]

The Jordanian and Iraqi governments signed several agreements in early February to strengthen their co-operation in energy, trade and other sectors.

The agreements were announced during February 2nd talks at the al-Karama-Trebil border crossing between Jordanian Prime Minister Omar al-Razzaz and Iraqi Prime Minister Adel Abdul Mahdi, attended by various ministers and officials.

One of the key agreements is for Jordan to supply electricity to Iraq through the linking of the electrical grids of the two countries.

The two sides agreed to begin technical studies and raise the necessary funding to start implementing the project within three months, with Jordan expected to start exporting electricity to Iraq within two years.

The two countries also agreed to begin studies for the establishment of an Iraqi oil pipeline from Basra to the Jordanian port of Aqaba via Haditha in Iraq's Anbar province, to enable Iraq to diversify its export outlets.

Under the agreements, Iraq will supply Jordan with 10,000 barrels of Kirkuk oil per day, which will open the door for the export of Iraqi oil to Jordan and stimulate transport and trucking activity on both sides.

Joint industrial zone

Iraq agreed to activate a 2017 cabinet decision to exempt a list of Jordanian goods from customs fees, after negotiations aimed at identifying commodities whose import would cause no harm to Iraqi industries and agricultural products.

The exempted goods either are not produced in Iraq, or if they are, do not cover the needs of the Iraqi market.

In another agreement, Jordan decided to exempt Iraqi goods imported through the port of Aqaba of 75% of the fees charged by the Aqaba Special Economic Zone Authority (ASEZA).

This means just 25% of the handling fees are paid by the Iraqi importer.

Within the framework of commercial exchange and integration, the two sides implemented several measures to move forward with the establishment of a joint Jordanian-Iraqi industrial zone.

This presents an opportunity for Iraqi products and industries to benefit from exemptions and advantages under various free trade agreements.

Furthermore, the "door to door" transport mechanism has been put into action for goods and petroleum products, which allows Jordanian trucks to enter Iraqi cities and Iraqi trucks to enter Jordanian territory.

This replaces the previous mechanism, necessitated by the security situation in Iraq, which required trucks to unload their cargo at the border and the trucks of the other country to transport them to their destination from there.

Transportation restrictions had been imposed in 2014, after the "Islamic State of Iraq and Syria" (ISIS) overran swathes of land on the Iraqi side of the border.

Agreements benefit both sides

The agreements between Jordan and Iraq "paved the way for the resumption of the massive trade exchange between the two countries, and will boost trade activity and co-operation", economist Wajdi Makhamreh told Al-Mashareq.

"Jordan will supply Iraq with electricity, and in return Jordanian goods will receive customs fee exemptions," he said. "This is of very high importance to Jordanian industries, as it allows Jordanian products to re-enter the Iraqi market."

The Iraqi market is one of the largest markets for Jordanian exports, and the closure of the Trebil border crossing between the two countries in 2014 led to heavy financial losses.

Renewed energy co-operation is of key importance to Jordan, which will receive oil from Iraq that covers about 7% of its daily needs for oil, he said. This "will help revitalize the oil tanker sector, and reduce the costs for Jordan".

Moving forward with the oil pipeline project is equally important, he said, noting that it is vital for both countries and creates thousands of job opportunities.

'Optimistic about the next phase'

"Dozens of Jordanian trucks entered Iraqi territory after the agreements were concluded earlier this month," Jordanian Truck Owners Syndicate chairman Mohammed Khair al-Daoud told Al-Mashareq.

That number will only increase, he said.

Exempting a number of goods from customs fees will be an important factor for trade, and will revitalize the land transport sector, which has lost more than 700 million Jordanian dinars ($987 million) since the border closure, he said.

"Unfortunately after the closure of the border, many truck owners and drivers were out of work," he said. "But we are optimistic about the next phase, and the agreements that were announced are huge and important."

He noted that more than 700 trucks used to enter Iraq every day before the border was closed.

The exemption of more than 300 Jordanian products from customs fees contributes to boosting Jordanian industries and increasing competitiveness, said Ministry of Industry, Trade and Supply media spokesman Yanal al-Bermawi.

"The exemption decision falls within the framework of the free trade agreement between the two countries," he told Al-Mashareq.

"The agreements are important and point to a promising future in the co-operation between the two countries," he said.

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