Israel and Jordan signed today an upgraded trade agreement, which includes a one-third reduction of customs duties on Israeli exports to Jordan, while customs duties on Jordanian exports to Israel will be halved.

The new agreement, signed in Amman, Jordan by Israel's minister of industry, trade and labour Ehud Olmert and his Jordanian counterpart minister of industry and trade Ahmad Hindawi, is considered to be Israel's most advanced trade treaty with an Arab country.

It also stipulates that both sides will continue gradually lowering customs duties, until the duties are totally eliminated in 2010.

A report in Globes notes that the agreement is designed to foster Israel-Jordanian cooperation in order to obtain an exemption from customs duties on exports to the European Union (EU), similar to the customs and quota exemption on exports to the USA from the Qualifying Industrial Zones (QIZ) in Jordan.

Trade sources in Tel Aviv commented that the new upgraded Israel-Jordan trade agreement "will contribute to a more comprehensive cooperation between the two sides regarding the export of fresh produce," which is part of the new pact.

“Jordanian and Israeli farmers will only benefit from joint ventures in logistics and marketing of fresh produce in Europe," the sources noted.

The agreement will enable Israel and Jordan to accumulate joint production under the pan-European accumulation rules, which will make possible customs and quota-exempt Israel-Jordanian exports to the EU.

The current stage in upgrading the trade agreement is due to the anticipated extension if the pan-European accumulation system to Mediterranean basin countries in the first quarter of 2005.

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