Abstract

Promoting trade is a key aspect of Jordan’s development policy. As a developing country, increasing exports and maintaining a healthy balance of trade with its trading partners are amongst the government’s most important goals. The Free Trade Agreement (FTA) signed with the United States in 2000 is a cornerstone of Jordan’s foreign economic policy and a key test case for its broader policy of trade liberalisation. Yet while there is some evidence for a positive relationship between trade liberalisation, and increased bilateral trade and economic growth, this approach to development is also criticised for opening up developing markets to competition from their more advanced counterparts. This investigation argues that FTAs do facilitate bilateral trade but that states with large and advanced economies benefit more than small developing states and markets. To explore this argument, this study examines overall levels of bilateral trade between Jordan and the United States before and after the JUSFTA came into effect. Linear trendline projections are used to offer a comparison between experienced levels of trade and projected potential levels of trade based on pre-JUSFTA era data. The conclusions drawn are that bilateral trade between Jordan and the United States rapidly increased after 2001 and this coincided with the implementation of the JUSFTA confirming a strong correlation between the two. Furthermore, we can observe that Jordanian exports to the United States have grown more rapidly than imports. Furthermore, Jordan has benefitted from an overall trade surplus since the implementation of the JUSFTA compared to the trade deficit experienced in the pre-JUSFTA era. However, following the complete implementation of the JUSFTA, Jordanian imports from the United States now exceed exports and the Jordanian trade deficit may continue in the coming years.

Key words: Jordan, United States, free trade, economic development, policy.