The Honourable Stockwell Day, Minister of International Trade and Minister for the Asia-Pacific Gateway, today signed four new agreements to increase trade and investment between Canada and Jordan.
“Following the visit by King Abdullah II to Canada in July 2007, our countries have made significant progress in strengthening trade and investment,” said Minister Day. “Our efforts have led to the signature of four agreements that will help open doors for Canadian and Jordanian business.”
In Amman, Minister Day signed the legal texts of a free trade agreement (FTA), related agreements on labour cooperation and the environment, and a foreign investment promotion and protection agreement (FIPA) at a ceremony with his counterpart, Jordan’s Minister of Industry and Trade, Amer Hadidi.
Upon implementation, this FTA will eliminate tariffs on the majority of Canadian exports to Jordan, directly benefiting Canadian exporters. Key Canadian sectors that will benefit from this immediate duty-free access include forestry, manufacturing, and agriculture and agri-food. These are sectors in which Canadian companies are global leaders. Jordan fully reopened its market to Canadian beef and cattle in February 2009, and this FTA will give Canadian beef producers competitive advantages in a market the Canadian Beef Export Federation estimates to be worth $1 million.
The parallel labour and environment agreements will help to ensure progress on labour rights and environmental protection. The labour cooperation agreement commits both countries to respect the core labour standards set out by the International Labour Organization, such as the elimination of child labour, forced labour and workplace discrimination, as well as respect for freedom of association and the right to bargain collectively. The agreement on the environment commits both countries to pursuing high levels of environmental protection, to enforcing their domestic environmental laws effectively, and to ensuring trade and investment are not encouraged at the expense of these laws.
Canada and Canadian companies benefit from international rules that create a predictable investment environment abroad and provide effective dispute settlement measures for breaches of these rules. These protections are provided by the FIPA and enable companies to invest with confidence.
“The FIPA signed today will encourage two-way investment by providing investors with the clarity and certainty they need when investing in foreign markets,” said Minister Day.
Promising sectors for Canadian investment in Jordan include resource extraction, nuclear energy, telecommunications, transportation and infrastructure, with the latter arising from Jordan’s growing importance as a regional commercial, shipping and transportation hub.
Following formal signature, the treaties will be tabled in the House of Commons for a period of 21 sitting days for members of Parliament to review and debate them. After the 21-day period, the Canadian government will table legislation to implement the agreements, as necessary.
Two-way merchandise trade between Canada and Jordan totalled $92.2 million in 2008. The FTA with Jordan will improve market access for both agricultural and industrial goods, and help to ensure a level playing field for Canadian exporters vis-à-vis competitors that currently benefit from preferential access to Jordan’s markets.
While in Jordan, Minister Day also met with King Abdullah II and Khalid Toukan, Chair of the Jordan Atomic Energy Commission, to advocate on behalf of Canada’s nuclear industry. Jordan relies on energy imports to meet most of its requirements and has embarked on a civilian nuclear energy program to achieve its energy goals. Canada’s CANDU technology is safe, reliable, and uniquely suited for Jordan’s power needs and water desalination projects. Canada and Jordan signed a bilateral, treaty-level nuclear cooperation agreement on February 17, 2009, which came into force earlier this month.
Minister Day also visited Arab Wings, an airline company that recently received a new Bombardier Challenger 605 aircraft and that is considering increasing its fleet of Bombardier aircraft.
More details about Minister Day’s visit to Jordan can be found at Minister Day travels to Saudi Arabia and Jordan.
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A backgrounder follows.
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Canada-Jordan Free Trade, Labour Cooperation, Environment and Foreign Investment Promotion and Protection Agreements
Canada-Jordan Free Trade Agreement
In August 2008, the Government of Canada concluded negotiations on a free trade agreement (FTA) with Jordan, as well as on parallel agreements on labour cooperation and the environment. The FTA will provide commercial benefits for both Canadian and Jordanian business.
Better market access through elimination of tariffs on goods
Upon implementation of the free trade agreement, the immediate elimination of tariffs on the vast majority of current Canadian exports to Jordan will directly benefit Canadian exporters.
Jordan will eliminate all non-agricultural tariffs and the vast majority of agricultural tariffs. Jordan's average tariff is currently 11 percent. Upon entry into force of the FTA, Jordan will immediately eliminate tariffs in the 10 to 30 percent range on many key Canadian exports, including pulse crops, frozen french fries, animal feed, various prepared foods, and certain forest products and machinery. These are sectors in which Canadian companies are global leaders.
The FTA will also contribute to Jordan’s economic development by creating new market opportunities for the export of Jordanian goods to Canada. Imports from Jordan totalled $15 million in 2008, and were led by apparel, fertilizer and agricultural products. Canada will eliminate all tariffs on Jordanian goods immediately upon entry into force of the FTA, with the exception of over-quota tariffs on dairy, poultry and eggs, which are excluded from tariff reductions.
Labour Cooperation Agreement
Canada and Jordan will commit to ensuring that their laws respect the International Labour Organization (ILO) 1998 Declaration on Fundamental Principles and Rights at Work, which covers the right to freedom of association and to collective bargaining, the abolition of child labour, the elimination of compulsory labour and the elimination of workplace discrimination.
Canada and Jordan will also commit to providing protections for occupational health and safety, acceptable minimum employment standards and compensation for occupational injuries and illnesses. Migrant workers will have the same legal protections as nationals in respect of working conditions.
The labour cooperation agreement will also include effective enforcement mechanisms. Although the agreement will focus on labour cooperation, it will provide that, as a last resort, failure to respect ILO principles and enforce domestic laws could result in an independent review panel assessing a monetary penalty. Any such assessments would accrue to a special cooperation fund and be used to strengthen labour rights and address the violation.
Agreement on the Environment
The agreement on the environment commits Canada and Jordan to pursuing high levels of environmental protection and to striving to develop and improve their environmental laws and policies. The agreement will also oblige the two countries to enforce their domestic environmental laws effectively, and ensure trade and investment are not encouraged at the expense of these laws.
Canada and Jordan also commit to ensuring that environmental assessment processes are in place, and to providing remedies for violations of environmental laws. The two countries also agree to encourage enterprises to adopt best practices of corporate social responsibility and to promote public awareness and engagement. The focus of the agreement is on consultation and cooperation to address any matter arising under the agreement, with access to an Independent Review Panel as a last resort.
Canada-Jordan Foreign Investment Promotion and Protection Agreement
The Canada-Jordan Foreign Investment Promotion and Protection Agreement (FIPA) stems from a mutual interest in promoting bilateral investment between the two countries. Once entered into force, the FIPA will provide investors with greater predictability, certainty and protection for their investments.
A FIPA is an international treaty providing binding obligations on governments regarding their treatment of foreign investors and investments. By establishing clear rules and an effective enforcement mechanism, a FIPA provides a stable legal framework to promote and protect foreign investment. It sets out a range of obligations that governments guarantee, such as non-discriminatory treatment, protection against expropriation without prompt and adequate compensation, the free transfer of funds, transparency and dispute settlement.