Economic Boom with an Environmental Bust?

In a report by the World Bank, the economic cost of environmental degradation in Jordan was estimated to be 3.1% of GDP annually, resulting in the loss of 205 million dinars (US $289 million) in five sectors.

The most significant impact was water pollution. As water is already scarce in Jordan (due to a lack of aquifers and the rapidly receding Jordan River), the cost of water pollution is placed at 0.71-1.24% of Jordan's 2005 GDP. The damage of air pollution is placed at a cost of 0.69% of GDP, while the cost of land degradation (as a result of improper agricultural practices) is placed at 0.46% of GDP. The cost of coastal degradation in Aqaba, the Jordanian port city on the Red Sea, is placed at 0.09% of GDP.

Despite these environment-based economic set backs, Jordan has seen a steady growth of GDP behind its growing textile sector in the Qualified Industrial Zones. At first glance, many would see the increased focus on manufacturing as the leading cause in this economic-environmental problem. Would this mean that Jordan's new cash cow is costing it 3.1% of GDP while simultaneously encouraging growth?

While the increased focus on manufacturing has created a certain amount of air pollution, it isn’t Jordan's biggest culprit. It is the agricultural sector, which accounts for a mere 2-3% of Jordan's GDP, that has done most of the damage to water resources. Poor irrigation has led to a run-off of fertilizer and other chemicals into Jordan's rare fresh water resources. Poor farming methods have further caused costly land degradation.

So would moving Jordan toward its comparative advantage, textiles and other manufactured goods, also move it away from costly environmental degradation? Doubtful. But as it stands now, the biggest obstacle to Jordan's environmental well-being isn’t the rapidly growing modern factories, but agricultural practices that have existed for hundreds if not thousands of years.

Free Trade for Slave Workers?

It was thought that with the Jordan-US Free Trade Agreement, the presence of manufacturing plants with free access to US markets would provide jobs for thousands of households. The textile industry has taken off in Jordan since 2001, and exported $1.2 billion to the US in 2005, supplying garments for Wal-Mart, Target, and other popular retailers.

But in May 2006, a shocking report by the National Labor Committe and an article in the New York Times reveiled that these textile plants are actually relying on migrant labor from southeast Asia, India, and Bangladesh. There are an estimated 300,000 foreign guest workers in Jordan, mostly from Bangladesh, China, India and Sri Lanka. Over 30,000 of these foreign workers are employed in Jordan's textile factories in the Qualified Industrial Zones, producing garments for US consumption. To make matters worse, these workers are forced to work in sweatshop conditions; receiving little pay and forced to live in unsanitary conditions. Workers are often forced to purchase for their employment contract, about the equivalent of $2,000 USD. Once they arrive in Jordan, they have their passports confiscated and are forced to work 16 hour work days for mere pennies per hour.

US lawmakers had hoped that the US-Jordan FTA’s requirements of fair labor practice would improve conditions of Jordanian labor and ensure a non-sweatshop product. Yet textile factory owners have found a way to get around fair labor practices thanks to US neglect. American lawmakers overlooked the fact that Jordanian labor laws are only applicable to its own citizens and do not provide protections for foreign workers. Standards such as receiving at least a one-day off per week (Friday), a minimum wage of 95 Dinars ($134.28) a week, and safe working conditions do not apply for foreign workers.

In an effort quell the bad publicity from the New York Times article, American retailers pressured the Jordanian government for rapid reforms. Jordan’s Ministry of Labor forced the textile factories to adhere to the same labor standards as are prescribed for Jordanian workers. Conditions are now improving for foreign workers in Jordan’s garment factories, many of whom are now receiving minimum wage and their passports.

But one large problem remains for Jordanians: the Qualified Industrial Zones are only benefiting factory owners and the political elite. Which begs one to question: how can the US and Jordan alter the treaty to benefit Jordan’s impoverished? And can the beneficiaries of outsourcing be outsourced themselves?

Exporting Peace?

Qulifying Industrial Zones



With the growing trend of globalization and privatization in the developing world in the mid-late 1990s, the Clinton administration sought ways for increased economic depenedancy to reduce the potential for conflicts, and to even bring about peace in conflict regions.

This led to a comprehensive economic strategy in one of the most protracted conflicts in the world, the Israeli-Arab conflict.

In 1996, the US Congress enacted a program of Qualified Industrial Zones (QIZ), where entitling goods jointly produced by Israel and either Jordan or Egypt to enter the United States duty free. It was hoped that the increased economic cooperation between Israeli and Arab nations would lead to further cooperation in issues such as governance, water resources, and security.

While these have not yet occurred, trade between Israel and Jordan have increased 6 -fold, and Jordanian exports to the US have increased from $5 mil in 1997 to $1.2 bn in 2005.

While this has been a boost to Jordan's economy, it has yet to be seen whether such economic cooperation will foster peace. The stigma surrounding colaberation with Israel in the Arab world still prevents many from cooperating in the QIZs.

A summary of QIZ and its history.

And for a view of the Qualified Industrial Zones through the eyes of the Arab media (Egypt's al-Ahram).

Also of note- the Qualified Industrial Zones in Jordan have been accused of creating sweatshop labor camps.