Economic Integration

Thank you, Azzam.

Its always a pleasure to get together with the American Chamber of Commerce, and I thank you for your invitation today.

AmCham Jordan has been a tireless – and sometimes courageous - promoter of the benefits of an open and robust trade environment. Your work is critical in educating government on how best to encourage business growth, job creation, and improved standards of living. So, I want to thank you for the work you are doing and for the sound advice – keep it coming.

I want to spend a few minutes speaking with you today about economic integration, and just how important an element this has become in keeping pace with the changes we see in the global economy.

I’ll also speak a bit about efforts we in the U.S. Government have made to work together with Jordan and others to support regional economic integration as a means of joining in change to the global economy.

We all know about globalization. And we all have our own opinions of this historic trend that continues to bring nations, economies, and communities around the world closer together. Like death and taxes, in Ronald Reagan’s famous words, some things are unavoidable. We might add globalization to that list.

The economic integration taking place under the rubric of globalization is one of the most important movements in the world today. If handled correctly, economic integration lays the groundwork for a rise in standards of living, an improvement in quality of life, and expanded opportunity for people around the world, in particular for many who have lived at or near the poverty line.

The economic integration I am talking about comprises everything from building roads to installing fiber optic telecommunications networks, and on to developing advanced and integrated banking systems and capital markets. It also includes streamlined government that reduces red tape for investors, government that embraces free trade and government that adopts key international protocols such as those that protect intellectual property.

These are not easy or trivial decisions. We are talking about realignments of economic activity, costly investments, and the confronting of entrenched interests. Globalization, while exciting, is demanding. It demands that countries adapt. And it is uncompromising. Failure to adapt could mean marginalization and serious trouble for one’s economy.

Countries have tended to approach this need to adapt in one of three ways. (1) Some ignore or resist it. (2) Others, through uncertainty or fear, provide minimal or grudging acceptance of it. (3) While still others see the opportunities at work in a globalized economy and embrace the need for adaptation and change with enthusiasm.

The members of this third group – those countries that enthusiastically embrace global economic integration -- are emerging as the winners in the modern economy. They act quickly to make the legal, regulatory, or institutional reforms needed to remain competitive, and in the process transform their economies and societies.

Several years ago, Jordan made the leap into this third group. King Abdullah II, his government, and the private sector began the difficult process of integrating Jordan to the world economy. You know the story: WTO Accession, the Jordan-U.S. Free Trade Agreement; partnership agreements with the European Union, and so forth.

Jordan didn’t have a large stake in the status quo before globalization, to be honest. Lacking abundant natural resources for export and long dependent on foreign remittances and outside assistance, Jordan had a limited economic horizon, but also little to lose. This meant that as changes realigned the world economy, Jordan had new opportunities, and could shift rapidly. It was an opportunity to position Jordan so that its geography might become an asset, rather than a liability. And it was opportunity move from aid to trade.

Of course, it is one thing to theorize about the benefits and threats of the globalized economy. It is quite another to begin the hard work to integrate one’s economy – implementing new regulations, adopting international standards, inviting the world’s investors, privatizating.

Jordan embarked on a process of rapid change and adaptation. In just a few years you have reached some remarkable achievements in integrating your economy regionally and globally. For example, today we see in Jordan one of the most competitive mobile telecom regimes in the region. There is a fiber optic trunk line being laid that will link Jordan with neighbors north and south and provide the anchor for a myriad of useful applications.

There is a gas pipeline with Egypt that will instantly diversify Jordan’s energy supply and thereby provide greater stability and certainty in the economy. There are exciting and bold initiatives in Aqaba and elsewhere to upgrade ports, roads and border crossings so that Jordan maintains momentum as a commercial center.

If we gathered together 15 years ago and I had proposed the idea of Jordan as a regional trade hub, or as a center of excellence in Arabic IT development, or as a country attracting foreign investment and building a strong manufacturing base in garments and pharmaceuticals, well, you might have been disbelieving. But this is exactly what is happening here.

But what does any of this have to do with the United States?

The United States supports the initiatives and bold thinking of the Jordanian Government as it manages this historic and sometimes dislocating transformation. We have lent help where we could and have provided some advice.

We have also listened, and worked to develop a partnership built on respect and common interest. And we’ve bought our fair share of Jordanian goods, too.

When this process began, our USAID program assisted the Jordanian legal teams that developed the country’s WTO accession regime. USAID also lent its assistance to establishing the Aqaba Special Economic Zone, a key element in Jordan’s development and regional integration strategy. And we helped in modernizing Jordan’s capital markets which have seen tremendous success in the past couple years in attracting domestic and foreign capital.

The U.S. Government has also provided technical assistance to Jordan as it pursued telecom deregulation; banking reform; streamlined customs practices; and enacted stronger Intellectual Property Rights protection. We have assisted the government’s efforts to broaden the country’s IT infrastructure, particularly so that it might reach the desktops of Jordan’s school children.

And of course we worked to achieve major bilateral agreements, like the Jordan-U.S. Free Trade Agreement, the Bilateral Investment Treaty and the expansion of the QIZ agreement to enable the construction of new zones throughout the country and whose remarkable success is well known.

These are just some examples, but give an idea of how we have cooperated with Jordan as it has made these bold and difficult changes to its economy and public sector.

We understand the difficulty and courage this entails, and have sought to help.

Where, some might ask, is all this headed? What can Jordan and other countries that have made this leap expect for the future? Will the strategy pay off in the end?

I’m not an economist, but one doesn’t need to be to recognize the signs of current and future success in these bold steps. Exports and transit trade soaring; strong growth in the capital markets; more and more international investors looking at regional operations and manufacturing opportunities here; a youthful IT industry; a competitive banking system; and the list goes on.

Add to this rural employment gains, especially for women, through the expansion of the QIZ’s and an innovative education strategy to prepare young Jordanians for the future, and I think you see what I’m talking about.

Jordan’s leadership is taking nothing for granted. But if you have made your achievements despite regional turmoil, think what you can do as the region stabilizes – as I am convinced it will do. Jordan is positioned for tremendous future gains.

President Bush has articulated his vision to encourage greater economic integration in this region. It includes an aggressive program to negotiate bilateral free trade agreements where feasible. It also envisions the eventual formation of a wider Free Trade Area, sometimes referred to as MEFTA.

As MEFTA moves forward, we hope to see Jordan at the center of this growing community. It can be a standard bearer for open markets and economic reform, promoting regional and global integration.

And here I urge you, the members of the American Chamber of Commerce, to keep all of us in the public sector focused on competitiveness and integration. You play the role of the squeaky wheel, the demanding customer. You must set the standards and keep this process moving forward. The AmCham in Jordan is a key player in this effort. It is your vision, energy, and ideas that are transforming your companies and your nation.

Countries that wait for this process to come to them won’t be in that winning third group we discussed earlier. Countries like Jordan that take the bold steps beyond rhetoric and theory face a myriad of difficulties and challenges. But they also stand to reap tremendous gains. The United States will continue to promote the possibilities created by free trade, openness, and greater economic integration. We will continue to stand by and work with our friends like Jordan who are grasping these opportunities before them.

Why do we care? Because we are just as subject to the forces of globalization – economic, political, ideological, social – as anyone, and we firmly believe that only on the foundation of economic growth can you create a healthy, stable Middle East with systems that respond to the needs and aspirations of its people. And the path to growth is called integration.