Jordan’s garments sector gains an edge

A confluence of factors is opening opportunities for Jordanian garment manufacturers in their bid to win a greater share of Western clothing markets.

Improved access to markets

In recent years the sector has been learning to take fuller advantage of the 2000 US-Jordan free trade agreement (FTA). For textiles and garments companies at least, the FTA has effectively rendered superfluous the Qualified Industrial Zones that drove the dramatic growth of the early 2000s, offering even easier access to the US market with fewer conditions, such as where to operate and how much Israeli input to include.

Jordan signed a similar FTA with Canada in 2009, and its relations with the EU are further along the official “Advanced Status” route than those of any other Arab country. It enjoys, therefore, largely unfettered connections to the world’s most sought-after clothing markets.

In addition, manufacturers have simultaneously differentiated themselves and gained a niche price advantage over low-wage competition overseas by moving into manmade fibres. Although the latter are more expensive than natural fibres like cotton, the FTA with the US reduces their cost of accessing the largest single consumer market.

The numbers so far are encouraging. After a decline in 2009, exports of clothing in particular have risen in value for each of the subsequent three years: 5.7% in 2010, 13.7% in 2011 and, according to preliminary figures published by the Central Bank of Jordan, 4.2% in 2012. The vast majority of these exports (upward of 90%) go to the US, but the growing trade relationship with Europe provides plenty of potential as well.

Better working conditions provides advantages

Now an ongoing effort – including the state, civil society and the Jordan Garments, Accessories and Textiles Exporters Association – to improve worker safety promises to accentuate the advantages of market access. This, in large part, is because more Western consumers are increasingly concerned about the conditions under which their purchases are manufactured. Labels, particularly so-called “fast fashion” marques, have come under increasing pressure to ensure their products are sourced from ethical manufacturers.

In January, Jordan signed an agreement with the US aimed at implementing better working and living conditions for workers in the kingdom. Then in April, Better Work Jordan, the local edition of a programme designed by the UN’s International Labour Organisation to foster improved working conditions and enhance competitiveness, hosted the fifth annual International Buyers’ Forum. Attended by retail and consumer brand giants like Wal-Mart, Gap and Nike, the gathering covered a variety of topics, including the methods used to recruit migrant labourers, working hours, discrimination and fire safety, as well as basic conditions on factory floors and inside worker dormitories.

These issues have come to the fore in the wake of a building collapse that killed more than 1100 people at Bangladesh’s Rana Plaza factory complex in April. Some clothing brands and retailers have signed binding agreements to help improve conditions there and elsewhere. Manufacturers are concerned that other fashion companies will follow Disney’s lead by deciding that the benefits of cheap production are no longer worth the risks of being associated with the poor treatment of workers.

Because Jordan was already years into a reform campaign when the latest concerns about the global fashion industry arose, its efforts are more advanced than those of other producer nations, giving it a powerful argument to entice the big names in the clothing and apparel business.

To be sure, other hurdles to a larger garments industry remain: the thirst for finance is exacerbated by the difficulty and expense of obtaining credit, energy costs are high and rising, and critics argue that the regulatory environment is unpredictable. On the other hand, the arrival of foreign capital and the partnerships that come with it would lessen the need for credit, alleviate the burden of energy prices and provide support for clearer rules that are more consistently applied.