Encouraging the employment of refugees through trade preferences

Abstract

Trade preferences provide a potential policy tool for supporting the integration of refugees in countries of first asylum. Thus, the EU-Jordan Compact, agreed following the London conference of February 2016 on ‘Supporting Syria and the Region’, eased the rules of origin for Jordanian exporters employing a minimum share of Syrian refugees. The debate on the use of trade preferences to encourage the labour-market integration of refugees has been reactivated by a similar proposal made recently by Turkey in the WTO context. The experience with the Qualifying Industrial Zones initiative, launched in 1996 by the US for Egypt and Jordan, suggests that trade preferences, if properly designed, can be a powerful instrument for generating export growth and employment. However, both this experience and the so far disappointing impact of the EU-Jordan agreement on rules of origin show the limits and drawbacks of this type of scheme. This Policy Brief discusses the conditions under which trade preferences can prove an effective instrument for refugee integration and puts forward some concrete policy recommendations.