Was the Türkiye-Jordan Free Trade Agreement effective in bilateral trade?

This study aims to analyze the effects of the Jordan-Turkey Free Trade Agreement, which came into force in March 2011 and was terminated by Jordan in November 2018 due to its adverse economic impacts. Free trade agreements are considered one of the economic integration models that contribute to the facilitation of foreign trade between the parties. However, there are differing views in the literature regarding the effects of these agreements on foreign trade; while some studies mention positive effects, others suggest adverse effects or no significant impact. In this study, quarterly data for the period 2002:Q1 - 2023:Q4 have been used to calculate the export specialization indices for Jordan and Turkey and to compare these indices in three periods (pre-agreement, during the agreement, and post-agreement). Additionally, the long- and short-term relationships between the Free Trade Agreement and foreign trade for both countries have been analyzed using the Autoregressive Distributed Lag (ARDL) Model, taking into account the Gross Domestic Product (GDP) of both countries and the nominal exchange rate of the Jordanian Dinar against the Turkish lira. The results of the study indicate that the agreement between Turkey and Jordan increased Jordan's export specialization index positively, while it decreased Turkey's export specialization index. In the long run, both Jordan's and Turkey's GDP, as well as the Free Trade Agreement, have a positive impact on Turkey's exports to Jordan, although the Jordanian Dinar's exchange rate has a negative impact on Turkey's exports to Jordan. For Turkey's imports from Jordan, the Free Trade Agreement variable showed a statistically significant and positive effect. This finding is consistent with the results of the Export Specialization Index analysis, both analyses showing that the agreement had a positive effect on Jordan's exports. In the short-term analysis, it was found that the exchange rate of the Jordanian Dinar had positive effects on Turkey's exports, while the Free Trade Agreement had a negative effect. For Turkey's imports, only Jordan's GDP had a positive effect. Consequently, it can be stated that the claim that the Free Trade Agreement harmed the Jordanian economy is not supported by the export specialization index scores and the statistical results of the ARDL model.