Jordan and Israel have upgraded a decade-long trade accord after talks at the World Economic Forum (WEF).
The two sides signed the deal at the World Economic Forum meeting
The original deal was signed months after their 1994 peace treaty.
The new Qualified Industrial Zones (QIZ) agreement will let many components cross the border between the countries without taxes, duties or tariffs.
The two countries will also seek free access to EU markets for goods made in the QIZs, situated mainly in Jordan and where many Israeli firms have plants.
There are currently a dozen QIZs in Jordan, whose products, mainly textile goods with a certain amount of Jordanian and Israeli content, are exported duty and quota free to the US.
The QIZ set-up was introduced by the US to boost peace between the neighbouring states.
The new agreement will ease the importation of components across Israeli and Jordanian borders into the QIZ for manufacture.
Under the new deal the two countries will also seek an agreement with the EU, similar to the US deal, to open its market for products made in the zones.
Israel's Deputy Prime Minister and Minister for Trade and Industry, Ehud Olmert, signed the deal with Mohammad Halaiqah, his Jordanian counterpart, at the WEF meeting in Southern Shuneh, Jordan.
Total QIZ exports were $600m (£338.9m) last year and should reach $700m this year, said Mr Halaiqah.
"We are delighted to sign this agreement under the auspices of the World Economic Forum," said Mr Olmert.
"It will make trade better for both sides."
Mr Halaiqah said: "This trade protocol is to help promote exports from the Qualified Industrial Zones.
"We are negotiating with the EU, and we hope that the QIZs will have the same preferential treatment in the EU as in the US."
Meanwhile, the state-run Petra news agency said Jordan and Singapore had signed a free trade agreement and a bilateral investment treaty at the sidelines of the conference.