US Exports to Arab World Likely to Soar in 2007

U.S. Exports to Arab World Likely to Soar in 2007

The National-U.S. Arab Chamber of Commerce (NUSACC) will release a report March 15 saying that U.S. merchandise exports to the Arab world are expected to increase sharply this year, "shattering" the record set in 2006."We are charting new territory in America's trade relations with the Arab world," said David Hamod, president and CEO of the group, which represents U.S. and Arab businesses. "The 2006 numbers are unprecedented, and the outlook for 2007 looks even brighter." The 16-page report, covering 21 Arab countries plus Palestine, says that U.S. sales to the Arab region totaled more than $ 35 billion last year -- a 28 percent increase over the previous year -- and are set to rise to roughly $ 45 billion in 2007.Hamod said that the report confirms that the Arab world remains one of the best export markets for U.S. firms. "If the early numbers are any indication," he said, "2007 promises to be a banner year for U.S. companies." Depreciating Dollar.The report suggests that the most important reason for the continuing rise in U.S. exports may be the depreciating U.S. dollar, which is making U.S. goods more competitive in the region. Moreover, according to the report, higher oil prices mean greater purchasing power for energy-producing economies, and the region's consumer market -- flush with disposable income -- is also helping to drive up U.S. export sales.Two trends also appear to be emerging, according to the report, which relies on data compiled for the NUSACC by the Institute for Research: Middle Eastern Policy (IRmep).First, countries that have concluded free trade agreements with the United States -- Jordan, Morocco, Bahrain, and Oman -- have seen their trade levels outpace those of non-FTA nations (a 32 percent increase from 2005 to 2006 vs. 24 percent for non-FTA countries).The NUSACC said that the so-called FTA Effect -- heightened confidence stemming from the perception that the FTA nations have upgraded their trade and investment standards -- has resulted in, among other things, more trade.Second, according to the NUSACC report, foreign direct investment in the Arab world appears to be flowing at unprecedented levels, with the number of greenfield FDI projects in the Arab Middle East jumping by 100 percent from 2002 to 2005. It said that the inflows in North Africa have been even more impressive: an increase of 154 percent over the same period.While exports are up, however, the report warns that there may be "storm clouds on the horizon," citing what it calls increasing evidence that regional and global political trends are beginning to take their toll on the U.S. relationship with the region.The report notes, for example, the war in Iraq, the Dubai Ports World incident, the war between Israel and Hezbollah in Lebanon, and a strong trend in the post-9/11 world for Arabs to "look east" to Asia for business partners and, increasingly, political support.

CBP Issues Interim Rule on U.S.-Jordan FTA

Customs and Border Protection has issued an interim rule, effective June 27, 2007 to implement the preferential tariff treatment, rules of origin, and other customs-related provisions of the U.S.-Jordan Free Trade Agreement, according to a Federal Register notice published June 27 (Vol. 72, Fed. Reg. 35,154 (June 27, 2007)).Comments must be received by Aug. 27, 2007. Comments, identified by docket number, can be submitted through the Federal eRulemaking Portal, http://www.regulations.gov (follow the instructions for submitting comments via docket number USCBP-2007-0001), or by mail to: Trade and Commercial Regulations Branch, Regulations and Rulings, Office of International Trade, U.S. Customs and Border Protection, 1300 Pennsylvania Avenue, N.W. (Mint Annex), Washington, D.C. 20229. Docket:

U.S. Warns UAE Over Diversion Of Sensitive Technology to Iran, Syria

The United States Dec. 14, 2006 issued a stern warning to the United Arab Emirates over its continuing failure to halt the diversion of sensitive technology to Iran and Syria, saying that there could be consequences if there is no change "in the near term." There has been a rising number of militarily sensitive items being diverted through the ports of Dubai and Abu Dhabi to Iran and Syria.

The United States may be forced to take action against the UAE "if there continues to be this problem." But he declined to specify what sort of action that might be. Restricting some high-technology exports to the UAE would be one possibility. The UAE still does not have an export control law and there is lack of oversight by the UAE authorities.

Reviving Trade Agreement between EU and Syria

Amid diplomatic moves to enlist Syria's help in stabilizing neighboring Iraq, the European Parliament called for activation of a stalled European Union trade and aid agreement with Syria, by way of an incentive. The agreement, signed in 2004, is the missing link in a series negotiated by the EU with the aim of creating a pan-Mediterranean free trade zone. The agreement has not been activated due to suspicions of Syrian involvement in the 2005 assassination of former Lebanese Premier Rafik Hariri. The 2004 accord includes tariff cuts on agricultural products; removal of technical barriers to trade, trade in services, and government procurement; intellectual property rights; and trade dispute settlement mechanisms.The EU is already Syria's main market, accounting for more than 40 percent of exports.

U.S. Senate Approves US-Oman Free Trade Agreement

The U.S. Senate on Sept. 19, 2006 overwhelmingly approved legislation to implement the U.S. free trade agreement with Oman, clearing the way for the president to sign the bill and for the agreement to enter into force.The agreement is the fifth between the United States and a Middle Eastern country -- after Israel, Jordan, Morocco, and Bahrain -- and is part of President Bush's plan, announced in May 2003, to create a U.S.-Middle East Free Trade Area (MEFTA) by 2013.

The U.S. Administration, however, disregarded the constitutional authority of Congress to regulate international trade by rejecting a forced-labor amendment to the implementing legislation that was approved unanimously by the committee on June 28.The amendment was designed to deny trade benefits to imports of products made with forced labor. These issues will come to the fore as the expiration of Trade Promotion Authority (TPA) in the middle of next year (2007) draws near. It will be high time that Congress take a hard look at the Administration trade policy.

Qualifying Industrail Zones (QIZs)

The Jordanian government has facilitated in recent days the transfer of hundreds of Bangladeshi textile workers from companies implicated in workers' rights violations in QIZs to other companies found to be in compliance with domestic labor law -- in a move designed at least in part to avoid the imposition of economic sanctions by the United States under the U.S.-Jordan free trade agreement.

The Dubai P&O ports deal -- and the possibility that a Middle Eastern nation could have control over some U.S. ports -- was one of several major M&A projects that triggered concerns over national security and strategic interests during 2005.Without contesting sovereign nations' right to regulate, there is a risk that regulatory action may sometimes exceed what is needed to safeguard essential interests, and be motivated by protectionist motives.

The principal challenge for governments "is to find ways of safeguarding essential interests, while at the same time keeping their investment regimes transparent and non-discriminatory.