U.S. Exports to Arab Countries Projected To Continue Surge in 2006

Published: November 4, 2005

Share Article

[Reprinted from Washington File – usinfo.state.gov]

U.S. Exports to Arab Countries Projected To Continue Surge in 2006
National U.S.-Arab Chamber of Commerce Chief Hamod examines the trend

By Phillip Kurata
Washington File Staff Writer

Washington — The National U.S.-Arab Chamber of Commerce (NUSACC) is projecting a continuing surge of U.S. exports to Arab countries in 2006, with opportunities “across the board” for doing business in the region, according NUSACC President David Hamod.

U.S.-Arab Tradeline, a publication of the chamber, predicts that U.S. merchandise exports to Arab countries will reach $37.9 billion in 2006, an increase of 40 percent compared to the expected figure for 2005.

In its September/October edition, Tradeline projected that U.S. merchandise exports to the Arab world in 2005 will reach $26.7 billion, a 38 percent increase over the 2004 level.

“The opportunities are really across the board and bode very well for U.S. companies wanting to do business in the region,” Hamod recently told the Washington File.

The Tradeline forecast dealt with 21 Arab countries and the Palestinian Territories, from Mauritania and Morocco in northwestern Africa eastward to Iraq and the countries bordering the western shore of the Gulf, as well as Sudan, Somalia and Djibouti.

Hamod said that some of the obvious areas of opportunity are in financial services, construction/engineering, information and communication technology and consumer products.

“In many ways, trade is the star of the show,” he said. “Politics is taking a back seat to trade and investment because business is playing a more direct role in creating jobs and putting bread on the table.”

Tradeline attributed the surge in U.S. exports to the Arab countries to three main factors:

• Higher oil prices that are boosting the import purchasing power of Arab countries;

• Increased investment by the Arab private sector, especially after September 11, 2001, when Arab businessmen began staying “closer to home,” and;

• An expanding consumer market as a result of globalization.

“This has been especially true for construction and engineering projects, like those involving petrochemicals, but there have also been major investments in leisure and residential development projects,” Tradeline wrote. Those large-scale projects “focus on infrastructure, and contain a substantial amount of U.S. goods and services,” Tradeline added.

“Arab consumers are more aware than ever about the appeal and availability of U.S. products, and they are flush with disposable income,” Tradeline said.

FREE-TRADE AGREEMENTS

Hamod said that the Bush administration’s policy of seeking free-trade agreements (FTAs) with Arab countries as part of its goal to create a free trade area in the Middle East by 2013 has “tremendous potential.”

The United States has completed FTAs with Israel, Jordan and Morocco, has finished FTA negotiations with Bahrain and Oman, and currently is negotiating an agreement with the United Arab Emirates. The United States and Egypt are weighing a decision to open FTA negotiations.

Tradeline projects that Egypt will be the third-largest market among Arab countries for U.S. exports in 2006, absorbing more than $5 billion worth of goods. Saudi Arabia, the largest U.S. market among Arab countries, is expected to buy $10.7 billion worth of goods in 2006, followed by the United Arab Emirates, which is predicted to import $10.2 billion in U.S. goods.

Hamod said that Egypt is a different type of market from Saudi Arabia or the Emirates because the Egyptian government places a high priority on foodstuffs and meeting the basic needs of its 70 million people.

The current Egyptian government “is working together to promote economic reform better than any team we’ve seen in the past,” Hamod said, adding that it is “systematically bringing about these economic reforms and doing away with decades old subsidies.”

He said that in light of the “bread riots” that occurred in Egypt in 1977, “Egypt can only move so far so fast, but the Egyptian people seem to be supportive of what’s going on.”

An FTA links the economies of the United States and its signatory partners, removing virtually all barriers to trade and investment in both directions. FTAs include protections of foreign investment, the environment, intellectual property and workers’ rights and open government procurement procedures.

Hamod says that Arab governments seek FTAs when they consider it in their best interest to do so.

“These are major decisions being made by the Arab countries in terms of positioning their economies for the 21st century,” Hamod said. “The governments can sign all the agreements they want, but unless they get the support they need from the private sector, the agreements won’t be worth the paper they are written on. The governments are opening the door to the private sector. Now it’s up to the private sector to walk through and decide how they can leverage these FTAs and create trade and investment.”

In 2000, Jordan became the first Arab country to conclude an FTA with the United States, leading to surges in exports, foreign investment and job creation. From 2000 to 2004, Jordanian exports to the United States grew from $63 million to $1.1 billion.

Hamod says it may be unrealistic to expect other Arab countries will experience comparable growth after signing FTAs.

“Countries’ expectations of what happens after the FTA gets signed need to stay reasonable. I don’t think we’re going to see a huge surge in either direction right off the bat. It takes time,” he said.

TRADE FAVORS DEMOCRACY, STABILITY

Hamod said that beneficial consequences of increased trade are greater rule of law, transparency and economic reform as people “become a more active part of the international trading system.”

“Trade has the potential to support the effort to spread democracy, but it’s not a given,” he said. “From the perspective of our chamber, we’re focused on the FTAs for the economic benefits that they’ll bring to people — Americans and Arabs. If democracy promotion is one of the side effects, so much the better.”

Source: Washington File

For additional information on U.S. trade in the region, see U.S.-Middle East Free Trade Area.

(The Washington File is a product of the Bureau of International Information Programs, U.S. Department of State. Web site: http://usinfo.state.gov)

About National US-Arab Chamber of Commerce

U.S. Trade Rep – Middle East/North Africa

Related Material
Political, Social and Economic Reform in Saudi Arabia — Interview with Usamah Al-Kurdi – SUSRIS Interview – Dec. 14, 2004

Saudi Arabia’s Plan for Changing Its Workforce – By Divya Pakkiasamy – SUSRIS IOI – Dec. 2, 2004

Georgia Exports to Saudi Arabia: Coke, Innovation and Islam – By Grant F. Smith – SAF Essay – Nov. 9, 2004

Virginia Exports: Diversifying for New Saudi Demand – By Grant F. Smith – SAF Essay – Sep. 29, 2004

The Dynamics of Economic and Commercial Reform: Near-Term Prognoses – Usamah Al-Kurdi – SUSRIS IOI – Sep. 27, 2004

Arab World Economies: Prosperity Amidst Political Uncertainty – Brad Bourland – SUSRIS IOI – Sep. 23, 2004

The Impact of U.S. Visa Policies: Implications for America’s Economy – An Initial Inquiry – By National U.S.-Arab Chamber of Commerce – SUSRIS IOI – Sep. 12, 2004

Saudis Fight Militancy With Jobs – Private Posts Formerly Held by Foreigners Are Offered to Locals – By Scott Wilson – SUSRIS IOI – Sep. 1, 2004

Drill Bits and Data Bytes: The Texas-Saudi Export Relationship – By Grant F. Smith – SAF Essay – Jul. 21, 2004

Restoring Saudi Visitor Flow: The American Stake – By Tanya Hsu and Hassan Elkhalil, Esq., Forecasts and quantitative analysis provided by Grant F. Smith – SAF Essay – May 13, 2004

Saudi Women and the Jeddah Economic Forum – By Maggie Mitchell Salem and Reem Al Jarbou – SUSRIS IOI – Feb. 12, 2004

“A Saudi Vision For Growth” – Women Make Their Mark at Jeddah Economic Forum – Lubna Olayan’s Keynote Address – SUSRIS IOI – Feb. 12, 2004

Special Energy Supplement: The New Geopolitics of Oil – By Joe Barnes, Amy Jaffe & Edward L. Morse – SUSRIS IOI – Jan. 6, 2004

U.S.-Arab Economic Forum – One World. Two Cultures. Endless Possibilities – SUSRIS IOI – Sep. 30, 2003

At Your Service: Future U.S. Service Exports to Saudi Arabia – By Grant F. Smith – SAF IOI – Aug. 20, 2003

Getting Back on Track: Saudi Study in the United States – By Grant F. Smith – SAF Essay – Jul 16, 2003

Political and Economic Transition on the Arabian Peninsula: Perils and Prospects – By James A. Russell – GulfWire Perspectives – May 15, 2003

Shaybah Cafe: Saudi Aramco Gathers Business Leaders to Ponder Future – By Stephen L. Brundage and Rick Snedeker – SUSRIS IOI – Sep. 13, 2004

Foreign Investment In Saudi Arabia’s Energy Sector – By Gawdat Bahgat – SUSRIS IOI – Sep. 2, 2004

Saudi Arabia: Driving Michigan Export Growth – By Grant F. Smith – SAF Essay – Aug. 30, 2004

Economic Reform in Saudi Arabia – Summary of Remarks by Usamah Al-Kurdi – SUSRIS IOI – Jun. 4, 2004

Examining the Relationship – Saudi Foreign Minister Prince Saud al-Faisal – SUSRIS IOI – Apr. 28, 2004

The Prospects for Stability in Saudi Arabia in 2004 – By Anthony H. Cordesman
Part II – The Saudi Economy in 2003 and 2004 – SUSRIS IOI – Feb. 25, 2004

Part III – The Issue of Political, Economic, and Social Reform – SUSRIS IOI – Feb. 23, 2004

Al-Ikhbariya Makes Waves – By Raid Qusti – SUSRIS IOI – Jan. 15, 2004