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. . . A new generation of US trade pacts pushes a political agenda by Mark Wallace Gulf States Newsletter, Friday, February 20, 2004 To the Bush administration's credit, the last few years have seen a new push to strengthen trade ties between the United States and the Middle East and Gulf region. With the benefits of the Clinton administration's landmark Free Trade Agreement (FTA) with Jordan now apparent – to the tune of 30,000 or more new jobs, according to the Jordanian government – the current White House has launched into talks to establish similar links throughout the region. Washington isn't being shy about it. The office of United States Trade Representative Robert Zoellick trumpeted the start of trade talks between Manama and Washington on 26 January, and this red-letter day was followed shortly by a visit to the White House by Bahrain's liberal Crown Prince Sheikh Salman Bin Hamad Al-Khalifa. Talks on a US-Morocco FTA are slated to wrap up shortly (albeit after delays and mounting concern over the consequences in Morocco), and new Trade and Investment Framework Agreements (TIFAs) – often the first step on the long road to a US trade deal – have just been struck with Kuwait and Yemen. Last May, President George W. Bush launched an ambitious initiative to set up a Middle East Free Trade Area by 2013. This would encompass not only those countries that already have signed FTZs and TIFAs, but Arab nations throughout the Middle East and North Africa – as well as Israel, which has had a free trade arrangment with the US since 1985. But how much of Washington's new trade agenda in the Arab world is economically motivated and how much is a political ploy is open to question. The idea that trade may be an effective tool against terrorism is quietly gaining adherents in Washington, and Israel's inclusion on Bush's list suggests a revival of the economic co-operation promised by the Middle East peace initiative of a decade ago – which ultimately failed. Perhaps not surprisingly, Washington trade experts say a more careful look at the agreements themselves reveals little economic benefit – and some potential political gains that could be good for both ends of the deals. As one Washington expert told GSN, "Trade policy isn't just about dollars and cents. It can fry other fish as well." In the case of Jordan's FTA, the apparel exports that are the mainstay of the agreement were already accorded preferential treatment under the system of Qualifying Industrial Zones (QIZs) that had been established between the two countries in 1997. This allowed products manufactured in the QIZs to be marketed in the US free of quotas and customs duties. The American free trade stamp of approval alone can draw the eager eyes of US businessmen, which in itself may be enough of a benefit. Washington insiders say that trade pacts may also be offered by the US as reward for moves toward the political liberalisation Bush has advocated so vocally in recent months. Trade is also being seen as a tool in the war on terrorism – though the administration's efforts are seen by some as insufficient. Lifting the fortunes of a nation like Bahrain might only engender animosity among neighbors like Qatar or Saudi Arabia, say some, having the opposite effect. With FTAs taking up to decades to negotiate and implement, it could be well beyond 2013 that a regional free trade area is established. To try to do a more thorough job, Democratic Senator Max Baucus and Republican Senator John McCain recently introduced a bill that would unilaterally lift import duties on products from the Gulf. But "the administration is assiduously not taking a position on the bill, hoping it will go away", according to a trade researcher at a Democratic think tank in Washington. It would be a shame if party politics stymied attempts to make real progress in building stronger links between the US and the Arab world. But there is some constructive rhetoric on both sides of the Congressional aisle. The test for Washington will be whether that rhetoric can be turned into something more concrete than hot air. -30- |
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