- The Washington Times - Monday, February 16, 2004

The Bush administration is piecing together a Middle East Free Trade Area, using closer commercial ties with a series of smaller nations to encourage others to follow suit.

President Bush in May proposed the U.S.-Middle East zone as a way to “defeat poverty and promote the habits of liberty.” The endeavor, if successful, within a decade would lower trade barriers throughout the region and create new business opportunities in countries that currently have growing populations but limited economic prospects.

So far this year, the U.S. Trade Representative’s Office has started free-trade negotiations with Bahrain, an island nation in the Persian Gulf, and hopes to finish talks with Morocco, located just across the Mediterranean Sea from Spain. Last week Persian Gulf nations Yemen and Kuwait signed trade and investment framework agreements, relatively simple documents with few commitments, but a step toward closer ties.

The United States already has free-trade agreements with Israel and Jordan.

Trade officials see the Jordan pact, negotiated by the Clinton administration but ushered into law by Mr. Bush, and the latest free-trade negotiations as setting examples for other nations to follow.

“You can create models of, not just reform, but results that come from reform. I think that that is extremely important, because I think it’s the results that then [produce the incentive for] the other neighbors to change,” said Catherine A. Novelli, assistant U.S. trade representative for Europe and the Mediterranean, and chief negotiator for the Middle East agreements.

Jordan’s trade with the United States increased more than 60 percent to almost $705 million from 2002 to 2003, according to U.S. Commerce Department figures, establishing one clear benefit — the potential for more exports.

Ms. Novelli said the announcement that negotiations would start with Bahrain, for example, helped spur Yemen and Kuwait to pursue their pacts and encouraged Saudi Arabia to resume talks on joining the World Trade Organization.

“I really believe that little Bahrain has been a catalyst for so much else,” Ms. Novelli said in an interview.

Countries in the region recently also have given more priority to economic reform as systems that create few new jobs are strained by the growth of a young population.

“For a very long time it was hard to have an economic dialogue with a lot of countries in this region because they had been not focused on economics,” she said.

Officials from Kuwait, in town this week, said they were eager to take advantage of opportunities since the fall of Saddam Hussein to reform the country’s economy, and to make a free-trade agreement with the United States a centerpiece of new policy.

“Because of security reasons, the area in general has been stagnant for a long time,” Abdullah Abdul Rahman Al-Taweel, Kuwait’s minister of commerce and industry, said during a presentation at the U.S. Chamber of Commerce.

“Now, we are hoping to put Kuwait on the map again,” Mr. Al-Taweel said, indicating the country could be a gateway for trade and investment in Iraq.

While the Bush administration has made progress toward closer economic ties in the Middle East, it has run into some roadblocks.

The negotiations with Morocco originally had a December deadline but were stalled by difficulties on agriculture. And the region’s biggest economies, such as Egypt and Saudi Arabia, are not immediate candidates for free-trade agreements with the United States.

Egypt had been considered but fell out of favor when it withdrew support from a U.S. case at the World Trade Organization. U.S. officials also said that the country had not made necessary customs reforms and tended to change its mind about making necessary economic reforms.

Saudi Arabia also has “blown hot and cold” on economic reforms, a U.S. official said.

And skeptics doubt the link between closer economic ties and the political reform that is supposed to result from the Middle East Free Trade Area.

“The free-trade agreements are, in part, ostensibly designed to encourage political change. But I think that link is very unclear,” said Amy Hawthorne, a Middle East specialist at the Carnegie Endowment for International Peace.

The European Union, for example, has been trying since 1995 to tie 12 nations in the region into a Euro-Mediterranean partnership through trade agreements.

“To date those really haven’t had any discernible impact on democratization,” she said.

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