ECONOMICS AND TRADE | Achieving growth through open markets
24 March 2008
U.S. Exports to Arab Countries Soar to New Highs in 2007
Arab investors still reluctant to enter U.S. market
Washington -- U.S. exports to Arab countries are soaring to new highs as a result of U.S. trade policy, the low value of the dollar and greater liquidity in the region tied to rising oil prices, according to the National U.S.-Arab Chamber of Commerce (NUSACC).
"U.S. exports have been breaking records in terms of sales to the Middle East,” said David Hamod, president and chief executive officer of NUSACC. “Part of that success is due to the Bush administration's strong support for U.S. goods and services in overseas markets.” U.S. exports to the Arab world exceeded $42 billion in 2007, up from $35 billion in 2006, and Hamod predicts that the figure may rise to more than $50 billion in 2008.
Another important legacy of this administration, Hamod suggested, is the commitment by President Bush to keep the doors open for foreign investment into the United States. He said that nowhere was this more apparent than in the case of the DP World imbroglio, when the Bush administration did the right thing to promote foreign investment in U.S. companies.
DP World, wholly controlled by the Dubai government of the United Arab Emirates, owns, operates and manages container terminals and other port facilities around the world. DP World won the Bush administration's backing to run six U.S. ports, but congressional opposition in 2006 forced a cancellation of the deal. (See "Bush Says Collapse of U.A.E. Ports Deal Sends Wrong Message.")
In the aftermath, the Bush administration worked hard to contain the damage from the incident and promote trade between the United States and the Arab world. Those efforts have helped U.S. exporters position themselves for their record-breaking sales to Arab countries, according to Hamod. He added that the undervalued dollar has helped make U.S. exports more competitive around the world, despite the fact that inflation has taken a bite out of profits and consumers’ pocketbooks.
Despite the glowing export figures, the U.S.-Arab trade picture remains darkened by shadows cast by the September 11, 2001, events.
"The biggest single setback since [September 11, 2001] has been that traders and investors from the Arab world no longer feel welcome in the United States. Arab business leaders are now looking east toward China, India, Vietnam and other markets," Hamod said. "That will be a loss to American workers and the U.S. economy."
The U.S. tourist industry has seen a decline in revenues from Arab travelers as a result of post-September 11 measures, including difficulties securing visas to visit the United States. U.S. Commerce Department figures show that travelers to the United States from Arab countries are a fraction of what they were before September 11. In contrast, the tourist industry in the Arab world is booming as Arabs travel to each other’s countries in "unprecedented" numbers, according to Hamod.
"People are building hotels like they are going out of style. There is a massive expansion of leisure facilities," Hamod said. Egypt, Lebanon, Morocco, Tunisia and the United Arab Emirates are among the leaders creating attractive destinations for the influx of Arab tourists.
A spinoff from the Arab tourism boom and soaring revenues in the oil-producing states is the appearance of numerous startup, low-cost airlines led by the private sector. Jazeera Airways in Kuwait, Bahrain Air, Air Arabia in Sharjah (United Arab Emirates), NasAir in Saudi Arabia and Menajet in Lebanon are a few of them.
"Oil revenues and the economic boom in the region have helped make these possible. Consumers want to travel, and they have the disposable income to do so. Moreover, when it comes to the government-run airlines, they have funds to buy the best planes for the fleet, and some can even afford to subsidize fuel," Hamod said.
NUSACC is a vigorous advocate of free-trade agreements (FTAs) and is the only business entity in the United States that has been invited by the U.S. Congress to testify on the three most recent FTAs with the Arab world (Morocco, Bahrain and Oman). FTAs provide broad access to the signatories' markets, including protections of intellectual property rights, labor and the environment.
Hamod says the FTAs have the potential to generate jobs, enhance economies and create wealth for citizens in participating countries. He calls this the "FTA effect."
"When a country signs an FTA with the United States, it raises the bar. It means the country has met the 'gold standard,' and other nations take notice. It is not just a function of how much trade they do with the United States; the FTA also enhances their ability to attract investment from our country and other countries," Hamod said. "That's part of what we're seeing in the Arab world today. There is more investment within the Arab world, going from one country to another, than at any time in recent memory. In our view, this is a win/win opportunity for everyone involved."
More information about U.S.-Arab trade is available on the NUSACC Web site.
