No US-ME free trade talks this year but with Egypt

Kuwait News Agency (KUNA) - 11/02/2006

No US-ME Free Trade talks this year but with Egypt

By Aya Batrawy WASHINGTON, Feb 11 (KUNA) — The United States is not expected to embark on any new Free Trade Agreement (FTA) negotiations with countries in the Middle East, including Kuwait, in the next year despite the recent launch of bilateral FTAs with a few Gulf States.

According to US Trade Representative for Europe and the Middle East Shaun Donnelly, speaking to KUNA in an interview, the only Arab country under consideration for beginning FTA talks before the summer of 2007 is Egypt.

"We have had some good preliminary discussion with Egypt, but we have not yet been able to come to a conclusion on whether we are prepared to launch an FTA," said Donnelly.

Currently, Egypt is a "potential FTA partner" and "the most likely candidate" for an FTA, but beyond Egypt the United States is not likely to start an FTA with any country in the region soon, he said.

The Trade Promotion Authority (TPA), a law that gives US President George Bush the authority to conclude trade deals with less restrictions and involvement from Congress, is set to expire in July 2007 and Congress is not expected to extend it.

Prior to the TPA, Congress was more heavily involved in drafting trade negotiations, and because of politics and pressure from lobbying groups, trade agreements did not pass through Congress as swiftly.

Donnelly explained that Egypt, which for the last decade has expressed a desire for an Agreement, is the only country that may start FTA talks before the TPA expires.

The United States recently signed FTAs with Bahrain and Oman with overwhelming support from Congress and is expected to finalize ongoing talks for an FTA with the UAE by end of this year, in addition to the FTAs already in place with Jordan and Morocco Several Mideast countries have Trade and Investment Framework Agreements (TIFA) with the United States, including Kuwait, Egypt, Algeria, Tunisia, Saudi Arabia, Yemen, Qatar and Iraq.

And while a TIFA is seen as an important tool for an FTA with the United States, it is not an automatic stepping-stone to an Agreement.

"It is not like getting on a conveyer belt where you sign a TIFA and move along and just automatically get your FTA at the end of some process. It depends on the countries being ready and willing," explained Donnelly.

Jordan, though, is an example of a country that had a TIFA prior to signing the first ever FTA between the United States and an Arab country in 2001.

"Each country is different. We try to move at the speed that the country is, and in the case of Kuwait, we would like very much to have a long-term vision of getting to an FTA, but it will take some time," he said.

There are some countries that are just not ready, able or willing to meet the high and demanding standards put forth in an Agreement, said Donnelly, who stopped short of naming such countries.

Earlier in the week Donnelly met with a team of Kuwaiti trade officials to discuss scheduling an official TIFA meeting sometime before the end of this year.

Although the last TIFA meeting between US and Kuwaiti experts was nearly two years ago, Donnelly said he is "confident" there will be another TIFA meeting this year.

The US Trade Representative official commended Kuwaiti improvements in the area of intellectual property rights, but said American companies still have concerns about this issue, technical standards and taxation with regard to Kuwait.

An FTA with the United States is highly coveted by Mideast partners because it is seen as a means to encourage foreign investment in the country, create jobs and increase exports to the world’s largest economy.

In 1999, Jordanian exports to the United States hovered around 9-million dollars, but soared to 54-million dollars in 2001 when the FTA with the United States was signed.

But some Mideast countries are concerned that if an FTA is signed too soon with the United States it could result in a large trade gap, with imports surpassing exports at a much higher level.

Furthermore, some critics complain that bilateral FTAs between the United States and countries in the region pit economies in the region against one another and threaten local producers that may be unable to compete with multinational companies.

"We are not trying to carve out a protectionist club," said Donnelly.

The United States is trying to develop relationships with countries in the region that make both the United States and the Middle East more competitive and open in the face of growing competition with China and India, he said.

In fact, FTAs between the United States and countries in the Middle East are relatively new phenomena.

Enhanced economic cooperation is a tool the United States is using to reach out to the region to promote democracy, liberalization, accountability and reduce poverty.

Bush has proposed a Middle East Free Trade Agreement by 2013 that would encourage FTAs with many more partners in the region, but it is unlikely that such an Agreement will meet its proposed timeline or include countries in the region such as Libya and Syria.

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source: MENAFN