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The Marginalized Mideast

By Neal Asbury
Thursday, 11 Aug 2011 07:54 AM Current | Bio | Archive

A looming danger of the “Arab Spring” is that in addition to allowing destabilizing forces like al-Qaida, Hezbollah and Hamas to alter the once-friendly governments with the U.S., there is a real risk that the U.S. may lose some traditional trading partners in the Mideast.

The instability in Egypt, for example, is impacting U.S. grain exports, where Egypt is the world's top wheat buyer and an importer of U.S. corn and beef.

The U.S. Department of Agriculture projects that upheaval in Egypt earlier this year "put a dent" in economic prospects, with gross domestic product growth predicted at 2 percent to 3 percent compared with earlier forecasts of 5.5 percent to 6 percent, the agency said. The Egyptian government is non-existent and recent political moves by hard core Islamists looks like the dream of a Democracy is dead.

The potential for reduced exports to Egypt comes as U.S. producers are already worried about a slowdown in demand from earthquake-battered Japan, the world's top corn importer.

Widespread unrest could derail the 2003 Middle East Free Trade Area Initiative (MEFTA) which is a series of graduated steps for Middle Eastern nations to increase trade and investment with the U.S., leading to the eventual goal of a regional free trade agreement.

The first step is for the U.S. to work closely with peaceful nations that want to become members of the World Trade Organization (WTO) in order to facilitate their accession to that body. Specifically, the U.S. has been actively pursuing efforts to ease the way of WTO participation for Lebanon, Algeria, and Yemen.

As these countries implement domestic reform agendas, institute the rule of law, protect property rights (including intellectual property), and create a foundation for openness and economic growth, the U.S. is committed to pursue strategies to enhance trade and investment relations with them.

Unfortunately current instability could set these initiatives back a decade.

The U.S. has been committed to deepening economic ties throughout the region through Trade and Investment Framework Agreements (TIFAs), Bilateral Investment Treaties (BITs), and Free Trade Agreements (FTAs). Bilateral Free Trade Agreements with Israel, Jordan, Morocco, Bahrain, and Oman have already entered into effect. These concluded agreements are not only essential for increasing American exports thus creating American jobs, but are the foundation of peace and prosperity for these nations.

The threat of upheaval and human rights violations in Bahrain has tarnished its reputation as a stable Mideast economic power and could eventually unravel the Free Trade Agreement signed by the U.S. and Bahrain in 2006.

This was the first U.S. Free Trade Agreement with a Gulf State and the third with an Arab state. The agreement provides duty-free access for all U.S. consumer, industrial and agricultural exports (except alcohol and tobacco) and significant market access for U.S. service providers such as banking, insurance, and logistics. It includes strong Intellectual Property Rights (IPR) enforcement, an issue of paramount importance to the U.S.

American exports to Bahrain in the first three years of the agreement (August 2006 – July 2009), increased from $529 million to $784 million, a 48 percent increase. By any measure it has been a remarkable success and is a template for our future trade relations with other Arab countries.

As for Syria, the bloody revolt against the despotic rule of President Bashar al-Assad might actually provide an opening for future U.S.-Syrian trade relations. Currently there are three types of sanctions the U.S. government has imposed against Syria. The most comprehensive sanction called the Syria Accountability Act (SAA) of 2004 prohibits the export of most goods containing more than 10 percent of U.S. manufactured components to Syria.

Another sanction, resulting from the Patriot Act, was levied specifically against the Commercial Bank of Syria in 2006. The third type of sanction contains many Executive Orders from the President that specifically deny certain Syrian citizens and entities access to the U.S. financial system due to their participation in proliferation of weapons of mass destruction and their association with al-Qaida, the Taliban, Hezbollah, and other organizations that the U.S. has identified as terrorist groups. These sanctions have been ramped up as the violence practiced by the Syrian government against its own citizens has increased.

We can all agree, regardless of political affiliation, Obama needs to get focused on job creation.

Increasing U.S. exports does just that. It is critical that as the Administration evaluates the rapidly unfolding events in the Mideast, priority must be given to those governments that will support a vigorous trade relation with the U.S.

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A looming danger of the Arab Spring is that in addition to allowing destabilizing forces like al-Qaida, Hezbollah and Hamas to alter the once-friendly governments with the U.S., there is a real risk that the U.S. may lose some traditional trading partners in the...
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