Thanks to steady increases, the six economies of the Gulf Cooperation Council (GCC) have succeeded in reversing the balance to their advantage in 2011 with regard to doing business with the US.

Calculating statistics released by the US Census Bureau, this writer feels that the GCC has collectively enjoyed a $10 billion (Dh36 billion) net trade balance in goods in 2011. By comparison, the US recorded a tiny $500 million trade surplus in 2010.

The shortage with the GCC is insignificant by American standards, having sustained a deficit of $737 billion in goods trade last year.

In fact, the GCC countries accounted for a mere 1.4 per cent of total US deficit in goods.

In contrast, China accounted for a hefty $296 billion or 40 per cent of the US's trade deficit in the same year.

The deficit would have been worse but for the rise in US exports to the UAE, which grew by a notable $4.2 billion to $15.9 billion in 2011. The development partly reflects the steady rise in exports of American transportation equipment.

In reality, the UAE stands out among fellow GCC countries by being home to four airlines, namely Emirates, Etihad, Air Arabia and flydubai.

Interestingly enough, the GCC countries were divided equally with regard to having surpluses and deficits in their trade relations with the US in 2011.

At $13.5 billion, the US recorded the highest trade surplus with the UAE than with any other GCC state. This is extraordinary as the UAE is a key exporter of crude in the world, yet open for imports.

The size of the UAE's trade with the US is second only to that of Saudi Arabia in the GCC.

In reality, US-Saudi Arabia trade amounted to $62.3 billion in 2011, an increase of 42 per cent in a span of a single year.

The Saudi side enjoyed a $33.6 billion surplus on the back of rising exports by a notable $16 billion.

The development chiefly reflects growing exports of crude oil from the kingdom to the US with oil prices remaining steady.

More specifically, the increased net imports of petroleum products accounted for about two-thirds of the growth of the US trade shortage in goods last year.

Heavily dependent

This phenomenon serves to prove that the US remains heavily dependent on imported oil and refined petroleum products despite all the talk of efficiency in the use of energy and home-grown options.

Not surprisingly, Saudi Arabia plays a key role in trade between the US and the Arab world.

As such, trade between the US and Saudi Arabia accounted for 40 per cent of total US trade with all Arab states last year.

The two-way trade between the US and all Arab countries stood at $153 billion in 2011, up from $119 billion in 2010. Saudi Arabia enjoys numerous qualities such as being the largest Arab economy, boasting GDP of $577 billion, as well as serving as the largest oil exporter in the world.

Trade imbalance

It remains to be seen whether or not the US would press for concluding a Trade and Investment Cooperation Agreement or (TICA) with the GCC bloc if only to offset the trade imbalance.

At the moment, the US has separate free trade agreements (FTAs) with Bahrain and Oman. However, the two FTAs were meant to provide the two smallest GCC economies access to the US economy.

Certainly, TICA would serve in enticing investments from wealthy GCC economies currently enjoying windfalls of oil revenues, and the US has to exert efforts for that to happen.

 

The writer is a Member of Parliament in Bahrain.