Increasing intra-Arab trade vital for region

Some, but not all proposals emerging out of last week's Arab economic summit, are viable. Kuwait hosted the Arab Economic, Development and Social Summit, only the second of its kind (Amman, the capital of Jordan, hosted the first such meeting back in 1980).

The proposal to establish a rail link among Arab states could be regarded as wishful thinking. The 22-member of the Arab League are spread over two continents, namely Asia and Africa. Also, the distance between some states, such as that between Morocco and Iraq is exceptionally long.

Still, the proposal of making Arab countries more dependent for their food is somehow but not fully a realistic one. True, some Arab countries have potential when it comes to farmlands but lack the necessary political stability to attract investments. This is particularly true of the Sudan, the largest Arab country in terms of area. The UAE stands out for purchasing 70,000 acres of arable land in Sudan to develop products for its home market.

Yet, Sudan faces rivalry from other countries. Pakistan continues to promote its agriculture potential to Gulf Cooperation Council (GCC) countries seeking to diversify food imports. Still, Pakistan has reportedly offered Saudi Arabia huge tracts of agricultural land in return for oil. Asian countries such as Thailand and the Philippines have joined the bandwagon of attracting GCC investments in farmlands.

On the other hand, the proposal of commencing a customs union in 2010 and completing the project in 2015 is a worthwhile one. The idea provides members ample time to adapt their economies to requirements of customs union status. The project should serve the goal of making Arab states more interdependent on each in their trading activities.

Now trading amongst Arab states is limited, hovering around 12 per cent of their total foreign trade. Still, most of this inter-Arab trade takes place among GCC states. In turn, the statistics partly reflect growing economic integration within the GCC by virtue of implementing a customs union project from 2003. The agreement requires adoption of a common external trade policy with non-members. Also, the GCC started the common market status in 2008, which in turn allows for unrestricted access for factors of production to move around the member states.

Several factors explain the low level of trading among Arab countries. One such hurdle is geography, requiring dependence on air rather than port logistics.

Still, air links amongst Arab countries are not necessarily frequent or direct.

In fact, airlines of the Gulf are now helping to strengthen air links amongst Arab nations, notably such carriers as Emirates, Etihad, Saudi Arabian Airlines and Qatar Airways.

The trouble is that countries have their own different challenges requiring unique solutions. This is exemplified by the push of Arab counties for signing free trade agreements (FTA) with the US. At the moment, the US has separate FTAs with Jordan, Morocco, Bahrain and Oman.

Individual Arab countries cannot be blamed for taking unilateral decisions to secure accords with the US.

These countries desire to get access to the vast American economy to help solving their problems, such as unemployment.

The GDP of the US amounts to $14 trillion, undoubtedly the largest in the world.

Increasing intra-Arab trade from 12 to 20 per cent requires doing away with non-tariff problems such as bureaucracy and unnecessary paperwork. This was the message of private sector investors meeting in Kuwait on the sidelines of the summit. Additionally, private sector investors are right to demand involvement in decision-making processes dealing with economic issues.

- The writer is a Member of Parliament in Bahrain.