On the road to Arab free trade zone

The Middle East could very well become one big free trade market by 2013. Ramshackle borders could be torn down and the region may become a free market.

But it is no thanks to the believers of Arab unity - one big nation replacing the 22 states in the region. No, it is due to Uncle Sam! The present American administration wants to make the region a free trade area linked to the U.S.

Nobody is yet quite sure how this is going to be done. How is America, thousands of miles away from the Arab world, going achieve this?

Although the U.S.-Middle East Free Trade initiative is yet to receive a big hand from the people of the region, the Bush administration has been upbeat.

U.S. President George W. Bush introduced the idea on May 9 with these words: "Across the globe, free markets and trade have helped to defeat poverty, and taught men and women the habits of liberty. So I propose the establishment of a U.S.-Middle East Free Trade Area within a decade, to bring the Middle East into an expanding circle of opportunity, to provide hope for the people who live in the region."

Robert B. Zoellick, U.S. Trade Representative, who constantly travels back and forth to the region, says: "The President's (Bush) administration is clear. Trade liberalisation and increased economic integration will generate growth, create opportunity and promote security through the Middle East."

Since the region-wide trade idea is a U.S. initiative, it is they who are coming up with the steps and measures to be taken in the Arab world. The idea is to start through the continued establishment of bilateral free trade zones between the countries of the region and the U.S.

Already free trade areas between Jordan, Israel and the U.S. are being supplemented by trade agreements between individual countries such as Egypt, Morocco, and Bahrain. Zoellick says it is important, first of all, to help states of the region become members of the World Trade Organisation and for individual governments to encourage investments and improve their trade.

These are termed in U.S. jargon as "Trade and Investment Framework Agreements" and will be used to "build Free Trade Areas" with the idea of fostering "market liberalisation", "trade liberalisation" and entry into the "global trading system".

On the agenda

Right up to 2013, that is if the idea is still alive as there will likely be successive American administrations, there is going to be a lot of things on the agenda.

These include building a "trade capacity… so countries can benefit from integration into the global trading system", establish a "Middle East finance facility to help small- and medium-sized businesses gain access to capital and generate jobs", reform commercial codes, improve the climate for trade and investment, promote transparency, fight corruption and support financial sector reforms.
America is thinking big with regard to the Middle East.

In the free trade area there is a stress on promoting education by raising the level of literacy especially among women in Morocco and Egypt.

There is also a move towards judicial reforms, media training and introduction of media law projects and support for parliamentarians and civil society institutions.

On paper, this may sound good. But analysts are asking many questions about such a free trade zone that is supposed to improve trade exchange but has social and political trappings as well. The question that keeps coming up time and again is why now, after the war on Iraq, has America suddenly become interested in doing something about the plight of the region.

There is now a movement to get the Middle East peace process on the road. U.S. Secretary of State Colin Powell puts it this way: "We want peace in the region, but with peace you need economic development or the people will not benefit…."

Despite such pronouncements, people and experts in this part of the world feel uneasy about American intentions. Former Egyptian Ambassador Ahmad Taha Mohammad writing in the Cairo-based Al Ahram Arabic daily says there is a new rivalry between Europe and America over the Middle East.

The EU factor

The European Union has been building economic, social and now political association agreements with the countries south of the Mediterranean from the mid-1990s onwards. This is in a bid to strengthen their relations with countries like Morocco, Tunisia, Egypt, Jordan, Israel, Lebanon and Syria.

It is argued America has come to feel a great need to entrench itself further in the Middle East through formal relations to make sure it has a big slice of the pie. Arab analysts are also worried about reintegrating Israel in the area and making it a fully-fledged member of the region, with all the political, economic and cultural relations it entails.

The worry here is that Israel might be "integrated" without granting full rights to the Palestinians. But the Americans will point out they are working on two tracks.

Despite the commercial exchange trade benefits - it is pointed out Jordanian exports to the U.S. increased by 80 per cent since the U.S.-Jordan Free Trade Agreement was signed - Dr Ibrahim Al Essawi in Al Ahram does not see it that way.

He says Arab people will not benefit from a free trade area with the United States because of four main reasons:
A free trade area will increase American hegemony, and make it an even bigger imperialist power; the partnership between both is not equal and, therefore, the strongest power will impose its economic will and competition; it would be wrong to say such an area will increase economic development because it will be based on a free market and the dismantling of the public sector; such an area will act against Arab complementarity and Arab identity.

Zoellick, on the other hand, says if anything, the free trade zone aims at the gradual integration of the Arab world and hence at facilitating duty-free product entry to the U.S.

Needless to say, it will be the same for American products to the Middle East.

It is said $300 million worth of products from the Middle East could be gained from the establishment of a free trade link with the U.S. But one wonders how much it would be for American trade entering the area.

This is also why the whole idea needs to be examined more thoroughly. One final comment by Dr Ibrahim Seif in Ad Dustour, a Jordanian daily, quite simply points out the idea is ambiguous and needs to be cleared before its advantages and disadvantages are seen.