NBD outlines major US objectives of FTAs
BY A STAFF REPORTER
28 July 2005
DUBAI - National Bank of Dubai in a report outlined the US main objectives from regional trade agreements, the Free Trade Agreements (FTAs).
In March 2005, the US and the UAE began negotiations on a free trade area with goal of eliminating tariffs and non-tariff barriers and expanding trade in both goods and services between the 2 countries. The UAE is the third largest US trading partner in the region (US exports to the UAE in 2004 were $4.1 billion and its imports were $1.1 billion).
From the US perspective, these FTAs provide a key step towards the creation of a Middle East Free Trade Area, a key US objective. Each negotiation is a separate bilateral negotiation with the United States.
The US FTAs in the Arab region complement the 9/11 Commission Report recommendation urging the United States to expand trade with the countries in the region as a way to encourage development, more open societies and opportunities for people to improve the lives of their families.
The key negotiating objectives of the US include a far-reaching agreement on investment that would ensure high levels of protection for US investors, including protection related to national treatment and most-favoured nation treatment, expropriations, fair and equitable treatment, full protection and security, the free transfer of capital, and no performance requirement. This includes the requirements under UAE Commercial Agencies Law (Federal Law No 18 of 1981, as amended) that establish foreign ownership limitations on business operations in the UAE (outside the free trade zone). Significant limitations on land ownership and land transfer by foreigners. A discriminatory tax regime that burdens foreign banks.
Another objective is the liberalisation of services activities. This includes the elimination of barriers to entry and establishment, operation and cross border services. Here, the US will probably follow a negative list approach adopted in recent US FTAs with very limited non-conforming measures to ensure significant market opening throughout all key services sectors, as well as substantial commitments on the establishment and protection of foreign investment.