Pumping for Mideast business
Forbes.com
Pumping For Mideast Business
Matthew Swibel, 01.19.05, 6:00 AM ET
As President George W. Bush’s inaugural motorcade passes the U.S. Capitol tomorrow, several groups will stage dramatic protests to call attention to the soldiers dying in Iraq. One group even plans to carry 1,000 coffins draped in black.
Yet while the media and the public focus on the deadly turmoil in Iraq, business lobbyists have turned their attention to another side of the fragile Middle East region.
Following up on the Bush Administration’s call for a Middle East Free Trade Area that would "embrace and encourage reformers across the region," these businesses want Bush to sign and implement free trade agreements with Oman, the United Arab Emirates and Bahrain as one of his first post-inauguration tasks.
Aerospace giant Boeing; oil and chemical heavyweights Dow Chemical, ChevronTexaco and Exxon Mobil; and technology firms Motorola and Intel are among those corporations that have been urging congressional approval of a Bahrain free trade agreement, signed in 2004. They also want to see deals signed with Oman and the UAE. (Exxon and Chevron have both donated $250,000 to the 2005 presidential Inaugural Committee; Boeing gave $100,000.)
And just days before the inauguration, the powerful and well-connected Pharmaceutical Researchers and Manufacturers of America weighed in on the issue too, saying a trade agreement with Oman would provide life-saving medicines to the region and protect intellectual property standards that make new drug R&D possible. Susan Kling Finston, PhRMA’s associate vice president for Middle East/North African affairs, adds, "The standards will promote an attractive environment for foreign investment."
True, U.S. exports to Oman totaled just $323 million in 2003—half the amount exported to Haiti. But trade agreements would spur increased exports and stimulate investment in a strategic, if not tiny, regional market. To get a bigger slice of the multibillion-dollar construction pie in Lebanon, Qatar, Oman and the UAE these days, the Association of Equipment Manufacturers has been clamoring for expanded trade agreements in the Gulf. The group represents Caterpillar, Gehl and Astec Industries, among others.
The UAE, home to the third-busiest port in the world and an $8 billion customer of U.S. defense weapons, wants its own deal completed in Bush’s second term. Last week, CMS Energy testified before officials at the United States trade representative’s office in favor of a UAE trade agreement. Easy to see why: The UAE’s soaring demand for electric power bodes well for CMS, which owns 40% of an $800 million independent water and power co-generation plant in that Arab state.
So who would object to more Middle East trade deals? None other than Saudi Arabia, whose ruling family enjoys a solid relationship with Bush. Saudi Arabia, where most of the world’s oil reserves sit, gave Bahrain the cold shoulder when it signed a free trade agreement with the U.S. in September 2004 (it won’t be implemented until Congress approves it). Two-way trade amounted to $887 million in 2003, with 57% of the total representing exports to Bahrain, the unofficial financial hub of the Gulf region. The trade agreement would allow 100% of U.S .consumer and industrial exports and 81% of farm produce to enter Bahrain duty-free.
The Saudis contend that free trade deals with the U.S. could undermine efforts to promote greater regional cooperation, since the six-member Gulf Cooperation Council’s rules state that all imports from outside the group should incur a 5% import tariff. Saudi Foreign Minister Prince Saud al-Faisal has publicly expressed his worries that when GCC members sign bilateral deals separately with international powers, the required teamwork spirit is violated.
