businesstoday | 10 June 2006
The politics of business
David Hamod, president and CEO of the National US Arab Chamber of Commerce, speaks about US-Arab trade relations
BusinessToday: What role does the National US Arab Chamber of Commerce (NUSACC) play in promoting trade relations between the Arab states and the US?
HAMOD: We are the only chamber of commerce (from the Middle East) in the US, which is recognised by the Arab Chamber of Commerce in Beirut, so this gives us a unique position. We lead a number of trade delegations to the US every year. We received 30 delegations from the region last year. We have played an important role in promoting Free Trade Agreements (FTAs) between the US and Morocco, the US and Bahrain and now between the US and Oman. We are an official joint chamber of commerce with sister organizations in 22 countries in the Middle East. We work closely with the US Chamber of Commerce. And we are increasingly recognised as the best resource to understand the Arab world from a business point of view.
BusinessToday: Regarding the FTA between Oman and the US, there were some concerns in the US about the labour laws here. Will this have an impact on the ratification process?
HAMOD: The two countries have come a long way. Oman moved faster than any other country in the region on FTA largely due to the sultanate’s good institutions. The ball is now in the court of the US Congress as it is pending ratification. Regarding concerns about labour laws, in my experience in every FTA that the US signs, labour issues always come up. Oman has articulated its side very well at the highest levels in the US and I do not see it as a problem area in the long run. On the other hand, since the FTA has come up in an election year and the attendant posturing that goes along with it, it may take some time. We saw an example of this posturing in the Dubai Ports World (DPW) case and would see some of it in the case of the Oman-US FTA also, though not anywhere near that scale.
BusinessToday: How do you see the DPW case impacting trade relations between the US and the Middle East?
HAMOD: The DPW fiasco is a big setback to US-Arab commercial relations. The September 11 attacks started the downslide, and a number of issues that have surfaced since then have complicated commercial relations between the two. The DPW episode sent the wrong message to foreign investors. The message was that, if you want to acquire companies in the US, you have to be prepared to deal with domestic American processes. And most investors do not have an interest in getting into legal tangles. Investors also like to see consistency and transparency in policy. In the DPW case, the rules changed midway. It highlighted the double standards of the US Congress. Just because the purchase was being made by an Arab country, the deal got much more scrutiny than usual. There are companies from Denmark and Singapore, which run ports in the US, but they have never been put through the same scrutiny. So while the US asks other countries to keep its borders open for capital, goods and services, it itself is practising prot-ectionism and xenophobic policies.
BusinessToday: Given such a scenario, is there realistic trade potential between the Arab countries and the US in non-oil sectors?
HAMOD: There is great potential and people are keen to do business with the US and Arab countries.
According to our forecasts, we expect US exports to the Arab countries to grow by 40 per cent in 2006. The economic conditions in the region are right. With oil prices remaining high, there is a lot of discretionary income available at the disposal of governments in the Middle East. And unlike the 1970s, most governments are investing this money in large-scale projects. This is being done in the right manner with feasibility studies about the potential impact of such investments. Governments need to put in more energy and resources in training, job creation and education, as these are surely the best investments in people. I see this happening in Oman and find it encouraging. The education rate in the sultanate is high across gender, which would translate into a better qualified workforce.
BusinessToday: Can you identify the sectors that hold the biggest promise as far as the US-Arab business relations are concerned?
HAMOD: Financial services, healthcare, const-ruction and engineering, ICT (information, communication, technology) and tourism are the sectors which have great potential. For example, take construction. While the US companies may not be in a position to compete with companies in the Middle East on labour costs, US companies still provide the best proj-ect management in the world and this is a skill those companies in the region need. Tourism is another area that holds great promise. There has been a ten-fold increase in the number of tourists coming to the US from Arab countries in the last couple of years. In the long run, I think Oman has much more to offer tourists than Dubai because of its history, culture and natural beauty. Oman is building the finest hotels and leisure facilities. The sultanate also offers the best quality of life compared to any other country in the Arab world.
BusinessToday: What are the factors that have an impact on US-Arab relations and what needs to be done to strengthen these ties?
HAMOD: There is a greater awareness in the US about the Arab world and market opportunities in the Middle East. We see US universities and hospitals being established in the region. There is also a greater receptivity towards US institutions and the English language. In spite of this, stereotypes about the Middle East (which are no longer valid) are still strong in the US. The way to overcome this is to send more Arab students and Arab tourists to the US and vice versa so that people-to-people contacts are established and these negative perceptions are dispelled.
BusinessToday: Tell us something about your professional and educational background and your association with the Middle East.
HAMOD: I have been coming to the region as a businessman for the last 20 years. Two years ago, NUSACC approached me to serve as its president and CEO. I accepted the position as this was a crucial period for US-Arab relations (in the aftermath of September 11 attacks) and it was essential for the chamber to have a leadership that has roots in the US and the Arab world. As I am a third generation American of Arab descent, I fit that description.
Graduate in International Relations and Economics from Johns Hopkins University
Undergraduate from the University of Iowa and the American University at Cairo
Fellowship from Yale University
Worked with IBM, Overseas Private Investment Corporation and Brookings Institute
Started Intercom (a technology consultancy firm) in 1988
By Mayank Singh