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US-Oman free trade agreement: Potential economy-wide and selected sectoral effects

US International Trade Commission

Publication number: 3837

Report title: U.S.-Oman Free Trade Agreement: Potential Economy-wide and Selected Sectoral Effects

Investigation number: TA-2104-19

Author’s name(s): Robert Wallace, Laura Bloodgood, Heidi Colby-Oizumi, Eric Forden, Cynthia Foreso, Christopher Johnson, Katherine Linton, Deborah McNay, Bill Lipovsky, Eric Land, Kimberlie Freund, Jennifer Baumert, William Chadwick, Dennis Luther, Lisa Alejandro-Ferens, David Ingersoll, Jan Summers, Donnette Rimmer, Nannette Christ, William Deese, William Powers

Date published: February 2006

Report description/Introductory text: The free trade agreement (FTA) between the United States and Oman will likely spur U.S. trade with Oman in goods and services by eliminating tariff and nontariff barriers. Under the market access provisions of the FTA, the United States and Oman will provide each other immediate duty-free access for tariff lines covering almost all consumer and industrial goods and 87 percent of all agricultural tariff lines; both countries will phase out all tariffs on the remaining eligible goods within 10 years. The FTA contains trade facilitation measures designed to expedite the movement of goods and the provision of services between Oman and the United States; investment provisions intended to strengthen protections for U.S. investors operating in Oman; and provisions on safeguards, intellectual property rights, government procurement, labor, environment, and dispute settlement to improve the regulatory climate for bilateral trade and investment.

The expected growth in U.S. trade with Oman under the FTA would likely have a small but positive impact on the U.S. economy, with the benefits moderated by the relatively small size of Oman’s economy and Oman’s share of total U.S. trade. The majority of U.S. imports from Oman already enter duty-free or at low tariffs, while most U.S. exports to Oman face a tariff of 5 percent ad valorem. The elimination of U.S. tariffs under the FTA would likely have the greatest effect on U.S. imports of apparel from Oman, albeit from a small and diminished 2005 base. As such, the expected increase in U.S. apparel imports from Oman would likely be small in absolute value and quantity terms, and the resulting increased annual level of U.S. apparel imports from Oman would likely remain below the 2004 level of U.S. apparel imports from Oman. Most of the expected increase in U.S. apparel imports from Oman would likely displace U.S. apparel imports from other countries, rather than domestic production, and thus have almost no effect on U.S. industry. The FTA would also increase opportunities for U.S. exports to Oman, which would eliminate tariffs immediately on U.S. products that accounted for 91 percent of U.S. exports to Oman in 2004.

U.S. bilateral merchandise trade with Oman in 2004 totaled $736 million, representing less than 0.5 percent of total U.S. trade. U.S. exports to Oman totaled $314 million and consisted mainly of motor vehicles, machinery, measuring instruments, and related goods; U.S. imports from Oman were $422 million and consisted mostly of energy and apparel products.

Keywords (Metadata): FTA, free trade agreement, Oman, tariffs, nontariff barriers, tariff liberalization, imports, exports, trade, intellectual property rights, foreign investment, service industries, apparel, insurance, banking, telecommunications, technical barriers to trade, trade facilitation

Countries: Oman and Bahrain

HTS numbers: 61 and 62

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 source: ITC