Washington File (US State Department) | 15 December 2006
U.S. Trade, Investment Deals in Middle East Advance Bolder Goals
Partnerships with U.S. also help regional integration, U.S. officials say
By Jaroslaw Anders
USINFO Staff Writer
Washington - Trade and Investment Framework Agreements (TIFAs) the United States signs with countries in the Middle East and North Africa help realize the vision of a regional free trade area integrated with global economy, U.S. officials say.
TIFAs are “part of a set of tools we are using under the Middle East Free Trade Area initiative [MEFTA] ... to deepen and expand our engagement with key partners in the region, as well as to seek to assist their efforts at economic reform and development,” a U.S. official told USINFO.
Launched by President Bush in 2003, MEFTA aims to support economic reform, promote free trade throughout the region, and diversify and improve the economies of the Middle East to boost their growth. The initiative seeks to establish a free trade area by 2013.
The U.S. administration works to move interested, reform-oriented countries toward MEFTA by a step-by-step process that usually starts with a TIFA. TIFAs provide a forum for senior-level discussions of issues the two countries consider “of importance to their trade and investments relationships,” said the U.S. official, who did not want to be identified.
The United States recently signed such an agreement with Lebanon, adding this country to the list of eight other regional TIFA partners: Algeria, Egypt, Kuwait, Qatar, Saudi Arabia, Tunisia, the United Arab Emirates and Yemen.
According to the office of the U.S. Trade Representative (USTR), TIFAs focus on implementing legal protection for investors, and transparent and efficient trade procedures. The TIFA was instrumental, for example, in convincing Egypt to float its currency, to introduce intellectual property legislation and to establish a Qualifying Industrial Zone (QIZ) with Israel to give goods jointly produced by the two countries duty-free access to U.S. markets, the USTR office said.
Private-sector experts say successful TIFAs should lead to full-fledged bilateral trade treaties, such as free trade agreements (FTAs), which are considered the main building blocks of a future Middle East Free Trade Area. The United States has concluded FTAs with five regional economies: Bahrain, Israel, Jordan, Morocco and, most recently, Oman. It also is negotiating an agreement with the United Arab Emirates. (See related article.)
Jordan, the first Arab country to sign an FTA with the United States in 2001, increased its two-way trade from $301 million in 1999 to $1.9 billion in 2005 and enjoyed a 500 percent increase in direct foreign investment. Jordan estimates that its economy has created more than 45,000 jobs by expanding trade with the United States.
The U.S. official who spoke with USINFO said bilateral agreements with the United States also are enhancing regional economic ties. A number of studies show that the intraregional level of trade in the Middle East is among the lowest in the world.
“Most countries prosper by trading with their neighbors,” the official said. “Part of the goal of MEFTA is to help individual countries in the region to realize their development ambitions and take down barriers with their neighbors.”
There is “a very broad consensus between the United States and our key partners on the mutual benefits that come from that kind of strategy,” the official said. Partnership with the United States works best, he added, “when our partners say, yes, this kind of endeavor ... makes sense in the context of our own domestic programs that we have already taken up for our own reasons.”
The official said the United States has devoted a great deal of effort and resources to MEFTA since the program’s inception in 2003. In his view, this reflects a broad agreement among the U.S. administration, business community and Congress that more trade, more investment and more jobs make the region more stable and prosperous.
“That’s better for everybody: for the U.S. foreign policy in the region and for the region itself,” the official said.