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US, UAE postpone free-trade talks amid ports row


US, UAE postpone free-trade talks amid ports row

Saturday 11 March 2006

By Doug Palmer

WASHINGTON, March 10 (Reuters) - The United States and United Arab Emirates postponed their next round of free-trade talks, the two countries said on Friday, a day after a Dubai state-owned company said it would sell U.S. port management operations to calm a political furor.

Lawmakers, who saw Dubai Ports World’s acquisition of terminal operation rights at major U.S. ports as a potential national security threat, had been pushing to block the deal.

The United States and the UAE have been working on a free- trade pact since March 2005 and their fifth round of talks had been scheduled for next week in Abu Dhabi.

"In order to get an agreement that both sides can successfully implement, we need additional time to prepare for the next round of negotiations," said Neena Moorjani, a spokeswoman for the U.S. Trade Representative’s office.

U.S. Commerce Secretary Carlos Gutierrez said delays were not uncommon in trade talks.

"We do want to get back on track. The UAE is a very important strategic partner. In order to win the war on terror we need moderate Arab nations. So we need to explain why there is so much concern, why the Congress was concerned about this deal," Gutierrez told Bloomberg television.

Reem Al-Hashimy, the UAE’s commercial attache in Washington, told CNN the delay was only a minor one and some negotiations would continue by phone and video links.

"I believe the (UAE-U.S.) relationship will continue to be strong because relationships that matter don’t crumble at the first bumpy ride," she said.

David Hamod, president of the National U.S.-Arab Chamber of Commerce, said it would have been difficult for the two sides to hold formal talks while the issue was so hot.

"I think both sides agreed that they needed a little period of cooling off. ... This was not the most conducive environment to talk about free trade in light of the strong protectionist message coming out of the U.S. Congress," Hamod said.

Trade between the United States and UAE amounted to $10 billion in 2005, making it the third-largest U.S. trading partner in the Middle East behind Israel and Saudi Arabia.

The proposed trade deal is part of a broader U.S. effort to craft a regional free-trade zone in the Middle East by 2013. The United States already has free-trade pacts with Israel, Jordan, Morocco and Bahrain. Congress is expected to vote this year on an agreement with UAE’s neighbor, Oman.

Bill Reinsch, president of the National Foreign Trade Council, said the ports episode would make it harder for Bush to accomplish his goals in the Middle East.

"The message is that we’re not distinguishing between countries that help us in the war on terrorism and countries that don’t. So the obvious question is why cooperate with the United States, if we’re going to treat you as a terrorist anyway?" Reinsch said.

U.S. Treasury Secretary John Snow told CNBC television that the Dubai Ports drama was an isolated case and insisted the United States was still "open for business."

While some in the region expressed anger over what they saw as a decision forced on Dubai Ports World, Cathy Novelli, former chief U.S. negotiator for the UAE talks, said she thought the two countries would get past the episode.

"This is one very unfortunate incident and that should not be the determining factor in a very robust overall economic relationship," Novelli said. But "I think it’s very understandable that this would upsetting to them."

(Additional reporting by David Lawder and Susan Cornwell)

 source: Reuters