Oman Daily Observer | 07 December 2006
Oman-US free trade to begin in early 2007
By Ebby Chacko George
MUSCAT — The US-Oman Free Trade Agreement (FTA) is expected to take effect in the first quarter of 2007, offering boundless bilateral trading opportunities, Maqbool bin Ali Sultan, Minister of Commerce and Industry, said yesterday. Both the governments are exerting all efforts to put in place a legal framework to facilitate the implementation of the FTA, he told the Oman-US FTA awareness seminar held at the Oman Chamber of Commerce and Industry (OCCI).
Shaun Donnelly, Assistant US Trade Representative for Europe and Middle East, was present at the seminar attended by over 400 senior representatives of the Sultanate’s corporate sector. The high profile gathering was organised by the US embassy, the Ministry of Commerce and Industry, OCCI and the Omani Centre for Investment Promotion and Export Development (Ociped).
"This is an eventful gathering. We hope to successfully implement the US-Oman FTA in the first quarter of 2007," Maqbool said. "The Sultanate has always pursued a strategy of free economy, facilitating commerce and trade. With Oman’s membership to the World Trade Organisation (WTO) in 2000, the Sultanate’s economy was merged with the world economy. The US-Oman FTA is a natural progression and logical development to achieve tangible economic benefits. This is more than just an agreement.
The FTA will upgrade the role of the private sector, merging the Omani economy with the world economy and achieving the best interests for the Omani economy. There is huge potential in the US economy even as there are various levels of obligations from both sides. Omani exports have gained from all these agreements in the backdrop of the Arab free trade zone and the GCC customs union. To further enhance economic opportunities, Oman is pursuing free trade agreements with various trading blocks, including the European Union, Turkey, China, Japan, India, Pakistan and New Zealand,".
Shaun Donnelly pointed out that the Oman-US FTA will cement economic ties, rising to the levels of the strong security, political and cultural ties existing between the two countries. The FTA will further strengthen these pillars of US-Oman relations, he added. Both the governments are working towards creating a strong framework for the implementation of the FTA, he said, adding that the role of the private sector will determine the success of the agreement.
We must strengthen dialogue and have an understanding of the available opportunities, taking advantage of the situation and working for the future as opportunities abound for creating jobs and boosting trade. Constant dialogue between the two governments will ensure the efficacy of the FTA implementation as annual ministerial meetings will take stock of the situation to make the agreement a success, Donnelly said.
Oman will have incredible advantages from the FTA in terms of preferential access and duty-free access. The US market is huge but also competitive and Omani businessmen must find partners and work to gain from the US and other markets, Donnelly said. The FTA will attract US investment in Oman. These are very exciting times and there will be incredible opportunities for exporting Omani goods and services to the US which is the world’s largest procurement market, Donnelly pointed out.
In 2001 when the US signed an FTA with Jordan, the two-way trade amounted to only $300 million, but it has grown to $2 billion in favour of Jordan. The early results of the FTAs signed with Morocco and Bahrain are also impressive, Donnelly said. Salim bin Said al Ghattami, Chairman of OCCI, said the Sultanate and the US enjoy historical ties, dating back to the visit of Ambassador Ahmed bin No’man al Kaabi, the first Arab leader’s representative to set foot in the US in 1883 when the Treaty of Commerce and Amity was signed between the two countries. Since that time, the Oman-US relations have witnessed developments at all levels, leading to more co-operation and coordination achievements in the fields of trade, economic and investment co-operation.
The US-Oman FTA signed early this year crowned this historic ties. The FTA enjoys a wide support in both the countries, offering a lot of incentives and opportunities to develop and improve business and establish effective partnerships between businessmen, investors and economic establishments. In addition to the big opportunities, which this agreement offers to transfer modern practices and technology, it also provides opportunities to rehabilitate, train and employ manpower, especially in technical industries. The FTA will also facilitate flow of American capital into large economic projects in Oman, Al Ghattami said.
A common effort is required from both sides to channelise its advantages to the private sector, leading to economic diversification, employment of people and attracting investment, transfer of technology and developing tools of management, production and marketing. The FTA will activate the national economy cycle, in addition to employing manpower and promoting quality national products, Al Ghattami added.
Gary A Grappo, US Ambassador to the Sultanate, said ample opportunities await business communities when the US-Oman FTA agreement enters into force. "The FTA is a fitting capstone to a relationship rooted in both trade and shared security interests. The negotiations for this landmark agreement concluded in record time, reflecting that the US highly values the importance of a free trade regime to the betterment of our economies. Our relationship is truly a ’partnership of prosperity’.
The FTA has the potential to usher in a new era in bilateral economic relations. Once the agreement enters into force, 100 per cent of bilateral trade in consumer and industrial products will become duty-free, as will trade in most agricultural goods," Grappo said. In addition to eliminating tariff barriers, the FTA will provide new opportunities in services, a secure and predictable legal framework for investment and streamlined customs procedures to facilitate trade.
There will be substantive legal protections, including the right to equal treatment and due process, the prohibition of placing certain restrictive requirements on investors, and the establishment of an effective, impartial and transparent dispute settlement process. The agreement also commits each government to establish high levels of environmental protection and to ensure that labour standards are consistent, Grappo pointed out.
"With the US president’s signing of the FTA into law and the issuance of His Majesty Sultan Qaboos’s Royal Decree, we are working expeditiously with the Omani government to ensure that the agreement takes effect at the earliest possible time," Grappo said.
Oman’s signing of the FTA comes at a propitious time in its drive to diversify its economy.
The Omani government is moving forward on its plans to invest in a number of important economic diversification projects in which US companies are actively involved. Dow Chemicals is teaming up with the Sultanate to build a petrochemicals complex that will serve as an anchor for the development of Sohar. Bechtel Corporation is constructing the first greenfield smelter in the region in over 25 years for Sohar Aluminium Company, part of an overall $2.2 billion project. Occidental Petroleum, along with its project partners, will invest over $3 billion over the next several years in its development of the Mukhaizna field. US corporations AES and PSEG have actively participated in the Sultanate’s privatisation of power and water generation facilities, while Parsons is consulting on Oman’s transportation infrastructure development, Grappo said.
With Oman aggressively marketing itself as an upscale, environmentally conscious tourist destination, US construction and financial firms such as Turner Construction and Bear Stearns are actively participating in Oman’s resort complex developments. Once completed, these projects will provide numerous opportunities for corporations specialsing in the hotel, restaurant and institutional-management fields and additional US firms will be attracted by the FTA agreement to participate in this promising sector, the US ambassador said.
"The US is the world’s largest single country market where the opportunities are boundless. Oman has embarked on an ambitious diversification programme as it joins only a handful of nations that have concluded FTAs with the US. The high standards that are the hallmark of our FTAs send a clear signal to investors from allover the world that Oman is a prized partner in which to invest and with whom to do business," Grappo said.