Global Policy Forum

Oman Pact Boosts US Agenda in the Middle East


By Emad Mekay

Inter Press Service
January 21, 2006

The George W. Bush administration is pushing a spate of free trade agreements with its allies in the Middle East that mostly lack input from marginalised local communities or civil society groups. Business groups that are lobbying for such agreements say that the deals will benefit U.S. firms and could provide them with a stable market of almost 350 million Arabs, and 70 billion dollars in trade with the United States.

On Thursday, the United States signed free trade agreement with the small Arab country of Oman, a Sultanate of three million people at the southeastern border of Saudi Arabia. The agreement will have to pass the U.S. Congress later this year.

It is part of the Bush administration's proposal to create a Middle East Free Trade Area (MEFTA), which would link 22 Arab nations, Israel and the United States by 2013. Bush had proposed MEFTA in May 2003 as part of the U.S. response to the Sep. 11, 2001 attacks on New York and Washington.

The deal with Oman, U.S. officials say, includes protection of intellectual property rights and establishes "a predictable and secure legal framework" for U.S. companies in Oman. U.S. businesses cheered the deal and said they want to see more countries open up in the Middle East. Under the terms of the agreement, which could serve as a template for other deals in the region, all consumer and industrial products will immediately become duty-free.

Oman is a likely market for U.S. oil and gas equipment and services, transportation equipment, water, electrical and mechanical equipment and services. U.S. businesses hope that by securing bilateral deals with smaller markets, they can put pressure on more attractive markets like that of Saudi Arabia, now glutted with oil revenues, and of Egypt, with a population of 75 million people.

The U.S.-Middle East Free Trade Coalition, a business lobby group of about 110 U.S. companies, urged immediate Congressional approval of the Oman deal in order to lure further Arab nations into similar deals. "This agreement is a key building block in the president's initiative to build a Middle East Free Trade Area," said Ian Davis of the coalition, which includes compnies such as Boeing, Booz Allen Hamilton, ChevronTexaco, Dow, ExxonMobil, Intel, JR McDermott and Motorola. "Swift Congressional passage of the U.S.-Oman FTA will send an important message to the Arab world that the United States is eager to work with its allies to increase mutually beneficial economic opportunities," said Davis, who is also vice president for international affairs at Occidental Petroleum Corporation.

The National U.S.-Arab Chamber of Commerce (NUSACC), another business group, said that the benefits of the U.S.-Oman FTA will reach both countries, and not just U.S. corporations. "As the economic partnership increases between the two nations, the livelihoods of both the Americans and Omanis will grow, thereby enhancing economic stability and the quality of life," a statement from the NUSACC said.

A free trade agreement between the U.S. and Morocco went into effect on Jan. 1, and a similar agreement with Bahrain was approved by Congress in December and is expected to take force this March. Other MEFTA agreements now exist between the United States and Israel and Jordan.

In U.S.-occupied Iraq, the government there has pledged to open up the country's economy to foreign trade and to implement other neo-liberal economic reforms. For example, foreigners can now own 100 percent of a local business. Washington still has advisers in all Iraqi government departments, including the finance and economy ministries.

On Friday, U.S. Trade Representative Robert Portman said the next agreement with the region will likely be with the United Arab Emirates, perhaps the wealthiest Arab country to agree to talks so far. Egyptian sources tell IPS that Egypt, one of the largest markets in the region, is likely to start talks for an FTA this year.

Washington says its work toward opening the area for U.S. businesses includes assisting in the accession of Saudi Arabia to the World Trade Organisation (WTO). Riyadh participated in the first formal WTO meeting in Hong Kong in December. Washington, by way of lubricating a larger deal, has also signed six Trade and Investment Framework Agreements -- a lighter version of free trade deals -- with Middle Eastern countries, among other initiatives.

However, U.S. free trade negotiations with countries in the region have been conducted largely away from the eyes of trade watchdog groups, which have traditionally monitored such deals and usually opposed them. Few civil society groups exist there, and parliaments are mostly undemocratic, whose members tend to be part of the ruling regimes. International civil society groups cite the political nature of trade deals with Middle Eastern countries for their reluctance to examine their economic effects.

Washington has also used trade as a way to end the Arab boycott of Israel, a nation that still has no relations with many of its neighbours because of its occupation of Arab territories. Generally, international civil society organizations and development groups warn that the benefits of trade deals have been overstated and end up doing more harm than good to developing nations.

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