Uniting Arab economies [Archives:2006/999/Business & Economy]
By: Abu Hamood Siddiqui
Arab countries need to link their economies in complementary frameworks if they want to have a stronger business image across the world. As the regional economies boom, it is the right time to evaluate joint economic action and give priority to collective rather than individual country-based interests, writes Abu Hamood. The 18-member Arab Economic and Social Council formed in late 2005, is all set to finalise a strategy for the full implementation of Greater Arab Free Trade Zone.
The Arab League's follow-up committee has recently reviewed ways to formulate the overall structure of Arab Free Trade Zone in order boost economic ties. It comes amid reports that showed overall trade internally within Arab states has increased following involvement of the six-nation Gulf Cooperation Council in free trade zone pacts and the implementation of the GCC Customs Union.
Between 1998 and 2005 internal Arab trade exports jumped from US $14 billion to US $41 billion and imports increased from US $13 billion to US $37 billion. In comparison to total exports by member nations, throughout the seven years Arab internal trade exports increased from 11 percent to nearly 15 percent, while Arab trade imports, when compared to the total imports, increased from under 4 percent to over 8 percent. During the same period, trade exports of food products increased from US $1.82 billion to over US $7 billion and trade exports of petrochemicals increased from US $2.24 billion to juat under US $6 billion.
The Arab League-sponsored study noted that the size of internal trade is determined by a variety of factors, such as commercial conditions, transportation and customs. It added that cross-border trade among member-nations is much smoother than the commerce between geographically distant countries. All these things hint at the acute necessity of a greater free trade zone in the region.
After reviewing these developments, the Secretariat of the Arab League has prepared a framework for a new strategy for joint Arab economic action. This strategy will be presented at the Arab Economic and Social Council meeting, and then it will go to the Arab summit for approval in March. Apart from the full implementation of the Gulf Arab Free Trade Zone the strategy also aims at establishing the Arab Union by 2015 and then the Arab Common Market in 2020.
Although these objectives had always remained among major priorities since the establishment of the Arab League, they had not yet materialised in a practical sense. The Arab League had made several failed attempts over the past 50 years to achieve economic integration. There were the 1957 Agreement on Economic Unity, the 1964 formation of the Arab Common Market, and the 1981 Facilitation and Promotion of Inter-Arab Trade Agreement (the “Facilitation Agreement””).
Geopolitical tensions
