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Conference highlights opportunities in the region
The Middle East North Africa (MENA) Council of American Chambers of Commerce held a one-day conference at the Four Seasons Nile Plaza on January 30. The conference, held under the title “MENA: region of opportunities,” included keynote speakers Rachid Mohamed Rachid, Egyptian minister of trade and industry, and his Lebanese counterpart, Sami Haddad. The list of speakers included representatives from various American chambers of commerce from across the Middle East and North Africa, as well as business leaders from throughout the region.
The event was divided into four sessions. The plenary session, “The Middle East North Africa region: prospects for increasing inter-regional trade,” focused on inter-regional trade within the MENA region. Rachid commenced with a hesitant optimism, stating that “the attraction of having a 300 billion population market... with an income of $650 billion on a yearly basis has not been exploited yet.” Haddad voiced similar sentiment, stating that “in retrospect, the MENA region has so far missed on the opportunity to fully exploit global trade as a dynamic and sustainable route for growth.”
Speakers outlined a number of problems facing inter-regional trade. The poor state of transportation from one Arab country to the next was seen as a hurdle to implementation of the Greater Arab Free Trade Agreement (GAFTA). The lack of a unified economic model in the MENA region was also discussed. The speakers agreed, however, that this has been addressed in the past two and a half years, and there is greater convergence of economies in the region. They also noted a shift toward a more market-oriented economy and the increasing number of governments that are concentrating on regional market factors. Nevertheless, the emerging labor force of Arab countries is still focused on local markets, making them ill equipped to join the international trading arena, they said.
Shaun Donnelly, assistant US trade representative for Europe and the Middle East, opened the second session on “Trade and investment frameworks of participating AmChams,” which included representatives of MENA AmChams. Donnelly discussed America’s current push towards free trade agreements in the Middle East as part of Washington’s envisioned pan-Arab FTA. He reiterated and supported Rachid and Haddad’s call for economic integration throughout the region.
The representatives of MENA AmChams each gave a brief description of their respective activities, the obstacles they face and achievements of the past few years. Recurrent issues within the group’s session included the need for more trade agreements with the US and an emphasis on reform.
The third session began with opening remarks from Luna Abbadi, director of the competition directorate at the Jordanian ministry of industry and trade. The session focused on the commercial opportunities in the MENA region and how they can be exploited, particularly by the private sector. Abbadi, who has prior experience with trade agreements, such as the Euro-Jordanian Partnership, expressed her satisfaction with the successful attempts Arab countries have made toward regional economic cooperation.
Naguib Sawiris, CEO of Orascom Telecom, discussed the effect of globalization on the region. He stated that in the not too distant past globalization was perceived by the developing world as “an attempt by the advanced world to invade the market system.” Once this misperception was corrected, however, regional governments realized the need to become more competitive and create open market economies.
While stories of accomplishment were exemplified during the session, they were also critiqued and cited as only the beginning of true international economic victories. Speakers called for liberalization of Arab markets and warned that if governments do not open their markets to the fullest extent they will not be able to compete on an international level and reap the fruits of globalization.
Speakers discussed a number of ways to create a viable regional market that would prosper within the global economy with a focus on benchmarking. It was pointed out that corporations must learn from examples of other economic high fliers. Whether in terms of privatization or methods of management, Arab companies would do well to ascertain the approaches of others, they said.
Mohammed Batainah, CEO of Badr Development in Jordan, discussed Jordan’s highly succesful Aqaba Special Economic Zone (ASEZ). He said that the ASEZ was devised after careful study of successful international models, including American models. The research was adapted to fit the region and proved to be invaluable to the project’s success, he said.
One issue raised throughout the conference was the need to improve inter-regional transportation. One speaker pointed out that the cost of transporting goods from Egypt to the Gulf was about three times more expensive than transporting the same goods from China to the Gulf. Unless this transport issue is addressed, trade growth will be muted.
The final session was on the topic of “The US trade agenda in the MENA region: current status and future,” with guest speaker David A. Sampson, deputy secretary of commerce, US Department of Commerce. Sampson began by congratulating Egypt on its success in expanding its trade relations with all countries, and encouraging it to consider the opportunities to expand trade with the US. “Commerce and industry have a central role to play in helping people achieve a better life and ensuring future stability throughout the Middle East. Business opportunities continue to develop in this region. Long-term partnerships are being formed to further integrate this region into the global economy. The United States wants to be a partner in this process,” he said.
Steps taken by the US to ensure the prosperity of the Arab region in the fiercely competitive global business environment include the establishment of free trade agreements and the Qualifying Industrial Zones (QIZ) Agreement, which have created more than 100,000 jobs in Egypt alone. He said these agreements would help improve the standard of living for the citizens of Arab countries and thus provide opportunity for growth.
Sampson then discussed the critical role of American chambers of commerce throughout the Middle East to encourage and advance economic growth and reform. This reform is needed in order to press forward towards regional and global trade, which will lower prices for consumer goods, create jobs and improve the welfare of people. Each AmCham has played an important role in attaining this objective, he said. The AmCham in Lebanon, for instance, helped initiate the Trade and Investment Framework Agreement (TIFA); the AmCham in Morocco is promoting their FTA; and AmCham Egypt was commended on its promotion and implementation of the QIZ program and the measures that it has taken in ensuring the rapid growth of US-Egypt trade.
The US trade official went on to express his appreciation towards American businesses operating in the region. He specifically mentioned the role of Hewlett Packard, which has supported the Foreign Trade Training Center in Egypt. He spoke of the company as “a superb example of public-private partnership, where the government and the private sector work together towards a positive change.” Other companies mentioned with similar initiatives included Apache, Cisco, Google, Intel, P&G, Microsoft and NCR.
Sampson commended the trend towards freer trade in the Middle East, but pointed out that formidable challenges exist, including a worldwide rise in protectionist sentiments due to a fear of competition. This fear must be eliminated in order to foster economic growth, he said.
The rate of unemployment was also criticized as an obstacle to the region’s aspiration of economic integration into a global economy. A 15-percent unemployment rate was described as too high for a region whose “labor force is going to increase by an estimated 85 percent by 2020.” American chambers must undertake the task, with the cooperation of companies, of creating a business environment that can absorb this work force and enhance their skills in order to compete in the world market.
Sampson concluded his discussion by stating the US recognizes the fact “that a future of shared opportunity and expanding prosperity nurtured by broad economic cooperation is the best strategy for peace, stability and the triumph of hope in the Middle East and throughout the world.”
A question and answer session followed in which he addressed the importance of FTAs in the region and the prerequisites for such agreements to take place. Additional topics discussed included US relations with China and other emerging markets, including India.
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