CAIRO: Secretary General of the Council for Arab Economic Unity (CAEU) Ahmed Goueli announced at the People’s Assembly last week that inter-Arab trade in 2006 reached $85 billion, similar to 2005 estimates. The figure represents approximately 11 percent of total trade, a modest boost from the 8 percent recorded in past years, though oil trade partly accounts for the increase.
He also said Arab nations import 90 percent of their needs.
“Of course trade is increasing over the years, counselor Hamdy Abdel-Alim from the CAEU told The Daily Star Egypt, largely crediting the Arab Free Trade Agreement (Afta) for the improvements.
An Afta, signed in 1981 under the auspices of the Arab League, was implemented in 1998 with a gradual dismantling of customs. It was fully ratified in Jan. 2005, with the abolishment of most tariffs for its 17 member countries and the facilitation of some trade processes.
However Abdel-Alim says inter-Arab trade must advance: “More than this is expected. At the same time, he noted the importance of attracting Foreign Direct Investment.
Chairman of the Economic Department at the Al Ahram Center for Political and Strategic Studies Abdel Fattah El Gibaly disagrees that the Afta has been successful.
“I doubt it [AFTA] has made a difference, he says. “Arab countries have the same shortages in similar products, explains El Gibaly. Lack of crop diversification is one problem for the region, for example, due to similar weather patterns.
El Gibaly adds that Arab countries have “negative lists, including products such as engineering products, petrochemicals and food commodities, which they will not import from other Arab countries out of fear of competition, unlike with Western imports, which are priced significantly higher.
He suggests that canceling the negative list would boost trade. “If they communicated more, trade could improve.
Goueli of the CAEU was quoted in a Business Today article last year as suggesting that customs were not the only obstacle to trade, saying that “bureaucracy remains a major problem and sometimes discourages entrepreneurs before they even start.
Another obstacle he cited was the inadequate transportation sector, in need of liberalization to complement the Afta reforms.
To increase inter-Arab trade further, a customs union is scheduled for 2008 and a common market for 2020.