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French Version

Arab states must address obstacles to trade

Nontariff barriers, bureaucratic procedures, high cost of transport and limited economic diversifications are among the main problems Arab countries should tackle in order to improve inter-Arab trade, a senior ESCWA official said Wednesday. "The Arab states should take more action on all fronts if they wanted to enhance economic integration in the region," said Nazem Abdullah, the director of Globalization Management and Regional Integration at the Economic and Social Commission for Western Asia.

He added that globalization and regional integration indicators saw some improvement in the Middle East in 2004.

"But these indicators are still low and Arab countries are still suffering from a weak link to the global economy," Abdullah said.

Comparing statistics between 2003 and 2004, Abdullah said there was an improvement in the number of tourists coming to the Arab world.

The Arab share in the number of tourists rose from 4.4 percent to 5.8 percent globally.

Revenues from tourism also surged from 2.7 percent to 3.1 percent while foreign direct investment (FDI) in 2004 rose to 1.9 percent from 1.5 percent in 2003.

But the Arab contribution to world trade volume in 2004 remained at 3.5 percent.

According to Abdullah, oil still represents the main source of income for many of the Arab states.

He added that in 2004, Arab oil production reached 22.3 million barrels a day or 31 percent of the global production compared to 19.2 million in 2003, or 26 percent of the world output.

The high demand for oil was triggered by the tremendous growth in many emerging markets such as China and India.

Oil prices reached $70 at one point during the Iraq war before falling to $61 and $62 now.

In an attempt to diversify their sources of income, many Arab states joined the World Trade Organization (WTO).

Saudi Arabia became the 12th Arab country to join the WTO and many countries like Lebanon are waiting their turn to join the organization.

Inter Arab investments in 2004 represents 48 percent from total FDI influx into the region compared to 40 percent in 2003.

In addition, Inter Arab trade rose to $57.4 billion in 2004 from $41.1 billion in 2003, an increase of 8.8 percent.

Abdullah noted that despite the GDP growth in Arab world in 2004, the Arab economy still lags behind other countries in the world in terms of GDP ratios.

He added that Arab GDP reached $864.5 billion in 2004 or 2.1 percent only of the entire global economy.

The population of the Arab world now stands at 305.6 million or 4.8 percent of the world population.

Many economists say that Arab governments have not yet implemented economic reforms and privatization program.

They added that some of the Arab states are still too afraid to open up their economies.

Some critics say the unstable political situations in some Arab countries and lack of proper laws to protect investments have induced many Arab firms to keep their massive assets in the U.S. and Europe.

Beirut,03 06 2006
Osama Habib
The Daily Star
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