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American exports to Arab world expected to rise by a third in 2007

Propelled by the dollar's depreciation and high international oil prices last year, US exports to the Arab world are expected to increase by more than a third in 2007 to reach $45 billion, said a March report released by the US-Arab Chamber of Commerce (NUCACC).


Excess liquidity from record energy prices in 2006 trickled down to most of the MENA region, spurring development projects, boosting consumer spending, and increasing demand for US-manufactured civilian aircraft and military and border security systems, especially in oil-producing countries.

The total value of Arab-US defense contracts, if exercised, will exceed $16 billion in hardware and services over the next three years, according to figures from the US Defense Security Cooperation Agency.

Due to the dollar's decline in relation to the euro, sales of US merchandise in the Middle East topped $35 billion last year - up 28 percent from 2005 - allowing America to increase its regional market share in relation to European and Asian competitors.

"The bottom line is the Arab world remains one of the best US export markets," said NUCACC president David Hamod.

"If US firms generate $45 billion in merchandise exports to the region, as expected, that will sustain at least 364,000 direct and indirect US manufacturing jobs at a time of growing economic uncertainty in the US," said NUCACC. The study made no mention of what impact increased US imports would have on the manufacturing sectors of its various Arab trading partners.

Of the 22 countries in the report, the UAE, which is expected to import $14.75 billion of US products in 2007 compared to almost $12 billion in 2006, is America's biggest regional trading partner, while Palestine falls to the bottom, thanks no-doubt to the crippling embargo on the Hamas-led government.

But NUCACC did note a trend it called the "FTA (Free Trade Agreement) Effect" in the four nations America signed bilateral trade agreements with in 2006, Jordan, Bahrain, Morocco, and Oman. Trade between the US and "FTA-Arab countries" rose 32 percent last year, compared to an average of 24 percent for "non-FTA Arab countries."

The four nations accounted for 6 percent of total US-Arab trade volume in 2006,

"The FTA effect hinges on confidence: the perception is that in signing FTAs with the US, these nations are holding themselves to higher investment standards than ever before, which is attracting traders and investors who want to increase business with the US and by extension these nations," the report says.

Heightened anti-American sentiment in Lebanon notwithstanding, US exports are expected to rise from $93 million in 2006 to $99 million this year, increasing America's share in the country's $6 billion import market to 16 percent.

American products are more appealing to local manufacturers in 2007 than ever before since they are an average of 30 percent less expensive than comparable European imports, giving the US a leg up on Lebanon's other main trading partner Italy, according to Arslan Sinno, the Vice President of the Lebanese American Chamber of Commerce.

Five particularly promising US "export opportunities" in Lebanon in 2007 are identified in the report: nuts, logs and lumber, textiles and household goods; newsprint; and soybeans.

Inferior Syrian imports now dominate Lebanon's nut market thanks to two bilateral trade agreements enacted before 2005, which essentially amounted to government protection for another country's industry.

"Lebanon and Syria signed a bilateral agreement exempting all Syrian imports from customs duties, and imposed a separate 70 percent import duty on imported nuts," explained Sinno.

"We've been lobbying for a long time to have customs on nuts repealed, but its not easy to change a bilateral agreement. It would be beneficial if we could access American nuts which are better quality and cheaper."

Lebanon and Egypt were the only countries in the survey to see a dip in consumer confidence in 2006, says NUCACC.

Marseille,03 26 2007
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