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Mail, Express & Air Cargo Expo : Working together as a region

First discussed by the Arab League over 50 years ago, the Arab Free Trade Agreement (AFTA) calls for the elimination of all tariffs, non-tariff barriers, taxes and other distortions by 2007. It was eventually signed by all partners in 1998 and is set to come into force in 2007—a move that is being welcomed by the majority of leading regional businesses.

A World Economic Forum 2002 report titled Arab World Competitiveness Report, supports this view by concluding that non-tariff barriers such as “red tape”, corruption and other bureaucracy accounted for an additional 10 percent of costs of goods shipped.

Addressing the first World Mail, Express & Air Cargo Expo in Dubai last week, ARAMEX President and CEO Fadi Ghandour called on the Arab logistics industry to play a more active role and increase co-operation in shaping the future of trade in the region.

Currently intra-regional trade is only 8-10 percent of total compared to the EU’s 60 percent. “Regional companies are currently spending the equivalent of around 95 days of labor yearly to resolve customs problems, representing a significant loss and inefficiency. Within the logistics industry we are going to be the largest beneficiaries to trade barriers coming down and therefore we must work together to have a positive contribution to the economic reform process. I am confident that the positive commercial benefits and effects will be immediately felt by the industry and our customers,” said Ghandour. In terms of the significance of the logistics industry’s impact as a result of trade reform, Ghandour made example of one McKinsey study published in early 2005 which estimated that one Asian country could increase GDP by 1.5-2 percent if it reduced its logistics costs by 15-20 percent, and that cutting indirect costs, such as excessive inventory resulting from inefficient supply chains, would account for the bulk of the savings.

In his presentation, “Working Together as a Region”, Ghandour called for the establishment of an industry lobby or think tank that would be concerned with addressing issues of inter-MENA trade, along with the industry’s customs and postal issues. Ghandour recommended that this industry lobby group be launched after publishing a white paper on inter-regional trade and its effects on economic development of the region; an initiative he said both ARAMEX and others would be willing to finance. Ghandour said, “The industry as a whole must work together towards total liberalization without royalties, special taxes or levies, and placing us on a level playing field with postal operators.

There must also be increased transparency in reporting industry numbers such as financial performance, as in the US and other regions—and ARAMEX is willing to be the first to do so. “Only by working together can the Arab World, as a whole, start moving towards realizing and implementing the Arab Free Trade Agreement standards. The Express, Logistics and transportation industry in the region can and should play a leading role in the creation and ultimate success of this trade area,” concluded Ghandour.

Amman,03 21 2005
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