Press Releases
U.S. – UAE Free Trade Agreement Press Conference
Press Round Table with Catherine Novelli, Assistant U. S. Trade Representative
Abu Dhabi, United Arab Emirates
March 8, 2005
A/USTR Novelli
Thank you all for being here. I wanted to take this opportunity to meet with you and explain to you our perspective on how we see the Free Trade Agreement negotiations.
Today's the opening round, which is really a continuation of the dialogue that we have been having between ourselves and the Emirates for over a year, through the Trade and Investment Framework Agreement process, or TIFA process, and in the course of that discussion it became very clear to us that we and the leadership here in the Emirates have a shared vision that open markets are the way to bring prosperity to all people. And so, building on that shared vision, it seemed to us a logical next step to move toward a Free Trade Agreement with the Emirates, and we are especially happy to be here. We see the Emirates as a leader in this region, and the policies that the leadership have taken here and their vision of having open markets, the success that occurred here with the free trade zones, I think is a good example of what open markets can do to create jobs, to create prosperity, to bring investment, to enhance a base of technology.
We know that these things work and have results. Our very first Free Trade Agreement that we did with an Arab country, was with Jordan, came into force in 2000, and when we started negotiating that agreement, Jordan exported only eleven million dollars worth of goods to the U.S. Last year after the Free Trade Agreement, it exported one point two billion, that's quite a jump. The U.S. is now the largest export destination for Jordan, and the Jordanians estimate that forty thousand jobs have been created in Jordan because of the agreement.
At the time when we negotiated the FTA there were some concerns in Jordan that were expressed that maybe, with the U.S. being such a big country that small and medium business would be somehow disadvantaged, or that U.S. companies would come in and put them out of business and I'm happy to say that there's been zero job loss in Jordan as a result of this. As I said, a huge job creation. And in fact what's happened is that those businesses and those entrepreneurs have developed whole new areas of commerce that never existed before, to service this burgeoning export that has been occurring.
Also in the intellectual property area, where very high standards were agreed to, this has spurred investment by research pharmaceutical companies, and has created a lot of jobs. Jordan exported thirty percent more pharmaceuticals produced by local firms last year than it had before, so its exports are increasing. It's also opened a whole new sector of clinical trials for its scientists where they can take part in things regionally that they had not before, as well as created incentives for medical tourism, so there are a number of specific and concrete benefits there.
Now obviously the Emirates has a very different economic base, and it's a much larger economy, so what we would expect is that there are exponentially larger benefits to be gained here.
And even in the Foreign Direct Investment (FDI) again, just to go back to the Jordan statistics, when we started negotiating the FTA overall FDI, not just from the US, in Jordan was only six hundred and twenty seven million dollars, which is not very much. Today, in 2002 when it has increased more, it's two point four billion.
So I think that the point is that there's exponential increases that the FTA can bring. The FTA is a statement that the Emirates is committed to having open markets, not just for today, but for the future, and that the business climate here is one of openness and that that's what the Emirates is committed to. And that will draw more investment. The UAE is already a place where a lot of investment is coming in and I think it will make a statement, not just to US companies, but to global companies who want to know what is the scene here. What we have found with our other FTAs is that it's almost like a publicity of what's really going on here already, and we look at this as a true partnership between ourselves and the Emirates. The FTA is a part of the vision of this leadership, and the vision of our leadership. And eventually there would be free trade region-wide in the Middle East. And that is what we are looking towards. So I'll stop there and just take questions.
Question: Sharq Al-Awsat
There are some people here who are wary of the political price that might be paid for such an agreement. Is there any political price for the agreement with the Emirates or any other countries in the area? Is there any demand to change some of the laws in the Emirates? …you aware that some laws are criticized by the media in the United States.
Answer: A/USTR Novelli
Well first of all in terms of political price, if what you mean by that is are there political conditions that are attached, no there are not. This is an economic agreement. It obviously builds on the overall relationship that we have with the Emirates, and we have an excellent relationship. We have a very strong and vibrant relationship politically and militarily, and this link has been developed in the private sector, but now we can have a government to government agreement on the economic side as well, and so that's what we look at this as, as completing the very excellent relationship that we already have.
In terms of your question about laws that need to be changed, we negotiate an agreement where we guarantee that there will be markets open in the US for goods, for services, for government procurement, for high standards for intellectual property. It is a reciprocal agreement so we're guaranteeing that to each other. Obviously we have to look, at ourselves in the US to see if there are laws that we need to change, and we present those changes to our Congress for them to vote on when we vote on the whole agreement, and we do have to change some of our laws in order to maintain this heightened level of openness. It will be for the Emiratis to analyze their own legal system to figure out whether there's anything that needs to be changed here. I wouldn't pretend to be an expert on Emirati law, so...
Question: WAM
Post September 11 there's a lot of constraints on people moving and traveling up and down, so this particular agreement, would it probably facilitate ... or entitle more businessmen from this end to go , would you ease so that people are not subjected to a lot of inconvenience, which is what is putting most people off from coming to the US now.
Answer: A/USTR Novelli
Well the agreement does not address the movement of people. That's addressed through other channels and other kinds of agreements, and I know that trying to make sure that there's an efficient movement of people into the US is something that people are really focusing on in the US. We are not trying to keep out people who are legitimately doing business. In fact our economy is built on open markets and having lots of people coming and going, so for our sake it's very important that we make that something that can facilitate movement. I will say that for us, post September 11th, I think that folks have had obviously heightened concerns, which I'm sure can be well understood here, over security, and working through new systems sometimes takes time, but I think that the hope is that as those new systems are in place and everybody gets used to them, things could actually move more quickly than they did in the past.
Question:
Wouldn't it be a better idea if you had this agreement with all the GCC states as an entity instead of having bilaterally with each one of these countries, because this would also perhaps enhance the confidence of the member states of GCC, because they have their own customs union and that things which still have basic settlement there are certain obstacles you know. Would that approach not be more unified in terms of....
Answer: A/USTR Novelli
Well thank you for asking that question, because I know this has been an issue and I really appreciate the opportunity to address it.
We are very supportive of the GCC. The United States thinks of the GCC as a good thing. We want it to be strong, we want it to continue, and we want to do everything we can to strengthen it, and we see this agreement as completely complimentary to the goals of the GCC.
What we have set out to do through this Middle East Free Trade area concept that we have, is to work with countries where they are, at their level, where their vision is taking them at that moment, and to work with them, to move forward as they decide that they want to move forward.
And I think that it is clear that there are different levels of decision making in the GCC in terms of open markets, and so what we are doing is working with individual members of the GCC where they are, so the Bahrainis came to us and said, we want to have a free trade agreement with you, and that's where - we are ready for that, and that's where we want to go, and so we were happy to do that.
Similarly the Emirates have come to us with the same request, and after, as I said, over a year of discussion between us, I think we mutually decided that it made sense for us to move ahead in this way.
We do not see this as in any way threatening to the GCC, and we are working with other members of the GCC to enter the WTO, working very robustly with them to do that, and so we are just looking at how we can build a very high quality, very high level of market openness with our partners here, and we don't want to have agreements that are at a low level or low common denominator, but rather take both of us to a higher level of market openness, because we think that's where the economic development will occur.
Question:
What are the areas of cooperation in the field of health, mainly research and pharmaceutical products?
Answer: A/USTR Novelli
Well that will be something that the private sector will decide. What we look at in this agreement is basically setting the table that allow the private sector to come in and then put the meal on the plates. So we are doing a framework here of rules that will govern our interaction, so in the area of pharmaceuticals for example, we agree mutually that we will have very high standards for intellectual property protection, and that then provides a base for research pharmaceuticals and other medical technology development can come here, or vice versa, come to the US and say - I know that if I come here my intellectual property that I've developed here is going to be protected, and so I have the incentive then to come and make this a hub, as so many other companies have already done.
Question:
What are the hitches you're likely to face in reaching this agreement?
Answer: A/USTR Novelli
It's hard to say. I think as I said we've developed very well, the discussion, and so we will take it forward as we go. I think there are certainly no hitches that we cannot overcome, because we are looking at this as a partnership, and as I said, we will have to make some changes in our laws. You know, we would expect that it is possible the Emirates will have to make some changes in their laws as well, but I can't tell you exactly what those are because I'm not an expert, but we're committed to this agreement so much that we are willing to make those changes, because we think it is important that we keep our markets open and that we look at how we can insure that the good of all people is what is foremost in our mind, and not just the interests of few a who, in our country, would like to keep our markets closed. So we are constantly working in that bent.
Question:
First on the GCC, you obviously are responding to the concerns expressed by Saudi Arabia. Are you saying that the Free Trade Agreements will not aid Gulf economic integration, which is already very slow, as Saudi Arabia has expressed concern. And do you see yourself down the line at one point negotiating such a Free Trade pact with Saudi Arabia? That's the first question.
The second, Is it on your agenda at any point to encourage the United Arab Emirates during those discussions, to ease off the boycott of Israel or open a trade office for Israel in the United Arab Emirates like some other countries have done?
Answer: A/USTR Novelli
OK. well, on the first question, we in no way see this as threatening to the GCC. We've talked with the Saudis directly about that. We certainly do foresee down the road, and part of the goal is to have a region-wide Free Trade Agreement that would include Saudi Arabia, and certainly would include a bilateral agreement with Saudi Arabia, but because our agreements are built on the WTO - the World Trade Organization obligations, it's necessary for a country to first be a member of the WTO, because that's sort of the floor, and then we build up from there. So you have to have the floor first. And that's why we're working so closely with the Saudis to move them forward as they've said they want to move to be members of the WTO, so we do not see this as any way hindering integration, but actually locking in very high levels of openness which can only help foster integration.
With respect to your second question; my understanding is that the GCC has itself said that it does not support the secondary and tertiary boycott of Israel, this is a policy that has been undertaken by the GCC. There is nothing in this agreement that talks about representational offices of other countries or any thing like that. However the private sector develops its businesses is basically up to the private sector.
Question:
Just to go back on the previous point: Saudi Arabia actually made its view very clear that it was unhappy about this bilateral agreement. At the GCC conference in Manama it made the point very clear. Because clearly it violates the principle of the GCC itself. It says that there would be collective bargaining and collective negotiations and so on, so how do you see this kind of disagreement - difference between these countries ... at this point?
Answer: A/USTR Novelli
Well, I don't agree with you that this Free Trade Agreement violates the principles of the GCC, and in fact when the Bahrainis and the Emiratis came to us to talk to us about bilateral free trade agreements, we asked about this question and we were told that there are legal opinions saying that it is permitted for countries to do individual Free Trade Agreements, and as I said, we look to do these agreement with countries who are ready to do them, and the Emirates is clearly in a place where their vision of open markets and ours is so matching that it doesn't make sense for us to say, well, we'll wait for years until everything is perfect and then try to do something with everybody at once. You know, we do see eventually melding all these things together and we certainly look down the road to concluding something very similar with Saudi Arabia once they are in the WTO. But they still have some work to do themselves to get into the WTO.
Question:
are you talking to other Gulf states?
Answer: A/USTR Novelli
Yes, we're starting Free Trade Agreement negotiations with Oman directly after this one. The first round of negotiations with Oman will be next week. We have had very serious discussion with Qatar, with Kuwait, and we're working with them through our TIFA process, so everybody is working with us to do exactly what I've described.
Question:
Is there a timetable for reaching this agreement?
Answer: A/USTR Novelli
We are ready to move as quickly as the Emirates are willing to move.
End of Press Conference