Office of the United States Trade Representative


A Return to the Cradle of Free Trade

By Robert B. Zoellick

Near the campus of Jordan University, at the offices of Estarta Solutions, 170 Jordanians are busy developing advanced business software. Last year, under the U.S.-Jordan Free Trade Agreement, Estarta earned $1 million in export sales to the United States. Estarta's president and co-founder, Ennis Rimawi, is one of a new generation who are making their mark as innovators and entrepreneurs in the global economy. Rimawi and his colleagues are reviving a proud past -- when the Middle East was the vibrant core of global trade -- and charting a brighter future: for Jordan, the Middle East and the world.

Trade and open markets have a long lineage in the Middle East. The Holy Koran urges the faithful to "Let there be trading by mutual consent." For centuries the Middle East was the world's preeminent bazaar, a region renowned for commercial prowess that lay at the center of a "silk road" stretching from Western Europe to China.

Ruinous military conflicts, misguided economic policies and brutal suppression of liberties in some countries have cut off the Middle East from today's growing global economy. The region's share of international trade and foreign direct investment is among the lowest in the world. According to the United Nations, it attracted just 0.7 percent of global foreign direct investment throughout the 1990s. Exports -- over 70 percent of which are accounted for by oil and oil-related products -- grew at 1.5 percent per year over the same period, far below a global average growth rate of 6 percent.

Reversing the Middle East's economic fortunes will take time. But America is committed for the long haul, through a step-by-step strategy for progress that will help nations build free, dynamic economies and rising standards of living for all.

First, the United States will actively support membership in the World Trade Organization for those peaceful countries in the region that seek it. We want to assist the full integration of the nations of the Middle East within the global trading system.

Second, the United States will expand the Generalized System of Preferences (GSP) program to increase U.S. trade linkages with the Middle East. GSP provides duty-free entry to the U.S. market for some 3,500 products from 140 developing economies, including six countries and the West Bank in the Middle East. Last year, Americans bought more than $278 million worth of products from the region under this program -- including Egyptian furniture, Omani jewelry and Lebanese olive oil.

Third, the United States will offer to negotiate trade and investment framework agreements, or TIFAs, which establish a framework for expanding trade and resolving outstanding disputes. In addition to negotiating new agreements, we will offer to deepen those TIFAs already in place with Bahrain, Morocco, Egypt, Tunisia and Algeria. TIFAs are an important rung on the ladder to a formal free trade agreement. They can help develop the experience, institutions and rules that advance integration into the global economy.

Fourth, the United States will offer to negotiate formal bilateral investment treaties, or BITs, with interested countries. By obligating governments to treat foreign investors fairly and offer legal protection equal to that available for domestic investors, a BIT signals that a country offers a safe place to do business.

Fifth, the United States will negotiate comprehensive free trade agreements. We will start by working with Congress to add free trade agreements with Morocco and Bahrain to the existing U.S.-Jordan free trade agreement. Then we will seek to negotiate agreements with other countries. Eventually, these bilateral agreements will be expanded into sub-regional agreements by bringing in willing countries that demonstrate a commitment to openness and reform. Within a decade, we hope to meld these sub-regions into a historic regional Middle East Free Trade Area: a mutual commitment for openness among the United States and the nations of the Middle East and Mahgreb (Morocco, Algeria and Tunisia).

The final element of the U.S. trade strategy is the provision of financial and technical aid to help countries realize fully the benefits of open markets. The Middle East Partnership Initiative will help target more than $1 billion of annual funding from various U.S. government agencies and spur partnerships with private organizations and businesses that support development.

The reconstruction and reopening of Iraq presents an opportunity for change -- a chance for the people of the Arab world to ask why their region, once a nucleus of trade, has been largely excluded from the gains of this modern era of globalization. The source of the venture might be an Arabic proverb: "Dwell not upon thy weariness, thy strength shall be according to the measure of thy desire."

The United States extends a hand of partnership to those in the Middle East who desire freedom, who are willing to tear down the walls of poverty and protectionism that have isolated their region for too long.

The writer is the U.S. trade representative.
© 2003 The Washington Post Company

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