US Middle East Free Trade Initiative

Trade Background: US Middle East Free Trade Initiative

U.S.-Middle East Free Trade Agreements

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September 30 – October 2, 2019

U.S.-Israel Free Trade Agreement & Trade Relations

In 1985, President Ronald Reagan signed the U.S.-Israel Free Trade Agreement. It was the first FTA the United States entered into, and has served as a model for many future trade agreements. The FTA eliminates all custom duties between the two countries, and has resulted in a huge increase in the overall volume of bi-national trade to total over $35.6 billion in 2021. The U.S. exported over $14.2 billion to Israel in 2022.

For more information on trade with Israel, click here.

USTR Announces Agreement between the U.S. and Israel to Reaffirm Commitment to Expand Bilateral Trade and Investment

Deputy United States Trade Representative Ambassador Miriam Sapiro and Israel’s Director General of the Ministry of Industry, Trade, and Labor, Sharon Kedmi, this week reached agreement on a process to further their shared commitment to expand trade and investment between the United States and Israel. They applauded progress on trade and investment issues since a meeting between Ambassador Kirk and Minister Ben Eliezer in Washington in October 2010, and agreed to a plan that will guide future discussions and develop further as those discussions evolve. They also agreed to redouble their efforts to make further progress ahead of the U.S.-Israel Free Trade Agreement (FTA) Joint Committee meeting, to be held later this fall.

“The Obama Administration places great importance on the relationship between our countries, and we will continue our collaborative efforts to expand trade and investment opportunities for American and Israeli exporters and investors,” said Ambassador Sapiro.

The two sides also agreed to explore ways to realize fully the potential benefits of the U.S.-Israel trade agreement, including through the further liberalization of trade in services and agriculture and the removal of trade-restrictive measures. Ambassador Sapiro and Director General Kedmi also committed to consider cooperation in other areas, including addressing regulatory issues which might be impeding the movement of goods, services and capital between the two countries, in consultation with relevant stakeholders.

By Sherwin Pomerantz

The basic economic statistics for 2012 are now beginning to surface and it is clear that economically, in spite of the world’s financial doldrums, Israel did pretty well.

From 2009-2012 Israel experienced economic growth of 14.7%, well ahead of most OECD countries (e.g. US – 3.2%, Germany – 2.7%, Australia – 10.7%, Canada – 4.8%) and much better than the general decline in economic growth in Europe of 1.5%. Israel might have had even better results if not for the continued sabotaging of the natural gas line from Egypt which caused the country to replace that source of energy by purchasing fuel from more expensive suppliers. There is, of course, no telling ultimately what will happen with that situation, as much depends on how the political situation in Egypt evolves.

In 2012, Israel demonstrated economic growth of 3.3%, which was more than double the OECD average of 1.4%. The only two major economies of the world that did better than Israel were India, which saw 4.5% growth, and China which experienced 7.5% growth. Coupled with this growth was a decline in Israeli unemployment to 6.9%, also lower than the OECD average of 8%.

Where Israel really did well last year was in tourism. With 2.9 million tourists in 2012 the country set a new annual record and 2013 looks to be even better, given existing travel agency bookings. The single largest group of tourists came from the US, while other significant sources of tourism included Russia, France, Germany and Britain with a growing cadre of visitors from Asia. This will, no doubt, continue to improve as even countries with which Israel does not have diplomatic relations such as Malaysia, are now permitting their nationals to travel to Israel, especially for religious tourism.

The challenge for the country, of course, is to keep these numbers progressing in the positive direction and to leverage Israel’s position as the world’s second largest source of innovation so as to spur continued economic growth. For the moment, large firms worldwide continue their interest in growing their Israel operations. As examples, Google late last year opened a start-up incubator in Israel and Dutch giant Phillips has also announced the establishment of a new R&D center in the country.

All of this, of course, remains quite amazing in the face of continuing political distress among most of Israel’s neighbors which, in Syria’s case, has resulted in large scale fatalities as well. Israel’s added value is its depth of technological capability along with relative political and financial stability.

EDI continues to encourage its clients and prospects to explore opportunities in Israel further, as the firm is uniquely positioned both to assist foreign entities to gain a foothold locally and to assist local companies to locate strategic partners overseas.

U.S.-Jordan Free Trade Agreement

The U.S.-Jordan Free Trade Agreement has brought significant benefits to both nations since its implementation in 2002. Jordan’s exports to the United States increased from $228 million in 2001 to $3 billion in 2022. U.S. exports to Jordan grew from $343 million in 2001 to $1.54 billion in 2022.

For more info on trade with Jordan, click here.

The positive impact on some of the United States major industries has been staggering. Exports of U.S. automobiles to Jordan have risen by 1500 percent. Corn exports have increased 2300 percent and exports of TV and radio transmitters have grown by 500 percent.

On September 28, 2001 President Bush signed into law the U.S.-Jordanian Free Trade Implementation Act. The Agreement went into effect on December 17, 2001.

The JFTA eliminates duties and commercial barriers to bilateral trade in goods and services originating in the United States and Jordan. It is America’s third free trade agreement, following the U.S.-Israel FTA and the North America Free Trade Agreement (NAFTA) and the first with an Arab country. The JFTA will support Jordan’s domestic economic reforms, encourage efforts by other Middle East countries to open their economies and enhance regional stability. The JFTA will play a major role in fostering closer bilateral business ties between American and Jordanian firms. It also will provide benefits to consumers and businesses in the United States and Jordan by increasing choices and lowering the prices of goods and services.

The JFTA also includes, for the first time ever in the text of a trade agreement, provisions addressing trade and environment, trade and labor, and electronic commerce. Other provisions address intellectual property rights protection, balance of payments, rules of origin, safeguards and procedural matters such as consultations and dispute settlement.

U.S.-Bahrain Free Trade Agreement

On August 1, 2006, President Bush issued a proclamation making official the U.S.-Bahrain Free Trade Agreement, opening the way for tariff-free bilateral trade in all industrial and consumer goods and creating new opportunities for trade in services and agricultural goods. The agreement eliminated duties on all consumer and industrial products and 81 percent of U.S. agricultural exports. This FTA is particularly beneficial to U.S. exports of aircraft, machinery, pharmaceuticals, and agricultural products. Two-way trade between the United States and Bahrain was over $2.84 billion in 2022.

For more info on trade with Bahrain, click here.

U.S.-Morocco Free Trade Agreement

The U.S. Morocco Free Trade Agreement was implemented on January 1, 2006. The Agreement eliminates tariffs on over 95 percent of bilateral trade in consumer and industrial products, with all tariffs being phased out within 9 years. This reduction in duties will create a huge opening in Morocco’s market for U.S. exports such as information technology, machinery, and agriculture.

In January 2005 the Moroccan Upper House of Parliament passed the U.S. Morocco FTA following the earlier passage by the Moroccan Lower House. The United States and Morocco will work to ensure that domestic laws comply with the terms of the agreement in order to bring the FTA into effect.

On August 17, 2004, President Bush signed the U.S.-Morocco Free Trade Agreement Implementation Act. Commenting on the legislation, the White House said, “This agreement will help create jobs and new opportunities for Americans by deepening our trade ties with an important friend in the Arab world.”

The U.S. House of Representatives passed the U.S.-Morocco Free Trade Agreement by a vote of 345-76 on July 22, 2004. This came just a day after the Senate passed the Agreement, 85-13. Both California Senators, Barbara Boxer and Dianne Feinstein voted for the bill. In a statement released after the vote, U.S. Trade Representative Robert Zoellick commented that the agreement, “signals our commitment to deepening America’s relationship with the Middle East and North Africa.”

On April 23, 2002 President Bush announced that the United States would work to enact an FTA with Morocco. This was announced at the White House following a meeting with His Majesty King Mohammed VI of Morocco. The King had already met with U.S. Trade Representative Ambassador Robert Zoellick twice. On October 1, 2002, the USTR notified the Congress of the President’s intent to enter into trade negotiations.

The U.S.-Morocco FTA will build on the bilateral work that began in 1995 under the U.S.-Morocco Trade and Investment Framework Agreement. The U.S.- Morocco FTA eliminates duties and barriers to trade for both U.S. and Moroccan-origin goods and also address trade in services, agricultural products, trade-related aspects of intellectual property rights, government procurement, trade-related environmental and labor matters, and other issues. The FTA is expected to contribute to stronger economies, the rule of law, sustainable development, and more accountable institutions of governance. The FTA will also help to support and accelerate economic and political reforms already underway in Morocco.

In 2022, the US exported roughly $3.5 billion worth of goods to Morocco.

For more info on trade with Morocco, click here.

The U.S.- Morocco Free Trade Agreement will send a strong signal that the United States intends to remain heavily engaged in the Middle East for a long time to come in business, economics, security and international politics. The FTA will stand as a model for other bilateral trade agreements in the region and in multilateral forums. The FTA will contribute to regional and global trade liberalization and strengthen the multilateral trading system.

Per June 2016 – WTO has released its second Trade Policy Review (TPR) of Morocco since the US-Morocco FTA entered into force and notes that Morocco has sustained a substantial level of economic growth annually. The report mentions that the FTA with the United States has opened up the market access for Moroccan non-agricultural products, excluding textiles and clothes. The majority of agricultural products are traded free of duty and some enjoy tariff preferences. The report also mentions the open strategic dialogue between the two countries to further and improve the economic relationship.

The report and additional background may be found at Morocco: Trade Policy Review

U.S.-Oman Free Trade Agreement

On September 26, 2006, President Bush signed legislation to implement the U.S.-Oman Free Trade Agreement, making it the fifth Middle Eastern country to have a free trade deal with the United States. Under this agreement, all bilateral trade in consumer goods and industrial products will become duty-free. The U.S. Senate passed the agreement first in June 2006 by a vote of 60-34, then again in September 2006 by a vote of 63-31. The measure passed through the House of Representatives by a vote of 221-205 on July 20, 2006. The U.S.-Oman FTA will benefit both the California and the United States. In 2020, California exports to Oman were more than $85 million. The U.S.-Oman Free Trade Agreement will continue to increase the state’s exports in machinery, primary metal manufacturing, computers, electronics, and agricultural products.

Oman is a potential market for U.S. oil equipment and services, transportation equipment, water and environmental technology, medical equipment, electrical and mechanical equipment, and many other competitive U.S. products and services. Bilateral trade between the United States and Oman totaled over $4.19 billion in 2022. U.S. goods exports to Oman were over $1.48 billion in 2022. USTR: U.S.-Omani Trade Relations Spotlight

CalChamber Position

The CalChamber, in keeping with long-standing policy, enthusiastically supports free trade worldwide, expansion of international trade and investment, fair and equitable market access for California products abroad and elimination of disincentives that impede the international competitiveness of California business. New multilateral, sectoral and regional trade agreements ensure that the United States may continue to gain access to world markets, resulting in an improved economy and additional employment of Americans.