Arab summit pays lip service to the elusive goal of common market

Published March 28th, 2001 - 02:00 GMT

While the foreign ministers of the Arab League’s 22 member-states were struggling to reach consensus over the political resolutions that would be passed in this week’s Arab leaders summit, the ministers of economy and commerce appeared to be having an easier time of things.  

 

At a joint pre-summit meeting they resolved that the forum would recommend the introduction of a program that will systematically cut down customs rates among Arab countries, leading to a total abolition of customs tariffs by the year 2005, instead of the target year 2007 decided upon earlier. 

 

The proposal was made by the United Arab Emirates, which had already signed free trade agreements with a number of Arab countries, including Syria, Lebanon and Jordan. In the case of those nations, the UAE plans to eliminate customs charges by 2003. 

 

Technically, the Arab ministers were speaking of the establishment of a free trade zone, which would stretch across North Africa, the Levant and the Arabian Gulf. But as the summit approached its conclusion, the term “Arab Common Market,” was thrust about, giving rise once again to a dream that has proved elusive for decades. 

 

In an article entitled “And now the Arab Economic Community,” Abdul Rahman Al-Rashed, the editor-in-chief of Al-Sharq Al-Awsat, noted that the Arab League has aspired toward a common market for almost 40 years, but only recently had came to appreciate how important it was to establish a formal economic block.  

 

“The Arab League has never been able to grasp the importance of the economy as a means of realizing political goals. Business and commerce were things that Arab politicians looked down on. They considered them the effects, not the causes, of political action. But now, with the emergence of various international blocs, the issue no longer needs to be argued,” he wrote. 

 

“We know that Sudan could be the bread basket of the region, the Gulf its oil reservoir, Egypt its labor force, Syria its farm and Morocco a great market. All these were—and still are—known facts,’ Al-Rashed continued. “But what has been missing is the plan, the determination and commitment. And they are still missing. Some Arab countries impose customs duties of up to 100 percent on imports from other Arab countries. This is something which even Israel or any other country does not do.” 

 

The bottom line is that, today, trade between Arab countries represents only eight percent of the $300 billion worth of annual commercial exchanges reported by the 22 Arab League members. It is compared to 10 percent of trade in 1990. This, despite the fact that the formal move to an Arab Common Market was initiated in 1965, and a range of pan-Arab economic organizations have been in existence for decades.  

 

A Jordanian-Egyptian working paper, prepared for the Amman summit, made four primary recommendations aimed at enhancing inter-Arab trade. They include the active promotion of inter-Arab trade, the encouragement of conditions conducive to inter-Arab investment, the merging Arab capital markets and the development of joint means of transport, energy and communications.  

 

In Amman, the economic ministers drafted resolutions calling for the strengthening of institutions, such as the Arab Monetary Fund and Arab Fund for Economic and Social Development. The resolutions also call for open-space accords for airlines. Jordan's Minister of state for economic affairs, Mohammad Halaykah, said the summit would focus on concrete steps to bring about a free-zone area, such as reducing a long list of excluded goods that have diluted existing free-trade zone agreements between Arab countries. 

 

Egyptian economy and foreign trade minister, Yussef Boutros Ghali, is a champion of the common market concept. With a combined $600-billion gross domestic product, he stresses, the Arab would be better able to stand their own with the World Trade Organization and international economic blocs.  

 

There do, of course, already exist two formal economic blocks within the Arab world—the Gulf Cooperation Council and the Arab Maghreb Union in North Africa. But the disparate nature of these two organizations emphasizes the difficulties in creating a true common market. The GCC comprises the affluent oil producing countries, whereas the Maghreb is made up of countries where the standard of living is decidedly third world. Saudi Arabia’s GNP per capita is about 5.5 times that of Morocco, and the gap between other states is even larger. 

 

In considering the possibility of a common market, the Arab states have tended to consider favorably the model of the European Union. But that would appear an unreasonable aspiration. To be eligible for membership, the European Union has demanded that candidates comply with an exacting set of economic standards that have kept out such countries as Turkey. If, in an Arab Common Market, the stronger nations were to set the tone—as is the case in Europe—the less developed countries would be unlikely to gain entry for years to come. If, on the other hand, the bar were set too low, what economic incentive would there be for countries such as Saudi Arabia, the UAE, Oman and Qatar to sign up? 

 

The road to full economic union is necessarily gradual, and can typically be divided into four stages—the first involves the free movement of goods, the second being a single customs environment, the third involving the free movement of labor and capital, and fourth being a fully unified economic and fiscal policies, including a single currency. Europe currently is struggling to move from stage three to stage four. Reasonably, and for the foreseeable future, stages one and two are the best the Arab world can hope for. — (Albawaba-MEBG)

© 2001 Mena Report (www.menareport.com)


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