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Al-Ahram Weekly 6 - 12 April 2000 Issue No. 476 
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Published in Cairo by AL-AHRAM established in 1875 |
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Al-Ahram Weekly 6 - 12 April 2000 Issue No. 476
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| Published in Cairo by AL-AHRAM established in 1875 |
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Egypt Region International Economy Opinion Culture Summit Features Focus Travel Living Sports Profile People Time Out Chronicles Cartoons Letters Common market, recurring dream
By Gamal Essam El-DinArab countries must push for the establishment of an Arab Common Market (ACM): the conclusion, in short, of a 185-page report submitted to the Shura Council this week. Compiled by the Council's Arab Affairs Committee, "The Arab Common Market" argued that Arab economies have all the ingredients necessary to push for the establishment of a coherent economic bloc, including a huge potential market of some 270 million citizens, vast natural resources (especially oil), adequate capital flows and a reliable network of roads and basic infrastructure.
Yet despite such assets, inter-Arab trade remains weak. Inter-Arab exports accounted for only five per cent of total Arab exports in 1980. "In 1990, this percentage rose to 10 per cent, but fell in 1995 to 9.5 per cent," said the report. Inter-Arab investments, too, are low.
"Arab investments abroad reached $850 billion in 1997, in which year their turnover was 40 times that of inter-Arab investments," the report said.
An Arab common market was first envisaged in 1964. In the intervening three decades and a half, though, we are no nearer achieving that goal, said the report. In the same period, it notes, "more than 85 economic blocs have emerged in different parts of the world." The report blames the aborted initiative towards a common market on a lack of political.
"Most Arab countries wrongly believe that the formation of this market will be at the expense of their sovereignty. Several countries, the oil-rich Gulf, specifically, believe that the formation of such a market would lead to the dilution of the huge proceeds of their oil sales into the hands of other Arab countries, especially the more populous ones."
"The lack of a strong Arab production structure is another major impediment, with Arab economies lacking diversity in terms of exports, imports, and methods of production. This has led them to compete for limited markets. Raw materials, as opposed to manufactured goods, dominate Arab exports.
"In 1993, for example, oil exports accounted for 61 per cent of total Arab exports while manufactured goods accounted for almost 39 per cent. On the other hand, Arab imports of manufactured goods, machinery and transportation equipment increased from 30.5 per cent in 1985 to 33.5 per cent in 1993 of overall imports, which represents an excessive dependency on the outside world in order to meet Arab needs, especially for mega-development projects."
On a more optimistic note, Minister of the Economy and External Trade Youssef Boutros Ghali says that a common market is closer than ever, obstacles notwithstanding.
"The first step was the gradual application, over ten years, of an Arab Free Trade Area (AFTA)," Ghali told the Shura Council on Saturday. "As many as 14 countries have joined AFTA and a 30 per cent reduction in custom duties has been achieved since 1998 in annual 10 per cent cuts."
"AFTA will evolve into a major success because there is Arab political will (to create it)," Ghali insisted.
Rules of origin for inter-Arab trade have also been standardised. The local component in traded goods should reach 40 per cent in order to qualify for privileged access to Arab markets.
"AFTA aims ultimately at the creation of a unified customs union. This will be the major cornerstone of the Arab common market," predicted Ghali.
