In pursuit of globalisation
Economic reform priorities in the Arab world and the expected outcome for economic cooperation were discussed at a recent press conference. Eman Youssef reports
Despite numerous attempts to promote regional economic integration, trade among Arab states still only constitutes a small proportion of the total trade conducted by the Arab world, a recent international press conference highlighted. While the rate of inter-Arab trade has remained relatively constant over time, there has been significant growth of inter-state trade among the world's other regional groups. Indeed, figures indicate that Arab trade remains at minimum levels. At present, it represents only three per cent of world trade. The lack of a diversified export base, high custom tariffs, and trade costs, were identified by speakers at the conference to be some of the main obstacles hindering regional business opportunities.
"The Arab Economic Unity agreement was signed almost half-a-century ago in 1957," Secretary-General of the Council of Arab Economic Unity Ahmed Goweilli told Al-Ahram Weekly. "Since then the Arab countries have been trying to build an integrated Arab market, but it is still much easier to export Egyptian products to Africa than to the Arab market." Adding that the council's aim is to raise inter-Arab trade above the eight per cent mark, Goweili emphasised that "globalisation is progressing and the Arab world is lagging behind." In order to enhance trade relations, in January 2005 trade customs between council members will be removed altogether, he said.
Goweili explained that unemployment is the most difficult and important challenge the Arab world faces today. The 100-million-strong labour force is crippled by a 20 per cent unemployment rate, despite the fact that 60 per cent of the total are university graduates. "The Arab world is among the regions which attract the lowest foreign direct investment [FDI]," he said, adding that the region's share only amounts to one per cent of the world's FDI. Total investment in the Arab world peaked at $145 billion in 2002.
As part of a broader plan to boost inter-Arab trade, the German-Arab Chamber of Industry and Commerce (GACIC) -- one of the organising bodies behind the press conference -- is set to schedule several business delegation trips within the region. "These visits will offer our Egyptian and German member companies the opportunity to study Egypt's neighbouring Arab markets," CEO of GACIC Peter Goepfrich told the Weekly. The members will meet with high-level government officials as well as associations representing the local business community, he said. In the first half of 2004, a business delegation will visit Libya, Syria and Lebanon, while in the second half, GACIC will organise trips to Sudan, Jordan, Iraq and Dubai. The trips will provide opportunities for businessmen to interact face-to-face in making business agreements, according to Secretary-General of the Egyptian-German Business Council Alaa Ezz.
"The Arab world today stands at a very critical juncture," said Shafik Gabr, chairman of Egypt's International Economic Forum and of the Arab Business Council (ABC), adding that the development gap between the Arab region and the First World remains very wide, while a growing number of developing countries and regional blocs are moving swiftly towards integration with the global economy. Established in June 2003, the ABC seeks to galvanise the Arab private sector in order to empower its role in partnerships with central governments, Gabr told the Weekly. He emphasised that such a strategy will enhance the Arab world's competitiveness on the whole, and hence the region's economic potential.
"Enhancing economic performance, and thus raising the standards of living in the Arab world, necessitates a focus on boosting the levels of trade and investments," said Gabr, adding that this will both propel growth and combat poverty and unemployment. He also reasoned that Arab governments need to take rapid steps towards improving the region's investment and trade climate.
"Adopting trade policies and practices that are based on internationally agreed rules and procedures will ensure the success of the Greater Arab Free Trade Area," Gabr told the Weekly. The current export structure, which is heavily reliant on cheap labour, will not provide the platform that Arab economies require in order to improve. Gabr explained that maintaining the current structure will continue to expose the region to commodity price volatility risks, and subsequently to high-cost implications in the budget and trade balance.
"All trade-related procedures, including customs, must be simplified," Gabr told the Weekly, adding that exports should be facilitated in order to render the flow of trade regionally and internationally smoother and more profitable. He even suggested that restrictions on foreign investment be removed altogether, and that government monopoly rights in the distribution of imports be eliminated in order to actively encourage higher levels of FDI.
"Governments in the Arab world must take added steps to engage the private sector as a vital partner in the development process," Gabr said. This, he explained, could be achieved by the acceleration of the privatisation process, encouraging market openness and global integration.
