Trade Agreements Middle East Countries
What progress are we making? In May 2003, we launched our regional initiative. We looked at Jordan to create a model, but we had the idea that, given the great diversity of the region, we could actually create different models and partners to help us spread our message. That is why we are currently negotiating a free trade agreement with Morocco and we are close to concluding these negotiations by the end of 2003. This could be very important for all North African countries. It is based on one of the framework agreements on trade and investment that we signed in 1995. Thanks to this agreement, Morocco has already liberalized its telecommunications sector and strengthened its intellectual property rights legislation. It is also moving towards more foreign goods in key service sectors, including insurance. A free trade agreement could not only strengthen U.S. relations with Morocco, but also make Morocco another model for the region.
The U.S. Middle East Free Trade Area (MEFTA) initiative was an ambitious plan to reach a single free trade agreement (FTA) between the United States and all countries between Western Sahara and Iran. It was launched in 2003 by George W. Bush. As in the old free trade agreement between the United States and ASEAN, the idea is to build the free trade agreement from the bottom up, little by little. In theory, this means that all countries must impose a number of conditions: from WTO membership to a framework agreement on trade and investment, which results in a bilateral investment agreement and/or a free trade agreement. Third, we will negotiate bilateral investment agreements and framework agreements. A bilateral investment contract that we have with many countries around the world is an assurance of how investors will be treated and their remedies in the event of litigation. A framework agreement on trade and investment is the starting point for a deeper trade relationship between the United States and a country.
It is not a free trade agreement, far from it. But it creates a process in which we meet regularly with this country, we create business committees and we solve problems whose solutions become springboards to a more integrated trade relationship, or even a free trade agreement. In the case of Egypt, for example, customs procedures are so outdated and bureaucratic that there are more customs officers in Egypt than in the United States. If you reduce the tariff, but let the customs officers set the price of a good thing, the reduction in the tariff will not make much difference. It is a question of information technology, corruption, transparency and fair rules. In addition, we have created a Qualified Industrial Zone in Jordan (QIZ) that offers special access to the U.S. market for certain sensitive products, including textiles and clothing, if they have Israeli content. We are trying to overcome some of the barriers between the two neighbours through economic relations.
An QIZ is available for other countries in the region, including Egypt. The 1985 Free Trade Agreement with Israel was the first free trade agreement of the United States. It links economic ties to our close strategic and security relationships. Bilateral trade with U.S. and Israeli goods increased from $4.7 billion to $19.4 billion, with services trade also extending sharply to $3.9 billion. Here are the key components of President Bush`s initiative for the region. First, we will try to help countries that are not yet members of the World Trade Organization (WTO) — Saudi Arabia, Lebanon, Algeria and Yemen. This requires a fundamental framework for intellectual property rights, customs procedures and new tariffs. Different commitments are being made, but that is the basis. Otherwise, it will be difficult to move on to something more complex.