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Sat, May 10, 2003 - Page 12 News List

US wants free trade in Mideast

ARRESTED DEVELOPMENT One of the regions of the world that has missed out on trade liberalization has been the Arabian peninsula. The US is hoping to change that

BLOOMBERG , WASHINGTON

US President George W. Bush yesterday was to propose creating a US-Middle East free trade area within the next 10 years to promote democracy and stability, an administration official said.

Economic prosperity and secur-ity are essential to creating conditions for peace in the region after the war to end Saddam Hussein's regime in Iraq, the official told reporters in a preview of a speech Bush will give at the University of South Carolina's commencement.

"The Middle East has been a big loser in the last 20 years" as trade deals involving China, Africa and Southeast Asia mean those regions get more economic opportunity, said Edward Gresser, an analyst at the Progressive Policy Institute in Washington, a research organization for pro-trade Democrats.

The share of world exports from more than a dozen Muslim nations plunged to 3 percent in 2001 from 13.3 percent in 1980, said Gresser, a former US trade official. A free-trade accord would boost income and may help prospects for peace in the region, he said.

Lowering trade barriers and encouraging investment also is a way to mute anti-Americanism and discourage terrorism, US Trade Representative Robert Zoellick told the Export-Import Bank's annual conference last month.

"We're looking at how we can follow up the military victory in the Gulf with trade and economic initiatives," Zoellick said.

He and Secretary of State Colin Powell will discuss political, social and economic improvements at a World Economic Forum meeting in Jordan next month, the Bush official said.

Powell leaves today to seek progress on a top priority for Muslims: a peace accord between Palestinians and Israelis. The US gave both sides a "road map" of steps toward creating a Palestinian state in three years.

Bush's free-trade proposal comes as the US also is asking the UN Security Council to immediately lift sanctions on Iraq and for the resumption of oil exports under UN and World Bank monitoring.

The US has been at odds with France and Russia, which opposed the Iraq war, over the UN's role in postwar Iraq. France and Russia have called for the UN to take a "central" role; the US supports advisory participation.

The US government-backed Ex-Im Bank is "interested" in supporting US exports to Iraq, the agency's president, Philip Merrill, said at last month's Ex-Im Bank conference.

The agency is exploring how it could create an oil trust fund in Iraq to guarantee any loans, as one way to assure repayment, Merrill said.

Bush will say in today's speech that while the Middle East has rich cultural traditions, it is missing out on economic growth that has blossomed in other parts of the world, the official said at the briefing.

The World Bank expects annual economic growth in the Middle East to average 1.3 percent per capita during the decade, the slowest rate of any region. Half the 300 million citizens are younger than 24. One person in five is unemployed and the work force is the fastest growing in the world.

Bush will outline benchmarks for nations that want to qualify for membership in any free-trading zone, including progress on providing access to capital for small- and medium-sized businesses, improving property rights, fighting terror and strengthening the rule of law, the official said.

Bush won't specify which nations may qualify to participate in any agreement, the aide said.

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