Inter-Arab trade liberalisation obstacle course
Regional, Economics, 5/22/2002

Lack of Arab coordination and effective political policies will have been blamed for holding back the Arab Free Trade Zone program, to which only fourteen Arab states have signed up.

A recent study by Commercial Attache Mohamed Abdul-Gawad of the Egyptian Trade Representation Authority (TRA) recently compiled a study to evaluate the achievements of the program to date.

The study highlighted the several obstacles to the programme's success. Top of the list are procedures relating to customs clearance, inspection and problems arising from certificates of origin.

Inspections are too strict, many administrative and accounting measures are unnecessary, and certificates of origin are not standardised, whether for agricultural or industrial projects, the study said, adding that the lack of accurate, up-to-date information on member states, the absence of an arbitration body to settle disputes between members were also stumbling blocks to the development of the Arab Free Trade Zone.

The study showed that a disparity between the original schedule and what was done to realise the free trade zone, bearing in mind the differences in economic conditions in member states.

Customs tariffs in Syria and Iraq were set in line with the system enforced by Brussels, and the other members should have followed suit, the study said.

By the time the study was published, Morocco had still not applied the fourth and fifth phases of gradual reductions in customs duties on imports from other members. Reductions stand at only 30 per cent.

The Council for Arab Economic Union passed its Resolution No. 1381 in 1999, stating that certain goods from six Arab states, Egypt, Tunisia, Morocco, Syria, Lebanon and Jordan, were not subject to the phased reduction in customs duties. The program makes provision for the exclusion of only 15 per cent of these countries' exports from the reduction scheme. Such exceptions are made provided that they form no obstacle for the implementation of the free trade zone plan, and provided that the member country concerned submits an annual report on such goods to the Trade Negotiations Committee, who refer the reports to the Implementation and Follow-Up Committees.

The Arab Free Trade Zone has existed on paper since 1 January 1998 within the framework of the 1981 agreement to facilitate and develop inter-Arab trade. The free trade zone will become a reality by 1 May 2005, since the Council for Arab Economic Union brought the date forward to 1 May 2005. In theory, any two member states can apply customs exemptions on goods before that date, and other fees can be charged on imported-exported merchandise within the free trade zone regardless of international guidelines on protection measures, subsidies, dumping or a trade imbalance resulting from the implementation of the free trade zone programme. Less developed Arab states will be offered preferential treatment in trade exchange within the program.

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