U.S.-UAE Free Trade Agreement Moves Ahead — Slowly but Surely

A traditional dhow, symbol of UAE commerce for millennia.

Her comments were echoed by Shaun Donnelly, Assistant U.S. Trade Representative, who noted: “This remains a very important priority for both governments. We ran out of time under our Trade Promotion Authority.”

The UAE remains a strong advocate of free trade and has launched FTA negotiations with Australia and New Zealand. The UAE also is part of the free trade negotiations between the European Union (EU) and the Gulf Cooperation Council (GCC), of which the UAE is a member. The EU is the GCC’s biggest trade partner, and some experts predict that under an FTA, the value of total annual trade between the two entities could double from 40 billion euros to 80 billion euros in a few short years.

Negotiators await congressional vote on trade promotion authority

The surge in U.S. export growth to the UAE has been accomplished without the benefit of a bilateral Free Trade Agreement (FTA). The United States and the UAE initiated FTA negotiations in March 2005. At that time, the parties were close to an agreement on many issues, but were still working out differences over labor rights and investment issues, primarily related to the telecommunications sector. UAE officials indicated that they did not want to allow foreign investment in the telecom sector before 2010 in order to allow local operators the chance to develop.

The controversy in early 2006 over the proposed purchase of some U.S. port operations by Dubai-based DP World did not derail the FTA talks, but the fallout certainly had a negative impact on the atmosphere of the trade talks. Congressional Democrats were among the most outspoken opponents of that deal, and the Democrats’ victory in the November 2006 U.S. midterm elections – coupled with U.S. presidential elections in 2008 – have further complicated the negotiations.

Congressional Democrats are tough on FTAs in general and are expected to demand further concessions from the UAE on a range of issues.

Congressional Democrats are also less likely to approve Trade Promotion Authority (TPA) for President George Bush. TPA – formerly known as “fast-track” trade authority – allows the President of the United States to negotiate trade agreements with foreign countries and then submit them to Congress for an up or down (“yes” or “no”) vote. It is generally agreed in Washington that no FTA could be confidently negotiated if the President – whether Republican or Democrat – does not have TPA.

U.S. and UAE officials met in London at the end of February and came to the conclusion that they would not be able to wrap up these FTA negotiations within the timeframe established by current Trade Promotion Authority. Both countries are committed to eventually completing a comprehensive, world-class FTA. In the meantime, the two governments have activated a “TIFA Plus” (Trade and Investment Framework Agreement Plus) in order to make further progress on developing the bilateral trading and investment relationship.

In a recent speech in Washington DC, the UAE’s Economy Minister, H.E. Sheikha Lubna Al-Qasimi, stated, “We are committed on both sides ... and [the problems] are solvable.”

One Plane Every 45 Days…

One of the 44 Boeing 777 airplanes Emirates Airline ordered for delivery in the upcoming five years.

distribution facilities worldwide. It houses around $25 million worth of parts and an inventory of more than 24,000 items that are shipped to Boeing’s many commercial airline customers in the region. Dubai also is home to 12 Boeing field service representatives who provide on-site support to Boeing’s commercial customers.

UAE’s Emirates Airlines set to become world’s largest
operator of Boeing 777s

Dubai-based Emirates Airlines will soon become the world’s largest operator of Boeing’s 777 long-haul aircraft. In 2005, Emirates placed an order for 44 Boeing 777 planes, with purchase rights for an additional 20. This means that for the next five years, Boeing will deliver a new 777 to Emirates every 45 days. Emirates eventually will operate 98 of the wide-bodied, twin-jet planes.

In 2006, Emirates also ordered 10 Boeing 747-8 Freighters, with purchase rights for 10 more. These planes will be used to meet growing demand for Emirates’ Skycargo freight operation.

“While we’re very active throughout the Middle East, the UAE is clearly a key market

for Boeing Commercial Airplanes,” says Lee Monson, Boeing’s Vice President of Sales for the Middle East & Africa. “Recent airplane orders from Emirates and Etihad, as well as the many Boeing personnel based out of our Dubai office, demonstrates a high level of engagement with the UAE.”

In 2004, the Government of Abu Dhabi launched its own airline, Etihad. The new airline placed an order for five Boeing 777 planes, all of which have been delivered. The planes form the core of Etihad’s long-haul fleet. (See related story on page 22.)

Boeing’s presence in the UAE goes well beyond Emirates Airlines and Etihad Airlines. The Boeing Service Center, located in Dubai, is one of the company’s eight spares