US Exports to the Arab World Increased During Arab Spring, Close Competition from China, India
Author: assafir Posted February 18, 2012
The Arab Spring seems to have had a positive effect on US exports to the Arab world, especially to the countries of the Gulf Cooperation Council (GCC). US exports in the sectors of energy and defense totalled US $56.18 billion in 2011. China and India are the US’ main competitors for the share of trade with the Arab world.
US exports to the Arab world rose from US $48.77 billion in 2010 to US $56.18 billion last year, a 15.2% increase. Exports to the Arab world accounted for 3.8% of total US exports, approximately US $1.48 trillion.
The United Arab Emirates was the top importer [in the region] - about US $15.9 billion worth of goods. It was followed by Saudi Arabia at US $13.8 billion, and Egypt at US $6.2 billion. Lebanon ranked eighth among Arab states, with about US $1.8 billion in imports, and Palestine was ranked just before last at US $1.193 billion. Qatar ranked fifth (US $2.796 billion), followed by Iraq (US $2.4 billion), Algeria (US $1.59 billion), Jordan (US $1454 billion), Bahrain (US $1.2 billion), Tunisia (US $586 million), Libya (US $286 million), Syria (US $249 million) and Sudan (US $73 million).
Countries which saw the highest rise in US exports from 2010 to 2011 were Somalia, with a 260% increase, Mauritania (191.5%) and Iraq (48%). However, US exports to Lebanon fell by 10% in 2011, 11.5% in Qatar and 9.5% in Egypt. They also fell by 50.3% in Syria, by 51.5% in Palestine and by 56.9% in Libya. Exports to Tunisia remained unaffected by the Tunisian revolution, rising by 2.7% last year.
These figures were provided by the American Arab Chamber of Commerce, and were originally obtained based on official information from the US Census Bureau. The Chamber expects US exports to the Arab world to reach US $117 billion in 2013, and projects that US investment could create more than a million jobs to the Arab market, given that demand is expected to exceed a trillion dollars next year. However, according to the Chamber, the "bad news" is that China and India now compete with the US in this market, which is expected to rise from 8.9% in 2010 to 11.2% by 2013.
The four major US exports to the Arab world are in the infrastructure, energy development, petrochemical, and defense sectors. Energy and infrastructure are at the very top of these exports - especially to the GCC - and account for 70% of US exports to the Arab world.
In accordance with the Obama administration’s plan announced in March 2010 to double US global exports to US $3.14 trillion by 2015 in order to create approximately two million jobs in the US, the Chamber expects US exports to the Arab World to provide 340,000 direct job opportunities and 683,000 indirect job opportunities by 2013. [These jobs will especially in the agricultural, manufacturing and service sectors.
Within the last four years, China became a strong contestant in commercial competition, and even managed to replace the US as the largest exporter to the Arab world. From India, meanwhile, technology exports to the Middle East and North Africa (MENA) region rose by 154%, totaling US $2.5 billion. In light of these developments, the Chamber called on US companies "to increase their competitiveness amid strong support offered by the US government.”
Infrastructure projects accounted for 7% of total US direct investment in 2009. Annual investments in infrastructure and energy in Saudi Arabia have reached US $32 billion, followed by the UAE at US $10.6 billion and Egypt at US $9.3 billion. Natural gas prices are expected to recover next year despite a 2% dip in 2011.
In addition, the Gulf countries spent US $37 billion on defense equipment between 2005 and 2009, 88% of which went to the UAE (US $32.6 billion), and $146 billion of defense equipment is expected to be sold to the MENA region in 2013. According to the Chamber, tensions created by Iran’s nuclear program caused a rise in defense spending in 2010. The UAE ranked third in projected military sales and is currently considering buying fighter jets and helicopters worth US $45 billion. Saudi Arabia spent US $67 billion in 2010 to develop its air force, and proposes to spend US $30 billion to upgrade its naval forces.
In the 2010-2011 budget, defense exports totaled US $1.5 billion to Egypt, US $7 billion to Kuwait, US $13 billion to Iraq, US $100 million to Bahrain and US $300 million to Tunisia.
According to McKinsey Consulting Group, trade is expected to increase between China and the GCC from US $350 billion to US $500 billion by 2020. India's trade with the GCC was worth US $83.9 billion in 2009-2010, including US $43.5 billion with the UAE, whereas India's trade with the entire MENA region is currently worth US $116.9 billion.
US investment in Lebanon could create 30,000 job opportunities in the US, since the US is the top exporter to Lebanon, even before China. 47% of these exports are in new and used cars, 10% in computers, 8% in oil and 8% in communications equipment. The Chamber highlights two essential sectors in Lebanon, namely oil and gas exploration; a possible third sector is mobile phones.
Read More: http://www.al-monitor.com/pulse/business/2012/02/us-exports-increase-in-middle-ea.html