TBY talks to Francisco J. Sánchez, US Under Secretary of Commerce for International Trade, on the trade relationship between the US and the UAE.
TBY Why did the current trade mission choose Qatar and the UAE specifically?
FRANCISCO J. SÁNCHEZ We chose Qatar and the UAE for three main reasons. First, both countries are investing heavily in infrastructure and transportation, to the tune of $300 billion combined. Second, both countries have strong economic growth projections during the short, medium, and long term. Third, these countries have histories as profitable markets and business hubs for many American companies. Since the beginning of this administration, these markets have been some of our top priorities. In addition to my trips to the region, our Assistant Secretary for Market Access and Compliance, Michael Camuñez, and our Assistant Secretary for Trade Promotion, Suresh Kumar, have also visited both countries in order to promote further trade and investment.
The Gulf has been identified as a priority market for the US. What factors went into this calculation, and specifically what makes the region as a whole stand out?
The Gulf is showing strong economic growth projections in the short, medium, and long term. Additionally, US companies face increased competition from East Asian, South Asian, and European businesses in the region. Thus, it behooves the US government to increase its work in as close collaboration as possible with our private sector, which is competing against foreign firms. The US government has always been dedicated to its relationships with the Gulf, and our private sector has always been active in the region. President Obama’s National Export Initiative provides us a platform to show the Gulf that our government and private sector are each, and together, committed to the region and our continued economic and commercial relationships. As a region, what stands out is the vision for the future that the governments of the Gulf countries have taken. They see the need and opportunity for economic diversification. While oil and gas is, and will continue to be, an important sector—one in which we have been and will continue to be involved—many of the regions have a vision to invest in their people by investing in health, education, and new technologies, all using environmentally sound strategies, and we have competitive advantages in each of these areas.
Historically, what has the trade relationship been like between the US and the UAE, Dubai specifically, and what key developments have you witnessed?
The US-UAE trade relationship is marked by the same characteristics as are our political, military, and strategic relationship: friendship, dedication, and collaboration. US-UAE trade has almost quadrupled in the last decade from $3.3 billion in 2000 to $12.8 billion in 2011. Each year, the UAE is the largest, or one of the largest, destinations for US exports in the Middle East and North Africa. While the energy sector is still a major contributor to the UAE’s GDP, and our companies have been and will continue to be very active in that sector, our trade relationship has expanded into consumer products, services, and almost anything else you can think of. Today, US companies are already active in the country’s moves into renewable energy, education, and other activities undertaken to diversify its economy and provide greater opportunities for its population. In regard to Dubai specifically, we have been a partner in the Emirate’s impressive growth since the beginning. Our trade relationship with Dubai has continued to mature.
In which industries and sectors do you see the most potential for greater commercial integration between Dubai and the US?
I never like to limit the products or services that I cover when I speak about opportunities for US–UAE commercial integration. We shouldn’t limit our imagination. Already one has seen American companies participate in Dubai’s impressive growth across many sectors; from energy to water, from glass to coffee outlets, from automobiles to speedboats and yachts, and from shoes and clothing to jewelry. For instance, Pottery Barn opened its first Middle East store in Dubai, to take advantage of the Emirate’s purchasing power. Additionally, the UAE is a top destination for US SMEs; from 2007-2008, the UAE was one of the markets with the largest percentage increases in SME exports to the world. Today’s global economy is so diverse and changes so quickly, that it is almost impossible for anyone to say what is going to be hot tomorrow. Rather than naming a specific sector, I can say that commercial integration between Dubai and the US is going to be based on products, services, technologies, and individuals that are dedicated to mutually beneficial commercial relationships that help create knowledge and economic return for both sides.
Would you say there are any further regulatory changes needed to attract more businesses to Dubai?
In a global economy that is as fluid and competitive as the one in which we operate, there is increasing pressure on nearly all governments to ensure their regulatory environments can keep up with changing economies, and that there is transparency. Dubai has rightfully earned its favorable reputation as a good place to do business. And a large part of that reputation stems from the excellent counseling and assistance offered to foreign companies by the Dubai Chamber of Commerce, the Dubai Department of Economic Development, and other government organizations geared to promoting trade and investment. Of course there are always areas for improvement. US (and other foreign) firms often cite the restrictions on foreign ownership, the requirement of having a local agent in order to do business in the UAE, and difficulties in terminating agents as some of the issues affecting their investment decisions in Dubai and the UAE. I understand that the new revisions to the Companies Law that was just passed by the UAE Cabinet will allow more than 49% foreign ownership in certain sectors. We will be following these new developments closely and welcome any changes that make it easier for our firms to do business in the UAE. Additionally, another concern I have heard from US companies across industries, vis-à-vis Dubai, is a need for increased transparency in regulatory development.
What is your outlook for US businesses operating in Dubai and for the region as a whole in the coming year?
I am bullish on our companies operating in Dubai and in the region. Our exports to the UAE were up almost 35% for January-October 2011, versus the same period in 2010. Despite regional political unrest, the Gulf has generally remained stable and is making heavy investments to address many of the socioeconomic concerns of its citizens. US businesses must be ready to compete, of course; but they have the technology, products, and business know-how to do so. In 2012, like in years past, you’ll see our companies visiting Dubai’s trade shows, meeting with potential partners from throughout the region, and inviting them to visit their sites and facilities in the US.
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