x Abu Dhabi, UAESunday 23 July 2017

Easier trade can create 2 million jobs in Arab world

At least two million jobs could be created across the Arab world if export barriers are lifted to help stimulate stagnant regional trade, says the head of a major global trade organisation.

Boosting trade can help in creating jobs in the Arab world. Pawan Singh / The National
Boosting trade can help in creating jobs in the Arab world. Pawan Singh / The National

At least two million jobs could be created across the Arab world if export barriers are lifted to help stimulate stagnant regional trade, says the head of a major global trade organisation.

At the moment, most Arab countries trade far more with Europe, the United States and Asian countries than they do with each other. Only 11 per cent of Arab non-oil exports are within the region, one of the lowest rates of intra-regional trade in the world, says a report by the International Trade Centre (ITC).

"Arab states have taken away tariff barriers and put in non-tariff barriers instead. Most of them are significant and quite discriminatory in the way they are constructed," said Patricia Francis, the executive director of the ITC, a joint agency of the World Trade Organisation and the United Nations.

Taxes on goods exported within the region have come down in recent years under free trade agreements. But red tape relating to technical regulations, product standards and customs procedures has multiplied for companies wanting to export to a fellow Arab country. Many rules were beyond the capability of small firms to observe, the ITC report said.

Such rules could be swept away with little effort, said Ms Francis.

The move would help boost trade by 10 per cent and create more than 2 million jobs in the Arab world, she said. Joblessness in the Arab world is estimated at about 20 million by the Arab Labour Organisation.

"It's do-able and what it needs is political will," Ms Francis said. "It's a good first step in getting this region fully integrated into the world economy and diversified away from oil and gas."

Calls to refocus on regional trade comes as tremors in the global economy threaten some of the Arab world's leading trading partners. The euro-zone debt crisis risks curbing large flows of everything from car parts to vegetables from North African economies to the single-currency area. Signs of slowing growth are also emerging in China, another main buyer of Arab goods.

Biolife, a Tunisian organic food producer, plans to begin shipping vegetables and fruit to Dubai next year as recession spreads across swathe of Europe, its leading export market.

Belhassen Ben Zakour, the manager of Biolife, blames low awareness about organic food in the Middle East as well as insufficient air freight availability for the company's lack of focus on the region until now.

"Next year we will enter the Dubai market as there are a lot of opportunities," he said.

Low levels of tariffs and non-tariff obstacles mean the UAE is a favourite target for Arab exporters, said Juma Al Kait, the assistant undersecretary of foreign trade affairs at the Ministry of Foreign Trade.

"The openness of the trade regime and awareness of the importance of trade to the economy and economic diversification enabled the UAE to enjoy a low level of non-tariff barriers," he said.

But the ITC estimated the removal of further barriers would create about 35,000 unskilled jobs and 2,000 skilled jobs in the UAE by 2025.

Across the region, one of the most common trade barriers relates to "rules of origin", which require exporters to produce extra paperwork if their goods contain ingredients from a third-party country, said Ms Francis.

A lack of clarity on the classification of goods is another common problem, she said.

She cited a Jordanian company that makes cosmetic products from Dead Sea salts. When the firm tried to export goods to Egypt, it was told by the Egyptian authorities the products had to be classified as pharmaceutical goods, requiring the payment of higher tax and the need to meet stricter sanitary standards.

"There was no way they could have complied with pharmaceutical rules [but] we were able to negotiate a breakthrough," she said.

In addition, countries need to focus on developing skill-intensive sectors such as clothing manufacturing and services to help lift employment among women and youths, segments of the population where joblessness is especially high, said the ITC, which works on behalf of exporters in developing countries.

tarnold@thenational.ae

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