x Abu Dhabi, UAEThursday 27 July 2017

Lower the barriers to regional trade

Tariffs have been lowered, but trade within the Mena region still lags. Now a global trade-promotion body has pinpointed the problem.

The Arab world, chronically short of work for young people, could add two million jobs by trimming back the thicket of rules constraining trade within the region, experts say. This is advice that governments will, we hope, want to take seriously.

The International Trade Centre (ITC), an agency of the UN and the World Trade Organisation (WTO), says that states in the Middle East and North Africa are missing an opportunity to stimulate additional economic development.

Most countries around the world do a brisk trade with their neighbours. But of all non-oil exports from Arab states, only 11 per cent are sold within the region, among the world's lowest proportion of trade between neighbours. The problem, the ITC says, is not with tariffs, but with amorphous, intractable "non-tariff barriers" - high walls of regulations and paperwork that can seal borders tight. Under the guise of protecting public health, for example, a product can be banned even if it's not truly dangerous. This may prove far more beneficial to a well-connected local manufacturer whose monopoly is protected than it is to public health.

The UAE, the ITC says, has an "open" trade regime "with low tariffs and few non-tariff barriers". But not all our neighbours do as well. True, the 17 states of the Greater Arab Free Trade Area have reduced import tariffs sharply. And the GCC, which maintains a low common tariff on many imports, has made some progress on non-tariff barriers.

But too many Mena countries impose fiddly little rules that can change at short notice (a customs agent asking for attested documents guaranteeing the origin of each part in a chair, for example). These can be a more formidable barrier than the tariffs they replace.

A focused effort to sweep away such barriers would allow the entire region to enjoy the benefits of competitive advantage, by which each country produces and exports what it can make most efficiently. To be sure, two million jobs will barely make waves in a sea of unemployed ; the UN says Arab countries need 51 million more jobs by 2020, just to keep the region's jobless rate at the current ruinous 27 per cent.

The WTO's current round of global free-trade talks, named for Doha, where they began in 2001, has in fact been comatose since the 2008 global financial meltdown.

Yet bilateral, regional and wider freer-trade deals are proliferating. In that context, the ITC has usefully reminded us that there is a good way to ensure the Arab world maximises the benefits of trade.