8 3,8 ˘! %024:9,7 :?9 - amcham egypt inc

AmCham MENA Regional Councilwww.amchammena.org

The AmCham MENA Regional Council (MENA Council) was established in 2005, and comprises the AmChams of

Abu Dhabi-UAE, Algeria, Bahrain, Egypt, Jordan, Lebanon, Morocco and Tunisia. The objective of the Council is

to work on promoting greater business opportunities between the US and the Middle East and North Africa region.

The Council works on effectively linking the various members, and institutionalizing their ongoing coordination

with the US Chamber of Commerce. It also works on promoting free trade agreements between MENA countries

and the US and on fostering increased awareness among MENA region manufacturers and producers of export

opportunities to the US through those agreements.

AmCham Tunis is the current chair of the Council, and AmCham Abu Dhabi is the Vice Chair. The Council’s per-

manent secretariat resides at AmCham Egypt.

MissionTo promote trade and investment between the US and the MENA Region

Objectives of the AmCham MENA Regional Council• Promote free trade between MENA countries and the United States.

• Foster increased awareness among MENA region manufacturers and producers for potential business opportu-

nities between the US and the MENA region.

• Promote closer ties with the US market.

• Support and promote various investment and trade initiatives.

• Coordinate formal programs focusing on the promotion of US business opportunities.

• Foster increased collaboration between members of the Council.

• Effectively link the different organizations, and institutionalize their ongoing collaboration with the US Cham-

ber of Commerce.

• Organize regional trade and investment conferences and exhibitions.

Trade and Investment ReportMENA-US

May 2012

4 • MENA-US Trade and Investment Report

1 General Overview of MENA

1.1 Background on MENA

MENA is an acronym for “Middle East and North Africa", a geographic classification fora group of countries extending from Morocco in northwest Africa to Iran in southwestAsia. According to the World Bank, the MENA region consists of 21 members, of whichthere are 17 Arab nations, the Palestinian Authority, and the non-Arab Israel, Iran andMalta. By some definitions Cyprus and Turkey also belong to MENA.

The MENA region includes all Arab countries except for the sub-Saharan countries ofSudan, Somalia and Mauritania. Whichever definition of MENA is used, it is a regionunique in its geopolitical setting and supported by a longstanding history of strategic inter-national economic relations and strong political dialogue.

In the following sections we refer to the MENA region according to the definition ofthe United States Trade Representative (USTR) which divides MENA into 16 Arab nationsin addition to Iran and Israel. We are only concerned with the Arab MENA countries in addi-tion to the West Bank and Gaza, with a focus on recent trends in investment and tradebetween the US and countries of the AmCham MENA Regional Council.

The MENA region is endowed with a wealth of natural petroleum resources (60% ofworld oil reserves and 45% of natural gas reserves) concentrated in the Arabian Gulf andMaghreb, which serves as an important growth engine for these countries. Eight MENAcountries are members of the Organization of Petroleum Exporting Countries (OPEC),which was founded in 1960, while 10 Arab countries currently comprise the Organizationof Arab Petroleum Exporting Countries (OAPEC), founded in 1968. All Arab MENA nationsare members of the Arab League and the Greater Arab Free Trade Area (GAFTA).

Tunisia

Bahrain

Algeria

Morocco

Libya

IraqSyria

Kuwait

Qatar

Jordan

Oman

United ArabEmiratesYemen

SaudiArabia

Lebanon

Egypt

PalestinianAuthority

Iran

Turkey

Arab MENA and GAFTA Non-Arab MENA AGADIR

COMESA OPEC US FTA EuroMed Partnership

Israel

Mercosur

EFTA

Arab MENA covers an area of 9.6 million km2, or 6.5% of the world’s landmass, whichmakes it the third largest after Russia and Canada. It is larger in area than China and theUnited States and more than twice the size of the EU. The population of Arab MENA com-prises 4.2% of the total world population, and is equivalent to almost one quarter of thepopulation of China, and just larger than the population of the US.

1.2 MENA Business Environment

The year 2011 has been one of dramatic change for the MENA region and end result has yetto fully materialize. Clearly though, rising costs and lingering political instability are com-mon in the Arab MENA region, but to varying degree. In April 2012, the International Mon-etary Fund (IMF) forecast regional growth at a reasonable 4.2%; below the trend in 2011 buthigher than the 3.5% global average in 2012.

Arab MENA Demographics (2011)

5

Total Population (million) 303.07

Total Land Area (km2) 9,582,497

Average Population Density (people/ km2) 217.22

Population Growth Rate 1.68%

Total Labor Force (million) 98.40

Top Three by Land Area (million km2)

Algeria 2.38

Saudi Arabia 2.15

Libya 1.76

Top Three by Population (million)

Egypt 86.1

Algeria 36.3

Morocco 32.8

Top Three by Population Density (people/km2)

Bahrain 1,642.56

West Bank and Gaza 696.59

Lebanon 398.10

Top Three by Labor Force (million)

Egypt 27.74

Morocco 11.60

Algeria 11.13

Source: Calculated from CIA World Factbook and EIU

2010Tunisia Tunisia Yemen Bahrain Libya

ProtestsBegin

PresidentLeavesCountry

Discontentand Protests

BeginViolence

Rebels Assert

Control

Dec-17 Jan-14 Feb-03 Feb-14 Mar-05

Jan-07 Jan-25 Feb-11 Feb-16 Mar-16

Algeria Egypt Egypt Libya Syria

Riots overUnemploy-ment and

Food Prices

MassDemonstra-tions Begin

PresidentSteps Down

ProtestsBegin

ProtestsBegin


Among oil exporters, high oil prices contributed to growth of 4%. Among oil importers,growth was 2% as a direct reflection of the effects of social unrest. Other than throughtheir effects on oil prices, global factors and European developments have had a rela-tively minor impact on the MENA region.

While growth was modest some countries managed to score positively in the businessenvironment. In the World Bank Doing Business Report for 2012, Morocco improved itsbusiness regulation the most compared to other global economies, climbing 21 places to94, by simplifying the construction permitting process, easing the administrative burden of tax compliance, and providing greater protections to minority shareholders. Since 2005,Morocco has implemented 15 business regulatory reforms. The UAE and Saudi Arabiascored the highest in the region in doing business in general.

12

10

8

6

4

2

0

-2Yemen Egypt Jordan AlgeriaLebanon Saudi

ArabiaBahrain OmanUAETunisia KuwaitMorocco Qatar Iraq

0

1.5 2.0 2.2 2.32.8 3.0 3.1

3.75.0

6.0 6.06.6

11.1

-0.9

(%)

2012 Growth Forecast in Arab MENA Countries

Source: IMF

• Countries with publicprotests exceedingan estimated 1,000individuals

2011

2012Yemen Libya Tunisia Egypt Tunisia

PresidentLeavesCountry

Rebels EnterTripoli

Elections forNew

Constituent Assembly

Parliamen-tary

ElectionsBegin

MoncefMarzoukiElected asPresident

Jun-03 Aug-21 Oct-23 Nov-28 Dec-13

Aug-03 Oct-20 Nov-23 Dec-12 Feb-25

Egypt Libya Yemen Syria Yemen

PresidentGoes on

Trial

Presidentkilled

PresidentResigns

ElectionsAmid

Strikes andProtests

AbdrabuhMansur

Hadi SwornIn

7

2011

Indicator Sub-Region 2008 2009 2010 2011 2012 2013

Gulf Cooperation Council 7.4 1.3 5.3 6.5 4.8 5.0

Maghreb 3.8 2.4 3.5 -5.7 9.5 5.0

Mashreq and ACC 5.7 4.5 4.8 1.3 2.4 5.0

Arab MENA 5.6 2.7 4.5 0.7 5.6 5.0

Gulf Cooperation Council 1,287 1,298 1,367 1,476 1,585 1,694

Maghreb 609 629 658 646 705 754

Mashreq and ACC 821 870 926 955 999 1,073

Arab MENA 2,717 2,797 2,951 3,077 3,289 3,521


Maghreb 6.0 3.3 3.0 3.0 3.7 3.4

Mashreq and ACC 12.2 3.5 6.5 8.7 8.3 6.6

Arab MENA 9.6 2.9 3.9 5.1 5.1 4.4

Gulf Cooperation Council 37,839 37,827 39,672 41,883 42,678 43,033

Maghreb 9,740 9,814 10,097 9,270 10,618 11,235

Mashreq and ACC 5,642 5,918 6,197 6,273 6,475 6,832

Arab MENA 17,740 17,853 18,655 19,142 19,924 20,367


Maghreb 82.8 84 84.3 85.6 86.5 87.9

Mashreq and ACC 169.9 173.8 177.7 181.4 180.6 184.6

Arab MENA 294 300.1 305.4 312.1 313.9 321.5


Maghreb 11.9 1.3 4.7 -1.0 6.5 6.7

Mashreq and ACC -1.0 -6.4 -5.6 -7.3 -7.1 -5.8

Arab MENA 9.6 0.6 4.0 3.8 5.3 5.7

* Data not available for Palestinian territories

Source: Calculated from EIU and IMF∆

Real GDP Growth (%)

Nominal GDP (USD at PPP)

Average Consumer

Price Inflation (%) ∆ *

GDP per Capita

(USD at PPP)

Population (million)

Current Account Balance

(% of GDP)

MENA Economic Outlook

Type of transition• Violent/forced• Nonviolent, unscheduled• No transition yet


The MENA region's role as a hub and transit point for global trade, transportation andlogistics has made this the “highest potential” sector for the region. Middle East seaportsare expanding vigorously; a total of USD 46.5 billion has already been committed todevelop the 35 ports in the region. Seaports in the UAE account for 61% of the GCCtrade volume, which is expected to rise with new capacity being added.

There are four industries in Arab MENA that are seen as having higher growth potential

than the energy sector.

2 MENA-US Economic IntegrationMost Arab MENA countries have extended their regional trade network towards the west

through partnerships and bilateral agreements with Europe and the US.

Over the recent years the US has been intensifying efforts to increase bilateral trade,

expand investment and create jobs, and to improve Arab MENA integration and trade

facilitation. Evidently, the top potential sectors in MENA economies are also in the lead

for US trade and investment.

In 2012, Morocco

improved its business

regulation the most

compared to other

global economies.

Rank 2012 Rank 2011Number of reforms by

country

UAE 33 35 2

Bahrain 38 33 0

Tunisia 46 40 0

Morocco 94 115 3

Jordan 96 95 2

Lebanon 104 103 1

Egypt 110 108 0

Algeria 148 143 1

9

Ease of Doing Business in MENA Council Countries

Source: World Bank

0 25 50 75

Transportation & Logistics

Retail, Hospitality & Leisure

Financial Services

Information & CommunicationTechnologies

Energy & Extractive IndustriesEntertainment & Media

ConstructionProfessional Services

Chemicals & Manufacturing

Consumer Goods

Automotive, Aerospace & Defence

Life Sciences

Percentage of respondents identifying sector as ‘High potential’

S

High Potential Sectors in MENA

Source: PWC and World Economic Forum

9

The Deauville Partnership was launched in May 2012 at the G-8 Leaders' Summitin response to historic changes underway in MENA. The group’s aim is to supportdemocratic transitions and increase economic growth in the region. The Partnershipconsists of five countries, including Egypt, Jordan, Libya, Morocco, and Tunisia; fiveregional partner countries, including Kuwait, Qatar, Saudi Arabia, Turkey, and theUAE; as well as G-8 members and other international organizations.

2.1 MENA-US Trade

US trade with the Arab MENA region represented 4.1% of US exports and 3.6% of itsimports in 2011. The combined strength of the Arab MENA would rank it as the sixthlargest export destination and origin of imports for the US in 2011.

The amount of trade between the US and the Arab MENA has generally been on therise since the beginning of the decade and through 2011. Arab MENA exports to the USgrew by a compound annual growth rate (CAGR) of 11.5% to reach USD 99.4 billionin 2011, while imports during the same period grew by 14.5% reaching USD 55.7 bil-lion in 2011. The non-oil Arab MENA-US trade balance is largely in favor of the US.With oil and gas trade aside, Arab MENA imports from the US were more than four-times the value of exports. Top non-oil exports are textiles and clothing (Egypt and Jor-dan), aluminium (UAE and Qatar), and fertilizers (Saudi Arabia, Egypt and Kuwait).

0

20

40

60

80

100

120

2005 2006 2007 2008 2009 2010 2011

60.3

73.9

81.1

116.1

55.3

73.4

99.4

26.832.9

41.2

49.744.1

48.555.7

20042003200220012000

34.9

46.3

25.928.430.0

19.116.116.517.216.3

Arab MENA Exports to US Arab MENA Imports from US

Arab MENA-US Trade

High population growth

and the large workforce

are an asset to the Arab

MENA that remains to

be fully exploited.

Source: WISERTRADE

US

D b

illio

n


Saudi Arabia is the largest Arab MENA exporter to the US and the second largestimporter. Algeria follows behind, supplying almost one fifth of US imports from theArab MENA world. The majority of Algerian and Saudi Arabian exports to the US arein the form of crude oil. Saudi Arabia and the UAE, primarily import aircraft, large pas-senger cars and machinery. Altogether, 37% of US exports to the Arab MENA are inthe form of passenger cars exported to Saudi Arabia, UAE and Kuwait; civil aircraft,over half of which went to the UAE; and oilseeds and grains, mainly to Egypt.

Others (Yemen, Libya, Syria, West Bank and Gaza) 1.7%

Tunisa 1.1%

Bahrain 2.2%

Oman 2.6%

Jordan 2.6%

Algeria 2.9%

Lebanon 3.2%

Iraq 4.4%

Kuwait 4.9%

Qatar 5.0%

Morocco 5.1%

Saudi Arabia24.8%

UAE28.4%

Egypt11.1%

Oman 2.6%Oman 2.6%

Bahrain 2.2%

unisa 1.1%T

1.7%est Bank and Gaza WWe

emen, Libya Others (Y Yemen, Libya, Syria, est Bank and Gaza)

emen, Libya, Syria

Lebanon 3.2%

Algeria 2.9%

Jordan 2.6%

Kuwait 4.9%

Iraq 4.4%

Lebanon 3.2%

Algeria 2.9%

Jordan 2.6%

Kuwait 4.9%

28.4%UAE

Kuwait 4.9%

Qatar 5.0%

Kuwait 4.9%

Qatar 5.0%

5.1%Morocco 1.1%

24.8%

1Egypt

ArabiaSaudi 24.8%

Arabia

Oil and Gas 84.5%

Others 0.1%

Saudi Arabia47.6%

Iraq17.1%

Algeria14.7%

Tunisia 0.4%Syria 0.4%

Bahrain 0.5%Yemen 0.6%

Libya 0.6%

Morocco 1.0%

Jordan 1.1%

Qatar 1.2%

Egypt 2.1%

Oman 2.2%

UAE 2.5%

Kuwait 7.9%

Qatar 1.2%

Jordan 1.1%

Morocco 1.0%

Libya 0.6%

Morocco 1.0%

Libya 0.6%emen 0.6%YYemen 0.6%

Bahrain 0.5%Syria 0.4%

Bahrain 0.5%Syria 0.4%

%

Kuwait 7.9%

UAE 2.5%

Oman 2.2%

Egypt 2.1% Others 0.1%unisia 0.4%T

Others 0.1%unisia 0.4%

47

14.7%

47

17.1%

Algeria

Iraq

Saudi 7.6%7 6%

ArabiaSaudi

Petroleum and Coal Products 6.2%

Apparel 2.1%

Oil and Gas 84.5%

Pesticides, Fertilizers and Other Agricultural

Chemicals 1.4%

Alumina and Aluminum Processing 1.0%

Basic Chemicals 0.8%

Miscellaneous Manufactured Commodities 0.4%

Nonmetallic Minerals 0.3%

Textile Furnishings 0.3%

Others2.8%

Oil and Gas 84.7%

Miscellaneous Manufactured


Commodities 0.4%Miscellaneous Manufactured


extile Furnishings 0.3%TTextile Furnishings 0.3%


extile Furnishings 0.3%


Chemicals 1.4%and Other Pesticides, Fertilizers

Processing 1.0%Alumina and

Apparel 2.1%Chemicals 1.4%

Agricultural and Other Pesticides, Fertilizers

Processing 1.0%Aluminum Alumina and

Apparel 2.1%

Others2.8%Others2.8%

Products 6.2%Petroleum and Coal

Apparel 2.1%

nd 4 7

Apparel 2.1%

84.7Oil and d G d Gas

7%7% d Gas

Engines, Turbines, and Power Transmission Equipment 4%

Agriculture and Construction Machinery 4%

Petroleum and Coal Products 5%

Other General Purpose Machinery 3%

Grain and Oilseed Milling Products 3%

Other Fabricated Metal Products 3%

Navigational, Measuring,

Electromedical, and Control

Instruments 3%

Oilseeds and Grains 7%

Aerospace Products and Parts 14%

Motor Vehicles 16%

Others 38%

38%Others

16%ehicles V

Motor

Products Aerospace

Instruments 3%and Control

Electromedical, Measuring,

Navigational,

Instruments 3%and Control

Electromedical, Measuring,

Navigational,

38%

Products 5%Petroleum and Coal

Agriculture and Construction Products 5%Petroleum and Coal

Agriculture and Construction

and Parts 14%

and Grains 7%Oilseeds

Grain and Oilseed Milling

Other Fabricated Metal

Machinery 3%Other General Purpose

Products 3%

ain and Oilseed Milling

Products 3%Other Fabricated Metal Machinery 4%

Agriculture and Construction

ransmission Equipment 4%Turbines, and Power TEngines,

Machinery 3%Other General Purpose

Machinery 4%Agriculture and Construction

ransmission Equipment 4%urbines, and Power

Arab MENA Imports from the US (2011)

Top Arab MENA Exports to the US (2011) Top Arab MENA Imports from the US (2011)

Arab MENA Exports to the US (2011)

Source: WISERTRADE

Source: WISERTRADE

11

MENA Council Merchandise Trade Flows

2.2 MENA-US Investment Trends

Saudi Arabia is the largest recipient of Foreign Direct Investment (FDI) in the Arab MENAregion, receiving over one-half (USD 28.1 billion) of total FDI inflows in 2010. It is fol-lowed by the UAE and Egypt.

The presence of the US in FDI inflows to the MENA is certainly less visible than itspresence in trade flows, averaging 4.4% of total FDI inflows in 2010. US direct invest-ments in Arab MENA are concentrated in Egypt.

As of 2010, the Arab MENA region received a total of USD 64.4 billion in US FDI, down11.3% from the previous year and representing a mere 1.1% of the total stock of US FDI abroad.

In 2010 alone, Arab MENA as a whole received 2.4% of US FDI outflows. While USFDI global outflows increased by 16.7% in that year they rose a mere 10% in value for theMiddle East and Africa.

US

2007 2008 2009 2010 2011 2010 2011 Share in total

2011 (%)

Exports 61 79 45 57 73 14.5 14.6 20.0

Imports 27 39 39 40 48 1.2 1.6 3.3

Exports 14 18 13 14 21 0.4 0.5 2.5

Imports 11 14 10 11 18 1.2 1.2 6.7

Exports 24 30 23 25 28 2.2 2.1 7.4

Imports 45 57 46 52 56 6.8 6.2 11.0

Exports 6 8 6 7 8 1.0 1.1 13.3

Imports 14 17 15 15 19 1.2 1.5 7.7

Exports 3 3 3 4 4 0.1 0.1 2.0

Imports 12 16 16 18 20 2.0 1.8 9.0

Exports 15 20 14 18 21 0.7 1.0 4.7

Imports 32 42 33 35 43 1.9 2.9 6.7

Exports 15 19 14 16 18 0.4 0.4 2.0

Imports 19 25 19 22 25 0.6 0.6 2.3

Exports 179 239 192 212 253 1.1 2.4 1.0

Imports 150 200 170 183 211 11.7 15.9 7.5

Source: EIU and WISERTRADE

(Values in USD billion)

Bahrain

Egypt

Algeria

Jordan

Lebanon

Morocco

Tunisia

UAE

Country Trade Flow


2.3 Leading Sectors for US Investment in the MENA Council

Since the EU partnership agreement with North Africa, the US has been losing ground inits investment and trade positions. Despite this difficulty many major US corporations arelocated in the MENA region. This includes CitiBank, Coca-Cola, Ford, General Motors,Hewlett Packard, Microsoft, Oracle and Pfizer.

Over 120 American businesses and 80% of Fortune 500 companies are operating in theMENA region.

In Morocco, foreign investments totaled USD 1.3 billion in 2010, distributed across var-ious sectors including reneweble energy, building and construction and agriculture.

In Jordan, the leading opportunities for US investment are considered to be in the realestate sector, as the previous years have witnessed investments worth over USD 21 billionin the sector. Tourism also represents a key sector, especially medical tourism in the DeadSea region. The boom in private hospitals is also a key facet in the growing medical tourismsector, which generates about two-thirds of all tourism income for Jordan. ICT is consid-ered to be the third largest contributor to Jordan’s economy, accounting for 10% of GDPand 70,000 jobs.

Two-thirds of US FDI in Egypt is in the petroleum sector and the rest is distributedamong various other sectors such as consumer goods, pharmaceuticals, automobile pro-duction and financial services. Some of the largest US investors in Egypt include Ameri-can Express, AIG, American Standard, Coca-Cola, Energizer, ExxonMobil, GeneralMotors, GlaxoSmithKline, Heinz, Microsoft and Proctor & Gamble.

Total MENA Council =USD 22.3 billionTotal Arab MENA = USD 64.4 billion

Morocco 1.4%Tunisia 1.1%

Algeria 25.0%

Jordan 0.9%

Lebanon 1.3%

Egypt51.5%

Algeria25.0%

UAE 18.7%

(End of 2010)*

Co otal MENA ATTotal MENA Council =USD 22.3 billion

Lebanon 1.3% Morocco 1.4%

Arab MENAotal TTotal Co otal MENA A Council =USD 22.3 billionTTotal MENA

Lebanon 1.3%

Jordan 0.9%

unisia 1.1%TMorocco 1.4%

= USD 64.4 billion NA A = USD 64.4 billion Council =USD 22.3 billion

unisia 1.1%

Algeria

UAE 18.7%

25.0%Al i

51.5%Egypt

25.0%

(End of 2010)*(End of 2010)*

Morocco 0.7%Tunisia 0.8%

Bahrain 2.6%

Algeria 9.1%

Jordan 1.3%

UAE 3.4%

Lebanon 1.0%

Egypt81.1%

Jordan 1.3%

Lebanon 1.0%Jordan 1.3% unisia 0.8%T

Morocco 0.7%

Lebanon 1.0%unisia 0.8%

UAE 3.4%

Algeria 9.1%

UAE 3.4%

Algeria 9.1%

Bahrain 2.6%Morocco 0.7%

81.1%Egypt

Total MENA Council =USD 2.7 billionTotal Arab MENA = USD 2.8 billion

M

Arab MENAotal TTotal Co otal MENA A Council =USD 2.7 billionTTo

= USD 2.8 billion NA A = USD 2.8 billion Council =USD 2.7 billion

* Latest data available at the time of print.

Source: USITC

US Capital Stock in MENA Council CountriesUS Investment Inflows to MENA Council Countries in 2010

13

Leading Sectors for US Exports and Investment in MENA Council Countries (2011)

Source: US Commercial Service, Country Commercial Guides, 2010*-2012**.

Energy and

Power

ICT Industry Infrastructure

and Utilities

Machinery and

Equipment

Services

Algeria* Oil and Gas Telecommunica-tion Equipmentand Services

Public Works Healthcare

Bahrain** Electricity Telecommunica-tions- Computer and Peripherals

Frozen/ChilledBeef and Poultry -Motor Vehicles and Vehicle Parts

Water Desalination

Air Conditioningand RefrigerationEquipment - Medical Equip-ment/Healthcare

Financial Services- Education andTraining

Egypt** Electricity andPower Generation

Telecommunica-tion Equipmentand Services

Safety and Security Systems

Medical Equipment and Supplies

Port Development Services - Franchising

Jordan Renewable Energy

Information andCommunicationTechnology

Agriculture -Clean Tech -Biotechnology

Safety and Security Systems

Healthcare Technology andMedical Devices

Travel andTourism - Aviation/Aerospace

Lebanon Automotive -Drugs/Pharma-ceuticals - Agriculture - Apparel - PlasticMaterials/Resins

Medical Equipment(MED)

Education Services (EDS)

Morocco Renewable Energy

Agriculture -Clean Tech -Biotechnology

Safety and Security Systems - WaterManagement

Building and Construction

Tunisia Electrical PowerSystems and Renewable Energy

Telecommunica-tion Equipmentand Services

Agriculture Sector

Aircraft/AirportGround Support/Aeronautics

Pollution ControlEquipment -AutomotiveParts/Equip-ment/Services

Architecture/Con-struction/Engi-neering Services -Franchising - Insurance

UAE* Oil and Gas FieldMachinery andServices

Computers and Peripherals

Aircraft and Parts -Building Materials

Pollution Control Equipment - Medical Equipment -Sports and RecreationalEquipment

Architecture/Construction/Engineering Services


3. Partnerships and Agreements between MENA and the US

In May 2003, the US set out to re-ignite economic growth and expand opportunity inthe Middle East through establishing a US-Middle East Free Trade Area (MEFTA) by2013. The MEFTA focus is to work in graduated steps to increase MENA trade andinvestment with the US and the world economy and to assist them in implementingdomestic reforms, instituting rule of law, protecting private property rights (includingintellectual property) and creating a foundation for openness, economic growth andprosperity.

The US has existing free trade agreements with Jordan, Morocco, Bahrain, Oman,and the UAE, in addition to its Trade and Investment Framework Agreements (TIFAs)with most countries in the region. These agreements provide the context for US tradeand investment policy aimed at assisting the development of inter-regional economicties. The Arab MENA region also benefits from the US Generalized System of Pref-erences (GSP) and each of Egypt and Jordan are signatories of the Qualifying Indus-trial Zones Protocol (QIZ).

3.1 The Generalized System of Preferences (GSP)

The US GSP, established by the Trade Act of 1974, allows non-reciprocal, duty-freeentry into the US for about 4,800 products in 129 countries. In 2011, the GSP facili-tated $21 billion in imports into the US, of which USD 186.2 million (less than 2%)were from MENA region.

Tunisia is the largest Arab MENA beneficiary of the US GSP system, exportingaround USD 98.7 million worth of goods to the US in 2011, representing 53% of thetotal US GSP imports from the Arab MENA, followed by Egypt and Lebanon.

Item Exporting CountryValue (USD

million)

Tunisia 69.2

Lebanon 3.8

Subtotal 73.4

Egypt 14.8

Lebanon 4.9

Jordan 0.5

Tunisia 0.1

Subtotal 20.3

Egypt 15.3

Subtotal 15.3

Lebanon 7.2

Egypt 1.5

Tunisia 0.1

Subtotal 8.8

Tunisia 8.4

Subtotal 8.4

Egypt 5.4

Tunisia 0.9

Lebanon 0.3

Subtotal 6.7

Subtotal 140.1

Total MENA Council 186.1

Grains and Oilseeds

Fruit and Vegetable

Preserves

Aluminium Sheets

Plastic Products

Engines, Turbines, and

Power Transmission Equipment

Cut Stone and Stone Products

Top MENA Council GSP Exports to the US (2011)

Source: USITC

15

3.2 Qualifying Industrial Zones (QIZs)

In the process of amending the United States-Israel Free Trade Area ImplementationAct of 1985, the US Congress authorized in 1996 the creation of the Qualifying Indus-trial Zones (QIZs) as a way of promoting peace in the Middle East. Jordan and Egyptare the only two Arab states to sign the QIZ agreement; they are also the only countriesthat have a peace treaty with Israel. The protocol allows both Arab countries to haveduty-free entry into the US on products that are jointly manufactured with Israel.

0

200

400

600

800

1000

1200

2009 2010 2011

596.8

200.1

95.1

848.1

956.01,009.0

QIZ Export Trends

US

D m

illio

n

Source: USITC

0

50

100

150

200

2009 2010 2011

A

Iraq0.6%

Jordan 0.6%

Algeria 0.3%

Tunisia 53.1%

Lebanon 19.2%Egypt

26.1%

West Bank0.1%

152.6

139.1

98.7

45.451.5 48.7

43.6 38.4 35.812.9 6.6 1.2

US

D m

illio

n

Arab MENA GSP Exports

Tunisia Egypt Lebanon Jordan

Egypt Jordan


The protocol was first signed with Jordan in 2001. Products exported under the QIZfrom Jordan are mostly apparel, chemicals, plastics and rubber materials.

Egypt signed the protocol on December 14th, 2004, which coincided with the end ofEgypt’s quota on textiles and apparels under the Agreement on Textiles (ATC). Ready-made garments and home textiles dominated Egypt’s QIZ exports to the US, accountingfor over 90% of all exports under the QIZ protocol. The initial thrust of the QIZ in Egyptwas in seven industrial locations, where it started with 397 companies, and since then hasincreased to 15 industrial zones with around 823 companies.

3.3 Bilateral Investment Treaties (BITs)

The Bilateral Investment Treaty (BIT) program, initiated in 1981, was designed to protectand promote US investment in developing countries. The agreement protects the investorsthrough various regulations such as the most-favored-nation (MFN) treatment along withflexibility in financial transfers. The US government signed BITs with various MENAcountries including Bahrain, Egypt and Jordan.

Egypt was the first country to sign a BIT with the US in 1986. The treaty entered intoforce in June 1992. In 1998, a BIT between the US and Bahrain was signed and entered intoforce in 2001, the first of its kind in the GCC region. This was followed by a BIT betweenthe US and Jordan which entered into force in 2003.

There are 622 BITs signed

by the MENA region, com-

prising 21% of all BITs con-

cluded worldwide.

103

60

55

54

52

51

47

43

39

37

72

43

38

33

41

33

23

14

27

22

0 20 40 60 80 100 120

Egypt

Morocco

Kuwait

Tunisia

Lebanon

Jordan

Algeria

Qatar

Syria

Yemen

BITs in force Total BITs signed

T

Top 10 MENA BIT Signatories

Source: UNCTAD

17

3.4 Trade and Investment Framework Agreements (TIFAs)

Prior to the FTAs the US had signed TIFAs with Bahrain, Jordan, Egypt, Lebanon andTunisia as a step towards strengthening bilateral trade and investment ties with these coun-tries and as part of the MEFTA initiative.

3.5 US-MENA Bilateral Free Trade Agreements

Jordan became the first Arab MENA country to sign a free trade agreement (FTA) with theUS in 2001. Prior to the implementation of the FTA, Jordan’s exports to the US were justUSD 73 million in 2000. One year after the FTA entered into force exports multiplied toUSD 412 million, and by 2011 they exceeded USD 1.1 billion. Jordanian imports from theUS also increased over the years from USD 404 million in 2002 to USD 1.5 billion in 2011.

Five years later in 2006, the US-Morocco FTA was signed. This was also the first USFTA in Africa. The US-Morocco FTA led to an inevitable increase in trade. US importsfrom Morocco in 2006 were USD 521 million, by 2011 imports had reached USD 1 bil-lion. US exports to Morocco also increased significantly to reach USD 2.9 billion.

In that same year the third US FTA was signed in the MENA region with Bahrain tobecome the first FTA between the US and a Gulf country. The agreement entered into forceon August 1, 2006. Due to economic reforms in Bahrain over the previous few years,Bahrain has become a major financial center in the Gulf region. However, trade betweenthe US and Bahrain was relatively limited compared to the other two MENA countriesdue to Bahrain’s small size.

Algeria Bahrain Egypt Jordan Lebanon Morocco Tunisia UAE

GDP at Market Prices (USD billion) 207.0 20.0 231.1 27.6 43.2 99.0 44.3 357.5

Real GDP Growth (%) 2.5 1.8 1.8 3.1 1.5 4.3 3.7 3.3

Population (million) 36.3 1.3 86.1 6.0 4.3 32.8 10.5 7.5

Current GDP per Capita PPP (USD)1 7,210 27,368 6,504 5,900 15,597 5,070 9,557 48,598

Unemployment (%) 10.0 NA 12.2 12.9 9.0 9.2 14.2 4.0

Consumer Price Inflation (%) 4.5 2.0 10.2 5.0 3.1 1.4 4.4 1.1

Total International Reserves (USD billion) 187.6 4.0 19.2 13.6 47.6 21.5 9.8 56.0

Interest Rates (period average lending rate) 8.0 6.6 12.0 9.0 7.3 11.5 4.8 4.7

Average Exchange Rate (March 2012)

(Local Currency per USD)2 74.3 0.38 6.03 0.71 1,503.44 8.44 1.51 3.67

Source: EIU, IMF1 and Oanda2

Key Economic Indicators for MENA Council Countries (2011)


MENA Council Member AmChams

AMERICAN CHAMBER OF COMMERCE IN EGYPT(COUNCIL PERMANENT SECRETARIAT)

Tel: +202 3338-1050 • Fax: +202 3338-1060

E-mail: [email protected]/[email protected]

Website: www.amcham.org.eg

TUNISIAN AMERICAN CHAMBER OF COMMERCE (TACC)(COUNCIL CHAIR 2011-2013)

Tel: +216 7188-3226 • Fax: +216 7188-9880

E-mail: [email protected]

Website: www.tacc.org.tn

AMERICAN CHAMBER OF COMMERCE IN ABU DHABI-UAE(COUNCIL VICE CHAIR 2011-2013)

Tel: +971 2631-3604 • Fax: +971 2633-0489


Website: www.amchamabudhabi.org

AMERICAN CHAMBER OF COMMERCE IN ALGERIATel: +213 (0) 55001-0343, +213 (0) 66150-5045


Website: www.amcham-algeria.org

AMERICAN CHAMBER OF COMMERCE IN BAHRAINTel: +973 7708-8900 • Fax: +973 7708-8903


Website: www.amcham-bahrain.org

AMERICAN CHAMBER OF COMMERCE IN JORDANTel: +962 (6) 565-1860 • Fax: +962 (6) 565-1862


Website: www.amcham.jo

AMERICAN LEBANESE CHAMBER OF COMMERCETel: +961 198-5330 • Fax: +961 198-5331


Website: www.amcham.org.lb

AMERICAN CHAMBER OF COMMERCE IN MOROCCOTel: +212 52225-0736/37/51 • Fax: +212 52225-0730


Website: www.amcham-morocco.com

Produced by the Business Studies & Analysis Center (BSAC)The American Chamber of Commerce in Egypt (Regional Secretariat-AmCham MENA Regional Council)

© 2012 The American Chamber of Commerce in Egypt

Trade and Investment ReportMENA-US

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