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Global Trade

February 2012 - Posts

  • The APTA Agreement – Economic Development in the Pacific

    While the Asia-Pacific Trade Agreement has existed in this incarnation for less than a decade, the trade agreement has roots in the earlier Bangkok Agreement, finalized in 1975 as a means of increasing intra-regional trade among nations in the region. The APTA treaty emerged from initiatives set by the United Nations Economic and Social Commission for Asia and the Pacific, or ESCAP, and presently seeks to unite all regions of Asia in economic cooperation.

    APTA

    Presently eight nations comprise the treaty, with plans to engage other Asian countries into dialogue, that they may also accede into the agreement. Current members of APTA include:

    • Bangladesh - Of the nation's major exports, fabric and apparel and jute are among the most popular. Jute, a vegetable fiber used in the making of fabric, rope, and similar items, is one of the country's largest crops and as such Bangladesh is one of the world's top producers of jute.

    • China - China boasts of the largest economies in the world and is also a top exporter of goods. Nearly one-fifth of exported electronics, machinery, and clothing are sent to the United States alone.

    • India - Many these days associate India with the growing industry of outsourced labor. In addition to handling call centers and customer service for various countries, India exports textiles, leather, and medical equipment.

    • Korea - In recent decades, Korea has become known for their automobile exports - namely from Kia and Hyundai. Other popular exports include computer components and electronic equipment.

    • Lao People's Democratic Republic - Also known as Laos, this country has one of the smaller overall GDPs of the treaty nations. Laos relies upon natural resources like coffee and precious metals - gold and copper in particular - to satisfy export income.

    • Sri Lanka - Sri Lanka has enjoyed growth in the agricultural sector in recent years, with tea, rubber, and coconuts among their better known exports.

    • Nepal - On average, Nepal brings in under one billion dollars income annually from exports, making it one of the lesser economies among APTA nations. Carpets and apparel, jute byproducts and herbs comprise their more sought-after exports.

    • The Philippines - Outside of China, the Phillippines are a major trade partner with the United States in this region. Electronics and copper, and tropical fruits and byproducts are some of the top products exported.

    According to UNESCAP, APTA has the distinction of being the only active trade agreement to connect China and India, two of the largest populated countries in Asia, if not the Eastern Hemisphere. Presently APTA seeks to court neighboring countries Mongolia, Malaysia, Indonesia, Pakistan, and Papua New Guinea into the treaty. As trade continues to grow in the Pacific rim, the goal of APTA will hopefully allow for tariff concessions between member nations and assist those with lower GDPs, and in turn improve political relations between countries.

  • GAFTA – Improving Trade Relations Among Arab Nations

    The American perception of Arab nations as a whole may be colored by media reports of unrest of conflicts. We turn on the news to watch revolutions unfold and troops trade fire, nonetheless the Greater Arab Free Trade Area remains intact. Recent summits held for the discussion of economies in the Arab regions, however, suggest that this trade zone has become irrelevant. The UAE Daily News reported in 2008 that the belief that Arab countries should unify as a bloc in dealing with the rest of the world. By learning from the examples set forth by the European Union, it is believed such a move could better boost trade among Arab nations.

    Members of GAFTA, fourteen of which have been involved in the agreement since its inception in 1998, include:

    • Algeria - A recent addition to the treaty (Algeria was admitted in 2009), this country exports mainly petroleum and natural gas and their byproducts to the US and Europe.
    • Bahrain - After oil, aluminum and banking concerns make up the majority of Bahrain's exports. Recent internal conflicts have put the country's status as a financial power in the Gulf at risk.
    • Egypt - Egyptian cotton and cotton apparel are coveted around the world. Outside of the free trade zone, the country exports goods to the United States, Italy, and France.
    • Iraq - Like other nations in this region, oil is the primary export, which is traded to the United States, India, and Italy among other nations in exchange for food and medicine.
    • Jordan - One of the larger economies in the region, Jordan maintains FTAs with countries throughout the world. Phosphates and pharmaceuticals are prime exports to India and Iraq, while they tend to rely on neighboring countries for oil.
    • Kuwait - The majority of Kuwait's oil exports are transported to Asia, with Japan and South Korea taking nearly a quarter of all goods. Kuwait is also known for their production of fertilizers and construction materials.
    • Lebanon - Lebanon claims one of the less economies among this group, and relies heavily on imports from Syria, France, the United States and others. What precious metals and chemicals they can export go mainly to Syria and UAE.
    • Libya - Italy is one of Libya's major markets for crude oil and related products. Though Libya maintains agricultural resources, they import the majority of foodstuffs from Europe and Asia.
    • Morocco - Moroccan textiles and phosphates are popular in Europe, particularly Spain and France. The country also relies upon their fishing industry and electronics.
    • Oman - This oil rich nation relies upon their natural resources to export crude to the UAE, Saudi Arabia, and Iran.
    • Palestine - Palestine relies on their agricultural sector - citrus fruits, olives, and vegetables for exports to their trade partners.
    • Qatar - Natural gas and petroleum products make up the majority of their export commodities, more than a quarter of which are sent to Japan.
    • Saudi Arabia - The Saudi oil-based economy accounts for nearly $250 billion in export revenue, which comes from trade partners the United States, Japan, and South Korea.
    • Sudan - Sudan's recent issues with tariff barriers have caused a number of problems with trade. Crude oil is a primary export, though Economy Watch has reported the nation suffers a trade deficit close to $6 billion.
    • Syria - Crude oil and petroleum comprise the majority of the country's exports, which are sent to Iraq (more than a quarter of all goods) and Lebanon.
    • Tunis - Tunisian textiles and apparel and agricultural goods are popular in Europe, where France, Germany, and Italy receive the majority of exports.
    • United Arab Emirates - Much of the UAE's oil exports are shipped to Japan and India. Thanks to their rich resources, the UAE is ranked third among Middle Eastern nations for GDP.
    • Yemen - Depletion of oil fields has threatened Yemen's export income. Until a solution is found, the country also relies on their fishing industry to trade with Asia.
    In 2009, the Gulf Daily News reported that member nations took the first steps toward creating a common market, which is expected to see fruition in the next decade. Whether or not GAFTA will remain relevant by then remains to be seen, but those countries that rely upon the Arab nations for oil and other commodities will definitely want to monitor their progress.