Deputy Secretary's Speech

Deputy Commerce Secretary David A. Sampson
Business Council for International Understanding, Middle East Ambassadors' Tour
New York City, New York

Thank you for that kind introduction. On behalf of President Bush, I am honored to be here today.

As we all know, security issues dominate the agenda across the Middle East. The war we are fighting on terrorism, as President Bush has said many times, is a war we will win. His vision is for "a day when people across the Middle East have governments that honor their dignity, unleash their creativity, and count their votes."

But high on the agenda--which we don't hear enough about--is the drive to strengthen our commercial and economic ties with the Middle East.

Despite what some are saying, our economies and businesses are more closely aligned today than ever. And that is increasingly the case as more Middle Eastern nations reform and diversify their economies.

New Opportunities
As we heard this morning, there are many new business opportunities in the Middle East, and lasting partnerships are being created as these economies become more integrated with the global economy.

Contrary to perceptions widely held in the U.S., American brands, technology and expertise are popular and sought after in the region. From razors and refrigerators to oil exploration and production, U.S. products and services are prized. And demand is rising.

Libya
Libya's petrodollars and lack of existing infrastructure make it a very promising market for energy, construction, and communication firms. Shortly after Libya was removed from the list of state sponsors of terrorism this summer, I went as part of a delegation to build science and technology cooperation, which is a way outside of trade for societies to collaborate in a positive atmosphere.

In August, the Commerce Department adopted new export controls to reflect the new relationship with Libya. From January 2005 through August 2006, Commerce approved export licenses worth nearly $5 billion to Libya. And thanks to the regulatory changes, over 98% of them were for items that no longer will require export licenses. These changes will ease the costs and increase the speed of trade with Libya.

To further promote US goods and services in Libya and to serve as a reference for US businesses, the Department of Commerce will place a Commercial Service officer in Tripoli.

On top of the benefits that Middle Eastern countries receive from the trade and investment that comes with increased openness and diversity, new opportunities will be available to American businesses. Thus, we need to create and sustain a friendly business environment and ensure that these reforms continue.

We're missing out on opportunities in Algeria, Egypt, Kuwait, and Saudi Arabia and many others when we overlook how these nations are benefiting from growing openness.

So your work here today is timely and important. We know from experience (and 230 years of U.S. history) that open, competitive markets are the best approach for creating dynamic economies that produce jobs, wealth, and democratic freedoms. And nations that are open to competition grow and innovate more than those that don't.

I am very encouraged by what I've heard today and by recent economic developments in the Middle East.

Governments are reforming their economies, making them more transparent and business friendly. More and more decision makers are realizing that relying on a single commodity like oil or natural gas is not the best model for developing an economy, especially one capable of creating jobs and growth over the long haul.

They are learning that diversification is the path to a strong economy. There are movements in the right direction, but clearly there is still work to be done.

Free Trade Agreements
At the same time Mideastern economies are becoming more open, the President is pushing hard to access new markets for American businesses. Clearly this is good for American workers and businesses.

One of the most successful policies has been expanding our global network of Free Trade Agreements, including in the Middle East, where we now have agreements with five nations.

President Bush's vision is for open trade with the entire region, including North Africa, in seven years. A Middle East Free Trade Area (MEFTA) will bring open markets, rule of law, job creation, growth--this is where the future is.

Outside of the energy sector, we are seeing more demand for educational and financial services across the Middle East.

We are seeing rising demand for telecommunication products and infrastructure in countries such as Egypt and Bahrain. Egypt also recently reduced its customs clearance time, enabling goods to reach market more quickly and lowering the expense of doing so.

The latest trade agreement to take effect is with Bahrain, our first with a Gulf country. President Bush is very proud of this new agreement. Bahrain is now seen by many as having the freest economy in the entire Middle East. Services account for 50 percent of Bahrain's GDP, which means opportunities for U.S. financial, legal and medical service providers, among others.

And when the recent FTA with Oman is implemented, 100 percent of bi-lateral trade in industrial and consumer goods will become tariff-free.

Five years ago we signed an FTA with Jordan, our first FTA with an Arab country. Since then our exports to Jordan have more than doubled to $643 million.

But also consider this: Since that deal was signed, Jordan's exports to the U.S. surged over 1,600 percent to nearly $1.3 billion. In short, open trade policies and privatization efforts are paying off for Jordan.

A Free Trade Agreement with the United States is truly the "gold standard" of trade agreements. And there is a proven track record of increased prosperity of both sides with countries with which we have entered these agreements.

Challenges Ahead
We've seen a lot of progress in recent years, but clearly there is much more that can be done. I see several challenges ahead.

First is protectionism. We're facing this problem both in the U.S. and around the globe. But, as we all know, this is a failed policy. It has failed in the past, as we saw in the 1930s with the Smoot-Hawley tariff laws in the United States, and it will continue to fail in the future. There is no example in history of long-term growth or prosperity under the practice of protectionism and isolationism.

To fight off protectionism, we need to aggressively pursue the Doha round of world trade talks, negotiate new and enforce current trade agreements, and perhaps most important, educate people about the benefits of trade.

We need to encourage more nations to follow the example of Bahrain, Egypt, Jordan, Morocco, Oman, Saudi Arabia and others that are opening their doors to international commerce and working to diversify their economies. We encourage Algeria, Lebanon and Yemen to move quickly to accede to the WTO and join their Middle East neighbors and become full members of the global trading community.

Finally, the key to creating more stable economies, and ultimately creating more democracies, is for the Middle East to diversify its economic base beyond petroleum. President Bush's vision for a free trade area in the Middle East can help achieve a more diversified regional economy.

Closing
I believe that the United States and many nations in the Middle East share common goals. We want peace, openness, democratic rights, and stability for generations to come.

Our experience teaches us that economic reforms often help countries achieve these goals.

America recognizes that a future of shared opportunity and expanding prosperity nurtured by broad economic cooperation is the best strategy for peace and stability in the Middle East.

There are still problems, and there is a long way to go. But progress is being made and there is vast economic potential in the region. We look forward to working with the region to further rules-based, transparent, open economic systems that will contribute to their own prosperity and stability as well as the global economy.

Thank you very much.