US Imports From Middle East Rise; Exports Static

VOL. XLV

No 25

24-June-2002

TRADE & COMMERCE

US Imports From Middle East Rise; Exports Static

US imports from the Middle East more than doubled from $18,135mn in 1996 to $38,852mn in 2000, while US exports to the region rose from $19,934mn in 1996 to $23,620mn in 1998 before falling back to $19,023mn in 2000, according to figures released by the US International Trade Administration (ITA). The countries in the survey include Bahrain, Iran, Iraq, Israel, Jordan, Kuwait, Lebanon, Oman, Palestinian Authority, Qatar, Saudi Arabia, Syria, UAE and Yemen.

US imports of most of the top 20 commodities showed significant increases between 1996 and 2000. The trend for total imports was upwards, apart from a fall in 1998 which was attributable mainly to lower oil prices resulting in a fall in the value of crude oil imports. The largest single category of imports was crude oil, which rose from $9,471mn in 1996 to $22,030mn in 2000, and the value of imports of precious and semi-precious stones and telecommunications equipment also doubled over the period. Electrical machinery and apparatus and cathode valves registered particularly large percentage increases from 1999 to 2000.

In the figures for US exports to the Middle East, by far the most marked fall was in arms and ammunition, which plummeted from $1,932mn in 1996 to just $300mn in 2000, with the value falling in each consecutive year. Other notable trends are the fall in motor vehicle exports from $1,356mn in 1996 to $654mn in 2000, relatively static exports of telecommunications equipment, and a rise in aircraft and associated equipment exports, which fluctuated but showed an upward trend. This final category was the largest single US export to the Middle East over the whole five-year period.

According to the daily Saudi daily Al-Watan, the volume of US trade with Saudi Arabia fell considerably in January and February of this year. US exports to Saudi Arabia fell 30%, while US imports from the kingdom fell 39%. According to the US commercial counselor in Riyadh, Charley Kestenbaum, the fall is primarily due to the appreciation of the dollar, which has made US goods more expensive for Saudi importers. Mr Kestenbaum also identified lower oil prices as one of the causes of lower Saudi exports to the US. However, this fall in US-Saudi trade is part of a wider trend in which US trade with the Arab world has fallen away since 11 September 2001. Prior to the attacks on New York, bilateral US-Arab trade experienced major growth and looked set to reach record levels, but this promise has not been fulfilled. Whether the US attacks caused a permanent shift in US-Arab trade patterns, as some have suggested, remains to be seen. The backdrop of a global economic slowdown has certainly played its part in reducing trade levels, and it is likely that once the world economy begins to pick up again, so too will US-Arab trade.

A potentially more worrying development for trade between the US and the Arab world is the boycott of US goods which has been initiated by a number of non-governmental groups in the Middle East in an attempt to punish the US for failing to rein in Israel’s offensive against the Palestinians. Targets for the boycott include MacDonald’s and other fast-food chains, Starbucks coffee shops, Marlboro cigarettes and Coca Cola amongst others. Lists of products which are made by US firms with alleged Israeli connections or sympathies have been circulating widely, often on the internet, and this has resulted in a drop in sales for fast-food outlets and some fast-moving consumer goods. The effect on other US-owned brands has been less marked, however, as they play a more integral part in people’s lives. Critics also point out that US exports to the Arab world make up only a small proportion of total US exports, and therefore the boycott will not seriously hurt US trade. Furthermore, many US brand goods and services are produced locally under license or under a franchise and therefore the boycott will in fact hurt local producers more than US companies.

US Trade by Commodity with the Middle East

($Mn; Total Exports, FAS and General Imports, Customs)

Exports	1996	1997	1998	1999	2000
Commodity
Food and Live Animals	1,555	1,471	1,236	1,234	1,431
Beverages and Tobacco	576	589	623	566	601
Crude Materials, Inedible, Except Fuels	331	367	295	331	378
Mineral Fuels, Lubricants and Related Materials	239	177	161	158	161
Animal and Vegetable Oils, Fats and Waxes	101	99	176	139	86
Chemicals and Related Products	896	1,043	944	1,001	1,075
Manufactured Goods Classified Chiefly by Material	2,026	2,207	2,236	2,121	2,411
Machinery and Transport Equipment	10,294	11,949	14,843	12,422	10,174
Miscellaneous Manufactured Articles	3,173	2,131	2,145	2,048	1,785
Commodities and Transactions Not Classified Elsewhere	743	890	960	909	920
Total	19,934	20,923	23,620	20,928	19,023

Top 20 Commodities
Aircraft and Associated Equipment	2,693	3,858	7,017	5,480	3,037
Pearls, Precious and Semiprecious Stones	646	836	1,044	1,147	1,480
Telecommunications Equipment	799	1,056	1,058	1,028	813
All Motor Vehicles	1,356	960	916	664	654
Thermionic, Cold Cathode and Photocathode Valves	200	182	194	258	596
Tobacco, Manufacturing	562	575	610	551	586
Special Purpose Motor Vehicles	741	562	634	283	583
Automatic Data Process Machines	347	430	357	437	481
Special Transactions Not Classified by Kind	333	494	510	438	458
Measuring/Checking/Analysing Instruments	301	383	392	472	446
Non-Electric Engines and Motors	217	570	528	602	428
Civil Engineering and Contractors’ Plant and Equipment	486	605	769	425	370
Estimated Low Value Shipments	376	361	382	354	353
Pumps, Air or Other Gas Compressors and Fans	257	288	274	346	300
Arms and Ammunition	1,932	747	698	631	300
Parts for Office Machines and ADP Machines	221	223	215	240	297
Maize (Not Including Sweet Corn) Unmilled	358	267	172	310	285
Machinery Specialized for Particular Industries	203	221	245	313	283
Heating and Cooling Equipment	396	440	365	411	280
Wheat and Meslin, Unmilled	363	307	310	217	259

Imports
Food and Live Animals	89	101	115	127	132
Beverages and Tobacco	16	14	24	12	27
Crude Materials, Inedible, Except Fuels	45	63	68	75	67
Mineral Fuels, Lubricants and Related Materials	10,194	11,246	8,324	13,334	22,816
Animal and Vegetable Oils, Fats and Waxes	10	4	1	2	2
Chemicals and Related Products	1,107	1,149	1,231	1,188	1,724
Manufactured Goods Classified Chiefly by Material	2,871	3,495	4,161	5,008	6,392
Machinery and Transport Equipment	1,787	1,934	2,149	2,268	3,849
Miscellaneous Manufactured Articles	1,590	1,749	2,182	2,394	2,867
Commodities and Transactions Not Classified Elsewhere	426	818	620	964	976
Total	18,135	20,573	18,874	25,371	38,852

Top 20 Commodities
Crude Oil	9,471	10,516	7,961	12,922	22,030
Pearls, Precious and Semiprecious Stones	2,494	3,050	3,577	4,355	5,429
Telecommunications Equipment	478	599	653	793	1,114
Special Transactions Not Classified by Kind	388	770	549	872	833
Organic Chemicals	421	425	391	388	688
Oil (Not Crude)	620	676	293	340	622
Electrical Machinery and Apparatus	105	143	192	153	553
Thermionic, Cold Cathode and Photocathode Valves	39	45	38	69	502
Women’s/Girls’ Coats, Not Knit	191	231	`265	349	460
Measuring/Checking/Analysing Instruments	153	210	259	231	379
Articles of Apparel of Textile Fabrics	235	206	235	283	345
Aircraft and Associated Equipment	214	190	241	280	333
Jewellery, Goldsmiths’ and Silversmiths’ Wares	323	306	300	323	325
Mens’/Boys’ Coats, Jackets Etc, Not Knit	159	191	251	236	286
Medicaments (Including Veterinary Medicaments)	138	204	187	208	272
Automatic Data Process Machines	127	125	109	112	246
Women’s or Girls’ Coats, Capes, Knit	125	120	153	190	239
Aluminium	23	28	70	109	182
Medical Instruments and Appliances	51	69	193	276	178
Electrical Apparatus for Switching or Protecting	101	97	107	126	154

Top 20 commodities are sorted by 2000 values. Unrevised data. Last updated 24 January 2002.

Source: US International Trade Administration.

US Trade Representative Robert Zoellick has described the boycott as “disturbing” as it “creates an environment which makes it harder for US firms to operate,” but added that the campaign was more likely to hurt local producers than Americans. However, the disparate groups that are organizing the boycott recently began to coordinate their campaign, spurred on by the Israeli siege of Palestinian leader Yasir 'Arafat’s headquarters in Ramallah, and have agreed to focus on their targets more closely. The campaign has popular support and is encouraged by some religious leaders, and for many Arabs who feel unable to influence their own government’s policy, the boycott is a means by which they can express their disapproval of the situation in Israel and the occupied territories. In the longer term it is difficult to say whether there will be any serious impact on US-Arab trade. The most likely answer is that the impact will be small, but given that the chances for a peace deal between Israel and the Palestinians do not look good, the boycott could subtly change Arab consumption habits and shift demand away from US-brand goods.