RIYADH, 4 September 2004 — A study conducted by the Washington-based Institute for Research: Middle Eastern Policy (IRMEP) says that congressional roadblocks against Saudi Arabia’s accession to the World Trade Organization (WTO) are proving to be counter-productive as lucrative contracts are going to other countries.
The study becomes significant in the context of the current visit of Deputy Minister of Industry and Commerce Dr. Fawaz Al-Alamy to Washington to hold talks with US officials as part of the Kingdom’s efforts to gain admission to the WTO.
The study, undertaken by Grant F. Smith, director of the institute, has documented that while the total US-assembled auto and light passenger vehicle exports only grew by 6.6 percent, US auto exports to the Kingdom from Michigan alone surged by 25 percent during the same period.
The state of Michigan is the leading US supplier of manufactured transportation equipment to Saudi Arabia. Michigan exported over a quarter billion dollars of such equipment to the Kingdom, accounting for 85 percent of total state exports to Saudi Arabia in 2003.
In this context Smith described as “of little value to US national security or America’s international standing” the anti-Saudi trade legislation pushed by politicians in a small band of states that may result in the loss of US exports, and jobs, to international competitors. He has suggested that states that benefit from US-Arab trade should form a coalition to counter the anti-Saudi legislative agenda representing a narrow range of interests.
Citing a typical case of an American state that has benefited from its trade relations with the Kingdom, he said manufactured goods and services exports from Michigan to Saudi Arabia generated 8,700 jobs in 2004 and are on track to reach 13,000 by year 2013.
He points out that legislative roadblocks to trade deals emanating predominantly from New York and Florida congressional representatives could send Saudi business in search of more efficient markets. States firmly grounded in the US-Saudi relationship may soon have to form trade and development working groups in Congress to maintain open lines of international commerce.
The director said that during the years 1999-2003, automotive and transportation equipment accounted for over 85 percent of Michigan’s total exports to Saudi Arabia. Other export categories from Michigan such as furniture, chemicals, and machinery account for only 12 percent of the total export pie. The success of Detroit’s signature product, the passenger automobile, is not uniform across brands.
By forging a strong distribution partnership with Al-Jazirah Vehicles and responding to regional consumer tastes, Ford has delivered over 50,000 Crown Victorias to Saudi customers. Al-Jazirah was the world’s largest Ford Crown Victoria dealer, both in terms of sales and inventory, for six consecutive years, Smith said.
Yet, among the foreign visitors, there was general agreement that visas and travel obstacles in the United States were beginning to put the brakes on commerce. New restrictions and visa barriers placed on long-time business visitors to the United States have a direct consequence — replacement of US suppliers.
One recent example was a June 2004 million-dollar Saudi contract to produce three high-specification industrial loading vehicles. This deal went to a British company. The deal would have normally gone to the US.
Although Saudi Arabia’s 31 agreements with WTO member countries present increased competition, Michigan and other states exporting to Saudi Arabia face a far greater challenge close to home — New York and Florida legislators. By sponsoring a steady stream of hostile and xenophobic resolutions and acts targeting Saudi Arabia, successful or not, the trade environment is being slowly poisoned for states that are otherwise enjoying good trade relations with the Kingdom, he adds.