MUSCAT, 21 March 2005 — The Sultanate of Oman achieved much progress in negotiations on the articles of a free trade agreement (FTA) with the US over three days last week.
Maqbool bin Ali Sultan, minister of commerce and industry, led the negotiations on behalf of Oman, and Catherine Novelli, assistant trade representative for Europe and Mediterranean, headed the US delegation.
A final round of talks is scheduled for next month. The FTA would allow Omani and American products to enter each other’s market without the customs barriers. The competition in Omani or American markets would depend on the quality of the product.
Before the completion of negotiations on the FTA and its implementation, a few questions linger in the minds of the people regarding its impact on the Omani economy. Who is the beneficiary of this agreement? What would it contribute to the Omani economy?
These are questions that arise quite naturally, thanks to the scope of the agreement, the first of its kind as far as Oman is concerned.
Answers to such questions can be seen in the articles of the FTA and the statements made by two officials who led the negotiations last week. Before finding answers to the questions, it is important to stress that there are many advantages for Oman from the FTA.
The agreement, undoubtedly, would open new horizons for our private sector companies and establishments to promote and market their products in the biggest consumer market in the world.
The private sector will have to invest time and efforts to find ways to develop products that meet the quality standards and can compete with products from other countries. There should be joint meetings, seminars and opening of areas of cooperation between the Oman Chamber of Commerce and Industry and its counterparts in the US if we are to derive full benefits from the FTA.
The volume of Omani exports to America is at present 250 million Omani rial. This figure may double as the volume of exports increases when aluminum, petrochemicals and methanol projects, currently being established in Sohar, go on stream. And, not to forget the fertilizer plant in Sur. These are giant and strategic industries with big capacity for increasing the volume of exports to American as well as other international markets.
Opening American markets to Omani exports does not mean that the road is now paved with roses all the way. The FTA is no magic wand that would change the Omani economy overnight and raise it to international level. Competition in American markets, for sure, will be fierce and only products with quality and competitive price will survive. The FTA will not provide any protection for Omani products if their quality is not up to the mark. Private sector companies will have to prepare themselves for strong competition if they want to benefit from the FTA. Some Gulf states have already signed similar agreements with the US. This is an indication of the level of strong competition that should be expected among Gulf goods entering American markets. We do not want to give examples of high quality Gulf products compared with Omani products. However, we have to stress that the gigantic projects, under implementation in Sohar and Sur, which will be completed in 2010, could be the trademark that distinguishes Omani products from others in American markets.
— Essa bin Mohammed Al Zedjali is the publisher and editor in chief of The Times of Oman.
