1 Inaugural Speeches
  • 1 0000000404811396https://isni.org/isni/0000000404811396International Monetary Fund


It is a pleasure for me to welcome you to Abu Dhabi at the beginning of the Seminar on Foreign and Intratrade Policies of Arab Countries. On this occasion, I would like to convey the greetings of His Highness Sheikh Zayed Bin Sultan Al-Nhayan, Head of State, and His Highness Sheikh Maktoum Ben Rashed Al-Maktoum, Deputy Head of State and Prime Minister of the United Arab Emirates.

Ahmed Humaid Al-Tayer Minister of State for Finance and Industry United Arab Emirates

It is a pleasure for me to welcome you to Abu Dhabi at the beginning of the Seminar on Foreign and Intratrade Policies of Arab Countries. On this occasion, I would like to convey the greetings of His Highness Sheikh Zayed Bin Sultan Al-Nhayan, Head of State, and His Highness Sheikh Maktoum Ben Rashed Al-Maktoum, Deputy Head of State and Prime Minister of the United Arab Emirates.

It is also a pleasure at the onset of this speech to say that I am proud of the ongoing progress of our joint endeavor embodied in this meeting. Foreign and intratrade policies of Arab countries are currently one of the most important issues.

This seminar is held today under unfavorable conditions in the world economy. Despite international efforts to support world economic growth, the emphasis on international economic blocs has overshadowed the interest in addressing deteriorating terms of trade in developing countries.

While these blocs could be viewed as a step toward freer world trade, it remains to be seen whether they would contribute to a more open international trade system that would foster a better allocation of resources and increased competition and transfer of technology, or would rather prove to be disruptive and conducive to greater reliance on regional trade arrangements. In this decade of the nineties, the world trading system faces two of the most significant challenges of the last forty years: first, the need to maintain multilateral commitments in managing regional trade arrangements; and second, the need to reach a successful conclusion of the Uruguay Round.

In this respect, Arab countries, in coordination with the rest of the developing countries, could play a major role in serving their own legitimate interests, because collective pressure from developing countries is necessary to achieve a better international trading system.

Of course, the profound changes in international economic conditions have had a visible impact on developing countries’ economies, particularly through world trade. A review of the major indicators from the World Economic Outlook shows a recent deterioration in international trade growth from approximately 9 percent in 1988 to 6 percent in 1991. Concurrently there was a substantial increase in the deficit on current account of developing countries.

These indicators underscore the urgent need to liberalize trade. In particular, free trade could contribute to the acceleration of global economic growth and lay the foundation for conditions favorable to the expansion of exports of manufactured goods from developing countries, thus enabling these countries to make considerable gains in the field of industrialization.

In that connection, it has become necessary for Arab countries and their institutions concerned with developments in international trade and the world economy to urge trade blocs to eliminate trade barriers that limit access to their markets and to endeavor to reach a successful conclusion to the ongoing trade negotiations within the framework of the Uruguay Round.

Over the past few years, the Gulf Cooperation Council (GCC) countries, with liberal trade and exchange regimes, have suffered from sharp fluctuations in oil prices, highly unstable exchange rates among major currencies, as well as the negative impact of the two wars in the region.

Consequently, the GCC states have adopted several measures to support development and economic activity with a view to stimulating rates of growth and to consolidating integration efforts within the GCC area.

As we follow the efforts that Arab countries have made directly or through their specialized regional agencies for the development of intra-Arab trade, reference should be made to the Arab Trade Financing Program—an encouraging achievement in the direction of stronger economic ties among Arab economies.

In conclusion, I would like to wish you a pleasant stay in the United Arab Emirates, and that your seminar may make a valuable contribution to the growth and development of the Arab countries.

Osama J. Faquih Director General and Chairman of the Board Arab Monetary Fund

On my own behalf and that of His Excellency Abdlatif Al-Hamad, Director General and Chairman of the Board of Directors of the Arab Fund for Economic and Social Development, I have the pleasure of welcoming you to this hospitable country for the Seminar on Foreign and Intratrade Policies of Arab Countries, organized by the two Funds, in cooperation with the International Monetary Fund and the World Bank.

I am proud that we have now returned after a short interruption to the tradition upheld by the two Funds of holding an annual seminar on an important financial and economic topic of interest to economic policymakers, executives, and economic entities whose activities are affected by these policies in Arab countries. During these seminars, a distinguished group of officials and experts, from inside and outside Arab countries, meets to exchange ideas and views on trade issues and problems. It is hoped that these seminars will serve as a forum to convey the participants’ knowledge and expertise to Arab countries thereby assisting in the selection and adoption of the appropriate approaches and policies. This seminar is preceded by three others: Adjustment and Development in Arab Countries, Privatization and Structural Adjustment in Arab Countries, and Investment Policies in Arab Countries. This seminar addresses foreign and intratrade policies—a preeminent topic on the recent list of priorities for joint Arab action. IMF and World Bank cooperation has played an important role in the success of these seminars. I would like to take this opportunity to express our deep gratitude and appreciation to these two institutions, hoping that their cooperation will continue and that it will serve our common goals.

There is no doubt that our seminar is being held at a time when trade issues are paramount on the agendas of various international forums. This is not surprising. World trade growth, one of the main contributing factors underlying the postwar international economic boom, presently faces real dangers. If misconceived national policy considerations and protectionist measures dominate international trade relations, all countries and regions will suffer greatly.

Although it has become customary for protectionist calls in industrialized countries to intensify in times of world recession and domestic economic crisis, the more worrisome developments for the future of world trade growth and expansion are, first, the failure after more than five years of negotiations to bring the Uruguay Round to a successful conclusion and, second, the increased polarization of trade in industrialized countries, as evidenced by the emergence of three giant trade blocs: the European bloc, the North American bloc, and the bloc encompassing Japan and the newly industrialized countries in Eastern Asia.

The deadline originally set for the Uruguay Round negotiations has passed. It has been extended to enable participants to reach compromises on disputed issues, because a collapse of these negotiations, accompanied by reciprocal barriers to market access among the countries, would greatly jeopardize the entire international trading system. Yet major industrialized nations have hitherto seemed unwilling to make the necessary concessions to rescue these negotiations from failure. They seem more interested in avoiding confrontations with their powerful pressure groups that stand to benefit from protection, particularly in the case of agricultural subsidies, than they are in sound economic considerations that ensure the efficient allocation of resources and higher growth rates in the longer term.

While multilateral trade negotiations are stumbling, industrialized countries are heading toward regionalization under the banner of three massive trade blocs in Europe, North America, and Asia.

The European Community (EC) is about to establish a unified market; moreover, consultations continue to be held between the European Community and European Free Trade Association countries with a view to eliminating trade restrictions between the two groups. These developments, of course, are leading to the creation of a giant European trade bloc. The United States, Canada, and Mexico are heading toward a North American free trade area. A third trade pole has emerged; it includes Japan and the newly industrialized countries in Asia, which have enjoyed the highest growth rates. Although it is difficult at this stage to assess the repercussions of these developments on world trade, the EC’s experience has shown that its establishment has brought about a rapid expansion of trade among its member countries and a slower growth in trade with the rest of the world.

While these developments have been taking place in industrialized countries and causing concern over the future of international trade, many developing countries, in contrast, have begun to abandon the protectionist and inward-looking policies they had adopted for many years, realizing that such policies led only to an impasse characterized by poor growth rates, worsening external debt positions, and deteriorating standards of living. Indeed, it is unfortunate that the developing countries that began to liberalize their trade and open their markets, enduring the short-term social and political burden of these measures, are presently facing an unfavorable international trade environment in which access to the market is becoming more difficult, thus placing the economic reforms of these countries in jeopardy.

Bearing in mind these considerations, the only alternative is a commitment to remove the barriers to the expansion of world trade. In this connection, major industrialized countries have a special responsibility in the light of their substantial weight in the world economy and their greater capacity to bear the burden of the necessary structural reforms.

I would like now to discuss the Arab countries’ efforts toward, and concern about, the promotion of trade among themselves—an issue that is central to the work of this seminar. Development of intra-Arab trade has been considered—since the early days of joint Arab action during the 1950s—as a key approach to promoting Arab economic integration and development and broadening horizons toward a more efficient utilization of resources.

The steps that have been taken, however, to transform this concept into reality, that is, to realize a significant increase in intratrade, have been limited to the legal and organizational frame-works embodied in bilateral and multilateral trade agreements among Arab countries. One objective of these agreements is to promote the flows of goods and services among Arab countries through eliminating and/or reducing restrictions. Compliance with the provisions of these agreements, however, has fallen short of expectations, and thus their effectiveness in promoting intratrade has been limited.

However, interest in intratrade has continued; indeed, it has gained significant momentum during the past decade, when the development of intratrade was placed on top of the agenda of joint Arab action. Accordingly, other means were sought relating to the objective of trade liberalization and enhanced trade relations.

Based on its character and Articles of Agreement, the Arab Monetary Fund was assigned the task of finding efficient ways and means to contribute to the financing of Arab trade. In recent years, the AMF has attached great importance to this issue within the framework of its efforts to correct balance of payments imbalances in several member countries.

Its efforts, in coordination with Arab financial institutions concerned with the development of Arab trade (particularly the Arab Fund for Economic and Social Development), have borne fruit in the establishment of the Arab Trade Financing Program. It was envisaged that this structure should allow for a wide base of contributions to ensure that the program receives the appropriate flow of public and private funds needed to finance Arab trade. It was also envisaged that it should provide a comprehensive institutional framework under which all efforts to develop intra-Arab trade could be effectively coordinated.

The AMF’s commitment to the success of the program was highlighted by its decision to contribute half the program’s capital of $500 million. It is heartening to note that 90 percent of the program’s capital was subscribed and paid in by the participating Arab financial institutions and commercial banks. This enabled the program in early 1991 to begin financing Arab trade and to plan the establishment of a modern information network that would provide accessible and reliable statistical data related to Arab trade.

In addition to financing, the program sought an appropriate arrangement with the Inter-Arab Investment Guarantee Corporation to cover Arab trade finance flows. In this connection, it should be mentioned, however, that our efforts should not be limited to the aspects of financing and guarantees, for there are additional and important difficulties owing to the lack of other services necessary to promote growth in intra-Arab trade. Experts and others concerned with trade issues have emphasized on numerous occasions and in several meetings that it is essential for Arab countries to develop these services, in the areas of transportation, communications, marketing, and commercial information.

Efforts to make the Arab producers and exporters more competitive would certainly not be completely effective if limited to intra-Arab trade financing and the removal of trade restrictions among Arab countries. Additional efforts must be made to develop and modernize the other services mentioned above.

The efforts made by Arab countries to promote intra-Arab trade do not reflect a desire to raise barriers against, or reduce trade with, the rest of the world; indeed, most Arab countries apply import duties that are considered to be among the lowest in the world. In addition, many other Arab countries began to reduce tariff rates, liberalize external trade, and open their markets, under their adjustment programs. Thus, liberalization and development of trade flows among Arab countries aim at maximizing the actual and potential capacities of Arab markets, as well as enhancing and diversifying Arab production bases. Not only would Arab countries benefit from the realization of these goals, but their trading partners would benefit as well.

As long as we continue to attach great importance to foreign and intra-Arab trade issues, we will always need to re-evaluate our previous positions objectively in light of our experience, to ensure soundness of approach and orientation. We will also always need to explore new methods to develop trade, cope with the problems, and respond to questions generated by our interaction with international and Arab trade realities.

With that in mind, you may wish to consider the following questions during this seminar:

(1) In light of the emergence of giant regional trade blocs and the rise of protectionism in industrialized countries, what stance should Arab countries adopt regarding international trade issues? To what extent can Arab countries make their voices heard in the General Agreement on Tariffs and Trade and other pertinent forums, with a view to expressing their opinions effectively and defending their legitimate interests?

(2) With regard to intra-Arab trade, what steps could be taken to encourage Arab countries to comply more closely with the agreements aimed at eliminating intra-Arab trade restrictions? Doesn’t the progress achieved so far in this area seem rather modest and disproportionate relative to the interest shown by private and official Arab circles in developing intra-Arab trade? How far can regional Arab groups, which are presently seeking trade liberalization among their respective members, lead to free intra-Arab trade?

(3) After covering the Arab trade financing needs through the Arab Trade Financing Program, what could be done to remedy the deficiencies in the other services required in Arab countries for the growth of intra-Arab trade, including transportation, communications, marketing, and trade information? To what extent can the coordination of Arab efforts in this area contribute to the enhancement of these services?

In conclusion, I hope to have shed some light on the issues with which this seminar is concerned; and, in this connection, I am looking forward to listening to your ideas and views. Once again, I would like to welcome you and to express my thanks and appreciation to the institutions that cooperated in the organization of this seminar. I would like also to thank the officials of the United Arab Emirates for their hospitality.