Globalization and Trade Initiatives in the Arab World: Historical Context, Progress to Date, and Prospects for the Future

Abstract

The forces of globalization during the past two decades have been particularly powerful, but for many reasons, countries in the Arab region have not participated in globalization to the extent found in other regions of the world. Whereas most regions of the world experienced a significant increase in global trade as a percentage of total gross domestic product ("GDP") between 1980 and 2004, trade ratios in the Arab region actually declined during this time period. In its 2007 Economic Developments and Prospects report, the World Bank found that countries in the MENA region had all fallen behind in terms of "global trade and investment integration." At the start of the new millennium, many people inside and outside of the Arab region began to question whether efforts should be made to better integrate the Arab world into the changing global economy.

In an effort to enhance participation in the world's trading regime, in 2003, United States President George W. Bush proposed an initiative for a Middle East Free Trade Area ("MEFTA" or "MEFTA Initiative") to promote trade, development, and economic growth in the Arab region. The MEFTA Initiative called for the United States to take a series of graduated steps with countries in the region ultimately aimed at creating a region-wide free trade area by 2013. The proposed steps included: (1) United States assistance in acceding to the World Trade Organization ("WTO"); (2) expanding the Generalized System of Preferences ("GSP") program for eligible countries; (3) establishing Trade and Investment Framework Agreements ("TIFAs"); (4) establishing Bilateral Investment Treaties ("BITs"); (5) negotiating comprehensive Free Trade Agreements ("FTAs"); and (6) eventually "melding" all the FTAs into a Middle East Free Trade Area. The MEFTA Initiative also called for the United States to provide financial and technical aid to countries for trade capacity building.

This Article analyzes whether external trade intervention, such as the MEFTA Initiative, will lead to greater economic integration of the Arab world into the multilateral trading regime and whether it can serve as the catalyst to enhance intraregional trade and investment.

Keywords: international law, international trade, Globalization, Arab region, trade, World Trade Organization, WTO, Free Trade Agreements, MENA region, Middle East Free Trade Area, MEFTA