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US-Kuwait Trade Relations: Comradeship Through Multilateral Diplomatic Efforts
The Beginning of Trade

Kuwait is one of the Arab sheikdom's oil-rich nations. It is found on the northeastern part of the Arabian Peninsula just at the head of the Persian Gulf. Its modern economy is almost totally petroleum-based. Agricultural activities in the nation are very minimal though some fertilizers as well as consumer goods are being manufactured.

In Kuwait's law, it is required that 10% of the revenues from petroleum should be deposited on a special reserve fund. This enables the country to prepare for the time when almost all oil reserves were exhausted. Its exports were halted by an international embargo during the occupation of the Iraqis. Substantial assets of the country remained under the control of its exiled government. This contributed to the cost of US forces in the Persian Gulf and aided poorer Arab nations which backed the effort to liberate Kuwait.

Its economy was totally devastated by the occupation of Iraq. The settlement was brutal that it almost left the country with nothing. Basic services were systematically looted and destroyed while the population was brutalized. Hundreds of Kuwait's oil wells were set ablaze by retreating Iraqi troops. Rebuilding the entire country was estimated at $20 billion.

Strong ties between US and Kuwait began in 1951 when the former established a consulate in the Middle east nation. When Kuwait achieved its independence in 1961, the consulate became an embassy. Since then, the US supported Kuwait in its quest for sovereignty, security and independence. In 1987, the implementation of the so-called maritime protection era increased strategic cooperation between the two. When Iraq invaded Kuwait, US spearheaded the demand of the United Nation for Iraq to withdraw its forces from Kuwait. America also authorized the use of military forces in cases deemed necessary in order to remove Iraqi forces from the country it occupied. In order to liberate Kuwait, the US participated in the development of the Desert Shield and Desert Storm in the country.

Major Exports and Imports between the Two Nations

Trading wise, Kuwait's primary exports to other nations in world trade include oil and refined products as well as fertilizers. The major export partners of the country are Japan, South Korea, US, Taiwan, Singapore and The Netherlands. The imports of Kuwait on the other hand, are comprised of clothing, food, construction materials and vehicles. Its major suppliers are US, Germany, Japan, Saudi Arabia, UK, France and China.

The latest statistics on the traded goods of US with other nations was recorded by the US Census Bureau on October 2008. With the country's trade with Kuwait, exports amounted to $2.21 billion while imports made $6.33 billion. In 2007, the same agency recorded the following data on the trade relations of these two countries:

  • Kuwaiti Exports to US. The exports made by Kuwait to US totaled $4.12 billion in 2007. Of this amount, crude was sold at nearly 91.02% which is equivalent to earnings of $3.75 billion. Aside from crude, other valuable goods on the chart were: fertilizers, pesticides and insecticides; other petroleum products; US goods returned and reimports; other chemicals like photo chemicals printer inks and paint; toiletries and cosmetics; stone, sand, cement and lime; computer accessories, peripherals and parts; fuel oil; and minimum value shipments. Minimum value shipments made it to the charts even with mere sales of $482 thousand which is equivalent to .00017% of the year's total.
  • Kuwaiti Imports from US. The imports of Kuwait from US made remarkable market shares as well. In 2007, the total went up as high as $2.49 billion. With sales amounting to $621.70 million, new and used passenger cars led the list of products. This is 24.97% of the total imports of Kuwait from US for the year. Other commodities on the listing were: generators and accessories; complete military aircraft; drilling and oilfield equipment; other industrial machines; industrial engines; trucks, buses and special purpose vehicles; other chemicals; materials handling equipment; and automotive tires and tubes. The last items were sold at $46.97 million which is 1.89% of the year's total.
  • Fastest-Growing US Exports to Kuwait. The products sent by the US to Kuwait made outstanding sales when compared to how it faired in 2006. On top of the charts were bodies and chassis for passenger cars which had an income in 2007 of $9.42 million. This is said to be 5,147% higher than its total in 2006. Other than this commodity, goods included on the list were: other commercial vessels; aircraft launching gear and parachutes; automotive tires and tubes; and other coal and fuel. Other coal and fuel were sold for a total of $371 thousand which is 1,196.77% higher than in 2006.
  • Fastest-Growing US Imports from Kuwait. Kuwait's goods sold in the US market made excellent changes as well. Stone, sand, cement and lime made as much as 12,173.33%-increase from 2006 with an amount of $1.83 million. Other items under this category were: computer accessories, peripherals and parts; furniture, household items and baskets; other parts and accessories; and measuring, testing and control instruments. Although the last products made a mere $111 thousand with regards to total sales, it is still noteworthy since the data is 853.85% higher than its records in 2006.
Signing of the US-Kuwait Trade and Investment Framework Agreement

On February 6, 2004, US Trade Representative Robert Zoellick and Kuwait's Minister of Commerce and Industry in the person of Abdullah Al Taweel signed an agreement. Although, the pact is not yet a trade agreement in itself, this created a framework for future of free trade between the two nations. This is for the increased trade and investment opportunities for nationals and companies of Kuwait and the United States.

There were vital points stressed on the agreement:

  • Economic development of Kuwait. Zoellick stated that this is US's contribution to the economic development efforts in Kuwait. The US government believes that when trade opportunities are increased, a stronger foundation for the economic liberalization and diversification of Kuwait will be made possible. Since the US values the strong support of Kuwait in its quest to fight against terror, it is but proper to return the favor through economic means.
  • Regular meetings. Since the frameworks were laid, regular conduct of meetings to follow-up the development of the framework has to be conducted. Advancing the issues on trade and investment, it is deemed necessary for high-ranking officials together with the US Trade Representative and Kuwait's Minister of Commerce and Industry to meet and enumerate all the significant inclusions to be made in the pact.
The importance of working on the TIFA was felt by both sides. Besides administering trade exchanges, the framework will definitely lead to more vital things. This will open Kuwait's doors to understanding of the international laws associated with world trade. Foreign investors will also be given the chance to do business on each other's grounds.

In 2006, several meetings were held in order to discuss issues on Intellectual Property Rights. Some trade barriers before any companies could do business with Kuwait were also part of the conference. Privatization of the telecommunications sector in Kuwait as well as integrating new labor laws were also commendable as a start of the institution of the TIFA.

Primary Trade Barrier between the US and Kuwait

The issue on intellectual property rights used to be the primary trade barrier between the US and Kuwait. High levels of IP piracy was practiced in Kuwait thus inhibiting some unfavorable reactions from US. This issue led to more concerns especially that even international businesses and media companies feared of investing and distributing their outputs in Kuwait.

With the perseverance of Kuwait to trade not only with the United States but with other countries in global economy, it had gradually eliminated the IP piracy issues in the land. The past two to three years marked the start of the change that the government wants to implement. This is one of the reasons why the TIFA is being pushed hard by legislators of both the US and Kuwait.

Trade Opportunities between the Two Nations

Possibilities on the realization of the free trade agreement are yet to be seen in 2013. This marks one of the future trade opportunities between these two nations. It is not actually starting from scratch, so to speak, but there will definitely be more privileges for the trade relations of US and Kuwait.

Aside from the TIFA and FTA, there are other things in store for the American-Kuwaiti relations. The recent participation of Kuwait in the Brand USA 2008 show was a success. This is a good indication that future trade shows will also be favorable. These exhibits are usually sponsored by the American Business Council in different countries all over the world. This is a good means to foresee which of the exports of Kuwait will make it big on US grounds in the future. On Kuwait's side, this is relevant in realizing its dreams of being an economic and trade hub.

US-Kuwait Trade References

Note: Trade statistics, industry links, economic projections and global business resources on this page have been compiled from hundreds of trade related websites, government guides and resources on the Internet. We provide this valuable information for industrial suppliers, manufacturers, exporters and importers seeking to enter or expland business opportunities in Kuwait.

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Major Goods Exported

Major Goods Imported

Industrial Outlook

Kuwait is a small, rich, relatively open economy with proved crude oil reserves. Primary industries include Petroleum, petrochemicals, desalination, food processing, and construction materials.

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