USA-UAE Industrial Supply & Trade - Manufacturers, Exporters & Importers Industrial Supplies, Equipment & Machinery

How the Friendship Flourished

The United Arab Emirates (UAE) is located along the flat coastal plains of the Arabian Peninsula. It has several sheikdoms which include Abu Dhabi, Dubai, Ajman, Fujarah, Sharjah, Umm al-Qaiwain and Ras al-Khaiman. Eighty percent of the total land area is in Abu Dhabi. The major contributory factor in its rapidly-growing economy is petroleum.

Foreign workers primarily compose the labor force of the UAE. With a ratio of 52% to 48%, overseas employees gain access to the businesses in the country. Almost half of the population is South Asian. A good thing about staying in the country is having the opportunity to have six years of primary education for free. Petroleum wealth is very significant in providing extensive social services for health.

Petroleum in UAE was first exported in 1962 and from then on, it dominated the economy. In the year 1985, the formerly underdeveloped region made a name in world trade as it had the world's highest per capita income amounting to $19,120. The world oil glut affected the country in 1980 since the petroleum revenue declined. Capital improvements and other social services were abundant in the region but industrial development is somewhat hampered by the lack of raw materials and trained personnel. Domestic food sources are basically reliant upon limited irrigated agriculture, fishing, poultry-raising and sheep herding.

Since 1971, the United States was said to be an ally of the UAE. Much more than dealing with economic concerns especially on petroleum, both governments manifested the willingness to make ties through security assistance. In 2002, a dialogue between the two nations was made to foster strategic partnership thus covering all vital aspects of the trade relations. The UAE is also considered as one of US's primary partners on the war against terror. The former hosts US Navy ships more than any country in the world with which US is doing business with.

Major Exports and Imports between US and UAE

The primary exports of United Arab Emirates to other nations in global economy include crude oil, natural gas, dates, dried fish and even reexports. Its major export partners are Japan, South Korea, Thailand and India. The imports coming from other countries to UAE include food, chemicals and machinery and transport equipment. Its major suppliers are UK, China, US, India, Germany, Japan, France and Singapore. The US Census Bureau collected the data for the period ending October 2008. Since January 2008, US exports to UAE were tracked at approximately $12.25 billion while the imports from the latter to the former made as much as $1.13 billion. For the year 2007, the said American agency had gathered the following statistical information:

UAE Exports to US. For the exports of UAE to US, a total of $1.34 billion was recorded by the bureau in 2007. Topping the list of the goods under this category were bauxite and aluminum with total sales of $317.32 million which is roughly estimated at 23.70% of the year-end total. Other commodities found on top of the list were: US goods returned and reimports; crude; gem diamonds uncut or unset; apparel and household goods from cotton; advanced iron and steel manufactures; other petroleum products; synthetic cloth and fabrics, thread and cordage; apparel and household goods from other textiles; and fish and shellfish. Fish and shellfish made total sales of $21.51 million which is 1.61% of the earnings made for the year.
UAE Imports from US. Imports of the United Arab Emirates from US made a total of $11.61 billion in 2007. On this list, the highest sales went to civilian aircraft with an amount estimated at $2.88 billion 24.81% of the year-end total. Other goods found on top of the list were: new and used passenger cars; drilling and oilfield equipment; nonmonetary gold; telecommunications equipment; other industrial machines; industrial engines; parts for military-type goods; gem diamonds; and excavating machinery. Excavating machinery made total sales of $211.87 million 1.82% of the earnings for this category in 2007.
Fastest-Growing US Exports to UAE. American exports to UAE made raves in the latter's market for 2007 as compared to the records gathered in 2006. Along this line, sorghum, barley and oats made $1.87 million which is noteworthy for an increase of 23,437.50% from 2006. Other products found under this category were: bodies and chassis for passenger cars; hides and skins; wheat; and other precious metals. Other precious metals made a remarkable stint in the market due to sales percentage increase reaching as much as 820.90% or a total amount of $3.46 million.
Fastest-Growing US Imports from UAE. The imports from UAE sold on the US grounds made very fair earnings in 2007 when differentiated with how it performed in 2006. On this basis, other precious metals are excellent with 54,150% total sales percentage increase amounting to $1.08 million. Other goods found under this category were: apparel and household goods from wood; nonfarm tractors and parts; railway transportation equipment and engines for civilian aircraft. The last commodity's sales amounted to $988 thousand which is noteworthy for an increase of 676.71% when compared to what it made in 2006.

The US-UAE Free Trade Agreement

The US-UAE Free Trade Agreement is still to be realized by these two nations. This will certainly pave the way to an even stronger relationship between the US and UAE. It will surely improve economic relations as job opportunities and business ventures are seen along the way. Progress on the launching of the FTA includes the following vital points:

Attraction of Foreign Investment. Current investment environment in UAE grounds is said to be very conducive for attracting more US direct foreign investors. The more the possibilities of turning the FTA into reality, the more that trading concerns will definitely contribute to the growth of the nation.
Economic Relationship. The commitment to strengthen the bond of economic relationship of the two nations is also specified in the pact. Better visions that will foster bilateral relations are very significant to understand the advocacies and policies of the FTA.

Issues Hampering the Possibilities of the FTA

There are several issues which are associated to the non-conclusion of the FTA between the UAE and the US. Even if both parties made the necessary discussions together, there were certain reforms that one or the other requests which the other party could not deliver. Some of the noted concerns which hamper the sealing of the trade agreement include:

Labor. The United States is making a request for the UAE to reform its labor market. Associated with this, there is also a need for the latter to open its services sector to the public.
Investment. Investment issues are primarily focused on US's attaining a slot in the telecommunications sector. The UAE government disallows foreign investment on the said sector basically due to the fact that it wants its domestic businesses on the field to establish their own respected names in the area. Should the said establishments attain their own stature in the UAE economy, competition from foreigners will be allowed in the telecom arena.

Future Trade Opportunities between the Two Nations

While the FTA is not yet a done deal between the two nations, the ties remain strong enough to let the trade relations prosper. After all, there are other things to look forward to on a better level. The FTA is something to look forward to but not signing the deal does not mean that there are no other trade opportunities at stake.

Considering the statistics available in the US Census Bureau, the exported goods of US to UAE earned as much as 352% in 2006 than how it faired in the market in 2001. Within the five-year period, this increase is regarded to be even higher than how the US market made in the world economy. If the trend will continue in the coming years, US will definitely be getting the advantages of trading with the UAE.

Another increasing aspect of US economy with regards to its trade relations with the UAE is the direct foreign investment sector. With reference to the five-year period from 2001 to 2006, records show that the sector gained 445% increase from $834 million to more than $4.5 billion. This is indeed a favorable indicator of having a warm trade bond despite the non-existence of an FTA. The only contribution that the latter will give to this particular aspect is the opening of the telecommunications sector.

Other thing that the US should be focusing on is the willingness of UAE to continue reforming its economy. This would then open to more business opportunities for US nationals on the foreign ground the same way that other foreign workers from other global economies benefit from their employment in UAE. An open atmosphere for investment and its expanded role as the Gulf Business Hub will make UAE one of the most sought-after territory for US multinationals. Investments on several UAE firms by the US will surely continue as the years go by.

US-United Arab Emirates Trade References