February 24, 2006

US, UAE to resume free trade talks in March

By Doug Palmer

WASHINGTON (Reuters) - The United States will resume talks
in March on a free-trade pact with the United Arab Emirates
despite an uproar over Bush administration approval of a deal
to allow an UAE company to operate terminals at six U.S. ports,
a U.S. trade official said on Friday.

"UAE remains an important priority for us," Shaun Donnelly,
assistant U.S. trade representative for Europe and the Middle
East, told reporters. "It's very important in building over
time the Middle East free trade area."

The United States was making "good progress" in the talks
with UAE and hopes to finish relatively soon, Donnelly said.

Negotiators probably will not be able to resolve all the
remaining issues in areas ranging from agriculture to
investment to services when they hold their fifth round of
talks next month, he said.

The Bush administration's determination to proceed with the
free-trade talks comes as it has been accused of jeopardizing
national security by allowing state-owned Dubai Ports World to
take over some terminal operations at the six ports.

The storm of protest prompted the UAE company to announce
it would delay taking over management of the U.S. assets it
acquired as part of its $6.85 billion takeover of British
company P&O's global port operations.

The U.S. government has defended the UAE as a key ally in
its war on terrorism and says the country has worked hard to
close loopholes that allowed al Qaeda operatives to use it as a
financial and logistical hub before the September 11 attacks.

Many lawmakers remain opposed to the deal and want it
canceled, not just delayed.

Two-way trade between the United States and the UAE totaled
close to $10 billion in 2005, making it the third-largest U.S.
trading partner in the Middle East behind Israel and Saudi
Arabia. The United States enjoyed a $7 billion trade surplus
with the UAE last year, helped by $2.1 billion in civilian
aircraft sales to the Gulf state.

The Bush administration began free-trade talks with the UAE
in March 2005 as part of an effort to craft a regional
free-trade deal in the Middle East by 2013. The United States
already has free-trade pacts with Israel, Jordan, Morocco and
Bahrain and has concluded one with Oman that is expected to be
sent to Congress for approval early this year.


Donnelly said he hoped the ports controversy would not harm
chances for congressional approval of the agreement with Oman,
which is next door to UAE.

"We think it stands on its own merits," he said. "I really
think they are separate issues."

Oman's ambassador to the United States, Hunaina Sultan Al
Mughairy, told reporters she hoped Congress would approve the
Oman agreement soon.

Oman has been working with Democratic members of the U.S.
House of Representatives Ways and Means Committee to try to
satisfy their concerns about the country's labor laws, she

Donnelly also said Washington was investigating reports
that Saudi Arabia was continuing to enforce the Arab League
boycott of Israel, which he said would be a violation of its
World Trade Organization commitments. Riyadh joined the WTO
late last year.

U.S. Commerce Secretary Carlos Gutierrez began an eight-day
trip to the Middle East on Friday that will include stops in
Saudi Arabia, Bahrain and Egypt to talk about trade.