March 20, 2006

UAE, US hope for free trade deal by mid-year

By Caroline Drees

WASHINGTON (Reuters) - Free trade talks between the United
Arab Emirates and the United States should resume at the end of
April after a sudden delay this month, with a final deal seen
by mid-year, UAE and US officials said on Monday.

Both sides have been working on a free-trade pact since
March 2005 and had originally been scheduled to hold their
fifth round of talks last week. But the negotiations were
suddenly postponed after the collapse of a deal for a
state-owned Dubai company to manage U.S. port terminals.

UAE Economy Minister Sheikha Lubna al-Qassimi said the
delay in the talks was "absolutely not" related to the Dubai
Ports World deal, which unraveled after U.S. lawmakers raised
fierce security concerns.

She noted that government working groups had held talks on
the free-trade deal as recently as last week.

"We are targeting end of April, probably, for the next
round," she told Reuters in an interview after talks with U.S.
Trade Representative Rob Portman. She said the coming round
would take place in Abu Dhabi.

Portman's spokeswoman Neena Moorjani said, "Both sides are
committed to working through the complex issues in FTA
negotiations with an eye toward completing work by the middle
of this year."

Sheikha Lubna also said she would like to clinch a final
deal this summer.

Moorjani said Portman and Sheikha Lubna had "identified
areas where further progress will need to be made, including on
the investment chapter, and also on market access in financial
services and telecommunications."


Trade between the United States and the UAE amounted to $10
billion in 2005, making it the third-largest U.S. trading
partner in the Middle East behind Israel and Saudi Arabia.

The proposed trade deal is part of a broader U.S. effort to
craft a regional free-trade zone in the Middle East by 2013.
The United States already has free-trade pacts with Israel,
Jordan, Morocco and Bahrain. Congress is expected to vote this
year on an agreement with UAE's neighbor, Oman.

Sheikha Lubna said her country respected the U.S. security
concerns and did not consider the collapse of the Dubai Ports
World deal a setback for trade talks.

"What's important to understand is that Dubai Ports World
is a case that got politicized," she said. "It really doesn't
touch the free trade agreement."

She said the United Arab Emirates, a regional trading hub,
understood the security concerns raised in the United States,
which have also triggered a delay in another takeover bid by a
Dubai-owned firm.

The U.S. Treasury announced in early March that it had
launched an enhanced, 45-day security review of Dubai
International Capital's planned $1.24 billion acquisition of
Doncasters Group, a British-based engineering company that
operates U.S. plants making parts for defense contractors.

"We respect that the security issue is a crucial issue and
is a hot subject in the U.S. So we have to be understanding of
that. There is legitimacy to that here, that people are asking
these questions," Sheikha Lubna said. "I think in the
Doncasters case, it is the same."

(With additional reporting by Sophie Walker in Washington)