More leverage for UAE as FTA talks set to restart

DUBAI — The flexible stand taken by the UAE on DP World row is likely to provide it with more leverage and bargaining power against the US at the fifth round of free trade talks that may get a revival following Minister of Economy Shaikha Lubna Al Qassimi's visit to Washington next week, sources close to the government said.

By Isaac John (Chief Business Reporter)

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Published: Thu 16 Mar 2006, 9:56 AM

Last updated: Sat 4 Apr 2015, 3:35 PM

Shaikha Lubna's visit to meet US officials — raising a mix of scepticism and hopes — is viewed by both sides as a strategic initiative in clearing the air of mistrust that had strained the bilateral ties in the wake of the controversy surrounding the collapsed ports deal. With the expected resumption of the crucial fifth round of free trade talks, which has been postponed in the backdrop of DP World's aborted takeover bid of six American ports, both sides can now hope to clinch a trade deal within months, sources said.

Although UAE officials have been insisting that the DP World fiasco would not have any impact on the free trade agreement (FTA) talks, the conciliatory stand taken by the UAE on the issue by withdrawing from the takeover bid has considerably strengthened UAE's position at the negotiations.

"The UAE has shown an exemplary diplomacy and understanding by not pressing the deal to go ahead, thereby helping the US administration avoid a major showdown with the Congress members. Now it is up to the US side to show the same level of understanding at the talks," they said.

"We're going to talk about the status of relations and how to make them better. Maybe we should explain the nature of our relationship to the American people and their representatives," a government source was quoted by Reuters in its report.

The fifth round of the FTA talks was scheduled to be held in Abu Dhabi from March 14-16. Although officials deny that its postponement has nothing to do with the DP World furore, there is no denying the fact that it had cast a shadow on the trade talks.

Echoing the UAE government's position with regard to the issue, last week, Shaikha Lubna said the DP World setback would not deter the UAE from investing in the US, but it could influence other countries to divert funds to Asia and Europe.

According to UAE sources, the FTA talks have reached an advanced stage on various issues. In the fourth round of FTA negotiations held in London, negotiations focused on vital issues covering areas of services, telecommunications, E-Trade, textile, customs, and rules of origin. Financial services (banking and insurance), investment, intellectual property rights, and government procurement. There has been good progress on the negotiations during the last four rounds of talks and in continuing contacts between the delegations, one official said.

"Both negotiating teams have studied the agreement and its appendices and have shared information about regulatory structures, investment and trade environments in both countries. We have reached a common ground in some areas of the agreement, mainly environment, standardisation, agriculture, and labour. We are expecting the market access teams to exchange the final proposals about customs exemption in both countries," according to UAE Minister Dr Mohammed Khalfan bin Kharbash, who led the UAE side at the London talks.

The free trade agreement with the US will grant the UAE access to the largest consumer market in the world. UAE and US have preceded the FTA negotiations with a Trade and Investment Frame Work Agreement, which was ratified in April 2004 by the UAE Federal cabinet. However, the agreement will also yield some challenges which the negotiating council and its sub-teams are aware of and attempt to seal an agreement that will benefit the UAE economy and will strengthen the UAE’s position as a regional trade and financial hub.

The negotiating sub-teams have been consulting with the stakeholders from the private sector given the importance of the public-private sector partnership in establishing the UAE's position with regards to the substantive issues arising from the agreement. Several meetings with Chambers of Commerce, business, professional and industrial associations and other private sector representative bodies have been organised to find a common position on which the negotiation councils bases its negotiation stances.

The agreement will have a positive impact on the private sector in terms of raising the standards of work and performance and improving the external competitiveness of the UAE businesses and economy. The negotiation council aims to arrive at the best deal and the best outcome for the UAE.

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