NCPA - National Center for Policy Analysis

Trade Policy Isolates Muslim States

February 6, 2003

U.S. trade policy risks isolating the Muslim states on the front lines in the war on terrorism, according to a new study. Due largely to internal conditions, most of the large Muslim countries have become increasingly isolated from the global economy over the past two decades, and U.S. trade policies have added to the problem.

  • The Middle East's share of global foreign direct investment, for example, has fallen from nearly 5 per cent in 1985 to just 1.4 per cent last year.
  • Its share of global exports also fell from 13.5 per cent to 4.6 per cent between 1980 and 2001.
  • The fall in trade is mostly a consequence of oil-dominated economies, high barriers to trade and investment, and political tensions.
  • Seven of the 10 largest Arab League members, including Syria and Saudi Arabia, remain outside the World Trade Organization, as does Iran.

But U.S. trade policies have worsened the Muslim world's isolation, say analysts. Although the United States is conducting negotiations to establish a free trade area with Latin America, among Muslim nations it has signed agreements lowering tariffs and other trade barriers with only Jordan and Morocco. However, the five largest Muslim countries -- Bangladesh, Egypt, Indonesia, Pakistan and Turkey -- face some of the highest tariffs on exports to the United States.

Source: Edward Alden, "U.S. trade policy isolates Muslim states, study says," Financial Times, February 4, 2003; based on Edward Gresser, "Blank Spot on the Map: How Trade Policy is Working Against the War on Terror," Progressive Policy Institute, February 4, 2003.


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