The US-UAE Trade and Investment Relationship

Executive Summary

The United States and the United Arab Emirates (UAE) enjoy a robust trade and investment relationship, much of which now has little direct relationship to UAE oil exports. Moreover, this is one of the fastest growing U.S. economic partnerships, both globally and especially in the Gulf region. The trade surplus in goods with the UAE throughout this decade reflects strong U.S. competitiveness in a number of sectors. In addition, the volume of U.S. exports and foreign direct investment into the UAE in recent years has grown dramatically and is likely to continue to grow in the future. This growth reflects the increasingly diversified UAE economy as well as its leading role as a modernizing influence in the Arab world.

Highlights

U.S. goods exports to the UAE increased by 352 percent from ••$2.6 billion in 2001 to $11.9 billion in 2006. This is far greater than the 42 percent increase for overall U.S. exports around the world.

The UAE’s share in U.S. exports to the Gulf Cooperation ••Council (GCC), which consists of the UAE, Saudi Arabia, Qatar, Bahrain, Kuwait, and Oman, doubled from 25
percent in 2001 to 49 percent in 2006.

The UAE is the single largest export market for U.S. goods and services in the Middle East, and U.S. exports to the UAE have expanded nearly five-fold from 2000 to 2006.

In 2006, the UAE imported $2,571 of U.S. goods per capita, which exceeded that of many important U.S. trading partners including Kuwait ($821), Saudi Arabia ($330), Japan ($468), Germany ($501), Mexico ($1,287), and Israel ($1,558).

U.S. exports to the UAE originate from a wide variety of U.S. ••states. In 2006, the five largest sources were: Washington (33 percent), Texas (21 percent), California (8 percent),
New York (6 percent), and Tennessee (3 percent).

U.S. foreign direct investment in the UAE rose 445 percent from ••at least $834 million in 2001 to $4,547 million in 2006. This far exceeds a worldwide increase of 63 percent in the same period and an increase of only 22 percent in Saudi Arabia.

The pace of UAE investments in the United States have also ••quickened. Recent examples include a proposed 20 percent share in NASDAQ, a 7.5 percent share in the Carlyle Group, an 8.1 percent share in Advanced Micro Devices, and a 4.9 percent stake in Citigroup.

Cooperation extends beyond the private sector. U.S. non-••profit organizations are also expanding their activities in the UAE, including a Johns Hopkins University partnership in a new cancer treatment center and a New York University plan to establish a campus in Abu Dhabi by 2010.

This economic relationship will likely deepen further in coming years, given the UAE’s growing status as a regional business powerhouse, the high world price of petroleum and resulting high UAE growth rates, and the UAE’s continued political stability and sound economic policies.

by Michael Moore
Professor of Economics and International Affairs
Director, Institute for International Economic Policy
Elliott School of International Affairs
George Washington University

Download the full report .pdf

http://www.usuaebusiness.org/view/resources/uploaded/usuaewhitepaper.pdf

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