United Arab Emirates
[Source: NUSACC's U.S.-Arab Trade Outlook 2013]
The United Arab Emirates (UAE) has been the Arab world’s leading importer of U.S. goods and services for the past five years – a trend that is likely to continue through 2013 and beyond. “Commercial ties between the U.S. and the Arab world are extremely important,” commented H.E. Yousef Al-Otaiba, the UAE’s Ambassador to the United States, when presented with NUSACC’s “Ambassador of the Year” award in May 2010. “I am motivated to support the expansion of commercial relations – not just for the continued prosperity of my own country, but for that of the broader region.”
As a major gateway to the region and a top marketing and distribution hub for the Middle East and North Africa (MENA) region, the seven emirates of the UAE are very attractive trading partners for U.S. exporters. According to the UAE Ministry of Foreign Trade, a significant amount of the goods entering the UAE’s ports are re-exported – 29 percent in both 2008 and 2009. When combined with energy shipments, these re-exports elevate the UAE to the 13th largest goods exporter worldwide – excluding intra-EU trade, says the World Trade Organization.
Significant 2010 rankings underscore the growing importance of the UAE as a global trading partner. According to the World Bank’s Doing Business 2010 report, the UAE is the fifth easiest place in the world in which to conduct trade – placing it at the top of the Middle East and North Africa (MENA) region. In March 2010, the UAE was ranked the most innovative country in the MENA region and the 24th most innovative country in the world, according to INSEAD’s Global Innovation Index (GII). Prior to receiving this ranking from one of Europe’s leading business schools, the 2009/2010 World Economic Forum’s Networked Readiness Index (NRI) placed the UAE 23rd among 133 countries internationally and first among Arab nations.
The UAE’s numerous free economic zones give foreign investors 100 percent ownership, tax exemptions, and full repatriation of profits. Led by the Jebel Ali Free Zone in Dubai, the 32 free zones in the UAE offer access to a market of more than two billion consumers throughout the Middle East, South and West Asia, and Africa.
Additional Free Zones support the UAE’s thriving Information and Communications Technologies (ICT) infrastructure – including but not limited to Dubai Technology E-Commerce and Media Free Zone (TECOM), Dubai Silicon Oasis (DSO), and Abu Dhabi’s twofour54. In recent years, the UAE has aggressively developed its ICT sector as a premier vehicle to attract foreign investors, as well as a means to diversify the UAE economy. The success has been documented in a 2010 report by the International Telecommunication Union that ranks the UAE first among Arab nations and 29th worldwide.
Recently drafted regulations in the UAE are intended to boost private sector growth even further by facilitating higher foreign direct investment. Outside of the economic free zones, foreign corporations are currently limited to 49 percent ownership in UAE-based joint ventures across most sectors. A new corporate law opening some sectors of the economy to 100 percent foreign ownership is slated to enter into effect during 2011-2013. This is expected to revitalize growth and investment in the aftermath of the global economic downturn and should relieve some of the UAE’s debt overhang.
The appointment of H.E. Sheikh Ahmed bin Saeed Al Maktoum as the new Chairman of Dubai World has helped to ease investor concerns about the $40 billion in debt that this state-owned holding company amassed in recent years – setting the stage for renewed growth in the Emirate of Dubai. Next door, the Emirate of Abu Dhabi – seat of the Federal Government – continues to execute mega-projects for economic diversification away from energy and toward such key sectors as health, aerospace, semiconductors, renewable energy and manufacturing.
U.S. aerospace products and services are forecast to be the lead exports to the UAE throughout 2013. According to the Airline Council International, Dubai International Airport – which turned 50 years old in 2010 – registered aircraft traffic that has grown 12.4 percent every year since its founding. It is the fastest growing and sixth busiest airport in the world. The new Al Maktoum International Airport at Dubai World Central, which has begun handling cargo flights, will be ten times larger than Dubai International when fully operational on five runways in 2017. The combined total order book value of outstanding aircraft, engine, and service contracts for Emirates Airlines (Dubai) and Etihad Airways (Abu Dhabi) is $49.1 billion. Cargo freight, in addition to passenger carriage, has been critical, according to a study conducted by the Dubai Chamber of Commerce and Industry. It notes, “Since 2006, major UAE airlines – Emirates Air and Etihad – have emerged as serious global competitors to established carriers in Europe and the Americas.” For two years running, in 2009 and 2010, the World Travel Awards have named Etihad Airways as the world’s leading airline.
In 2007, Etihad Airways negotiated a three-year deal to become sponsors of the Formula One Grand Prix, which will be held in Abu Dhabi through 2016. Abu Dhabi held the first-ever Formula One Festival in 2007 and was subsequently awarded the rights to host a Grand Prix race from 2009 to 2016. The inaugural Abu Dhabi Grand Prix was held on the Yas Marina Circuit in November 2009.
The UAE is also home to three of the region’s low cost carriers: Air Arabia, Flydubai, and RAK Airways. The first and largest low cost airline in the Middle East, Air Arabia is based in the Sharjah Freight Center near Sharjah International Airport. Flydubai ordered 54 Boeing 737s in September 2010 and has logged in more than one million passengers to its 26 destinations since its inaugural flight in 2009. It is poised to reach 70 destinations by 2012 as it expands into Europe. RAK Airways is the national airline of the Emirate of Ras Al Khaimah. The airline relaunched operations in 2010 under a “value-for-money” business model, positioning itself between full-service and low cost carriers.
As the world’s sixth largest oil exporter, the Emirate of Abu Dhabi has been a leading global energy provider for the past five decades. It reached a production capacity of 2.7 million bpd and produced 2.3 million bpd in 2009. Projects underway are aimed at lifting total production capacity to 3.5 million bpd by 2017 through expansion of onshore fields Asab, Sahil, Shah and Bab. $5.3 billion worth of investments in the offshore Zakum field are underway to boost production another 400,000 bpd over the present output of 1.8 million bpd.
The UAE also has the fifth largest proven reserves of natural gas in the world. By 2013, state-run Abu Dhabi National Oil Company (ADNOC) plans to boost offshore gas output by one billion cubic feet per day (cfd). In partnership with Occidental Petroleum, ADNOC is developing the $12 billion Shah sour gas field project in Abu Dhabi, which is expected to produce one billion cfd by 2014.
The UAE is the world’s fourth largest defense market and the third largest purchaser within the U.S. Foreign Military Sales (FMS) program. That nation is currently considering $45 billion in defense acquisitions – concentrated in jet fighter aircraft – from the United States.
Beyond these traditional sectors of aerospace, oil & gas, and defense, the UAE is leading the way in the Middle East to become the future global center for renewable energy research, development and innovation. The Masdar Initiative, including the Masdar Institute of Science and Technology, is a multi-faceted effort that focuses on the development, commercialization, and utilization of renewable energy solutions and clean technologies. Masdar City – to be powered entirely by renewable wind and solar energy – is currently under construction and has a projected completion date of 2016. In 2009, Masdar City became home for the new International Renewable Energy Agency (IRENA).