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States in 2004 as a “Major Non-NATO Ally.” The two nations have a defense cooperation agreement that runs until 2012. Kuwait served as the main launch point for America’s 2003 invasion of Iraq, and the emirate remains the primary transit point for U.S. and other forces in Iraq.

Before the 2003 war, Kuwait was a major re-export center, with about 85 percent of re-exported merchandise going to Iraq, according to the U.S. Chamber of Commerce. By serving as a “reconstruction gateway” to Iraq since 2003, Kuwait has capitalized on its network of professional and family ties in Iraq and its close relations with the United States. But in the long run, competition from other ports in the region, coupled with the end of Iraq’s international isolation under U.N. economic sanctions, will likely diminish Kuwait’s role as a regional broker and is expected to lead to slower GDP growth.

While some nations in the region have placed their Free Trade Agreement (FTA) negotiations with the United States on the back burner, Kuwait has continued to make the FTA a high priority, and steady progress is being made.

Algeria

Algeria, a former colony of France, has historically looked North to Europe to satisfy its economic needs. The relationship with the United States seems to be growing warmer with every passing year, however, and Algeria has quietly become America’s number four trading partner in the Arab world with 2006 bilateral trade reaching $16.6 billion.

The U.S. Energy Information Administration estimates that Algeria has the eighth largest natural gas reserves in the world. That nation’s energy sector is responsible for 30 percent of GDP and accounts for over 95 percent of export earnings. More than 100 U.S. corporations are now doing business there and, despite the small drop in U.S. merchandise exports in 2006, Algeria is sourcing increasingly sophisticated goods from the United States, including telecommunications equipment, aircraft, and drilling and oilfield equipment. Opportunities also exist for U.S. companies to assist Algeria in its efforts to ramp up Sonatrach, the state-controlled energy firm, both inside the country and internationally.

Algeria’s role as a critical supplier of gas to Europe and the United States has international companies taking advantage of its location

and vast reserves to invest billions of dollars into natural gas projects. BP, Norway’s Statoil, Italy’s ENI and Spain’s Repsol are among key investors in Algeria – developing gas fields, building liquefied natural gas (LNG) facilities, and expanding pipeline capacity to cash in on the growing demand for cleaner energy.

Algeria – 2007 Forecast Top Ten Manufactured U.S. Imports ($ Billion)

(SOURCE: IRmep)

With this in mind, it is no surprise that greenfield FDI projects in Algeria posted 52 percent average annual growth during the period 2002 to 2005, according to the U.N. Conference on Trade and Development (UNCTAD).

Algeria’s first integrated LNG project is Gassi Touil, where production is scheduled to begin in 2009. The product was primarily designed for the U.S. market, but increasing demand from Asia is giving the United States a run for its money. H.E. Dr. Chakib Khelil, Algeria’s Minister of Energy and Mining, recently announced that Chinese and Indian producers competing to develop Algerian oil reserves will also be placing pressure on U.S. producer margins. Such increased competition suggests that U.S. companies may need to offer joint venture deals elsewhere in the world with Algerian firms in an effort to improve their standing for Algeria-based tender blocks.

Morocco

Morocco’s Free Trade Agreement (FTA) with the United States entered into force in 2006, allowing 98 percent of all consumer and industrial products to cross borders without tariffs. A comparable pact (Association Agreement) with the European Union will take effect in 2010, linking the fourth most populous Arab market to the world’s major Western markets. The FTA with the United States, coupled with the appreciation of the Euro and growing demand for Moroccan goods in Europe, bodes well for Moroccan exports in 2007.

Agriculture is important to Morocco, employing about 45 percent of the workforce, but agricultural exports have historically been hampered by unreliable rainfall levels. With this in mind, the Government of Morocco is strongly promoting growth in non-agricultural sectors, particularly those that lend themselves to privatization efforts, such as banking, telecommunications, aviation, and energy. »