In trade, bilats matter
■"U.S.-Bahrain Accord Stirs Persian Gulf Trade Partners," by Michelle Wallin, New York Times, 24 December 2004, p. W1.
America's freed trade accord with Bahrain is shaking things up in the Gulf, where Saudi Arabia has always acted like it was going to be the dominant economic player. But how can it possibly hope to play that role when all it offers is oil and nothing else? Trade is based on complimentarity and there is virtually none in the Gulf, because if there was, their intra-regional trade levels wouldn't be the lowest in the world.
So how to perturb that system? Give Jordan a free-trade agreement a few years back and watch it's exports to the U.S. soar many times over. Then do it again to Bahrain, and watch it redefine the Gulf Cooperation Council's flaccid customs union. And then watch the House of Saud get pissed.
Our long-term goal, a Middle East Free Trade Area by 2013. Insane you say? Ask Jordan and Bahrain, or any of the other GCC states now looking to replicate that bilateral treaty with the U.S.
Terrorism will haunt the Middle East and—by extension—the Core as a whole so long as the region remains fundamentally disconnected from the global economy save for the narrow oil trade. The U.S. can either wait on regionalism to emerge, with the self-preserving House of Saud "leading" the way, or for some massive global trade deal to emerge, or it can bilat the situation forward all by itself.
Of course, as I said in PNM:
Outside of military alliances, the United States need to continue doing exactly what U.S. Trade Representative Robert Zoellick has advocated and pursued over the past several years: bilateral free-trade agreements, regional free-trade agreements, and global free-trade agreements. None should be prioritized over another, and all should be pursued to their earliest common denominators. Bilateral agreements like the one the United States cut with Jordan more than half a decade ago can have huge demonstrative effects, even when the politics of the agreement far outpaces its economic logic.
I say, keep on "demonstrating" Bob, and when Bush asks you to be the new head of the World Bank, say "yes!"