Dubai – MENA Herald: The United Arab Emirates (UAE) remains one of the world’s top trading economies, ranking 20th globally and first in the Middle East and Africa in commodity exports. It also placed 19th internationally in commodity imports and led the MENA region in overall commodity trade, with regional exports totalling USD 265 billion to account for 1.6 per cent of the worldwide total in 2015. The figures were taken from a 2016 report from the World Trade Organization (WTO), the intergovernmental organization which regulates international trade, unveiled recently at a news conference in Geneva organized by WTO Director-General Roberto Azevedo.
The WTO document further revealed that the UAE had a 31.5 per cent share of the Middle East’s total exports in 2015 compared to 28 per cent in 2014, as well as 30.8 per cent of the region’s total imports. In terms of service trade, the country ranked 20th globally and first in the Arab World with service imports worth USD 68 billion, representing 1.9 per cent of the world total and a 1.5 per cent improvement over 2014.
The UAE further strengthened its economic ties with the European Union last year, ranking 13th globally as the bloc’s trade partner. It advanced one rank over 2014 to 24th internationally and led the Gulf region in service exports to the EU at USD 19 billion.
Commenting on the favourable results of the WTO report, H.E. Eng. Sultan bin Saeed Al Mansouri, the Minister of Economy, said that the top rankings affirm the UAE’s growing importance in international trade. He noted that the figures reflect the UAE’s success in occupying a strong standing in global business, adding that the coming years will see even more prosperity not only in commodities and services but in all other areas of trade as well.
His Excellency pointed to the country’s hosting of the 2020 World Expo and upcoming major projects such as the ‘Dubai Wholesale City’ development launched by H.H. Sheikh Mohammed bin Rashid Al Maktoum, UAE Vice President and Prime Minister and Ruler of Dubai, to increase the UAE’s share of global wholesale trade as bases for the UAE’s bright trade outlook. These, he said, mirror a firm commitment to further diversifying the national economy away from oil and towards other promising economic sectors such as foreign trade.
H.E. Abdullah Al Saleh, Undersecretary of the Ministry of Economy for Foreign Trade and Industry, added that nationwide efforts led by federal and local authorities to further develop non-oil exports; international trade, economic and technical cooperation agreements and special free trade arrangements with the GCC; and WTO-sanctioned agreements on trade facilitation and specialized exhibitions directly related to the UAE’s commercial sector will all advance the growth of foreign trade, especially in terms of re-exports.
He further noted that the UAE’s trade policy is based on economic openness and trade liberalization. He stated that the country has emerged as the Arab World’s commercial hub due to its advanced infrastructure, strategic geographical location, and sophisticated air, sea and land ports. He also cited economic and political stability, diversified investment opportunities, robust economic legislation, exceptional re-exporting capabilities, and investor-friendly free zones among the major factors driving rapid growth in the UAE’s non-oil trade.
The Undersecretary referred to the UAE’s intensive efforts over the past years to further open up its economy to foreign trade and investment in order to introduce more growth opportunities and improve the welfare of its people. He shared that the UAE joined the WTO in 1996, undergoing the first review of its trade policy as a member in April of 2006, followed by a second review in March 2012 at the WTO headquarters in Geneva. A third review will be conducted from 1 to 3 June 2016.
The 2016 WTO report forecasts the slow growth in global commodities trading to continue in the coming months, ending with a 2.8 per cent increase over 2015 at best by year-end based on current global demand. The growth of imports of developed countries coupled with demand for imported goods from Asia’s developing economies can help raise the volume of international trade. Global commodity trading is expected to rise by 3.6 per cent by 2017; the average has not exceeded 5 per cent since 1990. These forecasts are based on the projected real GDP growth of 2.4 per cent in 2016 and 2.7 per cent in 2017.
Middle East countries along with African and Commonwealth states grew their export volume by 3.9 per cent in 2015 – the highest growth rate recorded for country groups. The figure is expected to grow by 0.4 per cent in 2016 and 2017. The volume of imports decreased by 3.7 per cent in 2015, however, with a further fall of 1.0 per cent forecasted in 2016 before recovering by 1.0 per cent in 2017.
Azevedo said that in terms of volume, trade still posted positive growth rates, although far below the expected range. He noted that this will be the fifth consecutive year that trade has grown by less than 3 per cent. The Director-General added that while the volume of international trade continues to rise, its value has been sliding due mainly to exchange rate fluctuations. Basic commodity prices have been decreasing as well – a trend which may adversely affect the fragile economic growth of developing countries.
The WTO report emphasized the importance of differentiating between trade growth in dollars (value) and in volume. Trade declined in terms of value in US dollars in 2015, with total export value decreasing by 13.5 per cent to above USD 16 trillion and aggregate import value sliding 12.4 per cent. This slump was mainly the result of huge movements in commodity prices and exchange rates and not a lower number of traded goods. The same goes for oil prices, as fuel and mining products are responsible for more than half of the decline in the value of commodity trading in 2015.
As for the value of global commodity trading from 2010 to 2015, the report showed that exports achieved modest growth at an average of 5.5 per cent. Middle East countries performed the best among the surveyed regions, increasing export values for the period at an average of 9.1 per cent. This topped the growth rates recorded in North America, South and Central America, the European Union, the Commonwealth of Independent States, Africa, and Asia. Commodity imports, on the other hand, grew modestly at an average of 1.5 per cent. Imports of Middle East countries, the best performers at the regional level, rose at an average of 5.1 per cent.
Worldwide service trade exports for 2015 dwindled 6.4 per cent from 2014 with a value of USD 4.7 trillion, while average growth from 2010 to 2015 was at 3.8 per cent. The total value of 2015 imports, meanwhile, slid 5.4 per cent from with 2014 with a value of USD 4.6 trillion dollars. Average growth in service trade imports from 2010 to 2015 was at 4.1 per cent.
The report added that WTO members can significantly influence prevailing conditions. It referred to various steps that can be taken to ensure that trade spurs economic growth and helps create more employment and development opportunities. For example, members can review protectionist measures restricting trade which were adopted when the crisis began. These measures aim to implement important agreements such as WTO trade facilitation which is expected to help lower the costs of global trade by up to 15 per cent. Upon coming into force, this agreement is anticipated to have a more effective impact compared to the alternative of cancelling all remaining tariffs worldwide, potentially boosting global trade by USD 1 trillion.