TRADE POLICY AND PROSPECTS

• Oil dominates regional exports and oil prices drive imports. Historical import to oil price relationships suggest higher oil prices will generate 15 to 20 per cent import growth in 2000 and 2001. However, once oil prices stabilise or fall, OPEC quotas will constrain export and import growth. • Reducing oil dependence is a gradual process but rapid gas export growth will assist it. • Unlike exports, Gulf imports are diverse. Reflecting the oil industry’s capital intensity, capital goods dominate all Gulf economies ’ imports. The UAE’s entrepot role means consumer goods imports are particularly important for the UAE, while Iran’s diverse economy and protectionist policies means intermediate product imports are important. • The UAE is expected to remain the dominant Gulf entrepot, despite increased competition from Salalah in Oman and Aden in Yemen. Its re-exports are about four times the level of other non-oil exports, and between 1990 and 1998, doubled to US$11 billion. • World Trade Organization, WTO, membership is driving reform in critical areas including intellectual property protection, agency arrangements, foreign investment equity restrictions, telecommunications market access, and agricultural trade policy