The Red Sea port of Hodeidah in Yemen.
The Red Sea port of Hodeidah in Yemen.

numerous barriers Slowing Red Sea Trade

Although the area is home to some of the richest countries in the world and some of the fastest-growing, there are numerous barriers to intra-regional trade growth, such as a dependence on oil income in some states, political instability and a number of t

numerous barriers Slowing Red Sea Trade

Intra-regional trade between nations within the Red Sea region is improving but falls well short of other trading blocs, according to new research published by the Red Sea Foundation.
It said that intra-regional trade flows between countries around the Red Sea doubled between 2000 and 2015 to 16% of total regional trade, but that this falls significantly behind trading blocs such as the European Union (63%), North American Free Trade Agreement (52%) and East Asia and Pacific countries (45%), Zawya reported.
Intra-regional trade in non-oil merchandise is higher, at 35%, the foundation said. The bulk of the trading between countries that occurs within the region happens within the six (Persian) Gulf Cooperation Council states (UAE, Bahrain, Saudi Arabia, Oman, Qatar and Kuwait), the foundation said, citing a report it commissioned from Oxford Economics.
About 40% of non-oil exports traded within the region originates from the UAE, it said, while 16% comes from Saudi Arabia.
The report said that although the area is home to some of the richest countries in the world (UAE and Qatar) and some of the fastest-growing (Ethiopia, Mozambique and Rwanda), there are numerous barriers to intra-regional trade growth, such as a dependence on oil income in some states, political instability and a number of trade tariffs and other barriers, such as regulatory hurdles.
There are also “relatively weak transport logistics” in many countries, the report said.

 Lacking  Development
The report suggested there were opportunities to improve intra-regional trade, especially as 30% of sub-Saharan countries’ exports are food products and (P)GCC countries are relatively large importers of food. Similarly, (P)GCC countries import a significant amount of manufactured goods, as well as machinery and transport equipment, yet no Red Sea economy has developed the industrial capabilities to meet this demand.
Lawrence H. Summers, a former US secretary of the treasury and a professor at Charles W Eliot University, who sits on the board of trustees of the Red Sea Foundation, said the region “will be a crucial theater of global history in the years ahead”.
“It deserves extensive attention from the global community,” said Summers.
 Maliha Hashmi, executive director of the Red Sea Foundation, said the region’s mix of wealth and a low cost base should provide strong incentives for intra-regional trade.
“This study suggests that more should be done to help the region better integrate with the world economy and, like other economically dynamic regions, take full advantage of the potential benefits of international trade.”
“Understanding the dynamics, opportunities and challenges that characterize this diverse market is key to informing the policies and initiatives to encourage that integration,” Hashmi said.
The report said more effort should be placed on negotiations to remove barriers to trade, but that this would require “strong political commitment and leadership”, as well as better trade data.
The Red Sea Foundation is a not-for-profit think tank set up last year to raise awareness off the region’s potential. It covers a 20-country bloc that either lie on the Red Sea or use it as their “primary shipping channel”, including most Persian Gulf Arab countries and many East African nations. It is based in Geneva.




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