2012年-世界发展银行全球_Yemen___Towards_Deeper_Trade_Integration_25页_588kb

Summary of Yemen: Towards Deeper Trade Integration

Core Content

This document outlines a strategy for Yemen to deepen its trade integration with the Gulf Cooperation Council (GCC), suggesting that this should be a complementary effort to its ongoing WTO accession process. It also recommends pausing the implementation of the free trade agreement with Arab League signatories under the Greater Arab Free Trade Agreement (GAFTA) to better prepare for deeper regional integration with the GCC.

Main Views and Key Information

1. Economic Context

• Yemen's trade to GDP ratio reached over 80% in 2006, driven largely by oil exports, which account for 90% of total exports and 70% of government revenue.
• Oil production is declining, and the economy faces challenges such as GDP growth barely outpacing population growth and a high rate of unemployment.
• Diversification is crucial for economic growth and poverty alleviation, and non-oil exports, particularly in agriculture, fisheries, and services, show significant potential.

2. Trade Policy Options

• Yemen already has a relatively liberal trade regime, with most imports subject to tariffs of 5% or less.
• The WTO accession process is important, but it is not expected to significantly enhance trade access or competitiveness due to the lack of export diversification and the already existing duty-free access to many markets.
• Regional trade agreements (RTAs) can offer more comprehensive benefits than the WTO, especially in services trade, FDI, and labor mobility.

3. Integration with the GCC

• Integration with the GCC can help Yemen attract investment and improve access to regional markets and labor.
• The GCC offers a more comprehensive framework for trade, services, investment, and labor movement, with the ultimate goal of economic and monetary union.
• Unlike the WTO, the GCC does not have a formal accession process, but it allows for issue-by-issue integration, with Yemen already participating in several GCC bodies.

4. Proposed Areas for Action

• Tariff Convergence: Design a gradual path to align Yemen's tariffs with the GCC's common external tariff of 5%.
• Revenue Compensation: Implement alternative tax instruments to offset potential tariff revenue losses.
• Services Liberalization: Facilitate the entry of GCC investors into Yemen's services sector by improving regulatory frameworks.
• Business Climate Improvement: Develop mechanisms to support firms and employees affected by reduced trade protection.
• Labor Mobility: Create administrative arrangements to enhance the employment of Yemeni workers in the GCC, including vocational and professional training programs.

5. Regional Trade Agreements (RTAs)

• Yemen is a member of GAFTA, which provides duty-free access to Arab markets, but is considered a "shallow" agreement limited to goods trade.
• The GCC offers deeper integration, covering services, investment, and labor movement.
• Integration with the GCC is more beneficial for Yemen than with the EU or the US, due to proximity, cultural ties, and the potential for increased investment and labor mobility.

6. Sequencing of Tariff Reforms

• It is recommended that Yemen first converge to the GCC external tariff before implementing the NAFTA, as the GCC tariff of 5% is less disruptive than the zero tariffs under NAFTA.
• This approach would reduce adjustment pressure on Yemeni firms and allow for a staggered reduction in tariff revenue, giving time to implement alternative revenue instruments.

7. Challenges and Opportunities

• Challenges: Water scarcity, qat cultivation, and weak implementation of trade agreements are major barriers to agricultural and service exports.
• Opportunities: Yemen has locational advantages, including proximity to GCC and East African markets, a long coastline, and access to international maritime routes. These can be leveraged to attract investment and expand non-oil exports.

Conclusion

• A clear road map with the GCC is essential to achieve meaningful trade integration and economic diversification.
• The process should be accompanied by political commitment and a step-wise implementation plan.
• The GCC's potential to enhance economic opportunities for Yemen, including investment and labor mobility, makes it a strategic partner for deeper regional cooperation.