By David Shelby
Washington File Staff Writer

Washington -- Kuwaiti Minister for Commerce and Industry Abdullah Abdul Rahman Al-Taweel addressed a group of American businessmen at Washington's U.S. Chamber of Commerce February 10 to inform potential trade and investment partners of the opportunities that are opening up in the northern Gulf region with the reconstruction of Iraq and with the Kuwaiti government's steps toward establishing a free trade agreement with the United States.

"Kuwait took the courageous decision to be an ally to the United States and got involved in liberating the area from a dictatorship that ruled with blood and killed its own people, invaded Kuwait, and before that spent eight years at war with Iran, its neighbors," Al-Taweel said.

Al-Taweel maintained that the regime change in Iraq is having an effect on the entire region. He went on to say that Kuwait's modern infrastructure and strong banking institutions make it an ideal base for gaining access to the opportunities arising from these changes.

In response to audience questions about competition from Dubai and Bahrain for the position of regional investment hub, the minister pointed to Kuwait's proximity to Iraq as well as its historic and current economic ties with its northern neighbor as factors that make Kuwait a more favorable base for involvement there.

Later in the day at Washington's National Press Club, journalists raised the question of whether Al-Tanmia Commercial Marketing Company's alleged overcharging for gasoline provided to Halliburton subsidiary Kellogg, Brown and Root indicated an environment in which companies would be expected to pay special commissions for access to Kuwaiti and Iraqi markets.

Al-Taweel responded, "If you go within the law, you shouldn't have any problems, and if you violate the law, the procedures should take care of that. I'm happy to announce today that the parliament has decided to refer this to a committee, and they will investigate, and whatever report comes, I think the government will respect."

In his remarks at the Chamber of Commerce, the minister also pointed to the Trade and Investment Framework Agreement (TIFA) that he signed February 6 with the U.S. Trade Representative (USTR) as an important step toward establishing a better environment for trade and investment between the United States and Kuwait.

"I am very happy to say that we have signed a couple of days ago the TIFA agreement which we feel is an important stage in moving toward keeping the business community here and in Kuwait moving forward," he said.

The TIFA is the first major step towards establishing a free trade agreement (FTA). Al-Taweel informed the audience, "We're going to start today in negotiation of the free trade area, which we think is going to take about a year. And we hope that we can end it and sign it as soon as possible."

He added, "We see a lot of benefits coming out of this. We see that the trade is going to increase, that business is going to increase between the two countries."

The minister acknowledged that negotiations would be difficult. While he affirmed that most sectors are open for foreign investment and foreign ownership, he indicated that upstream [early stage] oil production would not likely be on the negotiating table.

In his remarks to journalists at the National Press Club, he said, "The sectors, as far as we are concerned, are mostly open in Kuwait, probably except for the oil production. But refineries and petrochemicals are mostly open."

Kuwait is the second Gulf country to engage in trade and investment negotiations with the United States. Bahrain began formal FTA negotiations with the USTR in late January 2004. The Bush administration has adopted an initiative to establish a Middle East Free Trade Area by 2013 and is pursuing this goal through a series of bilateral trade agreements.

Member states of the Gulf Cooperation Council (GCC) have decided to work together in a bloc to negotiate FTAs with the European Union and China, but the USTR has chosen to address each of the countries individually in recognition of the fact that they are each starting with a unique set of legal and economic circumstances.

Commenting on Kuwait's steps toward achieving an FTA, Al-Taweel said, "It's a commitment from our government for free trade. It's a commitment from our government for an open economy, and it's a commitment from our government to liberalize our economy and move forward."