US exports to UAE continues to rise in 2006

Corresponding values for same quarter in the last two years were only AED 6.2 billion in 2005 and AED 2.7 billion in 2004 (Figure 1). On the other hand, US imports from the UAE likewise grew at relatively high annual rate of 24%, from slightly higher than AED 1.0 billion in the first quarter of 2005 to AED 1.3 billion in the corresponding period this year. Growth of imports between first quarter of 2004 and 2005 was only 26%. Balance of trade remained highly favorable to US, for a surplus of AED 10.5 billion during the first quarter of 2006.
Total trade for the first quarter of 2006 was already equivalent to 34 percent of the total trade for the whole year of 2005, indicating a possibly much higher value of trade for the whole of 2006. Total trade between 2004 and 2005 grew at an annual rate of 90%, from AED 19 billion to AED 36.9 billion.

Machinery and transport equipment dominate US exports to UAE

US exports to the UAE had been mainly machinery and transport equipment. In the first quarter of 2004 and 2005, the group accounted for 57% and 70%, respectively, of the total exports during the first quarter of the year. The surge in exports of the product group continued to 2006, rising at an annual rate of 136% to reach AED 10.1 billion (Table 1). This brought up its share to nearly 86% of the quarter's total exports. The only other group that posted an increase was the group consisting of Manufactured goods classified chiefly by material, with export value of AED 408 million, for a growth of 14%.

All the other products groups registered declines ranging from 3% for Miscellaneous manufactured articles to 84% for Animal and vegetable oils, fats and waxes. In terms of nominal change, however, greatest decline was noted for Commodities and transactions not classified, from AED 300 million in 2005 to AED 135 million in 2006.

Import pattern remains relatively stable

Manufactured goods classified chiefly by material remained to be the largest imports of US from UAE, growing by 75% to reach AED 559 million; and thus, increasing its share to total to 44% (Table 2). Other growing imports were Commodities and transactions not classified, valued at AED 215 million; Chemicals and related products, AED 157 million; Machinery and transport equipment, AED 50 million; and Food and live animals, AED 42 million. Although significant growth of 36% each were noted for Beverages and tobacco and Inedible crude materials, the values were low at AED 1 and 2 million, respectively.

Miscellaneous manufactured articles actually placed second, with import value of AED 245 million. However, the value represented a downturn of 20%, from AED 305 million the previous year.

Major products traded

US exports to UAE in the first quarter of 2006 had been highly dominated by five types of goods. Aircrafts and parts, valued at AED 6.7 billion, accounted for 57% of the total, while exports worth AED 1.3 billion, representing 11%, consisted of motor cars and other motor vehicles for transport of people. Exports of Civil engineering and contractors' plant and equipment amounted to AED 498 million; Telecommunications equipment and parts, AED 208 million; and Scientific and precision instruments and apparatus, AED 176 million. Together, these products accounted for 76% of total value of US exports to UAE during the period.

Aluminum topped the list of US imports from the UAE during the same period, with import value of AED 266 million, or 21% of the total. Goods imported under special transactions and unclassified goods had import value of AED 212 million, or 17%. Other major imports consisted of Precious/Semi-precious tones and metals and jewellery items valued at AED 139 million; Organic chemicals, AED 124 million; Apparel in woven/textile fabrics, AED 207 million; and Nails, screws, rivets, bolts and similar articles of iron, steel, copper or aluminum, 79 million. Imports of Fresh crustaceans and mollusks and aquatic invertebrates for home consumption during the period was valued at AED 22 million. Together, the above products had accounted for 83% of total imports from UAE.
The statistics cited here indicate a need for UAE to actively pursue channels for improving its exports of manufactured goods to the US. Despite the stiff competition posed by China and other Asian countries, the US textile market is still a very active market for UAE products and the UAE must safeguard its share of this market.

The strength of UAE in aluminum and aluminum products and in gold and jewellery products in the world market needs to be maintained and US is one of its largest markets for these products.
The improved competitiveness of UAE's manufactured products in the US market under the FTA should be an impetus for the UAE to focus on developing and expanding its manufacturing sector.