Biden presidency gives hopes for new US-Gulf trade ties

After the US election, many analysts have speculated how the Biden administration will continue the relationship with the oil-exporting Gulf states as well as with the region’s largest economy, Saudi Arabia.

The elected President of US Joe Biden has already spurred hopes of new trade ties between the two large economic powers. Even though different administrations have taken varied policies in the region, the overall relationship between the US and Gulf states have remained resilient.

“Politically, the two sides see eye-to-eye on most regional and international issues and that is expected to continue. Energy cooperation is now more productive and equal, as the two sides sit on the same side of the table as major producers of oil and gas.”

Both the Gulf and the US are major suppliers of shale oil to the world and have a shared interest in ensuring oil market stability. The mutual interest will be highly important as the oil demand begins to pick up in light of the economic recovery following vaccine discovery hopefully in the near future.

US-Gulf trade relation

The US and Arab world relation lie beyond the oil market, according to the data evaluated by the National US-Arab Chamber of Commerce (NUSACC), in the past years show that the exports of US goods to the Middle East and North Africa (MENA) region have increased by $62.64 billion in 2019, a 4 percent rise. Since 2014, it was the first time the US goods sales to the MENA region have rebounded.

“After several years of declining sales to the MENA region, American goods exports rebounded in 2019. This is great news for American manufacturers, farmers, ranchers, and other innovators, whose order books have suffered in major markets around the world. The Arab world continues to be a strong destination for US exporters,” says David Hamod, NUSACC’s president.

The world is looking upon the coming Biden administration to respond to the trade war with China which has brought collateral damages around the globe and including the Arab world.

Many states hope for relaxation between the two powers and for some kind of harmonization approach that will rebuild the link between Beijing and Washington. However, there is no official indication that there will be any alteration in the policies to address the trade gap with China.

As per the US trade data, the UAE and Saudi Arabia are the biggest hubs for US goods in the Arab world. In 2019, the two gulf countries have consumed more than half of the goods exported to the MENA region.

The elected President Joe Biden has earlier stated that he will work with US allies to set the rules in global trade. This approach represents one of the notable differences between both administrations.

While President Trump’s trade policy was unilateral in its approach to China and a lesser extent with the EU, Biden wants to pursue a multilateral approach in partnering with similar interested countries to combat the rising influence of China on the global market.

One of Trump’s first big declarations after being the US president was to step back from the Trans-Pacific Partnership (TPP) that was initially launched by the Obama administration.

Less than four years later, 15 Asia-Pacific countries, including China, entered into the Regional Comprehensive Economic Partnership (RCEP), the world’s largest trade deal.

“We make up 25 percent of the world’s trading capacity, of the economy of the world. We need to be aligned with the other democracies for another 25 percent or more, so that we can set the rules of the road,” Biden said.