UAE to aid American exports

Buick Lucerne cars make their way down an assembly line at the GM plant in Detroit. US-made cars are a popular import.

The UAE is expected to become a key partner in US plans to double American exports in the next five years, says the US government's official export credit agency. "President Barack Obama wants American exports to double within the next five years and the UAE will be a key export destination if that goal is to be achieved," said Bijan Kian, a senior board member of the Export-Import Bank of the US (Exim).

Mr Kian said Exim would provide financial support in the form of loan guarantees for local companies wanting to trade with the US. Mr Kian said the bank would try to encourage other lenders to follow suit. His comments yesterday came as he addressed the Dubai Economic Council's dialogue session between the US consulate general in Dubai and representatives of the local business community at the Dubai Chamber of Commerce.

Last year, the US traded Dh31 billion (US$8.43bn) worth of goods with Dubai, making it the emirate's third-largest commercial partner after India and China. In the same year, Dubai's imports from the US dropped 45 per cent to Dh28bn, from Dh50.7bn in 2008. But Exim officials said that lack of credit from financial institutions was the main obstacle preventing Dubai merchants from importing US goods.

Local and international lenders were described as "hesitant" to issue loans to local businesses seeking to import goods from the US. "We don't want big numbers, we don't want aircraft," said Juma al Majed, the chairman of the Dubai Economic Council. "Today we want to talk about facilitating credit, especially loan guarantees for one year for imports of common things like cars, computers, machinery, Caterpillars, medical equipment and things like that from America."

Mr Kian said Exim would try harder to encourage financial institutions to issue business loans, and that his bank would commit the "full faith and credit" of the US government to cover commercial lenders against repayment risks. "The idea is to make sure that unfamiliarity between importers' and exporters' banks, or any other reason, does not lead to a failed deal," he said. "We want to make sure that all desired US exports go through."

Mr Kian said Exim's mission was to help finance the export of US goods and services to international markets. He added that the bank had a congressional mandate to assume credit and country risks the private sector might be unable or unwilling to accept without support. In order to qualify for Exim's loan guarantees, exported goods must be made in the US; they must be shipped on a US-flagged vessel; and they must be shipped to a country where Exim is open for business. The last condition includes a prohibition of re-exporting American goods to countries such as Iran from Dubai.

"We understand the guidelines and even though we re-export goods to more than 165 countries around the world, we want to assure you that the UAE will co-operate with the US re-export guidelines," said Hisham Abdullah al Shirawi, the second vice chairman of the Dubai Chamber of Commerce. [e-mail]