Saturday, June 14, 2014

Yemen accession to the WTO: Only way-out for sinking economy

For next few weeks I would be writing on Impact of WTO membership on Yemen’s economy and its impact on Global trade with in-depth focus on wheat & rice traders based at Yemenis ports.  

Part 1
Today morning I received call from my friend who is a coffee trader in Sana’a – capital of Yemen, he informed me that after 11 long rounds of negotiation, finally WTO has accepted Yemen as a member country. Yemen approached WTO to join in 2000, and now after 13 years Yemen deposited its “Instrument of Acceptance” on 27 May 2014 with Director-General Roberto Azevêdo, confirming its membership terms. Yemen’s WTO membership will be effective from 26th June 2014. After becoming member, Yemen’s has to adhere to WTO provisions in the areas of rules of origin, pre-shipment inspection, anti-dumping, countervailing and safeguard measures, export restrictions, subsidies, trade-related investment measures, free zones and preferential trade under bilateral, regional and other agreements. It has to bind agricultural export subsidies at zero upon accession (agricultural export subsidies in Yemen has no meaning??).  

Yemen is one of the poorest countries in the world. Its economy depends on foreign aid and remittances from workers in neighbouring gulf countries. The most important sector of the economy is dwindling oil extraction, it accounts for around 70 percent of government revenue and 25 percent of GDP. Agriculture is also very important as it employs over 50 percent of the population. In recent years, the government has engaged in efforts to diversify the economy from dependency on oil. After taking over the WTO membership, any natural or legal person of a WTO member country would have the right to import from Yemen, regardless of physical presence or investment in Yemen, it means that now a coffee processor from India can import coffee beans from Yemen without any problem. WTO also requires that all the state enterprises of Yemen who are directly or indirectly related to import-export jobs would notify any international transactions to WTO in prescribed format.

I feel that membership to WTO will be most beneficial to fish processing industry of Yemen. Yemen is blessed with lot of sea wealth as it has lot of area for fishing in Red sea and Arabian Sea. Frozen fish and cod liver oils from Yemen have good demand in lot of countries.

We as Indian are always supporter of Yemen. Back in 1962, India actively supported Yemen’s independence from British. India’s relationship with Yemen goes back to many centuries – Aden, Mocha and Kamran island were transit point for Haj Pilgrims.India has long relation with Yemenis acting as a intermediaries in trade with Romans. Presently India exports tea, rice, wheat, cereals, spices, tobacco, meat and meat products, pharma, hand tools, chemicals etc to Yemen. On the other hand, India imports crude oil, metal scrap, hide skin and limestone from Yemen. Yemen is a virgin land, commodity rich and is endowed with excellent prospects for prospecting iron ore, silver, gold, nickel, copper, zinc, cobalt etc. Indian private entity should tap the potential and try to get entry in this segment of Yemen.

Yemen’s exports face low tariff‐related barriers in relation to the rest of the world. Due to its least‐developed country (LDC) status, most of its export markets provide either duty‐free or preferential access to most of its products, including under the European Union’s “Everything But Arms” Initiative. Oil accounts for around 85 percent of Yemen's exports. Other exports include fish, naphthalene, cigarettes, fruits, soap and animal hides. Yemen's main exports partners are China, India, Thailand, the United Arab Emirates, Singapore, South Africa and Japan.

Customs duties on imported commodities do not exceed 5%. Yemen mostly imports fuels, wheat and corn, rice, meat, pharmaceutical products, sugar and vehicles. Yemen's main imports partners are the United Arab Emirates, China, Saudi Arabia, the United States, Switzerland, the Netherlands, Australia , Brazil, India, Thailand and Germany.  


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