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	When it comes to doing business in the Middle East, you can bet your bottom dollar! Despite the turmoil in the Middle East, exports from the United States to Arab countries continue to grow. The latest estimate from the National U.S.-Arab Chamber of Commerce is that merchandise exports to the region will grow 40 percent this year to approximately $37.9 billion. Since the year 2000, exports to the region have grown almost 250 percent and, according to the U.S. National Association of Manufacturers, the United States' trade surplus with Arab countries in the Middle East has almost tripled since 2002. There are several key factors influencing trade patterns between the U.S. and the Middle East: high oil prices, a weaker U.S. Dollar, and free trade agreements (FTA) between the United States and a growing number of Arab nations. As petroleum prices have reached near-record highs over the past several years, countries such as Saudi Arabia are flush with cash and exercising their stronger purchasing power. Secondly, the U.S. Dollar has been weak relative to most major currencies, which makes American exports more competitive in world markets. Finally, the benefits of several key FTAs are beginning to materialize. Inspired by the success of FTAs with Israel, Jordan, Bahrain, Morocco, Oman (pending approval by the U.S. Congress), and the United Arab Emirates (currently being negotiated), the Bush administration in 2003 unveiled a proposal to create a regional FTA called the Middle East Free Trade Area (MEFTA) by 2013. Saudi Arabia and Jordan are two promising Middle Eastern markets for U.S. exports: both countries' governments are strong allies of the United States, and each has a population that is relatively young and growing quickly at approximately 3 percent annually. Both nations are members of the World Trade Organization (WTO), meaning they are obligated to WTO conventions such as protection of intellectual property rights. Saudi Arabia An oil-based economy with strong government controls over major economic activities, Saudi Arabia possesses 25% of the world's proven petroleum reserves. The petroleum sector accounts for roughly 75% of budget revenues, 45% of GDP, and 90% of export earnings. Although the private sector accounts for only 40% of GDP, the government is encouraging private sector growth to diversify the economy and increase employment. The Saudi economy is projected to grow almost 5% in 2006. 2005 was a good year for trade between the United States and Saudi Arabia. The U.S. imported over $27 billion from the Saudis, representing an annual increase of 30 percent. Likewise, U.S. exports to Saudi Arabia also increased 30 percent in 2005 and reached a value of $6.8 billion. Leading export sectors included vehicles and automotive parts ($2.4 billion), industrial machinery ($1.5 billion), electrical machinery ($474 million), and parts and components for aircraft and spacecraft ($328 million). Examples of strong sub-sectors were passenger vehicles, automotive parts, cargo trucks, gas turbines, pumps and compressors, electric generating sets and rotary converters, and electric motors. U.S. exports to Saudi Arabia via Virginia fell slightly in 2005 to $202 million, with a significant drop in tobacco exports accounting for most of the decrease. Next to tobacco, Virginia's largest exports to the Kingdom were industrial machinery (led by pumps and compressors), automotive vehicles and parts, and electrical machinery (led by transmission apparatus for radio, TV, and camera). Jordan In contrast to Saudi Arabia, the Kingdom of Jordan is a small nation that lacks the abundant resources -particularly oil- of many of its neighbors. King Abdallah, since assuming the throne in 1999, has undertaken some broad economic reforms to improve living standards. The Queen of Jordan -Queen Noor- is an American who graduated from Princeton; consequently, the Jordanian monarchy has been one of the United States' closest allies in the Middle East. Despite regional instability, Jordan's economy has averaged growth of 4.1% in real terms over the last five years. The International Monetary Fund predicts this economic expansion will continue through 2006. Since the signing of the free trade agreement with Jordan in 2001 -the United States' first FTA with an Arab nation- U.S. exports to Jordan have doubled to reach $643 million in 2005. The strongest export sectors were non-railway vehicles, industrial machinery, and arms and ammunition. These three sectors saw substantial annual increases of 60 percent, 60 percent, and 94 percent, respectively. The non-railway vehicles category was dominated by passenger vehicles ($88 million), followed by cargo trucks ($6.4 million), automotive parts and accessories ($5.1 million), and tanks and armored combat vehicles (3 million). Industrial machinery included centrifuges/filters ($35.7million), computers and components ($11.8 million), and taps/cocks/valves for pipes and tanks ($6.3 million). Arms and ammunition exports were primarily parts and accessories for weapons ($65.1 million), weapons such as pistols and lances ($2.1 million), and bombs/grenades ($1.3 million). Virginia was the fourth largest exporting state to Jordan in 2005, behind California, Indiana, and Texas. Exports via Virginia to Jordan increased 275% in 2005 and were valued at $45.5 million. Industrial machinery comprised the majority of these exports at $38.6 million, and included centrifuges/filters ($28.4 million), computers and components ($3.6 million), and miscellaneous compressors ($2.7 million). With an annual estimated water deficit of 561 million cubic meters, Jordan also offers strong opportunities for Virginia companies involved in environmental services. So how can your business be a part of the growing commercial ties with the Middle East? The VEDP's Division of International Trade makes it easy through trade missions to Saudi Arabia and Jordan in November 2006. This mission will be Virginia's first to Jordan and fifth to Saudi Arabia, and will take participants to two Saudi cities (Riyadh and Jeddah), and to the Jordanian capital of Amman. Trade mission participants will enjoy one-on-one meetings with targeted, pre-screened companies that match their unique company and market objectives. Participants will travel with Virginia's International Trade Manager, Joe Robinson, and will benefit from his local connections and expertise. The VEDP will provide pre-arranged meeting rooms, in-country transportation, translation assistance, market briefings and networking functions. For more information on the Saudi Arabia and Jordan trade missions, please visit our website at http://www.exportvirginia.org/events.htm or contact Local Trade Manager Joe Robinson at JRobinson@yesvirginia.org.