The U.S.-Oman (FTA) is the fifth U.S. bilateral free trade agreement with a country in the proposed Middle East Free Trade Area (MEFTA). A sixth FTA is being negotiated with the United Arab Emirates (UAE). If the House passes its bill to the Senate, the Senate has an additional 15 days to consider the legislation. For final passage, both houses must vote the legislation up or down by a simple majority, and neither the implementing legislation nor the agreement itself may be amended. It is therefore trying to liberalize and diversify its trade regime as it seeks to broaden economic opportunities for a fast-growing workforce. U.S.-Oman Bilateral Trade and Investment

Oman is a small U.S. trade partner, ranking 88 th among all U.S. trade partners. Total U.S.-Oman trade at $1 billion in 2005 ($593 million in U.S. exports and $555 million in U.S. imports) accounts for 0.04% (four one-hundredths of one percent) of all U.S. trade. In 2005, the most important U.S. imports from Oman (see Table 1 ) were oil and natural gas (75%, constituting 1% of all U.S. oil and gas imports from MEFTA countries), and apparel (10%). The most important U.S. exports to Oman were various types of transport equipment and road vehicles (totaling 56%), and various types of machinery (24%). Foreign Direct Investment in Oman

Total U.S. foreign direct investment in Oman was $358 million in 2003, nearly double the $193 million investment in 2002. The U.S.-Oman FTA

The FTA with Oman is similar to other recent FTAs with MEFTA countries (Morocco and Bahrain), with slight variations. The U.S.-Oman FTA has three basic parts: new tariff schedules for each country, broad commitments to open markets and provisions to support these commitments, and protections for labor and the environment. The USITC argues that the economic effect of the agreement on the U.S. economy is expected to be small but positive, and that the impact on U.S. workers is likely to be minimal because trade with Oman is low. The USITC reports that tariff reductions and elimination under the U.S.-Oman FTA should restore some of the competitiveness of Oman's apparel exports among U.S. purchasers—and estimates that the resulting increase in imports would come at the expense of workers elsewhere in the world, not U.S. workers. Tariff Provisions

Under the U.S.-Oman FTA, the United States and Oman will provide each other immediate duty-free access for tariff lines covering almost all consumer and industrial goods, with special provisions for agriculture and textiles and apparel. Arguments in Favor of the Agreement

USTR Portman asserted that the U.S.-Oman FTA will contribute to economic growth and trade between both countries, generate export opportunities for U.S. companies, farmers, and ranchers, help create jobs in both countries, and help American consumers save money while offering them greater choices. On June 29 the House Ways and Means Committee also approved the draft implementing legislation ( H.R. The bill was signed by the President and became P.L. 109-283 on September 26, 2006. Some argue that this provision could obligate the United States to open up landside aspects of its port activities to operation by companies such as DP World. The United States Could Deny FTA Benefits to Owners of a "Shell" Operation; to Businesses Whose Owners Were Nationals of Countries Subject to U.S. Sanctions; or to Any Potential Investment Pursuant to the "Essential Security Exception" Described Below

If non-Omani persons set up an enterprise in Oman that was merely a "shell"—i.e., that was engaged in no substantial business activities in Oman—and that enterprise sought to make an investment in the United States, the FTA contains specific language that would arguably permit the United States to deny the FTA's investment-and services-related benefits to that enterprise. The United States Will Be Required to Offer Oman the Right to Bid to Operate at U.S. Ports—the Very Activities About Which Congress Expressed National Security Concerns During the Dubai Ports World Debate

Under the FTA, this right is conditional upon obtaining comparable market access in this sector from Oman.
In aiming to fight terrorism with trade, the United States negotiated and the President signed on January 19, 2006, the U.S.'s fifth bilateral free trade agreement (FTA) in the proposed 20-entity Middle-East-Free Trade Area (MEFTA). This FTA is with Oman. Other U.S.-FTAs are with Israel, Jordan, Morocco, and Bahrain. A sixth is being negotiated with the United Arab Emirates. Oman is a small oil-exporting U.S. trade partner that has been supportive of U.S. policies in the Middle East and is strategically located at the mouth of the Persian Gulf. Because its oil reserves could be exhausted within 15-20 years, Oman is trying to liberalize and diversify its trade regime beyond oil and gas to provide economic opportunities for its fast growing workforce. Supporters of the agreement typically cite political and economic reasons. Opponents typically point to labor and human rights issues.
The FTA with Oman is similar to other MEFTA FTAs and has three basic parts: new tariff schedules, broad commitments to open markets and provisions to support those commitments, and protections for labor and the environment. It provides immediate duty-free access for almost all consumer and industrial goods, with special provisions for agriculture and textiles and apparel.
Among all U.S. trade partners, Oman ranks 88th for the United States, while the United States ranks third for Oman (after the United Arab Emirates and Japan). U.S.-Oman trade at about $1 billion for 2005 represents 0.04% (four-one hundredths of one percent) of total U.S. trade. In 2005, the most important U.S. imports from Oman were oil and natural gas (75%), and apparel (10%). The most important U.S. exports to Oman were transport equipment (56%), and machinery (24%). The U.S. International Trade Commission (USITC) predicts that the economic effect of the U.S.-Oman FTA is likely to be minimal since trade levels are low; and any increase in U.S. imports of apparel would come at the expense of workers elsewhere in the world, not in the United States. Total U.S. foreign direct investment in Oman was $358 million in 2003, up from $193 million in 2002.
Supporters argue that the U.S.-Oman FTA will contribute to bilateral economic growth and trade, generate export opportunities for U.S. companies, farmers, and ranchers, and help create jobs in both countries. Critics argue that labor protections are inadequate for Omani workers, and that the FTA will not help level the playing field for Omani and U.S. workers. Critics also argue that a provision in Annex II of the FTA could obligate the United States to open up landside aspects of its port activities to operation by companies doing business in Oman—activities about which Congress expressed national security concerns during the Dubai Ports World debate. After the President submitted the agreement and the implementing legislation to Congress, relevant committees had 45 days to consider (or not consider) it, and either chamber had 15 more days to vote the legislation up or down without amendment to the agreement itself or the legislation. The Senate passed implementing legislation on June 29, 2006 (S. 3569); the House passed it (H.R. 5684) on July 20; the Senate re-passed it under the House number on September 19, and it became P.L. 109-283 on September 26, 2006. This report will be updated as events warrant.