_5_ billion higher than the second largest product group (manufactures -- which accounts for 24 percent of regional exports). Several countries, including Iran, Libya, Oman, Saudi Arabia and the UAE have developed only a limited capacity for exports of manufactures and are almost totally reliant on mineral fuels which account for at least 80 percent of their exports. This export concentration of some ME countries in fuels is an obvious factor limiting the opportunities mutually beneficial intra-regional trade.

Table 2 shows that Turkey, Israel and Cyprus, and to a lessor extent Jordan and Syria's exports are more heavily concentrated in manufactures than other middle-Eastern countries (68 percent of Turkey's exports are manufactured goods and their share in Israel's exports is 88 percent) Countries not specializing in energy products probably hold the key to increased regional trade opportunities since they can accommodate oil exports from other ME countries.<sup>4</sup> Increased opportunities for intra-regional trade may also occur in foodstuffs, the third largest ME export group (12 percent of total exports), with Cyprus, Jordan, Syria and Turkey being important net food importers.

The data in Table 2 provide preliminary evidence that some ME countries may not be strongly affected by changes in foreign trade barriers (particularly those in the OECD). Agricultural raw materials, fuels, ores and nonferrous metals generally are imported duty free, or face relatively low OECD tariffs and nontariff barriers. These items account for about 70 percent of all regional exports and over 90 percent of the exports of Iran, Libya, Oman and Saudi Arabia. The manufactures and food product exporters (Cyprus, Israel, Jordan, Syria and Turkey) have the potential to be more affected developments relating to the Uruguay Round, European integration or NAFTA.

The fact that OECD markets constitute the most important outlets for ME exports (see Table 1) raises the question of how the relative importance of individual countries differs in this exchange. The top half of Table 3 shows the value, share, and growth rates for individual regional country's total exports to the OECD for select years from 1970 to 1992 while the lower half excludes fuels. The relative importance of ME countries changes markedly depending on whether petroleum is included or excluded. Israel and Turkey are by far the largest regional non-oil exporters, accounting for over $20 billion, or 70 percent of ME shipments to the OECD. These countries' free trade area (FTA) agreements with the EU are certainly a factor accounting for their performance -- Israel also has FTA agreements with EFTA and the United States. However, once petroleum products are excluded the relative importance of individual countries changes dramatically -- Saudi Arabia alone accounts for 36 percent of all regional exports to the OECD while Iran and the UAE add a further 23 percent. Table 3 also shows the shares of some energy exporting countries have experienced sizeable changes since the early 1970s. Saudi Arabia's share increased by about 15 percentage points (to over one-third of the region's total

> 4Based on 1990 trade flow information Cyprus, Jordan, Lebanon, Israel and Turkey were all net importers of petroleum products in SITC 3. Of these countries net imports of $1.2 billion Israel accounted for 28 percent of the total and Turkey for 21 percent.