AU.S. free trade agreement (FTA) with Oman was concluded on October 13, 2005, after seven months of negotiation, and was signed by U.S. Trade Representative (USTR) Bob Portman and Omani Minister of Commerce and Industry Maqbool bin Ali Sultan on January 19, 2006. 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). MEFTA would consist of 16 entities in the Middle East and four in North Africa. The entire proposed MEFTA is included in the map in Figure 1 , with Oman, heavily shaded, in the lower right hand corner. Completion of a MEFTA by 2013 was proposed by President George W. Bush in 2003, as part of a plan to fight terrorism by supporting Middle East economic growth and democracy through trade. To date, besides Oman, the Administration has negotiated and Congress has implemented free trade agreements with four other MEFTA political entities: Israel and Jordan (before MEFTA was announced), Morocco, and Bahrain. A sixth FTA is being negotiated with the United Arab Emirates (UAE). Congressional consideration of the U.S.-Oman FTA is governed by the timeline set forth in the Trade Act of 2002 ( P.L. 107-210 ). Under this law, which lays out the President's trade promotion authority (TPA), the President must give Congress a 90-day prenotification of his intent to enter into the trade agreement. After that, the President must submit to Congress—under no particular time constraints, but on a day when both houses of Congress are in session—both the agreement itself and the implementing legislation. Any House or Senate committees to which the legislation is referred will have 45 days to report (or not report) the bill; and each house has 15 days after the bill is reported (or the 45 days expire) to consider the legislation. If the House passes its bill to the Senate, the Senate has an additional 15 days to consider the legislation. Floor debate in either house is limited to 20 hours, divided equally between supporters and opponents. 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. Figure 1. Oman's Geographic Location in the Proposed MEFTASource: Map Resources. Adapted by CRS. U.S. interest in Oman stems from a number of factors. Oman is a small exporter of oil and natural gas that is strategically located at the entrance to the Persian Gulf, 35 miles directly opposite Iran. It is not a member of the Organization of the Petroleum Exporting Countries (OPEC). Oman is a moderate Islamic country which has sought to maintain good relations with all Middle East countries. It also has a 170 year history of political and economic cooperation with the United States, and has supported the U.S. war on terrorism. Oman is an important gateway to the Persian Gulf region. Oman has many reasons for wanting to negotiate an FTA with the United States. It is a country whose proven oil reserves could be exhausted within 15 or 20 years; yet, almost 40% of the country's GDP, two-thirds of its export earnings and three-fourth of its government revenues currently come from oil revenues. It is therefore trying to liberalize and diversify its trade regime as it seeks to broaden economic opportunities for a fast-growing workforce. As a result, it is looking to expand its economy beyond oil and gas exports. It sees the United States as an important ally in the venture to prepare itself for a time when its economic and social challenges intersect. 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. As a trading partner it is also 11 th among the 20 MEFTA entities, which together represent 4% of U.S. trade for 2005. The United States, on the other hand, ranks fourth in importance among Oman's trading partners, behind the United Arab Emirates (UAE), Japan, and the United Kingdom for 2004 (most recent data). 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%). Since 2001, U.S. exports to Oman have almost doubled to $593 million, for various reasons, while U.S. imports from Oman, at $555 million, have increased by about a third, primarily because of increases in the price of petroleum imports. As a result, for 2005, the United States had a small trade surplus with Oman. Total U.S. foreign direct investment in Oman was $358 million in 2003, nearly double the $193 million investment in 2002. The Bureau of Economic Analysis does not report on investment by sector for Oman, when investment is highly concentrated in a small number of investors, and such reporting might reveal the identity of individual investors. However, most of it is likely invested in oil and gas-related facilities. However, the Department of Commerce's Country Commercial Guide for Oman reported that the largest investor in Oman is Royal Dutch Shell Oil which holds 34% of Petroleum Development in Oman, the state oil company, and 30% of Oman Liquid Natural Gas. In addition, U.S. firms, Gorman Rupp (water pumps) and FMC (wellhead equipment), have entered into industrial joint ventures with Omani firms, and Dow Chemical announced a joint venture with Oman Oil Company and the government of Oman in July 2004 to develop a large petrochemical plant in Sohar. The Country Commercial Guide for Oman also reported that total investment in listed Omani companies with foreign participation was $2.4 billion in September 2004, of which 8.94% ($215 million) was (worldwide) foreign investment. Foreign capital also constituted 7.5% of all capital invested in finance, 3% of all capital invested in manufacturing, and 9% of all capital invested in insurances and services. 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. U.S. apparel workers are a group that is potentially adversely affected. Apparel imports from Oman declined by 57% in 2005 over 2004, because the World Trade Organization (WTO) Agreement on Clothing and Textiles (ACT) expired in January of 2005, ending the trade quota system among WTO partner countries. 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. 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. For agricultural products, Oman will provide immediate duty-free access for current U.S. exports in 87% of agricultural tariff lines; and the United States will provide immediate duty-free access for 100% of Oman's current exports of agricultural products to the United States. Both countries will phase out all tariffs on the remaining eligible goods within 10 years. Textile and apparel products are divided into three categories. Most U.S. imports from Oman are category A (cotton and manmade fibers) for which duties will be eliminated immediately so long as the goods meet the FTA rules of origin requirements. On category B products (home furnishings—mainly bed and kitchen linens) tariffs will be reduced over five years, and for category C products (wool goods), tariffs will be reduced over 10 years. Most apparel must be assembled in an FTA party from inputs (yarn and fabric) made in an FTA party. At present, virtually all U.S. textile and apparel imports from Oman are dutiable, with an average tariff rate of 15.4% in 2005. At the same time, only 11% of U.S. agricultural imports from Oman are dutiable. These dutiable products carried an average tariff of 10.4% in 2005. Most U.S. exports to Oman incurred the common external Gulf Communications Council (GCC) tariff of 5% to all non-GCC members. The GCC includes, besides Oman, Bahrain, Kuwait, Qatar, Saudi Arabia, and the UAE. The U.S.-Oman FTA contains broad commitments to open markets in sectors such as banking, insurance, securities, and telecommunications.