Bush proposes bringing Arab nations into free-trade zone

COLUMBIA, S.C. -- President Bush linked Middle East peacemaking with a need for economic advancement on Friday, offering to extend U.S. free-trade benefits already enjoyed by Israel and Jordan to other nations in the region within a decade.

"The Arab world has a great cultural tradition but is largely missing out on the economic progress of our time," Bush told graduates at the University of South Carolina commencement.

He also wished Secretary of State Colin Powell well on his attempts in the coming days to nudge along the Israeli-Palestinian peace process. Bush said he and Powell shared a vision of "two states, Israel and Palestine, living side-by-side in security, in prosperity and in peace."

"The way forward in the Middle East is not a mystery," Bush said. "It is a matter of will and vision and action."

Powell was headed for weekend negotiations in the region with Israeli Prime Minister Ariel Sharon and new Palestinian Prime Minister Mahmoud Abbas.

Later, the White House announced that Sharon and Bush would meet on May 20 in Washington. "The two leaders will discuss efforts to move ahead toward a peace settlement between Israelis and Palestinians as well as a range of bilateral and regional issues," the White House statement said.

Wearing a blue gown with dark bands, the president told a graduating class of 1,200 students that economic prosperity is critical to a lasting peace accord and that unrestricted U.S. trade with the Middle East could help the entire region prosper.

The combined gross national product of all Arab countries is now smaller than that of Spain, he said.

With the overthrow of Saddam Hussein's regime in Iraq, Bush said it was now time "to seize the moment" and to bury old animosities.

"We're determined to build a Middle East that grows in hope, instead of resentment," Bush said.

Under the president's proposal for a U.S.-Middle East free trade zone, nations would be brought into the pact gradually. To quality, nations would have to meet certain requirements, such as renouncing and combatting terrorism and agreeing to lower their own barriers to trade and investment by U.S. companies. They would also have to agree to drop boycotts of Israel.

A free trade zone in the Middle East would put Arab countries on a more equal footing with Israel, analysts suggested.

Bush also announced that Powell and U.S.Trade Representative Robert Zoellick would hold meetings in Jordan next month with regional leaders to discuss economic and security issues important to the region. The meetings will occur on the sidelines of a meeting of the World Economic Forum.

A senior administration official, briefing reporters on condition of anonymity, said the ultimate goal was to see the entire area joined into a single free-trade zone.

But the official cautioned that this process will take a number of years, in large part because few Arab countries belong to the World Trade Organization.

The official said WTO membership, which can take years to complete, will be required before the United States would begin free trade negotiations with any individual country.

The U.S. official said that any Arab country wishing to join the WTO has to agree to drop the decades-old Arab trade boycott of Israel because such boycotts violate WTO rules.

A country that negotiates a free trade agreement with the United States wins a significant economic prize because it removes all tariff and other trade barriers to the world's largest market. Jordan, for instance, saw its exports to the United States rise by 80 percent to more than $400 million last year, the first year of Jordan's free trade agreement.

Bush, who was given an honorary doctorate of laws, had political reasons to visit the state now. Last weekend, on the same campus, nine Democratic contenders for president debated, criticizing Bush for his tax-cut plan and the sluggish economy.

Bush easily won South Carolina in the 2000 presidential race. But GOP strategists didn't want the Democratic message to hang in the air too long.

The president won hearty applause, but not all the students were happy Bush was commencement speaker.

"My graduation is turning into Bush's speech," said Matthew Brown, a political science major from Charlotte, S.C., adding that last weekend's Democratic debate is a "huge reason why he's here."

Some students refused to attend Friday's graduation ceremony in protest of the commencement speaker. "It's not a forum for the beginning of his 2004 presidential campaign," said Amanda Martin, 31, who was to receive two master's degrees in social work and public health.

Martin skipped the ceremony but stood outside the Carolina Center in her cap and gown despite the sunny skies and temperatures approaching 90 degrees.