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Broadbasing
its choices
The new GCC roadmap of
cooperating with new regional blocs will enhance its
economic choices and rectify the traditional trade
imbalance that these countries have suffered from
 Bahrain
is spearheading efforts to forge closer ties between Gulf
Cooperation Council countries (GCC) and other regional
blocs, and for noble reasons. This is happening ahead of a
Bahraini candidate, public security chief Abdul Latif bin
Rashid Al-Zayani, assuming the rotating chair of
secretary-general of GCC. Al-Zayani would take over his job
from Qatari Abdulrahman Al-Atiyyah after winning endorsement
from the 31st summit scheduled to take place in Abu Dhabi
towards end-2010.
Putting the new vision to work, GCC foreign ministers met in
Manama in late June to discuss a Bahraini roadmap for the
group, which amongst others call for economic-cooperation
with regional economic blocs and a joint action over human
rights. Undoubtedly, it makes sense for GCC officials to
explore fresh ways every now and then in order to strengthen
the group’s position on a global level in an ever-changing
socio-economic and socio-political landscape.
Reaching out
Bahrain first offered the roadmap during the GCC summit in
Kuwait in late 2009, and ostensibly used the first half of
2010 to explore some of its key proposals. For example,
Bahrain Foreign Minister Sheikh Khalid bin Ahmed bin
Mohammed Al-Khalifa has spent a considerable amount of time
talking to officials from the Association of South-East
Nations (ASEAN). Not surprisingly, strengthening economic
ties of six-nation GCC with 10-nation ASEAN is a key
component of Bahrain’s roadmap. Certainly, reaching out to
ASEAN neatly fits the GCC’s efforts of spiraling presence in
south-east Asia at large. To be sure, GCC’s first ever deal
with any nation was signed in late 2008 with ASEAN-member
Singapore.
Reinforcing economic cooperation with ASEAN falls in line
with the newly-founded drive in GCC for reaching out to
diverse economic blocs. Earlier this year, GCC signed a
memorandum of understanding on commercial and economic
cooperation with 19-member Common Market for Eastern and
Southern Africa (COMESA), the first with an African
grouping. In 2009 GCC signed a free trade agreement (FTA)
with the European Free Trade Association (EFTA), the first
such deal with a regional bloc. EFTA comprises of
Switzerland, Norway, Iceland and Liechtenstein.
Reviving talks with
EU
Another piece of good news relates to resumption in June
2010 of an annual economic dialogue between GCC and European
Union. The last time the two sides had such a dialogue was
in 2003. Meeting in Brussels, representatives from EU and
GCC discussed three major issues, the first being
consequences of the global financial crisis and lessons from
the experiences of both sides in addressing the debacle. The
second topic concerned comparing notes on implementation of
common market projects in both entities. In retrospect, GCC
commenced implementation of Gulf Common Market (GCM) project
in 2008, in turn designed to allow free flow of factors of
production in member countries. Yet, the third item on the
agenda related to EU’s handling of Greece’s debt problem. It
is probably fair to assume that the EU side felt obliged to
engage GCC in the aftermath of Greece’s problem, which
amongst others brought about pressures on the value of Euro,
in turn a currency for some 16 EU members. Possibly, EU
needs access to GCC markets and investments nowadays in
order to help addressing its own problems resulting from
Greece’s debt crisis. All said and done, the two sides
agreed on the need to continue the dialogue with the
eventual aim of signing an FTA between the two blocs.
Looking back, the GCC’s General Secretariat suspended talks
with the EU in late 2008 in order to signal its displeasure
with derailed negotiations. The decision was supposedly
designed to apply pressures on the EU in order to modify its
conditions prior to singing a deal with the GCC.
Addressing EU
demands
Yet, EU countries insist on addressing issues related to
human rights and democracy as preconditions for signing a
trade accord with GCC states. In addition they also
insist on the proliferation of democratic teachings in the
GCC. On their part, GCC states demand removal of customs
charges on aluminum and petrochemicals products. The EU
imposes a six per cent customs duty on imports of aluminum
from the GCC. However, the EU remains weary of governmental
support such as under-priced gas to GCC producers, a matter
that grants them unfair advantage against their European
counterparts notably countries joining since 2004. Some 12
countries joined the EU in a span of five years including
Romania, Poland, Hungary and the Czech Republic.
Needless to say, it is to GCC’s advantage to conclude a deal
with the EU, in turn the largest trading partner for
regional countries. The EU has a comfortable surplus in its
trade account with GCC countries. At the same, it is
increasingly emerging as a primary receiver of foreign
direct investments (FDI) from GCC states. Official EU
statistical sources put the amount of FDI from the GCC
regions in 27-member bloc at 63.2 billion Euros in 2008.
Conversely, EU countries pumped merely 18.9 billion Euros to
GCC economies in the same period. Yet, the GCC’s appetite
for investments in EU members remains as steady as ever, a
case in point being the decision by a sovereign Qatari fund
to purchase Harrods for some 1.5 billion pounds or $2.2bn.
Clearly, lack of FTA between the sides is to EU’s advantage
by virtue of enjoying surpluses in trade and investments. As
such, GCC countries need to have unrestricted access to EU
countries, in turn the largest economic bloc in the world.
Undoubtedly, time is ripe for the GCC to reach out to
different economic blocs and countries. GCC countries have
started free trade talks with Japan, China, South Korea, and
Pakistan plus Australia and New Zealand. Also, Turkey and
Iran are pushing for separate trade deals with the GCC as a
group. In the age of globalisation, economic cooperation
with others is the only way forward, with the GCC being no
exception. |
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