RIYADH, May 25: The Gulf Cooperation Council (GCC) said on Saturday its six member states were well on the way to full economic integration following their decision to set up a customs union in 2003, a monetary union in 2005 and a single currency by 2010.

“Our focus in the next phase should be to make the GCC an active organisation, reflecting transparency and clarity of objectives,” GCC secretary general Abdul Rahman al-Attiya said in a report released ahead of a summit by Gulf leaders due to be held Sunday in the western Saudi city of Jeddah.

“We should work to implement the Muscat resolutions with the aim of achieving Gulf (economic) integration,” Attiya said in reference to the decisions on monetary policy taken at the GCC summit in Oman last December.

The report also hailed the step-by-step approach that will lead gradually to full Gulf economic integration.

The GCC is “now ready to set up the customs union, move on to the Gulf common market, and then on to the monetary and economic union, on the road to achieve Gulf economic unity,” said Hamad al-Bazei, assistant undersecretary for economic affairs at the Saudi finance ministry.

GCC leaders have brought forward the implementation of the Gulf customs union to January 2003 from 2005.

“The customs union will simplify customs clearance procedures and promote the flow of goods into the GCC member states,” according to Sheikh Abdullah bin Jassem al-Thani, director of Customs and Ports in Qatar.

“After establishing the union, goods which enter any state will be able to move freely into other states,” Sheikh Abdullah said in the report.

The union will “strengthen the GCC negotiating position with international economic blocs, improve competitiveness of national products and expand the scope of the Gulf market,” Bazei added.

The GCC states have approved a “mechanism for collection and distribution of customs duties” but have until the end of 2002 to work out the fine details.

It is widely believed that just under half of the customs revenue will go to Saudi Arabia, more than 20 percent to the United Arab Emirates and the rest to the remaining four states, Bahrain, Kuwait, Oman and Qatar.

On their way to a monetary union, the GCC approved the US dollar as a yardstick for a single currency to be effective by 2010.

The currencies of the other GCC member states are pegged to the dollar, except the Kuwaiti dinar which is pegged against a basket of currencies, mainly the US dollar.

Governor of the UAE central bank Sultan al-Suwaidi suggested that steps similar to those adopted by Europe can be taken by the GCC states to achieve a monetary union by the end of 2005 and a single currency five years later.

“We have to agree on a ceiling for the ratio of public debt to Gross Domestic Product (GDP) and the ratio of budget deficit to GDP,” Suwaidi said.

The GCC states have a combined oil output of around 11.5 million barrels daily, and more than 50 percent of world’s proven crude reserves. Saudi Arabia alone produces 7.053 million barrels a day.—AFP