DUBAI, Feb 25: Gulf Arab states head for a summit with the European Union in Spain on Wednesday confident of signing a free-trade agreement after their recent endorsement of a regional customs union, the main hurdle to the much-delayed accord.
The Gulf Cooperation Council (GCC) is expected to use the February 27-28 Granada summit, the first high-level meeting between the two blocs since last September’s attacks on the United States, to press the EU to sign the landmark accord and discuss other economic and political issues.
“The two sides have agreed to turn the page on several years of fruitless discussions and finalize a free-trade agreement, maybe in the course of this year,” said Ahmad al-Harthi, head of Arab affairs at Oman’s foreign ministry.
Harthi, who headed a GCC delegation at last week’s preparatory meeting in Brussels, put his optimism down to the Gulf body’s decision to push ahead with plans for a customs union in 2003 and monetary union by 2010.
The 15-state EU has insisted that the GCC must have its own customs union before it signs a free-trade agreement with the six oil producers, in a campaign that has already lasted more than 13 years.
“There is no doubt that after the last Gulf summit in Muscat, the door is wide open for the GCC and EU to seal a free-trade agreement,” said Bahraini economist Mohammad al-Assumi.
“Up until now, negotiations between the two parties have stalled on this obstacle, but that has been eliminated,” he told AFP.
According to Assumi, “the conclusion of such an agreement no longer risks being blocked by traditional EU demands for improvement in human rights after the great progress shown by the Gulf states”.
In April last year, Saudi Foreign Minister Prince Saud al-Faisal accused the EU of using the issue of human rights to pressure GCC members and make “economic and political gains.
“One example of that is the free-trade agreement between the GCC and EU, which is blocked despite many years of negotiations,” the prince said.
Kuwaiti economist Amer al-Tamimi said the creation of a customs union in the Gulf will “boost the GCC’s position in negotiations with the EU.”
“We also hope that industrial exports from the GCC will make an impact on the European market when custom taxes are cut,” Tamimi told AFP.
The Gulf states — Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates — account for 45 per cent of the world’s oil reserves and provide around 20 per cent of the world’s crude.
At the last GCC summit in December 2001, the body decided to bring forward by two years to 2003 a customs union within the region, a precondition for the accord with the EU.
It also decided on the launch of a new single currency by January 1, 2010, “at the latest”.
The GCC has been trying since 1983 to seal a customs union as a vital step toward a Gulf common market worth more than 80 billion dollars in imports.
The Gulf bloc is critical of high taxes levied by the EU on its refined oil products and Gulf aluminium, as well as its massive trade deficit with Europe, estimated in 2000 at $12 billion.
The EU is the GCC’s biggest trade partner, while the Gulf is the EU’s fifth largest export market.
According to official statistics, trade between the two groups increased to 51.5 billion euros in 2000 from to 37 billion euros the year before.
Gulf investments in the EU are estimated at $122 billion, representing 35 per cent of all the region’s investments abroad.—AFP