Gulf News | 28 January 2009
EU responds to demands with more demands
By Dr Mohammad Al Asoomi, Special to Gulf News
European countries have always topped the list of Gulf Cooperation Council’s (GCC) trade partners due to the historic commercial relations and mutual interests between the two parties. However, many changes and developments in the international economic relations have affected the growing relations between GCC and European blocs.
Despite attempts by both parties to upgrade their relations to cope with these developments, there were many obstacles that hindered their efforts to develop commercial exchange in tune with the major developments in the relations between GCC countries and other economic groups in the world.
Among these obstacles is reaching a free trade agreement between GCC countries and European Union (EU) countries after 20 years of negotiations, while FTA negotiations with some other countries did not take more than five years, such as the free trade agreements signed by some Gulf states with the US.
In December 2008, the General Secretariat of the GCC announced the suspension of FTA negotiations with European countries until further notice after these negotiations reached a deadlock.
In fact, the GCC countries have never taken such intense decisions related to their commercial ties with other countries, which clearly means that there is a gap between the viewpoints of both sides. This places many hurdles before the development of commercial and economic relations between both parties.
This comes at a time when European countries look at new markets and outlets for their exports due to the stagnation that hit their economies due to the global financial crisis.
Obviously, GCC countries handled the dossier of FTA negotiations with flexibility over the past two decades. It also made bold steps as to ease the process of reaching a free trade agreement with the European party.
On the other side, the EU continued to ask for further impossible demands after its previous demands were met by the Gulf states.
These demands are made by the EU without taking into consideration the characteristics of GCC countries and their own circumstances.
The EU should understand that some of its demands need time as to ripen the circumstances required for their success and not to hinder the drawing up and implementation of other programmes by GCC countries.
It has been noticed that the demands which stood as obstacles before signing this agreement are non-commercial demands, although GCC countries made a great leap in updating and modernising economic and commercial laws in the past years, thinking this would meet EU requirements in this respect.
Five years ago, the key obstacle was the non-existence of a GCC customs union as the most important condition demanded by EU countries. This hurdle was overcome when GCC countries signed and implemented a unified customs tariff agreement in 2003. Yet this step was not enough for the EU to further raise the ceiling of its non-economic demands.
Despite these demands, significant changes happened in all GCC countries over the past five years and were praised by many international organisations, including EU ones. Yet, the Europeans adhered to non-basic demands which have no significant impacts on the development of GCC-EU trade and economic relations.
This explains that the EU has its own agenda through which it seeks to postpone the signing of such an agreement to facilitate the marketing of its imports from eastern European countries that joined the union lately. These imports include aluminium and petrochemical products. The EU therefore keeps high custom duties on similar imports from the Gulf and reduce their competitiveness in European markets.
Dr Mohammad Al Asoomi is a UAE economic expert.