Emirates Business 24/7 | Tuesday, September 29, 2009
EU urged to sign free trade deal with Gulf states
There is a pressing need to sign a free trade accord between the GCC and the EU as soon as possible. (AFP)
By Nadim Kawach
Gulf oil producers yesterday urged the European Union (EU) to stop setting conditions and sign a free trade agreement (FTA) that has eluded the two sides for nearly two decades because of persistent rifts.
Abdul Rahim Hassan Naqi, Secretary-General of the Dammam-based Federation of GCC Chambers of Commerce and Industry (FGCCI), said the planned FTA would be among the topics to be discussed when he heads a GCC chambers delegation during visits to several EU members in the first week of October.
Naqi said the absence of a free trade deal has largely upset the trade and investment balance in favour of Europe, adding that the GCC countries have invested nearly $542 billion (Dh1.98 trillion) in the EU during 2002-2006, while the EU’s investments in the Gulf are estimated at only $13bn.
"There is a pressing need to sign a free trade accord between the GCC and the EU as soon as possible. This agreement will largely boost trade and economic links between the two sides and create massive investment opportunities for both parties," Naqi said in a statement sent to Emirates Business.
"But the EU must first drop its conditions and remove all obstacles it is imposing on this agreement, which is preventing the GCC countries from achieving a balance in their economic relations between the two sides. There is no doubt that signing this agreement will serve the interests of both groups."
Naqi’s figures showed the EU’s foreign direct investment into the GCC stood at around $2.6bn in 2006, less than one per cent of Europe’s total FDI worldwide during that year. He said the EU’s balance of payments is also largely supported by its large exports to the Gulf and massive contracting and investment services provided by European companies to the GCC.
In statements last month, GCC Secretary-General Abdul Rahman Al Attiyah, said member states are willing to resume free trade negotiations with the EU after they decided to suspend the talks in protest at EU political demands.
He said the two sides would hold a series of meetings at expert levels over the next few months to discuss the FTA and other issues. The GCC suspended nearly two decades of FTA negotiations with the EU nations early this year, accusing them of trying to interfere in the group’s domestic affairs by linking the FTA to political concessions.
"The GCC countries do not agree to resume the FTA negotiations with the EU without tackling all differences about economic and political issues, which led to the suspension of the talks before the end of 2008," said Abdul Aziz Al Owaishiq, Director of Economic Relations at the Riyadh-based GCC Secretariat.
"Resumption of the talks now hinges on a significant change in the EU position towards the demands they have made as a pre-requisite for signing the FTA."
In a recent study, the GCC Secretariat blamed the Europeans for the failure to reach a free trade deal despite 20 years of negotiations, saying the EU has presented unacceptable demands.
"One of the main obstacles that faced the FTA negotiations is that the EU has not been interested in tackling this massive trade imbalance with the GCC because it is shifting its interest to East Europe," the study said.
"Another key obstacle is that the Europeans are not focussed on the development of the GCC economies and their various diversification programmes."