Gulf News | January 26, 2008
Free trade with EU entails endless conditions
By Dr Jasim Ali, Special To Gulf News
It seems that more time is needed before the six-nation Gulf Cooperation Council (GCC) and 27-member European Union (EU) sign a long-awaited free trade agreement (FTA). Negotiations started in 1988.
Qatar’s deputy premier and minister of energy and industry Abdullah Bin Hamad Al Attiyah raised alarm bells at the GCC meeting in Riyadh following his recent remarks at a conference in Abu Dhabi.
Al Attiyah spoke of "endless" EU conditions prior to clinching a deal with the GCC. His comments came against a backdrop of optimistic calls made by top European officials of an imminent signing of FTA between the two blocs.
In late 2007, Swedish minister for foreign trade Ewa Bjoerling expressed confidence that the FTA would be signed in the spring of 2008.
Oman’s minister of commerce and industry Makboul Bin Ali Bin Sultan somehow explained concerns on the mind of Qatar’s deputy premier. Sultan noted that the EU believes that there is lack of sufficient coordination between GCC countries. Certainly, this is a new condition. In 2007, EU Trade Commissioner Peter Mandelson and his negotiating team focused on four issues, namely market access, rules of origin, government procurement and application of the investment protection and guarantees criteria within the GCC.
The European side pressed for unrestricted access to numerous investment opportunities including the crucial energy sector.
To be sure, there is no consensus within the GCC states with respect to foreign investment in oil and gas. For example, Kuwait has yet to decide on allowing foreign participation in the development of its oil fields.
The scheme, known as Project Kuwait, aims at generating an additional 450,000 barrels per day from four fields located in the northern region of the country. The development requires an investment of $7 billion over a 20-year period. The Kuwaiti parliament continues to block the proposal on the grounds that the constitution bars foreign ownership of the country’s hydrocarbon resources.
Conversely, Qatar has been welcoming oil majors through production and sharing agreements. International oil companies are credited with developing the country’s petroleum sector particularly gas. Nevertheless, there is no GCC agreement on foreign ownership.
Yet, claim of lack of coordination within the GCC is uniquely untimely. Saudi Arabia, the UAE, Kuwait, Qatar, Oman and Bahrain commenced the ambitious common market project at the start of 2008. The Gulf Common Market (GCM) aims at unifying the regional market through which nationals benefit from available opportunities within the bloc.
In particular, GCM relates to free flow of factors of production amongst member states. It covers all economic and investment services, dealings in the stock market and setting up of companies in the public and private sectors besides social insurance among GCC citizens. In other words, intra-coordination is at an all-time high.
The EU probably feels no need to have a dedicated FTA with the GCC partly because European firms are gaining businesses anyway.
In fact, Qatar’s Al Attiyah echoed the warning, saying that "Companies from the EU win very big contracts in the GCC, in fact, very profitable contracts and yet we cannot export some of our products to their markets."
Clearly, Al Attiyah was referring to EU tariffs imposed on imports of aluminium and petrochemical products from the GCC.
The writer is a Member of Parliament in Bahrain.