China Daily | April 18, 2013
Sino-Gulf FTA ’may be signed this year’
A free trade agreement between China and the Gulf Cooperation Council may be concluded this year, the United Arab Emirate’s ambassador to China said.
"We are near to achieving the FTA between the GCC and China, with a few items including tariff issues to be resolved soon thanks to strong bilateral will," Omar Ahmad Adi Al Bitar said.
The envoy added that he hopes this year will not pass before the two sides conclude the agreement.
Established in Abu Dhabi in 1981, the GCC is a political and economic union of Arab states comprising the United Arab Emirates, Bahrain, Saudi Arabia, Oman, Kuwait and Qatar, accounting for more than 60 percent of the trade volume between China and the Arab League.
China and the GCC launched free trade agreement negotiations in 2004, with both sides reaching consensus on most areas of goods trade after four rounds of talks. Discussions on service trade are continuing.
Trade between China and the GCC mainly centers on the oil, mechanical and textile sectors.
Data from the Ministry of Commerce show that Sino-GCC trade totaled $133.8 billion in 2011, accounting for 68.3 percent of trade between China and the Arab League. By the end of 2011 bilateral investment reached $4.1 billion.
The UAE and Saudi Arabia are now major export destinations for China, with its exports to the two countries accounting for more than two-thirds of exports to the GCC.
China will overtake India to become the UAE’s biggest trading partner by 2015, when trade between the two countries will reach $60 billion in value, Al Bitar said.
China is the UAE’s second-largest trading partner, with trade between the two countries valued at $40 billion in 2012, according to the latest data from the UAE embassy.
"To a great extent, trade between China and the UAE will be further boosted by the FTA between China and the GCC," the ambassador said.
China mainly exports electronic products, steel and cameras to the UAE. The Gulf nation is planning to explore China’s Muslim food market, valued at $2.5 billion in 2011 and increasing by 10 percent annually, according to a report from the UAE Ministry of Foreign Trade.
UAE foreign trade is expected to reach $449.6 billion in 2013, an 18 percent growth year-on-year. The country also plans to boost its exports of gold, jewelry and precious-metal products to the Asian, European and American markets.
China surpassed the United States to become the world’s largest net importer of oil, rising to 6.12 million barrels in December last year, and that of the US dropping to 5.98 million barrels for the same period, according to Chinese customs and the US Energy Information Administration.
Jiang Shuzhu, professor at the economics school of Shandong Institute of Business and Technology, said: "Setting up an FTA with the GCC, an important global oil exporter, will ensure crude oil supply for China, so the FTA is regarded as China’s oil guarantee."
In addition, a Sino-GCC FTA will help Chinese enterprises further explore the Middle East market, which has strong demand for Chinese goods, Jiang said.
The FTA with the GCC will stimulate companies in the Gulf to set up petrochemical enterprises in the Chinese market, which can promote industry efficiency and reduce energy prices, Jiang said.
China’s investment in the Gulf region has seen fast growth in recent years.
According to Al Bitar, the number of Chinese companies operating in the UAE market stands at more than 5,000, up from the 3,000 three years ago.
Mei Xinyu, a researcher at the International Trade and Economic Cooperation Institute of the Ministry of Commerce, said there is huge potential for Chinese companies to develop in the GCC area.
GCC countries also need to dismantle the monopolies of US and European companies in the oil and gas exploration industries, he added.