GCC states have privately criticised Bahrain for unilaterally granting the United States a full exemption from custom duties under a Free Trade Agreement.

They said the deal, signed last month, might ruin the fundamental pillar of their newly born unified custom pact.

No word about the Bahrain move was mentioned in the final communiqué following a meeting of GCC finance ministers in Riyadh last week because of what a GCC secretariat official said was the "sensitivity of the issue."

The senior official told Gulf News the ministers viewed the FTA agreement between the United States and Bahrain as not only adding another obstacle to the fragile GCC customs unity, but said that it also hinders their planned economic and financial unity.

"This makes it difficult for the GCC member states to achieve our long-aspired economic bloc. The Bahrain-USA FTA includes some articles that contradict with the fundamentals of the GCC economic agreement," said the official who declined to be identified.

The customs duty agreement imposes five per cent duty on all foreign goods that enter GCC borders, while Bahrain has granted the United States a 100 per cent duty-free treatment to all its consumer and industrial products.

According to the GCC economic agreement signed by the Supreme Council of the member states in Muscat in 2001, "no member state may grant to a non-member state any preferential treatment exceeding that granted herein to member states, nor conclude any agreement that violates provisions of this agreement."

The agreement also stipulates, among other things, a common external customs tariff (CET), common customs regulations and procedures, a single entry point where customs duties are collected, and according goods produced in any member state the same treatment as national products.

On international economic relations, the pact underlines the principle of collective negotiations with other countries, blocs and regional groupings to secure better terms and more favourable conditions.

The finance ministers saw in the move a "violation of these principles," the GCC Secretariat official said, adding that Bahrain was the first to sign the FTA agreement with the United States, which is the biggest single exporter to the region.

Regional analysts said the United States had always worked to negotiate and conclude deals with countries in the region on an individual basis rather than working with them as a bloc under the rules of the so-called 9/11 Commission initiated by President George Bush to encourage political and economic reforms in the Middle East.

The commission was created in the aftermath of the September 11 attacks against the United States.

It aims to create a Middle East Free Trade Area by 2013. Besides Bahrain, the United States has signed FTAs with Morocco and Jordan. Similar pacts are planned with the UAE, Kuwait, Qatar and Tunisia.

Such countries as Saudi Arabia and Algeria will have to await their entry to the World Trade Organisation.

Duties

  • The GCC customs duty agreement imposes five per cent duty on all foreign goods that enter their borders.
  • Bahrain has granted the United States 100 per cent duty-free treatment to all its consumer and industrial products.