Gulf intra regional trade has continued to grow, reaching record highs with partially applying Custom Union provisions among Gulf Cooperation Council (GCC) countries. This nullifies the argument that the similarities between GCC economies stands against the growth of intra-regional trade, which will remain limited because there are no goods or services that can be traded among them.
This view may have been correct in the past, before the developments in international trade relationships where countries such as the UAE have been transformed into trade giants. Moreover, most of the trade conducted in the region goes through the UAE, and the economies of the six GCC countries have become more diverse than a decade ago.
Many GCC countries’ industrial and productive sectors depend entirely on semi-manufactured goods produced by one GCC country or another which results in value addition and re-exports.
Hence, the situation does not entail the exchange of consumer goods and services, as was the case before. The integration of GCC economies on one hand and the opening up of international markets as part of globalisation on the other have resulted in different circumstances that enable the expansion of Gulf intra regional trade.
For the intra regional trade to continue growing, the legislative structure facilitating this type of trade needs to be completed, especially the complete application of the Custom Union’s provisions expected in 2015. It also needs developing Gulf infrastructure facilities such as ports, airports, and roads, which will achieve a quantum leap with the Gulf-wide rail network.
The UAE infrastructure building experience provides a huge support and back up for Gulf intra regional trade. The UAE has 60 per cent of Gulf ports: It is expected that the UAE’s share of the region’s ports will jump to 65 per cent with the opening of the first phase of the Khalifa Port in Abu Dhabi, which was inaugurated in August.
This infrastructure has enabled the non-oil trade in Dubai alone with GCC countries to increase by 56 per cent during the first half of this year, to reach Dh58.5 billion ($ 15.9 billion) as compared to Dh37.5 billion for the responding period of last year according to Dubai Customs data.
With the launching of Khalifa Port’s first phase, a new quantum leap is expected in GCC countries intra regional trade. Khalifa Port is also expected to be linked through its adjacent industrial zone Kizad, along with the Gulf railway system which will connect all six GCC countries together. This will give the port a great advantage through binding its services with productive sectors and meeting its needs throughout GCC countries.
This is a big bonus especially if we take into consideration the low cost of train transportation in comparison to other forms of land transport, which will contribute to lowering Gulf goods production costs and stepping up its competitiveness in Gulf and international markets.
The importance of the Khalifa Port, which was established in Al Taweelah in Abu Dhabi over an area of 2.7 square kilometres, is evident in its capacity of 2.5 million containers that will jump to 15 million containers by 2030 with a storage capacity of 50 million containers. Moreover, the Kizad industrial zone is big enough to accommodate hundreds of projects where thousands of jobs will be available as per the Abu Dhabi vision of 2030.
The cost of Khalifa Port’s first phase was estimated at Dh26.5 billion and the second phase is expected to kick off after the official opening of the first phase in the beginning of 2013. This will open the way to markets with a population of 4 billion people, or 60 per cent of the world’s population.
In addition to developing the Gulf intra regional trade, Khalifa Port will enhance the ever growing role of the UAE in regional trade which suits its new position in international relations as a fast emerging and growing country.
Dr Mohammad Al Asoomi is a UAE economic expert and specialist in economic and social development in the UAE and the GCC countries
