The 12th Gulf Cooperation Council (GCC) consultative summit held in Riyadh last week will be recognised for facilitating the implementation of the customs union project.

In fact, the latest consultative meeting was about the regional customs union project as much as the 30th regular GCC summit held in Kuwait in late 2009 was concerned with the monetary union scheme. Only four GCC states are members of the monetary union project, which commenced at the start of 2010. However, all six member states are signatories to the customs union as well as Gulf Central Market (GCM) initiatives.

Launched in 2003, the customs union scheme has failed to meet repetitive deadlines. The original plan called for full implementation in a span of two years. However, meeting for their 26th summit in Abu Dhabi in late 2005, GCC leaders decided to delay implementation of the customs union project for two years. Yet, nothing materialised until the recent announcement of member states satisfying the requirements by the start of 2011.

In reality, the scheme has encountered serious challenges ever since its inception, notably relating to developing a formula for fair distribution of customs duties among member countries. To be sure, GCC authorities have yet to agree on a formula for distribution of revenues acceptable to all parties. Sticking points include port of entry and final destination of goods. Yet another problem concerns some member countries showing favours for certain countries while carrying out external trade. This is true of Bahrain and Oman, which have separate free trade agreements (FTAs) with the US.

Concurrently, a key implication of the customs union relates to adopting a unified external trade policy with non-members. It is asserted that some GCC states show favours towards imported goods from certain places in violation of a key principle.

Another issue requiring a concrete solution deals with ensuring the smooth movement of trucks carrying goods at crossing points. Sadly, the King Fahd causeway linking Bahrain to Saudi Arabia has lately witnessed unprecedented queues of trucks on the Saudi border. Happily, GCC leaders discussed this matter during their meeting last week, clearly indicating levels of concern. Suggested solutions called to ensure the availability of visas for non-GCC drivers around-the-clock on the one hand and sufficient support at entry points and uniform customs papers.

Integrating

Full implementation of the customs union project should help the process of integrating GCC economies. This four-stage economic integration process started back in 1982 with the introduction of FTAs among the six countries. But GCC states had to wait more than 20 years to move to the next stage of the customs union.

Strangely enough, the GCC states opted to move successive states of economic integration in relatively short periods of time. Aside from the customs union project, the six-nation grouping decided to start the execution of the Gulf Common Market (GCM) in 2008.

The GCM project involves a free flow of factors of production among 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.

Still, four GCC states, Saudi Arabia, Qatar, Kuwait and Bahrain agreed in late 2009 to start implementation of the monetary union scheme in 2010.

The scheme aims to unify fiscal and monetary policies with regards to budgetary deficit and interest plus inflation rates.

Finally, this writer shares the wishes of the GCC Secretary-General, Abdul Rahman Bin Hamad Al Attiyah to remove the obstacles for implementation of the custom union project prior to the convening of the 31st GCC summit in the UAE by year-end.

— The writer is a member of Parliament in Bahrain.