EU, GCC may revive stalled talks

Brussels/Dubai : The European trade commissioner may head to the Gulf by the end of the year in what is expected to be a last attempt to revive stalled talks to establish a free trade agreement (FTA) between the two blocs, Gulf News has learned.

Officials in the European Union who are involved in trade negotiations with the Gulf Cooperation Council (GCC) have expressed frustration at what they see as the Gulf's unwillingness to move forward with the agreement, but say they are keen to revive the talks.

European Trade Commissioner Karel De Gucht may be sent to the region at the end of the year in a last attempt to revive negotiations.

"The trade commissioner has identified this as a top priority… [but] we are close to reaching our limit," said an EU official who has been involved in negotiations.

"His visit will be important and will be passing a message that the EU is interested in concluding this agreement, but we need a final step," she said, speaking on condition of anonymity because she was not authorised to speak to the media. "We have an agreement that is ready to be signed."

A GCC trade negotiator however told Gulf News that the bloc has temporarily frozen FTA negotiations will all potential partners.

Abdul Malek Al Hinai, undersecretary for econ-omic affairs at Oman's Ministry of National Economy, told Gulf News that the negotiations were suspended until a study begun by the GCC five months ago on the feasibility of entering such agreements is completed in March.

The deadlock between the two blocs now hinges on one clause in the agreement on which both the EU and the GCC have refused to budge.

Duty clause

The EU has insisted on including a clause eliminating the GCC's right to impose duties on products that are exported. While no Gulf countries currently have such duties in place, the GCC has insisted on its right to introduce them if the need arises.

European and Gulf officials have said that the GCC has conceded to all other requirements made by the EU, including those relating to democratisation and human rights.

The GCC is the EU's fifth largest trading partner, as per figures provided by the EU.

Individually, Saudi Arabia is the bloc's largest trading partner in the GCC, ranking at 15, and Bahrain is the smallest at 74. The EU is the GCC's second largest trading partner after Japan.

Al Hinai said that the GCC states, led by Saudi Arabia, insisted on their right to introduce export duties under the terms of the World Trade Organisation.

"We [in the GCC] have no intention to introduce export duties, but we want to have the right to introduce them should the need arise," said Abdullah Al Mouallimi, ambassador of Saudi Arabia to Belgium and the EU.

Christian Koch, director of international studies at the Gulf Research Centre said the export duties are a matter of sovereignty for the Gulf states.

"The GCC does not understand why the EU wants to put restrictions on its already small non-oil exports… Over three quarters of exports to the EU are in the form of energy and these products are not covered under the FTA. The rest are chemical products, some machinery, transport equipment, and small amounts of clothing, food and live animals as well as a category listed as animal and vegetable oils," he said.

The EU official said that the elimination of export duties was not too much to ask of the GCC since member states such as Oman and Bahrain that had entered free trade agreements with the United States individually had conceded their right to introduce such duties.

"We have offered a number of clauses that depart from our practices [which have not been agreed upon] but we cannot completely [back down]," she said. "We wonder if export duties are the real issue."

Al Mouallimi said the two blocs had initially differed on a number of issues, particularly the political clauses, which had eventually been agreed upon "in principle".

Al Hinai however said that while those differences had been agreed upon, the GCC is yet to receive written confirmation from the EU indicating that the issues have been resolved.

"I cannot say that we have resolved the other issues until we see something in writing," he said, saying his counterparts in Europe had repeatedly introduced new reservations.

Time to diversify

Gulf ambassadors in Brussels did not express much faith in reviving the negotiations, saying it was time to diversify the relationship with the EU beyond the FTA.

"They [GCC states] have recognised that they cannot hang all their hopes to one agreement so they have decided to go to an earlier agreement… which will hopefully consolidate the relationship between the EU and the GCC," said Al Mouallimi.

Amal Al Hamad, GCC ambassador to European Union in Brussels, said the bloc had decided to reactivate the EU-GCC Cooperation Agreement of 1998.

"Why do we only tackle the FTA? The FTA is part of the whole agreement of cooperation," she said.