Book Review: Examining trade ties between the Gulf and EU

The EU can be a better and long-term trade partner with the Gulf region as compared to the U.S., with its narrow focus on political and security gains, according to a research which has been compiled as a book by Emirates Centre for Strategic Studies and Research (ECSSR).

The book, The Gulf Trade Relationship: Challenges and Opportunities, is prepared by Dr.Rodney Wilson, Professor of Economics at the Centre for Middle Eastern and Islamic Studies in the University of Durham, the UK.

It examines trade relations between the Gulf and EU during the 1980s and 1990s, as well as after September 11, 2001.

The author suggests that the EU is better organised in trade partnership than the U.S.

Dr Wilson contends that the EU, despite its limited political authority, presents an alternative Western partner to the U.S., with distinctive economic policies towards the GCC, Iran, Palestine and Iraq.

The U.S. had long-standing bilateral agreements with Saudi Arabia, which were extended after the liberation of Kuwait from Iraq.

However, U.S. relations are based on a country-by-country basis rather than with the GCC as a whole region.

"In this regard, the EU is better organised to further its commercial interest than the U.S., with its narrower focus on security only, which is complicated in any case by the special relationship between the U.S. and Israel."

The book also examines how economic relations have depended on oil price developments, and explores how far changing policies can affect future relations.

"Although much of the past and current emphasis has been on trade liberalisation, the relationship arguably needs to be seen in a broader context. There are, for example, very specific education, skills, and training needs in the GCC states in which there are already much European involvement, although not at EU level."

There is also considerable financial interdependence between individual European states, companies and the Gulf governments.

Referring to GCC's neighbours, Dr. Wilson says relations between the EU and Iran were normalised and an EU-Iran Working Group was established in November 2000 to promote trade and investment.

"There is no boycott of Iran, as in the case with the United States. In its dealings with Palestine, the EU has been notably more generous than the U.S. in terms of financial assistance and trade concessions."

Though the EU has no contractual relations with Iraq, imports from Iraq under the oil-for-food programme amounted to 3.68 million euros in 1999, and EU is Iraq's third largest market.

GCC is the EU's fifth largest export market at present, with exports in 1999 worth 34 billion euros, while imports are valued at less than half that figure.

"The substantial trade surplus that the EU enjoys with the GCC is a reversal of the position in the 1970s and early 1980s, when there was substantial deficit due to high oil prices.

"However, trade is not a zero-sum game, and flourishing bilateral trade can benefit third parties.

"Asian countries are of course also natural trading partners for the GCC, but good trade and wider economic relations with Japan China, the South East Asian Nations (Asean) and South Asia do not preclude close relations with the EU."

He said the EU, despite internal institutional short comings, can negotiate effectively as an entity, "unlike Asean that lacks an organisational structure comparable to the European Commission.

"In at least this respect, the GCC can deal with some of its major trading partners, the nations of the western and southern Europe, as a collective entity, rather than individually as in case of the Asian countries."