New push for GCC-EU free trade pact

Mahmoud Habboush

• Last Updated: November 26. 2009 10:43PM UAE / November 26. 2009 6:43PM GMT

BERLIN // The Federal National Council has urged Germany to use its influence to push for finalising a long-awaited free trade agreement between the European Union (EU) and the GCC.

Abdul Aziz al Ghurair, the FNC Speaker, arrived in Berlin on Monday night on a three-day visit to Germany. There he met his counterpart, the president of the German parliament, Dr Norbert Lammert, and other top German officials. On Wednesday, he met the prime minister of Lower Saxony state, Christian Wulff.

Mr al Ghurair said he understood that German officials would start looking into the free trade agreement, which would limit tariffs on petrochemical and other exports to Europe, and on European goods and services coming into the GCC.

“From the German side,” he said, “we found out that they are keen to push the free trade agreement, particularly when 60 per cent of the energy reserves of the world come from the Gulf countries.”

Talks over the agreement were suspended during a meeting in April in Muscat between top EU and Gulf officials.

The negotiations started in 1990 but were suspended on several occasions and have repeatedly stalled, initially over a European requirement for the GCC to form a customs union, which it eventually did in 2003. More recently, the sticking points have included the GCC’s unwillingness to accede to European demands for political and human rights reform, and Europe’s insistence on its right to tax petrochemicals. That insistence has only grown as climate-related carbon levies have worked their way up the European agenda.

In April, officials grappled with a clause dealing with human rights and failed to agree on the amount of tax levied on products exported by the Gulf states.

Mr al Ghurair said the disagreement over a clause that stipulates “the suspension” of the agreement if the GCC states failed to respect human rights was nearly solved.

“That’s been negotiated now, and there is some way to some conclusion,” he said. He added, however, that imposing further taxes on GCC exports “defeats the purpose of free agreement”.

“It’s unfortunate,” he said. “Every time we come around an obstacle, we overcome it, and then they create another obstacle.”

This reflected the frustration of GCC officials who had also suspended talks in December 2008, when the EU hesitated to sign a draft agreement that they said included many concessions by the GCC governments.

“We were quite eager to negotiate and finalise a free-trade agreement.”

When asked whether he expected talks to resume soon, the FNC Speaker said: “I don’t know. To restart the negotiations, it will take some time.”

But he said that it was vital for the concerned government organisations in the UAE to explain to their business communities the benefits of signing a free-trade agreement with the EU.

“People should be really aware of the benefits and consequences for the UAE of signing an agreement,” he said.

If signed, the free trade agreement would be the first between the two political and economic blocs.

The EU has sought to enter economic agreements with other countries to encourage free market and democratic reforms. However, GCC states have argued that any political reform should follow a pace that fits their societies.

Earlier this year, the British business secretary, Lord Mandelson, a former EU trade commissioner, said during a trip to the Gulf region that there were fewer hurdles to an agreement than in the past. “I think the remaining barriers are few, and with political will we will be able to climb over them,” he said.

mhabboush@thenational.ae