Any GCC company wanting to launch in another state has to be fully owned and managed by nationals and registered in a member state for at least three years.
GCC deal eases the way for UAE companies to set up in other states
UAE companies will find it easier to establish businesses in other GCC states under a deal signed by regional leaders meeting in Abu Dhabi.
Currently, high licence fees and red tape are obstacles for Gulf-based companies setting up branches in the region which saw US$76 billion (Dh279.14bn) worth of internal trade last year.
"The intention is to allow GCC companies to be treated the same as national firms when they set up branches elsewhere in the GCC," said Dr Abdel Aluwaisheg, the GCC director general of international economic relations. "It will reduce costs and encourage smaller companies to set up branches."
The GCC common market was set up in 2008 to boost growth through closer ties.
So far, it has enabled GCC nationals to work, buy houses, trade shares, attend schools and receive medical treatment in all six states.
But problems have beset other important aspects of the market, such as border disputes that have hampered the free flow of goods, raising costs for exporters in the private sector. The UAE has been pressing for greater progress in enabling GCC companies to conduct business and register companies in other states.
Faisal Belhoul, the managing director of the private equity firm Ithmar Capital, based in Dubai, and a board member of Dubai Chamber of Commerce and Industry, said the relaxation of existing rules was a breakthrough.
Ithmar has invested about $650 million over the past five years in healthcare, oil and gas, construction and engineering. Yet the company has found hurdles to expansion in other GCC states such as fees and administrative issues.
"The GCC is becoming a business cluster and a combined cultural experience," said Mr Belhoul. "Any easing of transparency and costs associated with the learning curve and procedures as well as cost and time delays will be beneficial to business."
Under the agreement, any GCC company wanting to launch in another state has to be fully owned and managed by nationals and registered in a member state for at least three years. However, the restrictions on management and registration can be amended by the host nation.
Officials hope the new rules will help to boost trade within the GCC. Inter-GCC trade rose to a peak of about $76bn last year, from almost $65bn in 2008.
No progress was revealed in the region's efforts to reach a free trade agreement (FTA) with the EU. Discussions ended in deadlock two years ago over the issue of export duties. EU members disagree with GCC proposals to allow members the right to impose limits on their own exports in case of domestic shortages or other circumstances.
"We are awaiting for them to show flexibility on this issue as we have done by reducing tariffs," said Dr Aluwaisheg. "The FTA will benefit Europe more than us as they have more to export."
Members were also given an update about the GCC's progress in arranging meetings of strategic dialogue between the GCC and the Association of South East Asian Nations, China and Turkey spanning trade, tourism, culture and politics. Similar meetings are planned with Russia and Australia.