The GCC revives a long-delayed plan for a customs union, but economists feel a sense of deja vu and stress the need for adequate technical preparation by member states.
GCC has mandate for customs union
The GCC now has a clear mandate to deliver a customs union, the long-delayed effort to boost trade flows among member states and deepen regional ties.
The six-member bloc aims to prepare for the union during the next three years, allowing it to come into effect by the beginning of 2015.
"We are looking forward to further supporting the integration process in the Gulf economies, and to focus more on full application of the customs union, to take advantage of the opportunities offered by a GCC common market," said Sheikh Hamdan bin Rashid, the UAE Minister of Finance.
"During the next three years, between 2011 and 2014, we should complete all the pending issues in regard to the customs union," said Obaid Humaid al Tayer, the UAE Minister of State for Financial Affairs.
"We've a mandate from the Supreme Council that by the end of this year we should have a complete and clear programme to tackle all the issues regarding the customs union," he said.
"We're trying now to identify what's the best way to achieve the objectives by following a kind of simulation exercise and working to a lot of 'what-if' issues."
A customs union abolishes quotas and tariffs between member states, effectively establishing a free trade bloc between Gulf nations, which would apply tariffs on goods brought into the GCC but allow free trade within it.
There was a previous attempt in 2003 to create a GCC customs union, but progress faltered as individual Gulf states sought their own treaties, such as Bahrain's free trade agreement with the US signed in 2004.
Member states would need to harmonise trade policies and set standardised categories for recording trade flows, similar to preparations made before the creation of the European Economic Community, which came into effect in 1958.
The creation of a single trade bloc would also allow the GCC to speak with a united voice in negotiations with the World Trade Organisation.
However, economists said the project would need to overcome significant difficulties.
"These things do take time," said Andrew Gilmour, the senior economist at Samba Financial Group. "The EU was a long, long, drawn-out process. Everyone needs to have a consistent and compatible system in place to list and classify the taxes and tariffs that you're going to apply.
"There's lots of exceptions that crop up, and they need to be addressed. All of that needs to be made consistent with everyone else."