x Abu Dhabi, UAESunday 23 July 2017

GCC signs European trade deal

The agreement, signed six months after negotiations for a GCC-EU trade agreement collapsed, is aimed at increasing bilateral trade

The GCC has finalised a free-trade agreement with a four-country bloc of European nations that acts independently of the EU.
The GCC has finalised a free-trade agreement with a four-country bloc of European nations that acts independently of the EU.

The GCC has finalised a free-trade agreement with a four-country bloc of European nations that acts independently of the EU. The agreement, signed six months after negotiations for a GCC-EU trade agreement collapsed, is aimed at increasing bilateral trade and commercial relations between GCC states and the European Free Trade Association (EFTA), which covers Iceland, Liechtenstein, Norway and Switzerland.

Trade between the two blocs is centred on imports to the GCC of luxury goods and advanced technology, and exports of commodities from the GCC to EFTA. The new agreement will allow companies from both blocs to bid for government contracts and tenders, and introduces a mechanism for resolving trade conflicts. The GCC imported more than US$1 billion (Dh3.67bn) of Swiss watches and clocks in 2007, according to EFTA's figures. Switzerland is also a major banking and wealth management centre for Gulf citizens. GCC exports to EFTA countries have more than tripled in the past decade, reaching $1.14bn last year.

Bilateral trade between the two regional groupings has grown at more than 25 per cent a year since 2003. In 2000, a preliminary agreement was signed between the two groups, opening the door to full negotiations, which began in 2006. The final agreement was signed last week at an EFTA ministerial meeting in Norway. For almost 20 years, Gulf states have sought a free-trade deal with the EU, with talks periodically breaking down and restarting. Last December talks were again suspended.

European officials cited difficulties in obtaining access to markets in service sectors such as banking, insurance and telecommunications, while GCC leaders were quoted as saying attempts to link political and human rights conditions to the trade talks caused progress to stall. "Every time we start a round of talks, the European party surprises us by raising new questions or by mixing politics and trade," Abdulrahman al Attiyah, the GCC secretary general, told the state news agency WAM at the time.

The EFTA bloc was formed in 1960 as an alternative grouping to the European Economic Community (EEC), which later became the EU. Its membership once included the UK, Portugal and Austria, but each departed on accession to the EEC or EU. The broader European Economic Area (EEA) free-trade zone covers both EU and EFTA nations, but not Switzerland, which signed a series of bilateral agreements with the EU after its citizens voted against joining the EEA in a 1994 referendum.

The GCC is seeking free-trade deals with Australia, China, India, Japan and New Zealand, among others. A deal between the GCC and the US is less likely, after Bahrain and Oman signed separate bilateral agreements. Other GCC states, including the UAE, are pursuing similar deals. tgara@thenational.ae